Document:

CREDIT AGREEMENT
                                      among
                            TELEREUNION S.A. de C.V.,
                    TELEREUNION INTERNATIONAL, S.A. de C.V.,
                          TELSCAPE INTERNATIONAL, INC.,
                                       and
                        THE OTHER BORROWERS PARTY HERETO
                                       and
                          THE ADDITIONAL BORROWERS FROM
                           TIME TO TIME A PARTY HERETO
                           collectively, as Borrowers
                                       and
                            THE LENDERS PARTY HERETO,
                                       and
                      GENERAL ELECTRIC CAPITAL CORPORATION,
                       as Administrative Agent and Lender

                         Dated as of September 29, 2000

<PAGE>
          CREDIT  AGREEMENT,  dated  as of September 29, 2000, among TELEREUNION
S.A.  de C.V., a Mexican corporation ("Telereunion"), TELEREUNION INTERNATIONAL,
S.A.  de  C.V.,  a  Mexican  corporation ("Telereunion International"), TELSCAPE
INTERNATIONAL,  INC.,  a  Texas corporation ("Holdings") and the other Borrowers
listed  on  Schedule  1.0  hereto and the Additional Borrowers from time to time
party  hereto (jointly and severally with Telereunion, Telereunion International
and  Holdings,  the  "Borrowers and each a "Borrower"), GENERAL ELECTRIC CAPITAL
CORPORATION,  a  New  York  corporation, in its capacity as Administrative Agent
(the  "Administrative  Agent")  and  Lender,  as  well  as  the  several lending
institutions  that  from  time to time are party to this Agreement (collectively
the  "Lenders"  and  individually,  a  "Lender").

                                   WITNESSETH:

          WHEREAS,  the  Borrowers  have  requested  that the Lenders enter into
certain  financing arrangements with the Borrowers pursuant to which the Lenders
may  make  loans  and  provide  other financial accommodations to the Borrowers;

          WHEREAS,  the  Lenders are willing to make such loans and provide such
financial  accommodations  on  the  terms  and  conditions  set  forth  herein;

          WHEREAS,  the Administrative Agent is willing to administer such loans
on  behalf  of  the  Lenders and in accordance with the terms and conditions set
forth  herein;

          WHEREAS,  Pointe  Communications  Corporation.  ("PCom"),  a  Nevada
corporation, has become a subsidiary of Holdings pursuant to a merger on June 2,
2000;  and

          WHEREAS,  the Borrower presently is party to a financing facility with
Lucent  Technologies  Inc., which facility it would like to retire entirely with
the  proceeds  of  the  facility  subject  of  this  Agreement.

          NOW  THEREFORE,  in consideration of the premises and mutual covenants
contained  herein,  the  parties  hereto  hereby  agree  as  follows:

                                    ARTICLE I

                  INTERPRETATION OF THIS AGREEMENT; DEFINITIONS
                  ---------------------------------------------

     Section  1.1   Defined  Terms.  As  used  in  this Agreement, the following
                    --------------
terms  shall  have  the  following  meanings:

          "ABR":  for  any  day,  the  greater  of:
           ---

          the floating  commercial loan rate announced from time to time by Bank
     of America,  N.A.,  as its prime rate,  or  equivalent,  for United  States
     dollar  loans made in the United  States,  in effect on such day,  with any
     change  in the ABR  resulting  from a change in such  announced  rate to be
     effective on the day of the relevant change,  plus the relevant  Applicable
     Margin; and

          the sum of (i) the Federal  Funds  Effective  Rate plus (ii) 1/2 of 1%
     (0.50%).

<PAGE>
          "ABR  Loans":  Loans the rate of interest applicable to which is based
           ----------
upon  the  ABR.

          "Accession  Agreement":  the  Accession Agreement substantially in the
           --------------------
form  of  Exhibit  N.
          ----------

          "Account  Control  Agreement":  the  Account  Control  Agreement
           ---------------------------
substantially  in  the  form  of  Exhibit  T,  with  such changes therein as the
                                  ----------
Administrative  Agent  shall  approve.

          "Accountants":  Any  internationally  recognized  firm  of independent
           -----------
certified  public  accountants  selected  by the Borrowers and acceptable to the
Administrative  Agent  in  its  reasonable  discretion.

          "Acknowledgement  of  Concession  Commencement":  a  letter  from  the
           ---------------------------------------------
Cofetel  in  form and substance satisfactory to the Administrative Agent, in its
sole  discretion,  acknowledging  that Telereunion has commenced exploitation of
the  Concession.

          "Acknowledgment  of  Indebtedness":  as  defined  in  Section  4.2(f).
           --------------------------------

          "Additional Approved Cities":  Chicago (Illinois), Dallas (Texas), New
           --------------------------
York  City  (New  York),  San Francisco (California) and San Juan (Puerto Rico).

          "Additional  Borrowers":  each  Borrower  party  to  an  Accession
           ---------------------
Agreement.

          "Administrative  Agent":  GE  Capital, as the Administrative Agent for
           ---------------------
the Lenders under this Agreement and the other Loan Documents, and any successor
thereto  pursuant  to  Section  10.9.

          "Affiliate":  as  to  any  Person,  any  other  Person who directly or
           ---------
indirectly  Controls,  is  under  common  Control with, or is Controlled by such
Person;  provided  that,  in  any  event:  (a)  any  Person who owns directly or
indirectly  ten  percent  (10%) or more of the securities having ordinary voting
power  for the election of directors or other governing body of a corporation or
ten percent (10%) or more of the partnership or other ownership interests of any
other such Person (other than as a limited partner of such other Person) will be
deemed  an  Affiliate of such corporation or other Person; and (b) each director
and officer of a Loan Party shall be deemed to be an Affiliate of the other Loan
Parties.

          "Agents":  the  Administrative  Agent  and  the  Collateral  Agents.
           ------

          "Agreement":  this  Credit  Agreement,  as  amended,  supplemented  or
           ---------
otherwise  modified  from  time  to  time.

                                        2
<PAGE>
          "Approved  Build-Out  Plan":  the  original  PCom business plan titled
           -------------------------
"Pointecom-Telscape  5  Year  --  Combined v4.xls" provided to the Lender in May
2000,  with  such  changes  as may be required thereto to reflect, in connection
with  infrastructure build-out in all the Additional Approved Cities, a need for
obtaining  aggregate  additional  financing (exclusively for application to such
infrastructure  build-out)  after  the  Closing  Date  in the form of (i) equity
contributions  in an aggregate amount of at least $9,000,000 and (ii) additional
financing  (in  the  form  of  equity  contributions  or  Indebtedness expressly
permitted  under  this  Agreement)  in  an  aggregate  amount, including without
duplication of any equity financing required pursuant to clause (i) above, of at
least  $21,000,000,  in each case as such business plan may from time to time be
modified  or  superseded  subject to the Administrative Agent's written consent.

          "Assignee":  as  defined  in  Section  11.6(c).
           --------

          "Assignment  and  Acceptance":  an  assignment  and acceptance entered
           ---------------------------
into by a Lender and an assignee (with the consent of any party whose consent is
required  by  Section 11.6(c)), and accepted by the Administrative Agent, in the
form  of  Exhibit  F  or  any  other  form approved by the Administrative Agent.
          ----------

          "Bankruptcy Code":  the Ley de Concursos Mercantiles and any successor
           ---------------
statute  thereto  with  respect  to  Mexico  and  otherwise  any  insolvency,
reorganization,  moratorium  or similar law for the general relief of debtors in
any  relevant  jurisdiction  and, in each case, the rules and regulations issued
thereunder,  as  in  effect  from  time  to  time.

          "Benefited  Lender":  as  defined  in  Section  11.7(a).
           -----------------

          "Blocked  Account  Agreement":  the  Blocked  Account  Agreement
           ---------------------------
substantially  in  the  form  of  Exhibit  O,  with  such changes therein as the
                                  ----------
Administrative  Agent  shall  approve.

          "Board  of  Governors":  the Board of Governors of the Federal Reserve
           --------------------
System and any Governmental Authority which succeeds to the powers and functions
thereof.

          "Borrowers":  as  defined  in  the  Preamble  to  this  Agreement.
           ---------

          "Borrowing  Date":  shall mean with respect to any Loan, the date that
           ---------------
the  amount  of such Loan is made available to the applicable Borrowers pursuant
to  Section  2.2.

                                        3
<PAGE>
          "Business  Day":  a  day other than a Saturday, Sunday or other day on
           -------------
which  commercial  banks in New York City or Mexico, D.F., Mexico are authorized
or  required  by  law  to  close.

          "California  Landlord's  Waiver  Agreements":  the  Landlord's  Waiver
           ------------------------------------------
Agreement  (Mountain  View)  and  the  Landlord's  Waiver Agreement (Sunnyvale).

          "Capital  Expenditures":  as  to  any  Person  for  any  period,  the
           ---------------------
aggregate  amount  incurred  by such Person and its Subsidiaries for the rental,
lease, purchase (including by way of the acquisition of securities of a Person),
construction  or  use  of  any property during such period, the value or cost of
which,  in  accordance  with  GAAP,  would  appear on such Person's consolidated
balance sheet in the category of property, plant or equipment at the end of such
period,  excluding:  any  such  expenditure  made to restore, replace or rebuild
property  to  the  condition  of  such property immediately prior to any damage,
loss,  destruction  or  condemnation  of  such  property,  to  the  extent  such
expenditure  is  made with insurance proceeds or condemnation awards relating to
any  such  damage,  loss,  destruction  or  condemnation.

          "Capital  Stock":  any  and  all  shares,  interests,  participations,
           --------------
social  parts  or  other  equivalents (however designated) of capital stock of a
corporation,  any and all equivalent ownership interests in a Person (other than
a  corporation)  and  any  and  all  warrants  or options to purchase any of the
foregoing.

          "Cash  Equivalents":  (a)  securities  issued  or  directly  and fully
           -----------------
guaranteed  or  insured  by  the  United  States  Government,  or  any agency or
instrumentality  thereof,  having  maturities of not more than one year from the
date  of  acquisition; (b) marketable general obligations issued by any state of
the  United  States of America or any political subdivision of any such state or
any  public  instrumentality or agency thereof maturing within one year from the
date  of  acquisition  thereof  and, at the time of acquisition thereof having a
credit  rating  of  "A" or better from either Standard & Poor's Ratings Group or
Moody's  Investors  Service,  Inc.;  (c) certificates of deposit, time deposits,
eurodollar time deposits, overnight bank deposits or bankers' acceptances having
maturities of not more than one year from the date of acquisition thereof of any
Lender,  or  of any U.S. domestic commercial bank the long-term debt of which is
rated at the time of acquisition thereof at least A or the equivalent thereof by
Standard  &  Poor's  Ratings  Group  or  A  or the equivalent thereof by Moody's
Investors  Service,  Inc.,  and  having  capital  and  surplus  in  excess  of
$500,000,000; (d) repurchase obligations with a term of not more than seven days
for  underlying  securities  of  the types described in clauses (a), (b) and (c)
above  entered into with any bank meeting the qualifications specified in clause
(c)  above;  (e)  commercial  paper  rated at the time of acquisition thereof at
least A-2 or the equivalent thereof by Standard & Poor's Ratings Group or P-2 or
the  equivalent  thereof  by  Moody's  Investors  Service,  Inc., or carrying an
equivalent  rating  by a nationally recognized rating agency, if both of the two
named  rating  agencies  cease  publishing ratings of investments, and in either
case  maturing  within  270  days  after  the  date  of acquisition thereof; (f)
interests  in  any investment company which invests solely in instruments of the
type  specified  in  clauses  (a)  through  (e)  above; and (g) other investment
installments  approved  in  writing  by  the Required Lenders and offered by any
Lender  or by any financial institution which has a combined capital and surplus
of  not  less  than  $500,000,000.

                                        4
<PAGE>
          "CFE":  Comision  Federal  de  Electricidad,  a  Mexican  federal
           ---
governmental  agency.

          "CFE  Consent":  evidence  satisfactory to the Administrative Agent in
           ------------
its  reasonable  discretion  of  the  consent  by CFE to the grant of a security
interest  to  the  Mexican  Collateral  Agent  pursuant  to  the  Mexican
Telecommunications  Mortgage on the rights of Telereunion derived from the lease
agreement  executed  by  and  between  Telereunion  and  CFE.

          "Change  in  Control":  (a)  with  respect  to any Borrower other than
           -------------------
Interlink and Holdings, the acquisition by any Person or Persons (other than the
Borrowers)  in the aggregate of more than five (5%) percent of the Capital Stock
of  such  Borrower  or of the Capital Stock of such Borrower having the ordinary
voting  power  to  elect  the  Board  of Directors or the governing body of such
Borrower,  (b)  with  respect to Interlink, the acquisition by another Person of
Capital  Stock  owned  beneficially  or  of  record  by a Borrower, and (c) with
respect  to  Holdings,  the  acquisition  by  another  Person  or Persons in the
aggregate  of either (i) twenty-five (25%) percent of such Capital Stock or (ii)
such  lesser  amount  of  such  Capital  Stock which would result in a change of
Control  or  upon the occurrence of specified events would result in a change in
Control and, in any case, the entering into of contractual or other arrangements
which  would  have  the effect of a change of Control in any Borrower, except as
permitted  pursuant  to  Section  6.8.

          "Closing  Date":  the date on which the conditions precedent set forth
           -------------
in  Section 4.1 and 4.2 shall be satisfied or waived and the Initial Loans shall
be  made.

          "Code":  the  Internal  Revenue  Code of 1986, as amended from time to
           ----
time.

          "Cofetel":  Comision  Federal de Telecomunicaciones, a Mexican federal
           -------
governmental  agency.

          "Collateral":  all  assets  of  the  Loan  Parties,  now  owned  or
           ----------
hereinafter  acquired,  upon  which  a  Lien  is  purported to be created by any
Security  Document.

          "Collateral Assignment of Lease":  each Collateral Assignment of Lease
           ------------------------------
substantially  in  the  form  of  Exhibit  L.
                                  -----------

          "Collateral  Agency Agreement":  the Collateral Agency Agreement which
           ----------------------------
appoints  the  U.S.  Collateral  Agent  and  the  Mexican  Collateral  Agent,
substantially  in  the  form  of  Exhibit  H.
                                  -----------

          "Collateral  Agents":  collectively, the U.S. Collateral Agent and the
           ------------------
Mexican  Collateral Agent and any other person designated to act in the capacity
as  a  collateral  agent  pursuant  to  the  terms  of  Section  5.10(a).

          "Commitment":  with respect to any Lender, that Lender's commitment to
           ----------
make  Loans  to  the  Borrowers  in an amount not to exceed the amount set forth
opposite  such Lender's name on Schedule 1.1, as such amount may be reduced from
time  to  time  pursuant  to  this  Agreement;  collectively  with  all Lenders,
"Commitments".  The  aggregate amount of the Lenders' Commitment is $60,000,000.

                                        5
<PAGE>
          "Commitment Percentage":  as to any Lender at any time, the percentage
           ---------------------
which  (a)  the  sum  of  (i) such Lender's then unused Commitment plus (ii) the
principal  amount of such Lender's Loans then outstanding constitutes of (b) the
sum  of  (x)  the  aggregate  unused  Commitments  of  all  Lenders plus (y) the
aggregate  principal  amount  of  all  Loans  of  all  Lenders then outstanding.

          "Commitment  Period":  the  period  from  the  Closing  Date  to  the
           ------------------
Commitment  Termination Date or such earlier date on which the Commitments shall
terminate  as  provided  herein.

          "Commitment  Termination  Date":  the  date  which  is  the  first
           -----------------------------
anniversary  of  the  Closing  Date.

          "Commonly Controlled Entity":  an entity, whether or not incorporated,
           --------------------------
which  is  under common Control with each of the Borrowers within the meaning of
Section  4001  of  ERISA  or is part of a group which includes the Borrowers and
which  is  treated  as a single employer under Section 414(b) or (c) of the Code
or,  solely  for  purposes  of  determining liabilities under Section 412 of the
Code,  which  is  treated  as  a  single  employer  under  Section
414(b),  (c),  (m)  or  (o)  of  the  Code.

          "Concession":  the concession to install, operate and exploit a public
           ----------
telecommunications network in the Federal District and the States of Guanajuato,
Jalisco,  Mexico,  Nuevo  Leon,  Puebla,  Tamaulipas  and  Veracruz,  granted to
Telereunion  by  the  Government  of Mexico through the SCT, as evidenced by the
Concession  Title  (Titulo  de Concesion), dated June 3, 1998 issued by the SCT.

          "Consent  and Agreement":  each Consent and Agreement substantially in
           ----------------------
the  form  of  Exhibit  S,  with  such changes as the Administrative Agent shall
               ----------
approve.

          "Consolidated  Debt  Service  Obligations":  as of the last day of any
           ----------------------------------------
quarter  of  Holdings and its Subsidiaries, the sum of (a) Consolidated Interest
Expense  for  the  prior  four  consecutive  quarters  of  Holdings  and  its
Subsidiaries,  plus  (b) scheduled principal payments in respect of Indebtedness
of  Holdings  and  its  Subsidiaries  for  prior  four  consecutive  quarters of
Holdings.

          "Consolidated  EBITDA":  for  any  period, the Consolidated Net Income
           --------------------
for  such  period, plus, to the extent deducted in determining such Consolidated
Net  Income  (without  duplication),  (a) Consolidated Interest Expense, (b) all
federal,  state,  local  and foreign income and corporate withholding taxes, (c)
depreciation  and  amortization  (including  amortization  of  debt discount and
deferred financing costs), (d) other non-cash charges, and (e) any extraordinary
and  unusual  losses,  and,  minus,  to  the  extent  added  in determining such
Consolidated  Net Income, (i) any non-cash income or non-cash gains and (ii) any
extraordinary and unusual gains, all as determined, to the extent applicable, on
a  consolidated  basis  in  accordance  with  GAAP.

                                        6
<PAGE>
          "Consolidated  Funded  Debt":  at  any  date of determination, the sum
           --------------------------
(without  duplication)  of  all  Funded Debt of Holdings and its Subsidiaries at
such  date  of  determination  that  would  be  included in the liabilities on a
consolidated  balance  sheet  of  Holdings and its Subsidiaries as at such date,
prepared  in  accordance  with  GAAP.

          "Consolidated  Interest  Expense":  for  any  period, the net interest
           -------------------------------
expense  of  Holdings  and  its  Subsidiaries for such period as determined on a
consolidated  basis  in  accordance  with  GAAP.

          "Consolidated Net Income":  for any period, the net income of Holdings
           -----------------------
and  its  Subsidiaries  for such period as determined on a consolidated basis in
accordance  with  GAAP.

          "Consolidated  Revenue":  for  any period, the revenue of Holdings and
           ---------------------
its  Subsidiaries  for  such  period  as  determined  on a consolidated basis in
accordance  with  GAAP.

          "Consolidated  Total  Debt":  at  any  date  of determination, the sum
           -------------------------
(without  duplication)  of  all Indebtedness of Holdings and its Subsidiaries at
such  date  of  determination  that  would  be  included in the liabilities on a
consolidated  balance  sheet  of  Holdings and its Subsidiaries as at such date,
prepared  in  accordance  with  GAAP.

          "Consolidated  Total  Equity":  as  of  any  date,  the  sum  of  the
           ---------------------------
consolidated  paid-in  capital, and including irrevocable capital contributions,
any  preferred  stock  and  accumulated  retained  earnings  of Holdings and its
Subsidiaries  as  of  such  date,  all  as  determined  in accordance with GAAP.

          "Contractual  Obligation":  as  to  any  Person,  any provision of any
           -----------------------
security  issued  by  such  Person  or  of  any  agreement, instrument, or other
material  undertaking  to  which such Person is a party or by which it or any of
its  property  is  bound.

          "Control":  the possession, directly or indirectly, of power to direct
           -------
(or  cause  the  direction of) management or policies of another Person (whether
through  ownership of securities or partnership or other ownership interests, by
contract  or  otherwise).  "Controlled  by" and "under common Control with" have
meanings  correlative  thereto.

          "Cooperation  and  Fee  Letter":  the  letter  agreement  among  the
           -----------------------------
Borrowers  and  GE  Capital  dated  the  date  hereof.

          "Corporate  Parts  Pledge  Agreement":  the  Corporate  Parts  Pledge
           -----------------------------------
Agreement,  dated  the  date  hereof,  executed  by  each of the Corporate Parts
Pledgors,  in  favor  of  the  Mexican  Collateral  Agent for the benefit of the
Lenders,  substantially  in  the  form  of  Exhibit  T.

          "Corporate  Parts  Pledgors":  Telereunion  and  Holdings.
           --------------------------

                                        7
<PAGE>
          "Default":  any  of the events specified in Article IX, whether or not
           -------
any  requirement  for  the  giving of notice, the lapse of time, or both, or any
other  condition that would be necessary in order to constitute such event as an
Event  of  Default,  has  occurred  or  been  satisfied.

          "Dollar" or "$":  the lawful currency of the United States of America.
           ------      -

          "Drawdown  Certificate":  a  request  by the Borrowers for a Borrowing
           ---------------------
and  executed  by  the relevant Borrower(s) using the proceeds of such Borrowing
pursuant  to  Section  2.6,  substantially  in  the  form  of  Exhibit  D.
                                                               ----------

          "EBITDA":  net  earnings,  plus  to the extent deducted in determining
           ------
net  earnings,  (a)  interest expense, (b) all income and withholding taxes, (c)
depreciation  and  amortization  (including  amortization  of  debt discount and
deferred financing costs), (d) other non-cash charges, and (e) any extraordinary
and  unusual  costs,  and  minus,  to  the  extent added in determining such net
income, (i) any non-cash income or non-cash gains and (ii) any extraordinary and
unusual  gains,  all  as determined, to the extent applicable, on a consolidated
basis  in  accordance  with  GAAP.

          "Endorsement":  each  Endorsement  to the U.S. Collateral Agent of the
           -----------
loss  payable  clause  under  any  insurance policy substantially in the form of
Exhibit  K.
----------

          "Environmental Laws":  any and all Federal, state, local, municipal or
           ------------------
foreign  laws, rules, orders, regulations, statutes, ordinances, codes, decrees,
requirements  of  any  Governmental  Authority  having the force of law or other
Requirements  of  Law (including common law) regulating, relating to or imposing
liability  or  standards of conduct concerning the protection of the environment
or  the  protection  of  human  health  as  it  relates to the protection of the
environment,  as  now  or  at  any  time  hereafter  in  effect.

          "Environmental  Permits":  all  permits,  licenses,  registrations,
           ----------------------
notifications,  exemptions,  and  other  authorizations  required by or from any
Governmental  Authority  under  Environmental  Laws.

          "Equipment":  as  defined  in  the  Supply  Contracts.
           ---------

          "ERISA":  the  Employee  Retirement  Income  Security  Act of 1974, as
           -----
amended  from  time  to  time.

          "Eurodollar Loans":  Loans the rate of interest applicable to which is
           ----------------
based  upon LIBOR,  regardless  of  how  the  Loans  are  actually  funded.

          "Event  of  Default":  any  of  the  events  specified  in Article IX,
           ------------------
provided  that  all requirements for the giving of notice, the lapse of time, or
both,  and  any  other  conditions,  have  been  satisfied.

                                        8
<PAGE>
          "Excess  Cash  Flow":  for  any  period,  for  all  Borrowers  on  a
           ------------------
consolidated  basis,  the  result  (without  duplication)  of:

          (a) Consolidated EBITDA; minus

          (b) Capital Expenditures for such period; minus

          (c) the  aggregate  amount of all scheduled  and paid  repayments  and
     voluntary and mandatory  prepayments of  Indebtedness  of the Borrowers and
     their  subsidiaries for borrowed money (excluding (i) payments on revolving
     credit  facilities if such amounts remain available to be reborrowed,  (ii)
     mandatory  prepayment of the Loans, and (iii) repayments and prepayments of
     Indebtedness pursuant to refinancings); minus

          (d) income tax payments accrued or paid for such period; minus

          (e) equity  investments in  Telecommunications  companies in an amount
     not to exceed $10,000,000 per annum.

          "Excess  Withholding  Taxes":  any  withholding  taxes, or any portion
           --------------------------
thereof,  which  would  not  have  been  imposed  but  for  (a)  failure  by the
Administrative  Agent  or  any  Lender  (i)  to  provide to Borrowers upon their
request, and if and when required under applicable law, a letter specifying that
the Lenders are the effective beneficiary of the interest payments hereunder and
under  the  Promissory Note(s), as set forth in the "Resolution that Establishes
General  Rules  and  Other  Provisions of a Tax Nature for 2000" (Resolucion que
Establece  Reglas Generales y Otras Disposiciones de Caracter Fiscal para el ano
de  2000)  or  any  equivalent  general  rules  in  effect thereafter while this
Agreement  shall  remain  in  full force and effect, (ii) following a reasonable
written  request  of  Borrowers,  to  complete  and  file  with  the appropriate
Governmental  Authority,  or  to  provide to Borrowers such forms, certificates,
information,  applications  or  declarations prescribed by any such law, rule or
regulation  enacted  or issued by Mexico or any political subdivision thereof or
authority  therein,  or a double taxation treaty to which Mexico is a party that
are  a precondition for a reduction of or exemption from such Taxes to which any
Lender  is entitled (provided, that neither Administrative Agent nor such Lender
shall  be  under any obligation to provide any information to Borrowers which it
deems,  in  Administrative Agent's and the Lender's judgment, to be confidential
or  legally  or commercially prejudicial to Administrative Agent or the Lender),
or  (iii)  to  use its reasonable commercial efforts to maintain its status as a
Registered Entity; provided, that for the purposes of this clause (iii), if such
Administrative  Agent  or  Lender  is prohibited by law (or by any other reason)
from maintaining its status as a Registered Entity, it will use its best efforts
to  minimize  or  avoid  the effects of such a result by designating a different
lending  office  or  transferring the Loans to any other office or affiliates of
such  Lender if such designation or transfer would avoid such a result and would
not,  in  the  sole opinion of such Lender, be otherwise disadvantageous to such
Lender,  or  (b)  the  participation  or  assignment of the Loans or any portion
thereof  to  an entity which is not a Mexican bank or a Registered Entity at the
time  of  such participation or assignment or which subsequently fails to comply
with  the  provisions  of clauses (a)(i) through (a)(iii) above as applicable to
any  Lender.

                                        9
<PAGE>
          "Excluded  Taxes":  (i)  net income taxes, franchise taxes and capital
           ---------------
taxes  imposed  on  the  Administrative Agent or any Lender (or Transferee) as a
result  of  any  future, present or former connection between the Administrative
Agent  or  such  Lender (or Transferee) and the jurisdiction of the Governmental
Authority  imposing  such  tax  or any political subdivision or taxing authority
thereof  or  therein  (other  than  any  such connection arising solely from the
Administrative  Agent  or such Lender (or Transferee) having executed, delivered
or  performed  its  obligations  or  received a payment under, or enforced, this
Agreement  or  any  Note  or  any  other Loan Document); and (ii) in the case of
Administrative  Agent  and  each Lender, taxes imposed on or measured by its net
income by the jurisdiction (or any political subdivision thereof) under the laws
of  which  Administrative  Agent  and  each Lender is organized or maintains its
lending  office  with  respect  to  the  Loans.

          "Federal  Funds Effective Rate":  for any day, the weighted average of
           -----------------------------
the  rates  on  overnight federal funds transactions with members of the Federal
Reserve  System  arranged  by  federal  funds  brokers, as published on the next
succeeding  Business  Day  by  the Federal Reserve Bank of New York, or, if such
rate is not so published for any day which is a Business Day, the average of the
quotations for the day of such transactions received by the Administrative Agent
from  three  federal funds brokers of nationally recognized standing selected by
it.

          "Financing  Lease":  any  lease  of  property,  real  or personal, the
           ----------------
obligations  of  the  lessee in respect of which are required in accordance with
GAAP  to  be  capitalized  on  a  balance  sheet  of  the  lessee.

          "Financing  Lease  Obligations":  as to any Person, the obligations of
           -----------------------------
such  Person  to pay rent or other amounts under any Financing Lease; the amount
of  such obligations at any time shall be the capitalized amount thereof at such
time  determined  in  accordance  with  GAAP.

          "Five-year  Projections":  as  defined  in  4.1(k).
           ----------------------

          "Fixed  Charges":  with  respect  to any Person for any fiscal period,
           --------------
(a)  the  aggregate  of all Interest Expense paid or accrued during such period,
plus  (b)  scheduled  payments  of principal with respect to Indebtedness during
such  period,  plus  (c)  Capital Expenditures during such period, plus (d) cash
payments  of  income  taxes.

          "Funded  Debt":  with  respect  to  any  Person,  all Indebtedness for
           ------------
borrowed  money  evidenced  by notes, bonds, debentures, or similar evidences of
Indebtedness  and  which  by  its  terms  matures more than one year from, or is
directly  or  indirectly renewable or extendible at such Person's option under a
revolving credit or similar agreement obligating the lender or lenders to extend
credit  over  a  period of more than one year from the date of creation thereof,
and  specifically  including  Financing Lease Obligations, current maturities of
long-term  debt, revolving credit and short-term debt extendible beyond one year
at  the  option of the debtor, and also including, in the case of Borrowers, the
Obligations  and,  without  duplication,  any  Guarantee  Obligation.

          "GAAP":  generally accepted accounting principles in the United States
           ----
of  America  in  effect  from  time  to  time.

                                       10
<PAGE>
          "GE  Capital":  General  Electric  Capital  Corporation,  a  New  York
           -----------
corporation.

          "Governmental  Authority":  any  nation  or  government,  any state or
           -----------------------
other  political  subdivision  thereof  and  any  entity  exercising  executive,
legislative,  judicial,  regulatory or administrative functions of or pertaining
to  government.

          "Guarantee Obligation":  as to any Person (the "Guaranteeing Person"),
           --------------------
any  obligation of (a) the Guaranteeing Person or (b) another Person (including,
without  limitation,  any bank under any letter of credit) pursuant to which the
Guaranteeing  Person  has  issued  a reimbursement, counter indemnity or similar
obligation,  in  either  case  guaranteeing  or  in  effect  guaranteeing  any
Indebtedness, lease, dividend or other obligation (the "Primary Obligations") of
any  other  third Person (the "Primary Obligor") in any manner, whether directly
or indirectly, including, without limitation, any obligation of the Guaranteeing
Person,  whether  or not contingent, (i) to purchase any such Primary Obligation
or  any  property  constituting  direct  or  indirect security therefor, (ii) to
advance  or  supply  funds  (A)  for the purchase or payment of any such Primary
Obligation  or  (B) to maintain working capital or equity capital of the Primary
Obligor  or  otherwise  to  maintain  the  net  worth or solvency of the Primary
Obligor,  (iii)  to  purchase property, securities or services primarily for the
purpose  of  assuring the owner of any such Primary Obligation of the ability of
the Primary Obligor to make payment of such Primary Obligation or (iv) otherwise
to assure or hold harmless the owner of any such Primary Obligation against loss
in  respect thereof; provided, however, that the term Guarantee Obligation shall
                     --------- -------
not  include  endorsements  of  instruments  for  deposit  or  collection in the
ordinary  course of business or normal and customary indemnification pursuant to
any transaction heretofore or hereafter entered into by the Borrowers, or any of
the  Borrowers'  Subsidiaries  in  the  ordinary  course  of  business permitted
hereunder,  or  in  connection  with  any  purchase  or sale of assets permitted
hereunder.  The  amount  of  any Guarantee Obligation of any Guaranteeing Person
shall  be  deemed  to  be  the  lower  of  (x)  an amount equal to the stated or
determinable amount of the Primary Obligation in respect of which such Guarantee
Obligation is made and (y) the maximum amount for which such Guaranteeing Person
may  be  liable pursuant to the terms of the instrument embodying such Guarantee
Obligation, unless such Primary Obligation and the maximum amount for which such
Guaranteeing  Person  may  be  liable  with  respect  thereto  are not stated or
determinable,  in  which  case  the amount of such Guarantee Obligation shall be
such  Guaranteeing  Person's maximum reasonably anticipated liability in respect
thereof  as  determined  by  the  Borrowers  in  good  faith.

          "Guaranteeing  Person":  as  defined  in  the definition of "Guarantee
           --------------------
Obligation"  contained  in  this  Section  1.1.

          "Hacienda":  means  the  Secretaria  de  Hacienda y Credito P blico, a
           --------
Mexican  federal  agency.

          "Hazardous  Materials":  any  petroleum  (including  crude  oil or any
           --------------------
fraction  thereof)  or  petroleum  products,  polychlorinated  biphenyls,
urea-formaldehyde  insulation,  asbestos  and  asbestos-containing  materials,
pollutants,  contaminants,  and all other materials and substances including but
not  limited  to  radioactive  materials regulated pursuant to any Environmental
Laws  or  the  handling or disposal of which could result in liability under any
Environmental  Law.

                                       11
<PAGE>
          "Holdings":  as  defined  in  the  Preamble  to  this  Agreement.
           --------

          "Indefeasibly Paid":  means, with respect to the making of any payment
           -----------------
on  any  Obligation, a payment of such Obligation in full that is not subject to
avoidance  under  Section  547 of the U.S. Bankruptcy Code or any similar law or
equitable  principle.

          "Increased  Amounts":  as  defined  in  Section  2.15(a).
           ------------------

          "Indebtedness":  of  any  Person at any date, without duplication, (a)
           ------------
all  indebtedness of such Person for borrowed money or for the deferred purchase
price  of property or services (other than current trade liabilities incurred in
the  ordinary  course of business payable in accordance with customary practices
and  not  more  than  90  days past due, unless being contested in good faith by
appropriate  proceedings,  and  compensation,  pension  obligations  and  other
obligations  arising  from employee benefits and employee arrangements), (b) any
other  indebtedness of such Person which is evidenced by a note, bond, debenture
or  similar  instrument, (c) all Financing Lease Obligations of such Person, (d)
all  obligations  of  such Person under Interest Rate Protection Agreements, (e)
all  obligations  of such Person in respect of letters of credit (whether or not
drawn), acceptances and similar obligations issued or created for the account of
such  Person,  (f)  all  Guarantee  Obligations  of  such  Person  and  (g)  all
liabilities secured by any Lien on any property owned by such Person even though
such  Person  has not assumed or otherwise become liable for the payment thereof
(the  amount of such indebtedness with respect to such Person being deemed to be
the  lesser  of  the  fair  market  value  of  such  property  or  the amount of
indebtedness  of  others  so  secured).

          "Indemnified  Liabilities":  as  defined  in  Section  11.5.
            -----------------------

          "Initial Loan":  the first Loan made under the Commitments pursuant to
           ------------
the  terms  of  this  Agreement.

          "Insolvency":  with  respect  to any Multiemployer Plan, the condition
           ----------
that  such  Plan  is  insolvent  within  the  meaning  of Section 4245 of ERISA.

          "Insolvent":  pertaining  to  a  condition  of  Insolvency.
           ---------

          "Intellectual  Property":  as  defined  in  Section  3.9.
           ----------------------

          "Interest  Expense":  shall  mean,  with respect to any Person for any
           -----------------
fiscal  period,  interest  expense  (whether  cash  or  non-cash) of such Person
determined  in  accordance with GAAP for the relevant period ended on such date,
including,  in  any  event,  interest expense with respect to any Funded Debt of
such  Person  and  interest  expense  for  the  relevant  period  that  has been
capitalized  on  the  balance  sheet  of  such  Person.

                                       12
<PAGE>
          "Interest  Payment  Date":  (a) with respect to any ABR Loan, the last
           -----------------------
day of each quarter and (b) with respect to any Eurodollar Loan, the last day of
the  Interest  Period  applicable  to such Eurodollar Loan and, in the case of a
Eurodollar  Loan  with  an  Interest Period of more than three months' duration,
each day which is three months, or a whole multiple thereof, after the first day
of  such  Interest  Period.

          "Interest  Period":  (a)  with  respect  to  an  ABR  Loan, the period
           ----------------
commencing  with  the  incurrence  of  such  ABR  Loan  (or  conversion  from an
Eurodollar  Loan)  and  ending on the next succeeding Interest Payment Date and,
thereafter,  from  the  last  day  of  the immediately preceding Interest Period
applying  to  such  ABR  Loan and ending on the next succeeding Interest Payment
Date  and,  (b)  with  respect  to  an  Eurodollar  Loan,  initially, the period
commencing on the Borrowing Date and ending on the numerically corresponding day
in  the  calendar  month  that  is six (6) months after such Borrowing Date, and
thereafter,  each period commencing on the last day of the immediately preceding
Interest  Period and ending six (6) months thereafter, provided that, all of the
foregoing  provisions relating to Interest Periods are subject to the following:

          (i) if any Interest  Period would otherwise end on a day that is not a
     Business Day, such Interest Period shall be extended to the next succeeding
     Business  Day unless the  result of such  extension  would be to carry such
     Interest  Period into another  calendar  month in which event such Interest
     Period  shall  end on the  immediately  preceding  Business  Day;

          (ii) any  Interest  Period  that  would  otherwise  extend  beyond the
     Maturity  Date or beyond the date final  payment  is  otherwise  due on the
     Loans shall end on the Maturity Date or such date final payment is due;

          (iii) any  Interest  Period that begins on the last  Business Day of a
     calendar month (or on a day for which there is no numerically corresponding
     day in the calendar month at the end of such Interest  Period) shall end on
     the last Business Day of a calendar month; and

          (iv) if an Interest  Period  shall be a period other than one of equal
     length to that of the Interest  Period which is  concluding,  the Borrowers
     shall issue and deliver to the Administrative  Agent a new Note as required
     pursuant to the provisions of Section 2.5 and, if such new Note or Notes is
     not provided to the  Administrative  Agent,  the  Interest  Period shall be
     deemed to be equal to six months.

          "Interest Rate Protection Agreements": as to any Person, all  interest
           -----------------------------------
     rate swaps,  caps or collar agreements or similar arrangements entered into
     by such Person providing  for protection  against  fluctuations in interest
     rates or the  exchange  of  nominal  interest obligations, either generally
     or under specific contingencies.

          "Interlink":  Interlink  Communications,  Inc., a Delaware corporation
           ---------
and  a  U.S.  Borrower.

          "Investment":  as  defined  in  Section  6.3.
           ----------

                                       13
<PAGE>
          "Landlord  Consent":  each  Landlord Consent substantially in the form
           -----------------
of  Exhibit  M  or  in  such  other  form  as  is  mutually  acceptable  to  the
    ----------
Administrative  Agent  and  the  Borrowers.

          "Landlord's  Waiver Agreement (Mountain View)":  the Landlord's Waiver
           --------------------------------------------
Agreement  substantially  in  the  form  of  Exhibit  P.
                                             -----------

          "Lenders":  as  defined  in  the  Preamble  to  the  Agreement.
           -------

          "LIBOR":  with  respect  to  any  Interest  Period  pertaining  to  a
           -----
Eurodollar  Loan,  the  rate  per annum (expressed as a decimal) for deposits in
                              ---------
Dollars  equal or approximately equal to the principal amount of such Eurodollar
Loan  and  for  a  period  equal or comparable to such Interest Period which (a)
appears on the Bridge Telerate Page 3750 (or such other page as may replace such
Telerate  Page 3750 for the purpose of displaying London interbank offered rates
for Dollar deposits), as of approximately 11:00 A.M. London time on the date two
(2)  London  business days prior to the first day of such Interest Period or (b)
in  the  event  that  the  Bridge Telerate Service or Telerate Page 3750 (or any
replacement  page  therefor) shall be unavailable on any such date, the rate per
annum  at  which  such  deposits  in Dollars are offered on such date by Bank of
America, N.A. to prime banks in the London interbank market at 11:00 A.M. London
time  on  the  date  two (2) London business days prior to the first day of such
Interest  Period.

          "Lien":  any mortgage, pledge, hypothecation, assignment for security,
           ----
deposit  arrangement,  encumbrance,  lien  (statutory or other), charge or other
security  interest  or  any  preference, priority or other security agreement or
preferential  arrangement  of  any kind or nature whatsoever (including, without
limitation,  any  conditional  sale  or  other title retention agreement and any
Financing  Lease  having  substantially  the  same economic effect as any of the
foregoing).

          "Loan  Documents":  collectively,  this  Agreement, any Note or Notes,
           ---------------
the Mexican Security Documents, the U.S. Security Documents, the Cooperation and
Fee  Letter,  the  Accession  Agreement,  and  any  other  material agreement or
material  document  entered  into  by  any  Loan  Party  in connection herewith.

          "Loan  Participants":  as  defined  in  Section  11.6(b).
           ------------------

          "Loan  Parties":  each  of  the  Borrowers  and  each  other direct or
           -------------
indirect  subsidiary  of  each  of  the  Borrowers  which  is  a party to a Loan
Document.

          "Loans":  as  defined  in  Section  2.1(a).
           -----

          "Lucent":  Lucent  Technologies  Inc.,  a  Delaware  corporation.
           ------

          "Lucent  Collateral":  any  and  all  collateral securing indebtedness
           ------------------
created  under  the  Lucent  Credit  Agreement.

                                       14
<PAGE>
          "Lucent Credit Agreement":  the Credit Agreement dated August 27, 1999
           -----------------------
among  certain  Borrowers,  Lucent  and  the  lenders  party  thereto.

          "Material  Adverse  Effect":  a  material  adverse  effect  on (a) the
           -------------------------
business,  operations,  property,  assets, prospects, or condition (financial or
otherwise)  of  Holdings and its Subsidiaries taken as a whole or of Telereunion
or  Telereunion  International individually, (b) the ability of the Borrowers or
any  other  Loan  Party  to perform in a timely manner their respective material
Obligations  under any of the Loan Documents, (c) the validity or enforceability
of this Agreement or any of the other Loan Documents, (d) the rights or remedies
of  the  Collateral  Agents  (or  any  other  collateral agent under the Mexican
Security  Documents and the U.S. Security Documents) or the Lenders under any of
the  Loan  Documents  or (e) the Liens, including the enforceability or validity
thereof,  provided to the Collateral Agents (or any other collateral agent under
the  Mexican  Security  Documents and the U.S. Security Documents) or any Lender
under  any  of  the  Loan  Documents.

          "Material Foreign  Subsidiary" shall mean, at any time, any Subsidiary
           ---------------------------
of  Holdings  which  is  organized  under  the laws of any country (or political
subdivision  of  any  country) other than the United States or Mexico and has at
such  time  either  (i)  EBITDA  for the preceding four fiscal quarter period in
excess  of  $1,000,000 or (ii) total assets, as of the last day of the preceding
fiscal  quarter,  having  a net book value in excess of $3,000,000, in each case
based upon the most recent annual or quarterly financial statements delivered to
the  Administrative  Agent  pursuant  to  Section  5.1.

          "Maturity  Date":  the  date  which  is  the  sixth anniversary of the
           --------------
Closing  Date.

          "Mexican  Borrower Obligations":  the unpaid principal of and interest
           -----------------------------
on  the  Loans  to  the  Mexican Borrowers, the proceeds of any Loan to any U.S.
Borrower  which either (i) are received by a Mexican Borrower either directly or
indirectly in the form of loans or capital contributions from such U.S. Borrower
to  pay  invoices  pursuant  to the Supply Contracts or (ii) are used to pay the
principal  or interest on any loan under the Lucent Credit Agreement that was an
obligation  of  a  Mexican Borrower and all other obligations and liabilities of
the Mexican Borrowers to the Administrative Agent, the Collateral Agents and the
Lenders (including, without limitation, interest accruing at the then applicable
rate  provided  in  this  Agreement after the maturity of the Loans and interest
accruing at the then applicable rate provided in this Agreement after the filing
of  any  petition  in  bankruptcy,  or  the  commencement  of  any  insolvency,
reorganization or like proceeding, relating to the Mexican Borrowers, whether or
not  a  claim  for  post-filing  or  post-petition  interest  is allowed in such
proceeding),  whether  direct  or  indirect,  absolute  or contingent, due or to
become  due,  or  now existing or hereafter incurred, which may arise under, out
of,  or  in  connection with, this Agreement, the other Loan Documents, any cash
management  services  agreement  entered  into by the Mexican Borrowers with any
Lender  or  any Affiliate of any Lender or any other document made, delivered or
given  in  connection  herewith or therewith, in each case whether on account of
principal,  interest,  reimbursement  obligations,  fees,  indemnities,  costs,
expenses  or  otherwise  (including, without limitation, all reasonable fees and
disbursements  of counsel to the Administrative Agent or to the Lenders that are
required  to  be  paid  by  the  Mexican Borrowers pursuant to the terms of this
Agreement,  any  other  Loan  Document  or  any  such  cash  management services
agreement entered into by the Mexican Borrowers with any Lender or any Affiliate
of  any  Lender).

                                       15
<PAGE>
          "Mexican  Borrowers":  each  Borrower  incorporated  under the laws of
           ------------------
Mexico.

          "Mexican  Collateral  Agent":  GE  Capital  Bank, S.A., Institucion de
           --------------------------
Banca  M  ltiple, , a Mexican banking corporation, in its capacity as collateral
agent  for  the  Lenders  under the Mexican Security Documents and any successor
thereto.

          "Mexican  Industrial  Mortgage":  each floating mortgage on the assets
           -----------------------------
of  the  Mexican Borrower which is a party thereto, substantially in the form of
Exhibit  B-2.
------------

          "Mexican  Landowner Consents":  each Landowner Consent with respect to
           ---------------------------
the  consent  to the collateral assignment of certain real property interests in
connection  with  the  Network.

          "Mexican  Mortgages":  the Mexican Telecommunications Mortgage and the
           ------------------
Mexican  Industrial  Mortgage.

          "Mexican  Security  Documents":  collectively,  the Mexican Mortgages,
           ----------------------------
the  Stock  Pledge  Agreement,  the  Corporate  Parts  Pledge Agreement, the CFE
Consent,  the  SCT Authorizations, the Mexican Landowner Consents and each other
agreement or document granting a security interest in any property in Mexico for
the  benefit  of  the  Lenders.

          "Mexican  Telecommunications  Mortgage":  the floating mortgage on the
           -------------------------------------
Concession,  the Network and other tangible and intangible assets of Telereunion
pursuant  to  Articles 92 and 93 of the Ley de Vias Generales de Comunicacion as
subrogated  and  amended  to  be  substantially  in  the  form  of  Exhibit B-1.
                                                                    -----------

          "Mortgages":  collectively,  each  Mexican  Mortgage  and  each  U.S.
           ---------
Mortgage,  if  any.

          "MSN":  M.S.  Noticias  y  Telecomunicaciones, S.A. de C.V., a Mexican
           ---
corporation  and  a  Mexican  Borrower.

          "Multiemployer Plan":  a Plan which is a multiemployer plan as defined
           ------------------
in  Section  4001(a)(3)  of  ERISA.

          "Network":  the telecommunications network to be built and operated by
           -------
the  Borrowers  in  order to provide telecommunications services pursuant to the
Concession.

          "New  Equity":  Additional  funds  (over and above those referenced in
           -----------
Section  4.1(v))  contributed to Holdings through the sale by Holdings of equity
securities.

          "New  Lending  Office":  as  defined  in  Section  2.15(c)(i)(A).
           --------------------

                                       16
<PAGE>
          "New  Note  Circumstance":  as  defined  in  Section  2.5(c).
           -----------------------

          "Net  Proceeds":  with  respect  to  any  event  (a) the cash proceeds
           -------------
received  in respect of such event including (i) any cash received in respect of
any  non-cash  proceeds,  but  only  as and when received, (ii) in the case of a
casualty, insurance proceeds, and (iii) in the case of a condemnation or similar
event,  condemnation  awards and similar payments, net of (b) the sum of (i) all
reasonable fees and out-of-pocket expenses paid by any Borrower to third parties
(other  than  Affiliates)  in  connection with such event, (ii) in the case of a
sale  or  other  disposition  of  an  asset (including pursuant to a casualty or
condemnation), the amount of all payments required to be made by any Borrower as
a  result of such event to repay Indebtedness (other than Loans) secured by such
asset  or  otherwise  subject to mandatory prepayment as a result of such event,
and  (iii)  the amount of all taxes paid (or reasonably estimated to be payable)
by  any  Borrower  and the amount of any reserves established by any Borrower to
fund  contingent  liabilities  reasonably  estimated to be payable, in each case
during  the  year  that such event occurred or the next succeeding year and that
are  directly  attributable  to such event (as determined reasonably and in good
faith  by  the  chief  financial  officer  of  each  of  the  Borrowers).

          "Non-Excluded  Taxes":  as  defined  in  Section  2.15.
           -------------------

          "Non-U.S.  Lender":  as  defined  in  Section  2.15.
           ----------------

          "Notes":  as  defined  in  Section  2.5(a).
           -----

          "Obligations":  collectively, the Mexican Borrower Obligations and the
           -----------
U.S.  Borrower  Obligations.

          "PBGC":  the Pension Benefit Guaranty Corporation established pursuant
           ----
to Subtitle A of Title IV of ERISA and any Governmental Authority which succeeds
to  the  powers  and  functions  thereof.

          "PCom":  Pointe  Communications  Corporation,  a  Nevada  corporation.
           -----

          "PCom  Subsidiaries": PCom, and each direct and indirect Subsidiary of
           ------------------
PCom which became a Subsidiary of Holdings upon the merger of PCom with and into
a  wholly  owned  Subsidiary  of  Holdings.

          "Permits":  the  permit  No. 42-STVA-946495 dated November 29, 1994 to
           -------
render  value  added  services  granted to Vextro and the registry No. 05-SVA-95
dated  July 25, 1995 to render value added services granted to MSN, each granted
by  the  Federal  Government  of  Mexico,  through  the  SCT.

          "Permitted  Liens":  as  defined  in  Section  6.1.
           ----------------

                                       17
<PAGE>
          "Permitted  Preferred Cash Dividends":  cash dividends with respect to
           -----------------------------------
classes  D,  E  or F of Telscape International Inc. Convertible Senior Preferred
Stock, payable solely out of proceeds of New Equity, at any time after the first
anniversary of the Closing Date so long as (i) Borrowers shall fully comply with
the  prepayment  obligations  set  forth  in  Section 2.8(b) hereof with respect
thereto,  and  (ii)  at  the  time  thereof  and after giving effect thereto, no
Default  has  occurred  and  is  continuing  and,  with  respect  to each of the
financial  covenants  set  forth  in  Article  VII,  (A)  Borrowers were in full
compliance therewith as of the most recent date on which such financial covenant
was  (is  being)  measured,  without  requiring  any waiver thereof or amendment
thereto  to  enable  such  compliance,  and  (B)  no Default could reasonably be
expected  to exist as of the next date on which such financial covenant is to be
measured.

          "Person":  any  individual,  corporation,  partnership, joint venture,
           ------
trust  or  unincorporated  organization,  joint stock company, limited liability
company  or  other similar organization, government or any political subdivision
thereof,  a  court,  or any other legal entity, whether acting in an individual,
fiduciary,  or  other  capacity.

          "Plan":  at  a  particular  time,  any  employee benefit plan which is
           ----
covered  by  ERISA  and  in respect of which each of the Borrowers or a Commonly
Controlled Entity is (or, if such plan were terminated at such time, would under
Section  4069 of ERISA be deemed to be) an "employer" as defined in Section 3(5)
of  ERISA.

          "Pledge Agreement":  the Pledge Agreement substantially in the form of
           ----------------
Exhibit  G pursuant to which Holdings and each other applicable Borrower pledges
----------
its  shares  in  a  U.S.  Borrower.

          "Primary  Obligor":  as  defined  in  the  definition  of  "Guarantee
           ----------------
Obligation"  contained  in  this  Section  1.1.

          "Primary  Obligations":  as  defined  in  the definition of "Guarantee
           --------------------
Obligation"  contained  in  this  Section  1.1.

          "Proceeding":  means  any:
           ----------

          (f) insolvency, bankruptcy, concurso mercantil, quiebra, receivership,
     liquidation,  reorganization,  readjustment,  composition, or other similar
     proceeding  relating to any  Borrower,  its  property,  or its creditors as
     such;

          (g) proceeding for any liquidation,  dissolution,  or other winding-up
     of any  Borrower,  voluntary  or  involuntary,  whether  or  not  involving
     insolvency or bankruptcy proceedings;

          (h) assignment for the benefit of creditors of any Borrower;

          (i) other  marshalling  of the  assets of any  Borrower  under any law
     relating to proceedings of the type referred to in the preceding clause (a)
     or (b); or

          (j) event  described  in Section  (g) of Article IX of this  Agreement
     with respect to any Borrower.

          "Properties":  as  defined  in  Section  3.16(a).
          ------------

                                       18
<PAGE>
          "Process  Agent":  as  defined  in  Section  11.12(b).
           --------------

          "Purchase  Money  Indebtedness":  shall  mean  (i)  any  Indebtedness
           -----------------------------
incurred  for  the payment of all or any part of the purchase price of any fixed
asset  or  equipment,  (ii)  any  Indebtedness  incurred for the sole purpose of
financing  or  refinancing  all  or  any part of the purchase price of any fixed
asset  or  equipment, and (iii) any renewals, extensions of refinancings thereof
(but  not  any  increases  in  the principal amounts thereof outstanding at that
time).

          "Purchase  Money  Lien":  shall mean any Lien upon any fixed assets or
           ---------------------
equipment which secures the Purchase Money Indebtedness related thereto but only
if  such  Lien  shall  at all times be confined solely to the asset the purchase
price of which was financed or refinanced through the incurrence of the Purchase
Money  Indebtedness secured by such Lien and only if such Lien secures only such
Purchase  Money  Indebtedness.

          "Reference Bank":  shall mean the London office of the Lender selected
           --------------
by  the  Required  Lenders.

          "Register":  as  defined  in  Section  11.6(d).
           --------

          "Registered  Entity":  an entity registered as a financial institution
           ------------------
with  Hacienda  for  purposes  of Article 154 of the Mexican Income Tax Law, for
which  the  applicable  withholding  tax  rate  as  of  the date hereof is 4.9%.

          "Regulation  D":  Regulation  D of the Board of Governors as in effect
           -------------
from  time  to  time.

          "Regulation  G":  Regulation  G of the Board of Governors as in effect
           -------------
from  time  to  time.

          "Regulation  H":  Regulation  H of the Board of Governors as in effect
           -------------
from  time  to  time.

          "Regulation  U":  Regulation  U of the Board of Governors as in effect
           -------------
from  time  to  time.

          "Regulation  X":  Regulation  X of the Board of Governors as in effect
           -------------
from  time  to  time.

          "Reorganization":  with  respect  to  any  Multiemployer  Plan,  the
           --------------
condition that such plan is in reorganization within the meaning of Section 4241
of  ERISA.

          "Reportable Event":  any of the events set forth in Section 4043(c) of
           ----------------
ERISA,  other  than  those  events  as  to which the thirty day notice period is
waived  under  the  regulations  adopted  by  PBGC.

                                       19
<PAGE>
          "Required  Lenders":  Lenders,  the  Commitment  Percentages  of which
           -----------------
aggregate  more  than  67%.

          "Requirements  of  Law":  as  to  any  Person,  (a) the certificate of
           ---------------------
incorporation and by-laws or other organizational or governing documents of such
Person,  and  (b)  any  law,  treaty,  rule or regulation or determination of an
arbitrator  or  a court or other Governmental Authority, in each case applicable
to or binding upon such Person or any of its property or to which such Person or
any  of  its  property  is  subject.

          "Responsible Officer":  as to any Person, the chief financial officer,
           -------------------
the  chief executive officer or the president of such Person or, with respect to
financial  matters,  the  chief  financial  officer of such Person or, in either
case,  such  other  executive officers as may be designated from time to time by
such  Person  in  writing  to  the  Administrative  Agent.

          "Restricted  Payment":  means  (a)  any dividend or other distribution
           -------------------
(whether in cash, securities or other property other than dividends of preferred
stock  of  Holdings paid to holders of such preferred stock) with respect to any
shares  of any class of Capital Stock of the Borrowers, (b) any payment (whether
in  cash,  securities  or  other property) in respect of any Subordinated Claim,
whether  on  account  of  principal,  interest  or otherwise, or (c) any payment
(whether  in  cash, securities or other property), including any sinking fund or
similar  deposit,  on  account  of  the  purchase,  redemption,  retirement,
acquisition, cancellation or termination of any Subordinated Claim or any shares
of  any  class  of Capital Stock of any Borrower or any option, warrant or other
right  to  acquire  any  such  shares  of  Capital  Stock  of  any  Borrower.

          "SCT":  the  Secretaria  de Comunicaciones y Transportes (Secretary of
           ---
Communications  and  Transportation),  a  Mexican  federal  government  agency.

          "SCT  Authorizations":  an  authorization from the SCT authorizing the
           -------------------
mortgage  of  the Permit of Vextro de Mexico, S.A. de C.V. pursuant to the terms
of  the  Mexican  Industrial  Mortgage  and  the  SCT  Notice.

          "SCT  Notice":  the notice to the SCT with respect to the amendment to
           -----------
the  Mexican  Telecommunications  Mortgage.

          "SEC":  the  Securities  and  Exchange  Commission or any Governmental
           ---
Authority  which  succeeds  to  the  powers  and  functions  thereof.

          "Secured  Party":  any  Lender,  the  Administrative  Agent,  and  the
           --------------
Collateral  Agents  or  other  holder  of  any  Obligation.

          "Security  Agreement":  the Security Agreement, dated the date hereof,
           -------------------
executed  and  delivered  by  each  of  the  U.S. Borrowers in favor of the U.S.
Collateral  Agent,  for the benefit of the Lenders, substantially in the form of
Exhibit  C.
----------

          "Security  Documents":   the  Mexican  Security  Documents,  the  U.S.
           -------------------
Security  Documents  and any document by which the Capital Stock of any Material
Foreign  Subsidiary  is  made  subject to a Lien for the benefit of the Lenders.

                                       20
<PAGE>
          "Servicios Corporativos":  Servicios Corporativos Vextro S.A. de C.V.,
           ----------------------
a  Mexican  corporation  and  a  Mexican  Borrower.

          "Single  Employer  Plan":  any  Plan  which  is covered by Title IV of
           ----------------------
ERISA,  but  which  is  not  a  Multiemployer  Plan.

          "Solvent":  when  used  with  respect to any Person, means that, as of
           -------
any  date  of determination, (a) the amount of the "present fair saleable value"
of  the assets of such Person will, as of such date, exceed the amount that will
be required to pay all "liabilities of such Person, contingent or otherwise", as
of  such date (as such quoted terms are determined in accordance with applicable
Federal and state laws governing determinations of the insolvency of debtors) as
such  debts  become  absolute  and matured, (b) such Person will not have, as of
such  date,  an  unreasonably  small amount of capital with which to conduct its
business,  and  (c)  such  Person  will be able to pay its debts as they mature,
taking  into  account  the  timing of and amounts of cash to be received by such
Person  and  the timing of and amounts of cash to be payable on or in respect of
indebtedness  of  such Person; in each case after giving effect to (A) as of the
Closing  Date  the  making  of  the Loans to be made on the Closing Date and the
application  of the proceeds of such Loans and (B) on any date after the Closing
Date,  the making of any Loan to be made on such date and the application of the
proceeds  of  such  Loan.  For  purposes  of  this  definition, (i) "debt" means
liability  on a "claim", and (ii) "claim" means any right to payment, whether or
not  such  a  right  is  reduced  to  judgment, liquidated, unliquidated, fixed,
contingent matured, unmatured, disputed, undisputed, legal equitable, secured or
unsecured.

          "Stock  Pledge Agreement":  the Stock Pledge Agreement, dated the date
           -----------------------
hereof,  executed  and  delivered  by each of the Stock Pledgors in favor of the
Mexican  Collateral  Agent,  for the benefit of the Lenders substantially in the
form  of  Exhibit  I.
          ----------

          "Stock  Pledgors":  Holdings,  Telscape  U.S.A.,  Inc.,  Enable
           ---------------
Commerce.com,  Inc.,  TSCP International, Inc. Telscape de Mexico, S.A. de C.V.,
Vextro,  Commercializadora  Lufravic, S.A. de C.V., Manuel Landa Rangel, Ricardo
Orea  Gudino,  and  Oscar  Garcia  Mora.

          "Subordinated  Agreement":  any  agreement,  document,  or  instrument
           -----------------------
evidencing  or  governing  any  Subordinated  Claim,  or  any other agreement or
instrument  executed pursuant thereto or in connection therewith, whether direct
or  indirect,  absolute  or contingent, due or to become due, or now existing or
hereafter  incurred.

          "Subordinated  Claims":  all amounts owed by any Borrower to any other
           --------------------
Borrower,  whether  direct or indirect, absolute or contingent, due or to become
due,  or  now  existing  or  hereafter  incurred.

          "Subordination  Provisions":  as  defined  in  Article  VIII  of  this
           -------------------------
Agreement.

          "Subsidiary":  as  to  any Person, a corporation, partnership or other
           ----------
entity  of  which  shares  of stock or other ownership interests having ordinary
voting  power  (other  than  stock or such 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 or
other  entity  are  at  the  time owned, or the management of which is otherwise
Controlled,  directly  or indirectly though one or more intermediaries, or both,
by such Person.  Unless otherwise qualified, all references to a "Subsidiary" or
to  "Subsidiaries"  in  this  Agreement  shall  refer  to  a  direct or indirect
Subsidiary  of  Holdings.

                                       21
<PAGE>
          "Supply  Contracts":   the  Agreement,  dated  May  31,  1999, between
           -----------------
Telereunion  and Lucent Technologies World Service, Inc. and Lucent Technologies
de  Mexico,  S.A.  and  each  other  agreement  pursuant to which a Vendor or an
Affiliate  of  a  Vendor  sells  goods  or  services  to  a  Borrower.

          "Taxes":  any  and all taxes, levies, imposts, deductions, charges, or
           -----
withholdings  and  liabilities  with  respect thereto, payable to a Governmental
Authority  in  any  jurisdiction.

          "Telecommunications":  voice,  video,  data  and  internet  services.
           ------------------

          "Telereunion":  as  defined  in  the  Preamble  to  this  Agreement.
           -----------

          "Telereunion  International":  as  defined  in  the  Preamble  to this
           --------------------------
Agreement.

          "Third  Party  Consents":  each  Consent  and Agreement of each of the
           ----------------------
contracting  parties  listed  on  Schedule  4.1(x).
                                  ----------------

          "Total  Capitalization":  at  any  date,  the  sum of (a) Consolidated
           ---------------------
Total  Debt  plus  (b)  Consolidated  Total  Equity  as  at  such  date.

          "Trademark  Security  Agreement":  the  Trademark  Security  Agreement
           ------------------------------
substantially  in  the  form  of  Exhibit  J.
                                  ----------

          "Transactions":  the  execution,  delivery  and performance by each of
           ------------
the  Loan  Parties  of  the  Loan  Documents  to  which it is to be a party, the
borrowing  of  the  Loans  and  the  use  of  the  proceeds  thereof.

          "Transferee":  as  defined  in  Section  11.6(f).
           ----------

          "UCC":  the  Uniform Commercial Code as from time to time in effect in
           ---
the  State  of  New  York.

          "U.S.  Borrower Obligations":  the unpaid principal of and interest on
           --------------------------
the  Loans  and  all  other  obligations and liabilities of the Borrowers to the
Administrative  Agent, the Collateral Agents and the Lenders (including, without
limitation,  interest  accruing  at  the  then  applicable rate provided in this
Agreement  after  the  maturity  of  the Loans and interest accruing at the then
applicable  rate  provided in this Agreement after the filing of any petition in
bankruptcy,  or  the  commencement  of  any  insolvency,  reorganization or like
proceeding, relating to the Borrowers, whether or not a claim for post-filing or
post-petition  interest  is  allowed  in  such  proceeding),  whether  direct or
indirect,  absolute  or  contingent,  due  or  to become due, or now existing or
hereafter  incurred,  which may arise under, out of, or in connection with, this

                                       22
<PAGE>
Agreement,  the  other  Loan  Documents,  any cash management services agreement
entered  into by the Borrowers with any Lender or any Affiliate of any Lender or
any other document made, delivered or given in connection herewith or therewith,
in  each  case  whether  on  account  of  principal,  interest,  reimbursement
obligations, fees, indemnities, costs, expenses or otherwise (including, without
limitation,  all  reasonable  fees  and  disbursements  of  counsel  to  the
Administrative  Agent  or  to  the  Lenders  that are required to be paid by the
Borrowers  pursuant  to  the terms of this Agreement, any other Loan Document or
any  such  cash management services agreement entered into by the Borrowers with
any  Lender  or  any  Affiliate  of  any  Lender).

          "U.S.  Borrowers":  each  Borrower  incorporated under the laws of the
           ---------------
United  States  of  America.

          "U.S.  Collateral Agent":  General Electric Capital Corporation, a New
           ----------------------
York  corporation, in its capacity as collateral agent for the Lenders under the
Collateral  Agency  Agreement,  and  any  successor  thereto.

          "U.S.  Mortgage":  each  Mortgage  to be executed and delivered by any
           --------------
Loan  Party, which shall be satisfactory to the Administrative Agent in form and
substance,  with  respect  to each parcel of real property located in the United
States  for  which  a  mortgage  is  granted  pursuant  to  the  terms  hereof.

          "U.S.  Security  Documents":  the  Collateral  Agency  Agreement,  the
           -------------------------
Security  Agreement,  the  Pledge Agreement, the Collateral Assignment of Lease,
each Landlord Consent, the California Landlord's Waiver Agreement, the Trademark
Security  Agreement,  each  Account  Control  Agreement,  each Endorsement, each
Blocked  Account  Agreement, each Third Party Consent and each U.S. Mortgage and
each other agreement or document granting a security interest in any property in
the  United  States  for  the  benefit of the Lenders with respect to the Loans.

          "Vendor":  Lucent Technologies World Services Inc. and its affiliates,
           ------
including Lucent Technologies de Mexico, S.A. de C.V., each in its capacity as a
vendor  of  goods  or  services  to  a  Borrower.

          "Vextro":  Vextro de Mexico, S.A. de C.V., a Mexican corporation and a
           ------
Mexican  Borrower.

          "Year":  any one of the consecutive twelve-month periods following the
           ----
Closing  Date,  each  of  which shall end on an anniversary of the Closing Date.

     Section  1.2   Time  Periods.  In  this  Agreement  and  the  other  Loan
                    -------------
Documents,  in  the  computation  of  periods of time from a specified date to a
later  specified  date,  (a) the word "from" means "from and including", (b) the
words  "to"  and  "until"  each  mean  "to,  but  excluding",  and (c) the words
"through", "end of", and "expiration" each mean "through and including".  Unless
otherwise  specified,  all  references  in  this  Agreement  and  the other Loan
Documents  to (i) a "month" shall be deemed to refer to a calendar month, (ii) a
"quarter"  shall  be  deemed  to refer to a calendar quarter, and (iii) a "year"
shall  be  deemed  to  refer  to  a  calendar  year.

                                       23
<PAGE>
     Section  1.3   Accounting  Terms  and Determinations.  All accounting terms
                    -------------------------------------
not  specifically  defined  herein  shall  be  construed,  all  accounting
determinations hereunder shall be made, and all financial statements required to
be  delivered  pursuant hereto shall be prepared, in accordance with GAAP.  When
used  herein,  the  term  "financial  statements"  shall  include  the notes and
schedules  thereto.

     Section  1.4   Construction.  Unless  the context of this Agreement clearly
                    ------------
requires  otherwise,  references  to  the  plural  include the singular, and the
singular  include  the  plural.  The  words  "hereof,"  "herein,"  "hereby,"
"hereunder,"  and  similar  terms in this Agreement refer to this Agreement as a
whole  and  not  to  any  particular  provision  of  this  Agreement.  The words
"include,"  "includes,"  and  "including"  mean  include, includes and including
"without  limitation"  and "without limitation by specification." All references
in  this  Agreement  to  "Article",  "Section",  "subsection",  "subparagraph",
"clause"  or  "Exhibit", unless otherwise indicated, shall be deemed to refer to
an Article, Section, subsection, subparagraph, clause or Exhibit, as applicable,
of this Agreement.  Unless otherwise expressly provided herein, any reference in
this  Agreement  to  any  Loan  Document  shall  mean  such document as amended,
restated,  supplemented  or  otherwise  modified  from  time  to  time.

     Section  1.5   Schedules  and  Exhibits.  All of the schedules and exhibits
                    ------------------------
attached  to  this  Agreement  shall be deemed incorporated herein by reference.

     Section  1.6   UCC  Terms.  Terms defined in the UCC and not defined herein
                    ----------
shall  have  the  respective  meanings  given  to  them  in  the  UCC.

     Section  1.7   Administrative  Agent's  Discretion.  Whenever  the  terms
                    -----------------------------------
"satisfactory  to  Administrative  Agent", "determined by Administrative Agent",
"acceptable  to  Administrative  Agent",  "consent  of  Administrative  Agent",
"Administrative  Agent  shall  elect",  "Administrative Agent shall request", or
similar  terms  are used in the Loan Documents, except as otherwise specifically
provided  therein,  such  terms  shall mean satisfactory to, at the election of,
determined  by,  acceptable to, consented to by, elected by, or requested by, as
applicable,  the  Administrative  Agent  in  its  sole and unlimited discretion.

                                   ARTICLE II

                                      LOANS
                                      -----

     Section  2.1   Agreement  to  Lend.
                    -------------------

          (a) Subject to the terms and  conditions  hereof and relying  upon the
     representations and warranties of each of the Borrowers herein, each Lender
     severally agrees to make loans (the "Loans") to the Borrowers,  jointly and
                                          -----
     severally,  from time to time during the Commitment Period in the amount of
     its pro rata share of such Loans as the Borrowers may request under Section
     2.2,  in  an  aggregate  principal  amount  not  to  exceed  such  Lender's
     Commitment.

          (b) All Loans shall be Eurodollar Loans except as provided in Sections
     2.11, 2.13 and 2.14.

                                       24
<PAGE>
          (c) The  obligations  of each U.S.  Borrower  hereunder and under each
     Note  evidencing  amounts  from time to time  advanced  hereunder to a U.S.
     Borrower shall be joint and several obligations of all U.S. Borrowers.  The
     obligations  of  each  Mexican  Borrower  hereunder  and  under  each  Note
     evidencing  amounts  from  time to  time  advanced  hereunder  constituting
     Mexican Borrower  Obligations shall be joint and several obligations of all
     Borrowers.

          (d) Subject to Section 2.1(a),  the Initial Loan shall be in an amount
     not less than the aggregate  amount of principal and interest due and owing
     under the Lucent Credit Agreement.

     Section 2.2 Procedure for Borrowing.
                 -----------------------

          (a)  Subject  to the terms and  conditions  hereof,  any  Borrower  or
     Borrowers may borrow under the Commitments  during the Commitment Period on
     any Business Day,  provided,  except as set forth in Section  2.2(b),  that
                        --------
     such Borrower or Borrowers shall give the Administrative  Agent irrevocable
     notice (which notice must be received by the Administrative  Agent prior to
     12:00 Noon, New York City time,  three Business Days prior to the requested
     Borrowing  Date,  specifying  (i) the  amount to be  borrowed  and (ii) the
     requested  Borrowing  Date.  If any Drawdown  Certificate  requests  that a
     borrowing  be made on the  Borrowing  Date  specified  therein  to  finance
     amounts  then due under  invoices  submitted  to any Borrower by the Vendor
     pursuant to the Supply Contracts,  such Drawdown Certificate shall identify
     such  invoices  and the  amounts  being paid  thereunder  pursuant  to such
     Borrowing.  Upon receipt of any such Drawdown Certificate from the relevant
     Borrower(s),  the  Administrative  Agent shall promptly  notify each Lender
     thereof.  Each  Lender  will make the  amount of its pro rata share of each
     borrowing  available to the Administrative  Agent for the account(s) of the
     relevant Borrower(s) at the office of the Administrative Agent specified in
     Section 11.2 prior to 11:00 A.M., New York City time, on the Borrowing Date
     requested  by  the  Borrower(s)  in  funds  immediately  available  to  the
     Administrative  Agent.  Such  borrowing  will then be made available to the
     Borrower(s) by the  Administrative  Agent (x) with respect to amounts to be
     used to pay invoices  pursuant to the Supply  Contracts,  by crediting  the
     account of the Vendor  designated  in its  borrowing  notice  prior to 2:00
     P.M., New York City time, on such Borrowing Date with the lesser of the (1)
     aggregate of the amounts made available to the Administrative  Agent by the
     Lenders and (2) the aggregate  amount of such invoices and (y) with respect
     to  proceeds  to be used for any other  permitted  use,  by  crediting  the
     account(s)  of  the  relevant   Borrower(s)   designated  in  the  Drawdown
     Certificate  prior to 1:00 P.M., New York time, on such Borrowing Date. The
     Borrowers may borrow no more than once in any month.

          (b)  Subject  to the  terms and  conditions  hereof,  on any  Interest
     Payment Date occurring prior to the first  anniversary of the Closing Date,
     the Borrowers  may borrow under the  Commitments  the  aggregate  amount of
     interest due and payable on such  Interest  Payment Date up to an aggregate
     maximum of  $4,200,000.  During such period,  unless the  Borrowers who are
     obligated on outstanding Loans provide a notice to the Administrative Agent
     at least four business  days prior to such Interest  Payment Date that they
     intend to pay  interest  due and  payable on such  Interest  Payment  Date,
     subject to the terms and conditions hereof, the Lenders shall make Loans to
     such Borrowers by increasing the outstanding  principal amount of the Loans
     in the amount of such  interest due on such date and such  Borrowers  shall
     deliver  the Notes  required  to be  delivered  by  Section  4.2(k) on such
     Interest Payment Date.

                                       25
<PAGE>
     Section  2.3   Commitment  and Other Fees.  The U.S. Borrowers, jointly and
                    --------------------------
severally,  agree  to  pay  to  the Administrative Agent for the account of each
Lender a commitment fee for the period from and including the date hereof to the
Commitment  Termination  Date,  computed  at  the  rate of three-quarters of one
percent  per  annum  (0.75%)  on  the average daily amount of the unutilized and
undrawn  Commitment  of  such  Lender  during  such period, payable quarterly in
arrears  on  the last day of each quarter and on the Commitment Termination Date
or  such  earlier  date  as  the  Commitment shall terminate as provided herein,
commencing  on  the  first  of  such  dates  to  occur  after  the  date hereof.

     Section 2.4   Termination or Reduction of Commitments.  The Borrowers shall
                   ---------------------------------------
have  the  right,  upon  not  less  than  one Business Day's prior notice to the
Administrative  Agent  (who  shall  notify  the  Lenders),  to  terminate  the
Commitments or, from time to time, to reduce the amount of the Commitments.  Any
such  reduction shall be in an amount equal to $1,000,000 or a whole multiple of
$100,000  in excess thereof and shall reduce permanently the Commitments then in
effect.  In  addition, the Commitments shall be permanently reduced as set forth
in  Sections  2.8(b)(iii)  and  (iv).

     Section  2.5   The  Notes.
                    ----------

          (a) The  obligation  of the U.S.  Borrowers  to repay Loans and to pay
     interest thereon at the rates provided herein shall be further evidenced by
     promissory  notes in the form of Exhibit A-1,  payable to the order of such
                                      -----------
     Lender  and in  the  principal  amount  of the  respective  Loan  evidenced
     thereby,  and in each case executed by the U.S. Borrowers  representing the
     joint and several  obligation  of the U.S.  Borrowers to pay the  aggregate
     unpaid  principal  amount of all of the promissory  notes (plus any accrued
     interest  thereon) until paid in full as provided below.  The obligation of
     the  Borrowers  to repay  Loans and to pay  interest  thereon  at the rates
     provided herein shall be further evidenced by bilingual promissory notes in
     the forms of Exhibit A-2 (in the case of each  Eurodollar  Loan for Mexican
                  -----------
     Borrower  Obligations),  and  Exhibit A-3 (in the case of each ABR Loan for
                                   -----------
     Mexican Borrower Obligations), each payable to the order of such Lender and
     in the principal  amount of the respective Loan evidenced  thereby,  and in
     each case  executed  by all  Borrowers  representing  the joint and several
     obligation of all Borrowers to pay the aggregate unpaid principal amount of
     all of the promissory notes (plus any accrued interest  thereon) until paid
     in full as provided below.  The promissory notes referenced in this Section
     2.5(a)  shall be  collectively  referred to herein as the  "Notes".  A U.S.
                                                                 -----
     Borrower  shall be jointly and  severally  liable for each Note executed by
     all other  Borrowers  under this Agreement even if the Note is issued prior
     to the addition of such  particular U.S.  Borrower as a Borrower  hereunder
     and such U.S. Borrower is not a maker of the Note. A Mexican Borrower shall
     be jointly and severally liable for each Note executed by all other Mexican
     Borrowers under this Agreement even if

                                       26
<PAGE>
     the  Note is  issued  prior  to the  addition  of such  particular  Mexican
     Borrower as a Borrower  hereunder and such Mexican  Borrower is not a maker
     of a Note. When a new entity is added as a U.S. Borrower, it, together with
     the other U.S.  Borrowers shall execute new Notes in  substitution  for the
     old Notes which shall be cancelled  and  returned to  Holdings.  When a new
     entity is added as a Mexican  Borrower,  such additional  Mexican  Borrower
     shall  immediately  execute and endorse  ("por  aval") all the  outstanding
                                                ---  ----
     Notes and all subsequent Notes. Each Borrower acknowledges that an Event of
     Default  under any Note issued under this  Agreement  shall  constitute  an
     Event of Default under all Notes issued hereunder.

          (b) With respect to the Notes executed by the Mexican Borrowers,  such
     Notes  evidencing  any Loan shall specify the applicable  Interest  Periods
     then in effect in accordance with the provisions of this Agreement.

          (c) The  Borrowers  shall issue a new Note to any Lender,  in exchange
     for the outstanding Note theretofore  issued to such Lender to evidence the
     corresponding  Loan for Mexican Borrowers  Obligations,  in accordance with
     the  procedure  set forth below in paragraph  (d) of this Section 2.5, upon
     any of the following  circumstances  (any such  circumstance is a "New Note
                                                                        --------
     Circumstance"):  (i) if the  length of the  Interest  Period  for such Loan
     ------------
     shall  differ  from the length of the  Interest  Period  then in effect and
     specified in the outstanding Note, in which case the new Note for such Loan
     shall specify the length of the applicable Interest Period to be in effect;
     (ii) if the  Applicable  Margin with respect to such Loan shall change from
     that  specified  in the  outstanding  Note  pursuant  to the  terms of this
     Agreement,  in which  case the new Note for such Loan  shall  specify  such
     change in the Applicable  Margin and the date of such change;  (iii) if the
     Maturity  Date for such  Loan  shall  change  from  that  specified  in the
     outstanding Note pursuant to the terms of this Agreement, in which case the
     new Note for such Loan shall specify the Maturity Date then in effect under
     this Agreement; or (iv) the Loan shall convert from a Eurodollar Loan to an
     ABR Loan.

          (d) If the Borrowers shall be required pursuant to paragraph (c) above
     to issue and deliver a new Note to any Lender, such Borrowers shall execute
     and deliver to the Administrative Agent for the account of each such Lender
     a new Note evidencing  each applicable Loan made by such Lender,  dated the
     date of the applicable New Note Circumstance,  payable to the order of such
     Lender and in an amount equal to the outstanding  principal  amount of such
     Loan.  Upon receipt by the  Administrative  Agent (i) from the Borrowers of
     any such new Note, and (ii) from the respective Lender of the corresponding
     Note to be replaced by such new Note, then the  Administrative  Agent shall
     promptly  deliver to such Lender the new Note and deliver to the  Borrowers
     the  corresponding  Note thereby  replaced,  it being understood and agreed
     that  the  Note  so  delivered  to  the  Borrowers  shall  then  be  marked
     "cancelled" by the relevant Borrowers.

          (e) The new  promissory  notes so executed and  delivered  pursuant to
     paragraph  (d) above,  shall  constitute  "Notes" for all  purposes of this
     Agreement and of any  instruments  or documents  delivered by the Borrowers
     pursuant  hereto and shall be deemed issued,  in each instance,  in partial
     substitution  for,  and to  evidence  a  portion  of the same  indebtedness
     formerly  evidenced by, the corresponding  Note theretofore  issued to, and
     held by, the corresponding  Lender, except that interest accrued and unpaid
     on the indebtedness  outstanding under the Note theretofore  issued to such
     Lender  shall,  from and after the date of the issuance of the new Note, be
     deemed to be payable under such new Note, and interest shall accrue on each
     such new Note from and including the date of issuance thereof

                                       27
<PAGE>
          (f) In the case of any  assignment by a Lender of its Loan pursuant to
     Section 11.6, the corresponding  exchange of Notes shall be governed by the
     applicable Assignment and Acceptance and not by paragraphs (c), (d) and (e)
     of this Section 2.5.

     Section  2.6   Proceeds.  The  proceeds of the Loans to the Borrowers shall
                    --------
be  used  (i) to repay principal and interest owed pursuant to the Lucent Credit
Agreement, (ii) to purchase or license Equipment, software and services pursuant
to the Supply Contracts, (iii) to pay import duties and taxes in connection with
the  Supply Contracts, (iv) to pay interest due on Loans hereunder to the extent
permitted  by Section 2.2(b), not to exceed $4,200,000 less the accrued interest
and  other  fees  and  expenses repaid under the Lucent Credit Agreement, (v) to
finance  loans  and  capital contributions from one Borrower to another Borrower
for  the  purposes  set  forth  in  clauses (i) through (iv) above, (v) to repay
$1,200,000  of amounts owned by Pointe Communications Corporation to Connecticut
Bank  of  Commerce  and  (vii)  to  pay  the  Arrangement  Fee as defined in the
Cooperation  and  Fee  Letter.

     Section  2.7  Amortization  of Loans.  Each of the  Borrowers,  jointly and
                   ----------------------
severally,  hereby  unconditionally  promises to pay to the Administrative Agent
for the  account of each Lender the  principal  amount of the Loans made by such
Lender, in the case of a U.S.  Borrower,  to any Borrower,  and in the case of a
Mexican  Borrower,  with respect to any Mexican  Borrower  Obligations,  in nine
equal semi-annual installments with the first such installment due on the second
anniversary  of the  Closing  Date with each  succeeding  payment due six months
thereafter  with the  final  installment  due on the  sixth  anniversary  of the
Closing Date. The Borrowers hereby further, jointly and severally,  agree to pay
to the  Administrative  Agent for the  account of each  Lender  interest  on the
unpaid  principal  amount of the Loans, in the case of a U.S.  Borrower,  to any
Borrower,  and in the  case  of a  Mexican  Borrower  for any  Mexican  Borrower
Obligations,  from time to time  outstanding from the Closing Date until payment
in full thereof at the rates per annum,  and on the dates,  set forth in Section
2.9(c).

     Section  2.8   Optional  and  Mandatory  Prepayments.
                    -------------------------------------

          (a) Optional Prepayments.  The Borrowers may at any time and from time
              --------------------
     to time prepay the Loans, in whole or in part,  without premium or penalty,
     on any Interest Payment Date, upon three Business Days' irrevocable  notice
     to the Administrative Agent, prior to such prepayment,  specifying the date
     and  amount  of   prepayment.   Upon   receipt  of  any  such   notice  the
     Administrative  Agent  shall  notify  each  Lender  thereof  on the date of
     receipt of such notice.  If any such notice is given,  the amount specified
     in such  notice  shall be due and  payable on the date  specified  therein,
     together  with any amounts  payable  pursuant to Section 2.16 and,  accrued
     interest to such date on the amount prepaid.  Partial prepayments  pursuant
     to this subsection  shall be in an aggregate  principal  amount of at least
     $1,000,000 and increments of $100,000 in excess thereof.

          (b) Mandatory Prepayments.
              ---------------------

                                       28
<PAGE>
               (i) The Borrowers shall prepay the outstanding  principal  amount
          of all Loans  hereunder  upon the  closing of any  financing  which is
          intended by the Borrowers to refinance the Loans hereunder.

               (ii)   Following  the  end  of  each  fiscal  year  of  Holdings,
          commencing with the year ending December 31, 2000, the Borrowers shall
          prepay Loans in an  aggregate  amount equal to 50% of Excess Cash Flow
          of such year.  Each prepayment  pursuant to this  subsection  shall be
          made within 90 days after the year for which Excess Cash Flow is being
          calculated  and  such  prepayment  shall  be in a  minimum  amount  of
          $50,000.

               (iii) If and on each  occasion that any Net Proceeds are received
          by or on behalf of the Borrowers in respect of any sale,  disposition,
          casualty or condemnation of any  Collateral,  the Borrowers  shall, to
          the extent such Net Proceeds are not  reinvested  in  Collateral of at
          least  substantially  similar nature and value and, in the case of any
          Collateral  acquired from the Vendor pursuant to the Supply Contracts,
          purchased from the Vendor in each case within a 90 day period,  prepay
          Loans  outstanding  (or if no Loans are then  outstanding,  reduce the
          Commitments) in an aggregate amount equal to such Net Proceeds.

               (iv) If and to the extent any  prepayments  are to be made on (A)
          any vendor  financing,  (B) any bank  credit  facilities  (other  than
          revolving  credit   facilities)  or  any  other  Indebtedness  of  the
          Borrowers,  or (C) any  Guarantee  Obligation  of the  Borrowers,  the
          Borrowers shall make a pro rata prepayment in an amount  equivalent to
          such  prepayment  of all  Loans  outstanding  (or if no Loans are then
          outstanding,  a reduction of the  Commitments)  under this  Agreement;
          provided, however, that the foregoing shall not apply (W) with respect
          --------  -------
          to any  prepayment  of  Indebtedness  owed by a  Borrower  to  another
          Borrower,  (X)  with  respect  to  repayment  of  Indebtedness  of any
          Borrower  (1)  to  Lenox  Invest  Ltd.  in an  amount  not  to  exceed
          $1,500,000 and (2) to Scott Crist in an amount not to exceed  $850,000
          so long as the repayment of such Indebtedness  comes from the proceeds
          of New Equity, or (Y) with respect to any prepayment of an amount that
          is equal to or less than $50,000.

               (v) If and on each  occasion  that any  Borrower  shall  make any
          Permitted  Preferred Cash  Dividends,  the record date for which shall
          occur  during the period  after the first  anniversary  of the Closing
          Date and before the second  anniversary of the Closing Date,  then, on
          or before the record date for such Permitted Preferred Cash Dividends,
          the  Borrowers  shall  make  a  prepayment  on the  Loans,  out of the
          proceeds of the New Equity  raised in connection  with such  Permitted
          Preferred  Cash  Dividends,  in an amount  equal to the amount of such
          Permitted Preferred Cash Dividends.

          (c) If any optional or mandatory  prepayment would trigger  compliance
     with  reserve  requirements  imposed  by  the  Mexican  Central  Bank,  the
     Borrowers shall make such required deposit.

                                       29
<PAGE>
          (d) All prepayments of Loans (except payments pursuant to Section 2.7)
     shall reduce the remaining scheduled payments of principal of such Loans in
     the inverse order of maturity.  Amounts prepaid on account of the Loans may
     not be reborrowed.

     Section  2.10   Computation  of  Interest  and  Fees.
                     ------------------------------------

          (a)  Commitment  fees and interest on Loans shall be calculated on the
     basis of a 360-day year for the actual days elapsed  except that,  whenever
     interest  is  calculated  on  the  basis  of the  ABR,  interest  shall  be
     calculated  on the basis of a 365 or 366 day  year,  as the case may be for
     the  actual  days  elapsed.  The  Administrative  Agent  shall  as  soon as
     practicable   notify  the  Borrowers  and  the  affected  Lenders  of  each
     determination of LIBOR.

          (b) Each determination of an interest rate by the Administrative Agent
     pursuant to any provision of this Agreement shall be conclusive and binding
     on the  Borrowers  and the Lenders in the absence of  manifest  error.  The
     Administrative Agent shall, at the request of the Borrowers, deliver to the
     Borrowers a statement  showing the  quotations  used by the  Administrative
     Agent in determining any interest rate pursuant to Section 2.10(a).

                                       30
<PAGE>

     Section  2.12   Pro  Rata  Treatment  and  Payments.
                     -----------------------------------

          (a) All payments  (including  prepayments) to be made by the Borrowers
     hereunder,  whether on account of principal,  interest,  fees or otherwise,
     shall be made  without set off or  counterclaim  and shall be made prior to
     12:00  Noon,   New  York  City  time,  on  the  due  date  thereof  to  the
     Administrative  Agent, for the account of the Lenders at the Administrative
     Agent's  office  specified in Section 11.2,  in Dollars and in  immediately
     available funds.  Payments received by the Administrative  Agent after such
     time shall be deemed to have been  received on the next  Business  Day. The
     Administrative Agent shall distribute such payments to the Lenders entitled
     to receive the same promptly upon receipt in like funds as received. If any
     payment hereunder (other than payments on the Eurodollar Loans) becomes due
     and  payable on a day other  than a Business  Day,  such  payment  shall be
     extended to the next succeeding Business Day, and, with respect to payments
     of principal, interest thereon shall be payable at the then applicable rate
     during such extension.  If any payment on a Eurodollar Loan becomes due and
     payable on a day other than a Business  Day, the maturity  thereof shall be
     extended to the next succeeding Business Day (and, with respect to payments
     of principal, interest shall be payable thereon at the then applicable rate
     during  such  extension)  unless the result of such  extension  would be to
     extend  such  payment  into  another  calendar  month,  in which event such
     payment shall be made on the immediately preceding Business Day. If, and to
     the extent that, on any Business Day the Administrative  Agent receives any
     payment  hereunder or under the other Loan  Documents  (including  any such
     payment  representing a realization upon the Collateral),  and such payment
     is not  sufficient to pay in full all principal,  interest,  fees and other
     amounts  then due and payable  hereunder,  the  Administrative  Agent shall
     apply such  payment in the  following  order of  priority:

                                       31
<PAGE>
               (i) First, all amounts due under this Agreement and not otherwise
          provided for in this Section 2.12(a);

               (ii) Second, interest and fees due hereunder; and

               (iii) Third, installments of principal due.

          (b) Unless  the  Administrative  Agent  shall  have been  notified  in
     writing by any Lender  prior to a borrowing  that such Lender will not make
     the amount that would constitute its portion of such borrowing available to
     the  Administrative  Agent, the  Administrative  Agent may assume that such
     Lender is making such amount available to the Administrative Agent, and the
     Administrative Agent may, in reliance upon such assumption,  make available
     to the  Borrowers  a  corresponding  amount.  If such  amount  is not  made
     available to the Administrative Agent by the required time on the Borrowing
     Date  therefor,  such  Lender  shall pay to the  Administrative  Agent,  on
     demand,  such  amount  with  interest  thereon at a rate equal to the daily
     average Federal Funds Effective Rate for the period until such Lender makes
     such  amount  immediately   available  to  the   Administrative   Agent.  A
     certificate  of the  Administrative  Agent  submitted  to any  Lender  with
     respect to any amounts  owing under this Section shall be conclusive in the
     absence of manifest error.

          (c) Each  borrowing  by the  Borrowers  of Loans shall be made ratably
     from  the  Lenders,  respectively,  in  accordance  with  their  respective
     Commitment  Percentages.  Any reduction of the Commitments or prepayment of
     Loans shall be made ratably  among the Lenders,  in  accordance  with their
     respective Commitment Percentages.

     Section  2.14   Requirements  of  Law.
                     ---------------------

                                       32
<PAGE>

          (a) If the adoption of or any change in any  Requirements of Law or in
     the interpretation or application  thereof or compliance by any Lender with
     any request or directive  (whether or not having the force of law) from any
     central bank or other  Governmental  Authority in each case made subsequent
     to the date hereof or, in the case of a  Transferee,  to the same extent as
     that of the  transferor  prior to the transfer or subsequent to the date of
     transfer:

               (i) shall subject any Lender to any  Non-Excluded Tax of any kind
          whatsoever  with respect to this  Agreement,  any Note, any Eurodollar
          Loan made by it, or change the basis of  taxation  of payments to such
          Lender in respect  thereof (except for  Non-Excluded  Taxes covered by
          Section 2.15 and changes in the basis of tax on the overall net income
          of such Lender and taxes imposed as a result of any future, present or
          former  connection  between  such Lender and the  jurisdiction  of the
          Governmental  Authority imposing such tax or any political subdivision
          or taxing authority  thereof or therein other than any such connection
          arising  solely  from  such  Lender  having  executed,   delivered  or
          performed its  obligations or received a payment  under,  or enforced,
          this Agreement or any Note or any other Loan Document);

               (ii) shall impose, modify or hold applicable any reserve, special
          deposit,  compulsory loan or similar  requirement  against assets held
          by, deposits or other  liabilities in or for the account of, advances,
          loans or other  extensions of credit by, or any other  acquisition  of
          funds by, any office of such Lender which is not otherwise included in
          the determination of LIBOR hereunder; or

               (iii) shall  impose on such Lender any other  condition;  and the
          result of any of the foregoing is to increase the cost to such Lender,
          by an amount which such Lender  reasonably  deems to be  material,  of
          making,  continuing or maintaining  Eurodollar  Loans or to reduce any
          amount  receivable  hereunder in respect  thereof,  then,  in any such
          case,  the Borrowers  shall,  within 20 Business Days after receipt by
          the  Borrowers  of such  Lender's  written  demand (with a copy to the
          Administrative  Agent),  pay such  Lender  such  additional  amount or
          amounts as will  compensate  such  Lender for such  increased  cost or
          reduced  amount  receivable.  If any Lender has demanded  compensation
          under this  Section  2.14 with  respect to any  Eurodollar  Loan,  the
          Borrowers shall have the option to convert immediately such Eurodollar
          Loan into an ABR Loan  until  the  circumstances  giving  rise to such
          demand for  compensation no longer apply;  provided,  that (x) no such
                                                     --------
          conversion shall affect the Borrowers'  obligation to pay compensation
          as provided  herein  which is due with  respect to the period prior to
          such  conversion and (y) on the date of such  conversion the Borrowers
          shall pay to the Administrative  Agent for the benefit of the relevant
          Lender  accrued  interest  on  such  Eurodollar  Loan  to the  date of
          conversion.

          (b) If any Lender  shall have  determined  that the adoption of or any
     change in any  Requirements  of Law  regarding  capital  adequacy or in the
     interpretation  or application  thereof or compliance by such Lender or any
     corporation Controlling such Lender with any request or directive regarding
     capital  adequacy  (whether  or not  having  the  force  of law)  from  any
     Governmental  Authority,  in each case made  subsequent to the date hereof,
     shall have the effect of  reducing  the rate of return on such  Lender's or
     such corporation's capital as a consequence of its obligations hereunder to
     a level below which

                                       33
<PAGE>
     that which such Lender or such corporation could have achieved but for such
     adoption,  change or compliance (taking into consideration such Lender's or
     such corporation's  policies with respect to capital adequacy) by an amount
     material  to such  Lender,  or such  corporation,  then  from time to time,
     within 20 Business  Days after  receipt by the  Borrowers of such  Lender's
     written  demand  therefor  (with a copy to the  Administrative  Agent)  the
     Borrowers  shall pay to such  Lender such  additional  amount or amounts as
     will compensate such Lender or such corporation for such reduction.

          (c) If any Lender  becomes  entitled to claim any  additional  amounts
     pursuant to Section  2.14(a) or (b), it shall  promptly give written notice
     to the Borrowers (with a copy to the  Administrative  Agent)  specifying in
     reasonable  detail the event by reason of which it has  become so  entitled
     and the  method  of  calculating  the  amounts  to  which it  claims  to be
     entitled.  A certificate as to any additional  amounts payable  pursuant to
     this Section 2.14 submitted by such Lender to the Borrowers (with a copy to
     the  Administrative  Agent) shall be  conclusive in the absence of manifest
     error. The agreements in this Section 2.14 shall survive the termination of
     this  Agreement and the payment of the Loans and all other amounts  payable
     hereunder.

     Section  2.15   Taxes.
                     -----

          (a) Subject to the provisions  (and  exceptions)  set forth in Section
     2.15(b) with respect to Mexican  Taxes,  all payments made by the Borrowers
     under  this  Agreement  and any Notes  shall be made free and clear of, and
     without  deduction  or  withholding  for or on account  of, any  present or
     future Taxes,  now or hereafter  imposed,  levied,  collected,  withheld or
     assessed by any Governmental  Authority,  excluding  Excluded Taxes. If any
     such non-excluded Taxes, ("Non-Excluded Taxes") are required to be withheld
                                ------------------
     from any  amounts  payable  to the  Administrative  Agent or any Lender (or
     Transferee)  hereunder  or under any Note,  the  amounts  so payable to the
     Administrative  Agent or such Lender (or Transferee)  shall be increased by
     the  amounts  ("Increased  Amounts")  necessary  so that  after  making all
                     ------------------
     required deductions and withholdings  (including,  without limitation,  the
     payment of all Non-Excluded Taxes) the Administrative  Agent or such Lender
     (or  Transferee)  receives  the amounts  equal to the  interest or any such
     other amounts payable hereunder at the rates or in the amounts specified in
     this Agreement; provided, however, that the Borrowers shall not be required
                     --------  -------
     to increase  any such amounts  payable to any Lender that is not  organized
     under  the laws of the  United  States of  America  or a state  thereof  (a
     "Non-U.S.  Lender") if such Lender fails to comply with the requirements of
      ----------------
     paragraph (c) or (d) of this subsection.  Whenever any  Non-Excluded  Taxes
     are payable by any  Borrower,  such  Borrower  shall  promptly  send to the
     Administrative  Agent for its own account or for the account of such Lender
     (or  Transferee),  as the  case  may be, a  certified  copy of an  original
     official receipt received by such Borrower showing payment thereof or other
     evidence of remittance of Non-Excluded  Taxes reasonably  acceptable to the
     Administrative  Agent. If such Borrower fails to pay any Non-Excluded Taxes
     when  due to the  appropriate  taxing  authority  or  fails to remit to the
     Administrative  Agent the required receipts or other reasonably  acceptable
     evidence, the Borrowers or, in the case of such failure by a U.S. Borrower,
     the U.S. Borrowers shall jointly and severally indemnify the Administrative
     Agent and the Lenders for any incremental taxes, interest or penalties that
     may  become  payable  by  the  Administrative  Agent  or  any

                                       34
<PAGE>
     Lender as a result of any such  failure.  The  Borrowers  or in the case of
     Non-Excluded  Taxes paid in connection  with Loans to U.S.  Borrowers,  the
     U.S.  Borrowers  will  jointly  and  severally  indemnify  each  Lender (or
     Transferee)  and the  Administrative  Agent for the amount of  Non-Excluded
     Taxes paid by such Lender (or Transferee) or the  Administrative  Agent, as
     the case may be,  and any  liability  (including  penalties,  interest  and
     expenses) arising therefrom or with respect thereto. The agreements in this
     Section  2.15 shall  survive  the  termination  of this  Agreement  and the
     payment of the Loans and all other  amounts  payable  hereunder;  provided,
                                                                       --------
     however, that the Borrowers shall not be required to indemnify any Non-U.S.
     -------
     Lender that fails to comply with the  requirements  of paragraph (c) or (d)
     of this  subsection  to the extent  amounts  would not be payable  had such
     Lender so complied.

          (b) All payments of principal,  interest,  fees and other amounts made
     or in respect to this Agreement or the Loan Documents shall be made without
     setoff or counterclaim and free and clear of and without  deduction for any
     and all present  and future  Mexican  Taxes  other than Excess  Withholding
     Taxes and  Excluded  Taxes.  Borrower  agrees to cause all such Taxes to be
     paid on behalf  of any  Lender  directly  to the  appropriate  Governmental
     Authority.  If at any time a Borrower is  required  by law or is  otherwise
     compelled  to withhold or deduct any such Taxes from any payment to be made
     by such Borrower in respect to this  Agreement or the Loan  Documents,  all
     such payments,  including payments made pursuant to this Section 2.15 shall
     be increased so that after provision for Mexican Taxes,  including  Mexican
     Taxes on such increase,  the amounts received by any Lender shall equal the
     amounts  such Lender  would have  received if no Mexican  Taxes were due on
     such payments or no deductions (other than for Excess  Withholding Taxes or
     Excluded  Taxes) were made;  provided  however,  that no Borrower  shall be
     required to  increase  any such  amounts  payable to any Lender that is not
     organized under the laws of the United States of America or a state thereof
     (a "Non-U.S.  Lender") if such Lender fails to comply with the requirements
     of  paragraph  (c) or (d) of this  section.  Such  Borrower  shall  provide
     Administrative  Agent with original Tax receipts,  notarized  copies of Tax
     receipts or such other  documentation  as will reasonably  prove payment of
     Tax before the Internal  Revenue  Service or a United States Court or other
     relevant  Governmental  Authority,  for all  Taxes  paid  by such  Borrower
     pursuant to this Section 2.15. Such Borrower shall deliver such receipts or
     other accountable  documentation to Administrative Agent within thirty (30)
     days from the due date of the  related  Tax.  No Lender  shall be under any
     obligation  to pass on to any Borrower any benefits  that may accrue to it,
     pursuant to this Section 2.15.

          (c) Each Non-U.S. Lender shall:

               (i) in the  case of a  Lender  (or  Transferee)  that is a "bank"
          under Section 881(c)(3)(A) of the Code;

          (A) on or before the date on which the first payment  becomes  payable
     to it hereunder  or under any Note (or, in the case of a Loan  Participant,
     on or  before  the date such Loan  Participant  becomes a Loan  Participant
     hereunder)  and on or before the date, if any, such Lender (or  Transferee)
     changes its

                                       35
<PAGE>
     applicable lending office by designating a different lending office (a "New
                                                                             ---
     Lending Office") deliver to the Borrowers and the Administrative  Agent (y)
     --------------
     two properly  completed and duly executed  copies of United States Internal
     Revenue  Service Form 1001 or 4224,  or successor  applicable  form, as the
     case may be,  and (z) an  Internal  Revenue  Service  Form  W-8 or W-9,  or
     successor applicable form, as the case may be;

          (B) deliver to the Borrowers and the Administrative  Agent two further
     properly   completed  and  duly  executed   copies  of  any  such  form  or
     certification  on or before  the date  that any such form or  certification
     expires or becomes obsolete and after the occurrence of any event requiring
     a  change  in  the  most  recent  form  previously  delivered  by it to the
     Borrowers or upon the request of the Borrowers or the Administrative Agent;
     and

          (C) obtain  such  extensions  of time for filing and  completing  such
     forms or certifications as may reasonably be requested by the Borrowers;

               (ii) in the case of a Lender or a Transferee that is not a "bank"
          under Section 881(c)(3)(A) of the Code:

          (A) on or before the date on which the first payment  becomes  payable
     to it under any Note (or, in the case of a Loan  Participant,  on or before
     the date  such  Loan  Participant  becomes  a Loan  Participant  hereunder)
     deliver to the Borrowers and the Administrative Agent (I) a statement under
     penalties  of perjury  that such Lender (x) is not a "bank"  under  Section
     881(c)(3)(A)  of the Code,  is not  subject to  regulatory  or other  legal
     requirements as a bank in any  jurisdiction,  and has not been treated as a
     bank for purposes of any tax,  securities law or other filing or submission
     made to any Governmental Authority, any application made to a rating agency
     or qualification for any exemption from tax,  securities law or other legal
     requirements,  (y) is not a 10-percent  shareholder of any Borrower  within
     the meaning of Section 881(c)(3)(B) of the Code and (z) is not a controlled
     foreign  corporation  receiving  interest from a related  person within the
     meaning of Section  881(c)(3)(C) of the Code and (II) a properly  completed
     and duly executed Internal Revenue Service Form W-8 or applicable successor
     form;

          (B) deliver to the Borrowers and the Administrative  Agent two further
     properly  completed  and duly  executed  copies of said  Form  W-8,  or any
     successor  applicable  form on or  before  the date  that any such Form W-8
     expires or becomes  obsolete or after the occurrence of any event requiring
     a  change  in  the  most  recent  form  previously  delivered  by it to the
     Borrowers or upon the request of the Borrowers; and

                                       36
<PAGE>
          (C) obtain  such  extensions  of time for filing and  completing  such
     forms or certifications as may be reasonably  requested by the Borrowers or
     the Administrative Agent; unless in any such case any change in treaty, law
     or  regulation  has  occurred  subsequent  to  the  date  such  Lender  (or
     Transferee)  became  a party  to this  Agreement  (or in the case of a Loan
     Participant,  the date  such  Loan  Participant  became a Loan  Participant
     hereunder) which renders all such forms inapplicable or which would prevent
     such Lender  from  properly  completing  and  executing  any such form with
     respect  to  it  and  such  Lender  so  advises  the   Borrowers   and  the
     Administrative  Agent in writing no later than 15 days  before any  payment
     hereunder or under any Note is due. Each such Lender (and each  Transferee)
     shall  certify (i) in the case of a Form 1001 or 4224,  that it is entitled
     to receive payments under this Agreement  without  deduction or withholding
     of any United  States  federal  income taxes and (ii) in the case of a Form
     W-8 or W-9 delivered pursuant to subsection 2.15(c)(i), that it is entitled
     to an exemption from United States backup withholding tax. Each Person that
     shall become a Lender or a Loan Participant pursuant to Section 11.6 shall,
     upon the  effectiveness of the related  transfer,  provide all of the forms
     and statements required pursuant to this subsection,  provided that, in the
                                                           --------
     case of a Loan  Participant,  such Loan Participant  shall furnish all such
     required  forms  and  statements  to the  Lender  from  which  the  related
     participation shall have been purchased.

          (d) Each Lender (and the Administrative Agent with respect to payments
     to the  Administrative  Agent for its own account)  agrees that it will (i)
     take all reasonable  actions by all usual means to maintain all exemptions,
     if any,  available  to it from United  States  withholding  taxes  (whether
     available  by  treaty,  existing  administrative  waiver,  by virtue of the
     location of any Lender's  applicable  lending office or otherwise) and (ii)
     otherwise  cooperate with the Borrowers to minimize  amounts payable by the
     Borrowers  under this  subsection  provided  such measures or actions would
     not,  in such  Lender's  determination,  cause  such  Lender to suffer  any
     material economic, legal or regulatory disadvantage.

     Section  2.16   Indemnity.  The  U.S. Borrowers agree jointly and severally
                     ---------
to  indemnify  each  Lender  and  to  hold each Lender harmless from any loss or
expense  which  such  Lender may sustain or incur as a direct consequence of (a)
default  by any Borrower in making a borrowing of, or continuation of Eurodollar
Loans  after  such Borrower has given a notice requesting the same in accordance
with the provisions of this Agreement, (b) default by any Borrower in making any
prepayment of Eurodollar Loans after such Borrower has given a notice thereof in
accordance  with  the  provisions  of  this  Agreement  or  (c)  the making of a
prepayment of Eurodollar Loan on a day which is not the last day of any Interest
Period  with respect thereto.  The Mexican Borrowers agree jointly and severally
to  indemnify  each  Lender  and  to  hold each Lender harmless from any loss or
expense  which  such  Lender may sustain or incur as a direct consequence to (a)
default  in  making  a  borrowing  of,  or  continuation  of  Eurodollar  Loans
constituting a Mexican Borrower Obligation after the relevant Borrower has given
a  notice  requesting  the  same  in  accordance  with  the  provisions  of this
Agreement, (b) default in making any prepayment of Eurodollar Loans constituting
a  Mexican  Borrower  Obligation  after the relevant Borrower has given a notice
thereof in accordance with the provisions of this Agreement or (c) the making of
a  prepayment of Eurodollar Loan which constitutes a Mexican Borrower Obligation
on  a day which is not the last day of any Interest Period with respect thereto.
In  each

                                       37
<PAGE>
case,  such  indemnification  may include an amount equal to the excess, if any,
of (i) the amount of interest which would have accrued on the amount so prepaid,
or  not  so borrowed, for the period from the date of such prepayment or of such
failure  to borrow to the last day of such Interest Period (or, in the case of a
failure  to borrow, the Interest Period that would have commenced on the date of
such  failure)  in  each  case at the applicable rate of interest for such Loans
provided  for  herein over (ii) the amount of interest (as reasonably determined
by  such  Lender)  which  would  have  accrued  to such Lender on such amount by
placing such amount on deposit for a comparable period with leading banks in the
interbank  eurodollar  market.  This  covenant  shall survive the termination of
this  Agreement  and  the  payment  of  the  Loans and all other amounts payable
hereunder.

     Section  2.17   Change  of  Lending  Office;  Filing  of  Certificates  or
                     ----------------------------------------------------------
Documents.  Each  Lender  agrees  that  if  it  makes any demand for payment, or
---------
becomes  entitled  to any additional amounts or Increased Amounts, under Section
2.13, 2.14 or 2.15 or if any adoption or change of the type described in Section
2.14  shall occur with respect to it, it will use reasonable efforts (consistent
with  its  internal  policy and legal and regulatory restrictions and so long as
such  efforts  would  not  be  disadvantageous  to it, as determined in its sole
discretion)  to  designate a different lending office or file any certificate or
document  reasonably  requested in writing by the Borrowers if such action would
reduce  or  obviate  the  need  for the Borrowers to make payments under Section
2.13,  2.14  or  2.15 or would eliminate or reduce the effect of any adoption or
change  described  in  Section  2.14.

     Section  2.18   Replacement Lenders.  If (a) the Borrowers become obligated
                     -------------------
to  pay  additional amounts or Increased Amounts to, or receive notice from, any
Lender  pursuant to Sections 2.13, 2.14 or 2.15, or (b) any Lender has defaulted
in  its  obligation  to  make  Loans  hereunder,  then the Borrowers may, on ten
Business Days' prior written notice to the Administrative Agent and such Lender,
cause  such Lender to (and such Lender shall) assign pursuant to Section 11.6(c)
all  of  its  rights  and  obligations  under  this Agreement to another bank or
financial  institution  of its selection which is willing to become a Lender and
is  acceptable  (which  acceptance  shall  not  be unreasonably withheld) to the
Administrative  Agent,  for  a purchase price equal to the outstanding principal
amount  of the Loans payable to such Lender plus any accrued but unpaid interest
on  such  Loans,  any  accrued  but  unpaid  commitment  fees in respect of such
Lender's  Commitment  and  any  other  amounts payable to such Lender under this
Agreement  (including,  without limitation, amounts payable under Sections 2.13,
2.14  or  2.15).

                                   ARTICLE III

                         REPRESENTATIONS AND WARRANTIES
                         ------------------------------

          To induce the Administrative Agent and  the Lenders to enter into this
Agreement and to make the Loans, Holdings with respect to itself and each of its
Subsidiaries  and  each  of  the  Borrowers  with  respect to itself (except for
Section  3.1)  hereby represent and warrant to the Administrative Agent and each
Lender  that:

                                       38
<PAGE>
     Section  3.1   Financial  Condition.  The  consolidated  unaudited  balance
                    --------------------
sheet  of  Holdings  as  at  June  30, 2000 and the consolidated audited balance
sheets  of  Holdings  and PCom respectively on December 31, 1999 and the related
consolidated  statements  of  income and cash flows for the fiscal year ended on
such  date,  audited by the BDO Seidman, LLP with respect to Holdings and Arthur
Andersen with respect to PCom, copies of which have heretofore been furnished to
each  Lender,  present fairly in accordance with GAAP the consolidated financial
condition  of Holdings and its Subsidiaries or, with respect to the 1999 audited
financials  of  PCom,  PCom  and  its  Subsidiaries  as  at  such  date, and the
consolidated  results  of operations and cash flows for the fiscal year ended on
such  date  of  Holdings  and  its Subsidiaries and PCom and it Subsidiaries, as
applicable,  for  such date then ended.  All such financial statements have been
prepared  in  accordance  with  GAAP applied consistently throughout the periods
involved.  Neither  Holdings  nor  PCom  had  at  the date of the balance sheets
referred  to  above,  any material Guarantee Obligation, contingent liability or
liability  for  taxes,  or  any  long-term lease or unusual forward or long-term
commitment, including, without limitation, any material interest rate or foreign
currency  swap  or exchange transaction, which is not reflected in the foregoing
statements  or  in  the  notes  thereto  or  expressly  permitted to be incurred
hereunder.

     Section 3.2  No Change. Except as set forth on Schedule 3.2, since June 30,
                  ---------                         ------------
2000,  there  has  been  no development, event or circumstance which has, had or
could  reasonably  be  expected  to  have  a  Material  Adverse  Effect.

     Section 3.3   Existence; Compliance with Law and Agreements.  Such Borrower
                   ---------------------------------------------
(a) is duly organized and validly existing under the laws of the jurisdiction of
its  organization,  (b)  has  the  power  and  authority  to own and operate its
property,  to  lease  the  property  it  operates  as  lessee and to conduct the
business  in  which  it  is currently engaged, (c) is duly qualified or licensed
under  the  laws of each jurisdiction where its ownership, lease or operation of
property or the conduct of its business requires such qualification except where
the failure to be so qualified in the aggregate could not reasonably be expected
to  have  a  Material  Adverse  Effect;  and  (d)  is  in  compliance  with  all
Requirements  of  Law  and, except as set forth on Schedule 3.3, all Contractual
                                                   ------------
Obligations  binding  upon  it or its property (including the Supply Contracts),
except where the failure to be in compliance could not reasonably be expected to
have  a  Material  Adverse  Effect.

     Section 3.4   Power; Authorization; Enforceable Obligations.  Such Borrower
                   ---------------------------------------------
has  the  power and authority, and the legal right, to make, deliver and perform
the  Loan  Documents  and  to  borrow  and obtain the making of the Loans.  Such
Borrower has taken all necessary action to authorize the execution, delivery and
performance by it of the Loan Documents.  No consent or authorization of, filing
with,  notice to or other act by or in respect of, any Governmental Authority or
any  other  Person  is  required  to  be  obtained  or  made by such Borrower in
connection with, the making of the Loans, or by such Borrower in connection with
the execution, delivery or performance by such Borrower of the Loan Documents or
the  validity  or  enforceability  with  respect  to  or  against it of the Loan
Documents or in connection with the continuing operations of such Borrower other
than  (a)  the  recordation  of  the amendment of the Mexican Mortgages and each
Acknowledgement  of Indebtedness, (b) registration of the Stock Pledge Agreement
in  the  stock  registry  of  each Mexican Borrower who issued the corresponding
stock,  (c)  registration of the Corporate Parts Pledge Agreement in the special
registry book of Servicios de Comunicacion Popular, S. de R.L., (d) registration
of  the  Trademark  Security Agreement (e) cancellation of the Lucent Collateral
other  than  the Mexican Mortgages and the recordation thereof in the registries

                                       39
<PAGE>
where  the  Lucent  collateral  is  registered, (f) consents, authorizations and
filings  in  connection  with  enforcement  of the Loan Documents, (g) consents,
permits  and  authorizations specified on Schedule 3.4 or Schedule 3.21, (h) the
                                          -----------------------------
periodic  filings  that  should  be  made  of the Loan and interest thereon with
Hacienda  and  the  periodic renewal of such registration for purpose of Article
154(I) of the Mexican Income Tax Law and (h) consents the absence of which could
not  reasonably  be  expected to have a Material Adverse Effect.  This Agreement
has  been,  and each other Loan Document will be, duly executed and delivered on
behalf  of  such Borrower which is a party thereto.  This Agreement constitutes,
and each other Loan Document to which such Borrower is a party when executed and
delivered  will  constitute,  a  legal,  valid  and  binding  obligation of such
Borrower  which is enforceable against such Person in accordance with its terms,
except  as  enforceability  may be limited by applicable bankruptcy, insolvency,
reorganization,  moratorium  or  similar  laws  affecting  the  enforcement  of
creditors'  rights  generally  and  by  general  equitable  principles  (whether
enforcement  is  sought  by  proceedings  in  equity  or  at  law).

     Section 3.5   No Legal Bar.  The execution, delivery and performance of the
                   ------------
Loan  Documents  by such Borrower, the making of the Loans hereunder and the use
of  the  proceeds  thereof by such Borrower will not violate any Requirements of
Law  or  Contractual  Obligation  of  such  Borrower  which  could reasonably be
expected  to  have a Material Adverse Effect and will not result in, or require,
the  creation  or  imposition of any Lien on any of its respective properties or
revenues  pursuant  to  any  such  Requirements of Law or Contractual Obligation
other  than  as  contemplated  in  or  permitted  by  the  Loan  Documents.

     Section  3.6   No  Litigation.  Except  as  set  forth  in Schedule 3.6, no
                    --------------                              ------------
litigation,  investigation  or  proceeding  of  or  before  any  arbitrator  or
Governmental  Authority  is  pending  or,  to  the  knowledge  of  such Borrower
threatened by or against such Borrower or against any of its or their respective
properties  or  revenues (a) with respect to any of the Loan Documents or any of
the  transactions  contemplated  hereby or thereby or (b) which has a reasonable
likelihood  of  an  adverse  determination,  and  if adversely determined, could
reasonably be expected to have a Material Adverse Effect, nor is there any basis
for  any  such  litigation,  investigation  or  proceeding.

     Section  3.7   No  Default.  Except  as  set  forth  on  Schedule 3.3, such
                    -----------
Borrower  is  not  in  default  under  or with respect to any of its Contractual
Obligations in any respect which could reasonably be expected to have a Material
Adverse  Effect.  No Default or Event of Default has occurred and is continuing.

     Section  3.8   Ownership  of  Property;  Liens.  Such  Borrower  has  good,
                    -------------------------------
marketable  and  unencumbered title to, and a full ownership interest or a valid
leasehold  interest  in,  (a)  all  its  Collateral  and  (b) all its other real
property  except  for such matters as do not materially adversely affect the use
of  such  property  in  the  conduct of the business as currently conducted, and
owns,  or  holds a valid leasehold interest in, all its other material property,
and  none of such property is subject to any Lien except as permitted by Section
6.1.  Schedule  3.8  sets  forth  a  true and complete list of all real property
      -------------
owned  by  such  Borrower  or  in  which  it  has  a  leasehold  interest.

     Section  3.9   Intellectual  Property.  Such Borrower owns or has the right
                    ----------------------
to use all patents, trademarks, permits, service marks, trade names, copyrights,
franchises,  formulas,  licenses  and  other  rights  with  respect  thereto
("Intellectual  Property")  which are material in the operation of its business.
  ----------------------
Schedule  3.9  accurately  and  completely  lists all such Intellectual Property
-------------
owned  or  possessed  by  or  licensed  to  any  Borrower.

                                       40
<PAGE>
     Section  3.10   No  Burdensome  Restrictions.  No  Requirements  of  Law or
                     ----------------------------
Contractual  Obligation applicable to such Borrower could reasonably be expected
to  have  a  Material  Adverse  Effect.

     Section  3.11   Taxes.  Except as set forth on Schedule 3.11, such Borrower
                     -----                          -------------
has  filed or caused to be filed all tax returns which, to the knowledge of such
Borrower,  are  required  to be filed and has paid all taxes shown to be due and
payable  on  said  returns  or  on any assessments made against it or any of its
property  in  respect of such periods and all other material taxes imposed on it
or  any  of its property by any Governmental Authority (other than any taxes the
amount  or  validity  of  which are being contested in good faith by appropriate
proceedings and with respect to which reserves in conformity with GAAP have been
provided  on  the  books  of  such  Borrower),  in  respect  of  such  periods.

     Section  3.12   Federal  Regulations.  No part of the proceeds of any Loans
                     --------------------
will be used for "buying" or "carrying" any "margin stock" within the respective
meanings  of each of the quoted terms under Regulation G or Regulation U, as now
and  from  time  to time hereafter in effect.  If requested by any Lender or the
Administrative Agent, such Borrower will furnish to the Administrative Agent and
each  Lender  a  statement  to  the  foregoing  effect  in  conformity  with the
requirements  of  FR  Form  G-1  or  FR  Form U-1 referred to in Regulation G or
Regulation  U,  as  the  case  may  be.

     Section  3.13   Availability  and  Transfer  of  Foreign  Currency.  All
                     --------------------------------------------------
requisite  foreign  exchange control approvals and other authorizations, if any,
of  the  Mexican  Central  Bank  and  all  other Governmental Authorities, where
applicable,  have  been  validly  obtained  and will be kept current and in full
force and effect, to the extent permitted by Mexican law, in order to allow each
of  the  Borrowers  to  purchase  Dollars  for the servicing through the banking
system  of  its  obligations  under  the Loan Documents in accordance with their
respective  terms.

     Section 3.14   Investment Company Act; Other Regulations.  Such Borrower is
                    -----------------------------------------
not  an "investment company" within the meaning of the Investment Company Act of
1940,  as  amended.  Such  Borrower  nor  any  Subsidiary  of such Borrower is a
"holding  company"  or  a "subsidiary company" of a "holding company" within the
meaning  of the Public Utility Holding Company Act of 1935, as amended.  No Loan
Party  is subject to regulation under any Federal or State statute or regulation
(other  than  Regulation  X)  which  limits its ability to incur Indebtedness as
contemplated  herein.

     Section  3.15   Purpose  of Loans.  The proceeds of the Loans shall be used
                     -----------------
in  the  manner  set  forth  in  Section  2.6.

     Section  3.16   Environmental  Matters.  Except  to  the  extent  that  the
                     ----------------------
inaccuracy  of  any  of  the following (or the circumstances giving rise to such
inaccuracy),  individually or in the aggregate, could not reasonably be expected
to  have  a  Material  Adverse  Effect:

                                       41
<PAGE>
          (a) The facilities and  properties  owned,  leased or operated by such
     Borrower  (the  "Properties")  do not contain any  Hazardous  Materials  in
                      ----------
     amounts or  concentrations  which (i)  constitute  a violation  of, or (ii)
     could give rise to any material  liability under, any  Environmental Law or
     could materially  interfere with the continued  operation of the Properties
     or could reasonably be expected to impair the fair saleable value thereof;

          (b) Such Borrower and the Properties are in compliance with and to the
     knowledge of such  Borrower  have since the date of  incorporation  of such
     Borrower been in compliance  with,  all applicable  Environmental  Laws and
     applicable  Environmental  Permits,  and each of the  Borrowers  reasonably
     believes that it will be able to comply with all  applicable  Environmental
     Laws in the future and renew or obtain all Environmental  Permits necessary
     for its operations in the future;

          (c) Such  Borrower has not received any written  notice of  violation,
     alleged  violation,   non-compliance,   liability  or  potential  liability
     regarding  environmental matters or compliance with Environmental Laws with
     regard to any of its properties, nor to the knowledge of such Borrower, has
     any such notice been threatened;

          (d)  Hazardous  Materials  have not  been  transported,  disposed  of,
     emitted,  discharged, or otherwise released or threatened to be released by
     such  Borrower,  nor has their disposal been arranged for by such Borrower,
     (i) in  violation  of, or (ii) in a manner  or to a  location  which  could
     reasonably  be expected to give rise to  liability  under,  any  applicable
     Environmental  Law;  nor  have  any  Hazardous  Materials  been  generated,
     treated, stored, emitted, discharged or otherwise released or threatened to
     be  released  or  disposed  of at,  on or under  any of the  Properties  in
     violation of, or in a manner that could reasonably be expected to give rise
     to liability under, any applicable Environmental Law; and

          (e) No judicial proceeding or governmental or administrative action is
     pending  or to  the  knowledge  of  such  Borrower,  threatened  under  any
     Environmental  Law to which such  Borrower is or to the  knowledge  of such
     Borrower  will be named as a party,  nor are there any  consent  decrees or
     other decrees,  consent orders,  administrative  orders or other orders, or
     other  administrative  or  judicial  requirements   outstanding  under  any
     Environmental Law with respect to such Borrower or the Properties.

     Section  3.17   Mexican  Security  Documents.  The  Mexican  Mortgages, the
                     ----------------------------
Corporate  Parts  Pledge  Agreement,  and  the  Stock Pledge Agreement when duly
executed,  delivered  and registered will be effective to create in favor of the
Mexican Collateral Agent, for the ratable benefit of the Lenders, a legal, valid
and enforceable security interest in all of the Collateral described therein and
will,  when  duly  notarized  and recorded, grant a legal, valid and enforceable
security  interest  in all the Collateral described therein and shall constitute
fully  perfected,  first priority liens, subject to applicable law and Permitted
Liens,  on,  and security interests in, all right, title and interest of each of
the  Borrowers  party  thereto  in  the Collateral described therein superior in
right  to  any  other  Person.

     Section  3.18   True  and  Complete  Disclosure.  All  factual  information
                     -------------------------------
including  all  periodic  reports  filed  with  the  SEC  heretofore  or
contemporaneously  furnished  by or on behalf of such Borrower in writing to the
Administrative  Agent or any Lender was or is, and all other factual information
(taken as a whole) hereafter furnished by or on behalf of such Borrower will be,
true  and  accurate  in  all  material  respects  on  the  date as of which such
information  is dated or certified and shall not omit to state any material fact
necessary  to  make  such  statements  therein  not  misleading.

                                       42
<PAGE>
     Section 3.19   Submission to Law and Jurisdiction.  The choice of governing
                    ----------------------------------
law  for each of the Loan Documents governed by New York or other state law will
be  recognized  in  the  courts of the Republic of Mexico, and those courts will
recognize  and  give  effect  to  any  judgment  in respect of any Loan Document
obtained  against  such  Borrower  in  the  courts  to  which  such Borrower has
submitted  to  the  jurisdiction  thereof

     Section  3.20   Supply  Contracts.  The  Supply Contracts are in full force
                     -----------------
and  effect  and  no  default  or  event of default has occurred and is existing
thereunder  and  Holdings and any Borrower to which any such Supply Contract has
been assigned in whole or in part is in compliance with all material obligations
pursuant  to  such  Supply  Contract.

     Section  3.21   Permits  and  Approvals.  Except  as otherwise set forth in
                     -----------------------
Schedule  3.21,  such  Borrower  has all permits, authorizations, approvals, and
--------------
licenses  of  any Governmental Authority or other Persons necessary with respect
to the operation and maintenance of the Network.  Such Borrower has all material
authorizations,  permits,  consents  or approvals required in the conduct of its
business  as  currently  conducted.  Schedule  3.21 also sets forth all material
                                     --------------
permits,  authorizations,  approvals  and licenses to any Governmental Authority
necessary  in  the  conduct  of  its  business  as  currently conducted.  Unless
otherwise  specified on Schedule 3.21, each such material permit, authorization,
                        -------------
approval or license on Schedule 3.21 has been duly obtained by such Borrower and
                       -------------
is  in  full  force  and  effect  and is not subject to any appeal, restriction,
condition,  limitation  or  other  provision  that  may  allow  modification  or
revocation  thereof  and  that  would  reasonably be expected to have a Material
Adverse  Effect.  Such  Borrower  is in compliance in all material respects with
all  conditions  of any such material authorization, permit, consent or approval
and  has  received  no  notification  and has no reason to believe that any such
material authorization, permit, consent or approval will be revoked, terminated,
modified  or  amended  in  any  material  way.

     Section  3.22   U.S.  Security  Documents.  Each  of  the  U.S.  Security
                     -------------------------
Documents  is effective to create in favor of the U.S. Collateral Agent, for the
ratable benefit of the Lenders, a legal, valid and enforceable security interest
in  all  the Collateral described therein and Proceeds thereof.  Upon completion
of  the  filings and other actions specified in the U.S. Security Documents, the
U.S.  Security Documents shall constitute fully perfected Liens on, and security
interests  in,  all  right,  title and interest of the relevant Borrowers in the
Collateral  described  therein  and  in  Proceeds  thereof.  Such Liens shall be
second  priority  Liens  on  Collateral  subject  to  Permitted  Liens listed on
Schedule  6.1(f)  or Collateral subject to Liens described in Section 6.1(m) and
shall  be first priority security interests with respect to all other Collateral
described  in  the  Security  Documents.

     Section  3.23   ERISA.  Except  as  set  forth  in Schedule 3.23, neither a
                     -----                              -------------
Reportable  Event nor an "accumulated funding deficiency" (within the meaning of
Section  412  of  the  Code  or  Section  302  of ERISA) has occurred during the
five-year  period  prior  to  the  date  on which this representation is made or
deemed made with respect to any Plan, and each Plan has complied in all material
respects  with the applicable provisions of ERISA and the Code, except where, in
connection  with  any  such event or noncompliance, the liability which would be
likely  to  result

                                       43
<PAGE>
could  not  be  reasonably  expected  to  have  a  Material  Adverse Effect.  No
termination  of  a Single Employer Plan has occurred except where, in connection
with  any  such termination, the liability which would be likely to result could
not  be reasonably expected to have a Material Adverse Effect, and no Lien which
remains  unsatisfied  in  favor  of  the  PBGC or a Plan has arisen, during such
five-year  period.  The  present value of all accrued benefits under each Single
Employer  Plan  (based on those assumptions used to fund such Plans) did not, as
of the last annual valuation date prior to the date on which this representation
is made or deemed made, exceed the value of the assets of such Plan allocable to
such  accrued  benefits  by  an  amount  in  excess  of $1,000,000.  None of the
Borrowers  nor  any  Commonly  Controlled  Entity  has had a complete or partial
withdrawal  from  any Multiemployer Plan; none of the Borrowers nor any Commonly
Controlled  Entity  would  become  subject  to  any liability under ERISA if the
Borrowers  or  any  such  Commonly Controlled Entity were to withdraw completely
from all Multiemployer Plans as of the valuation date most closely preceding the
date  on  which  this  representation  is  made  or  deemed  made;  and  no such
Multiemployer  Plan is in Reorganization or Insolvent, except where, in any such
case,  the  liability  which  would  be likely to result could not be reasonably
expected  to  have  a  Material  Adverse  Effect.

     Section  3.24   Solvency.  As  of  the Closing Date, after giving effect to
                     --------
the  Initial  Loan hereunder and the other transactions contemplated to occur on
the  Closing  Date  such  Borrower  is  Solvent.

     Section  3.25   Subsidiaries.  Schedule 3.25 sets forth the jurisdiction of
                     ------------   -------------
incorporation  and  the  location  of  the  principal  executive  office of such
Borrower.

     Section  3.26   US  Charter  de Mexico, S.A. de C.V.  US Charter de Mexico,
                     -----------------------------------
S.A.  de  C.V.  a  Mexican  corporation,  has  no  assets  and  no  operations.

     Section  3.27   Insurance.  Schedule  3.27  contains  a  description of all
                     ---------   --------------
insurance  which each of the Borrowers maintains on its behalf as of the date of
this  Agreement.  All  of  such  insurance is in full force and effect as of the
date  of  this  Agreement.

     Section  3.28   Accounts.  All of the deposit accounts, investment accounts
                     --------
or  other accounts in the name of or used by any Borrower maintained by any bank
or  other  financial  institution are set forth in Schedule 3.28, subject to the
                                                   -------------
right  of  the  Borrowers  to  establish new accounts in accordance with Section
6.11.

Section  3.29   Servicio  Corporativos.  Servicio  Corporativos  represents  and
                ----------------------
warrants  that  its  sole  assets are contracts between it and the other Mexican
Borrowers  for  the  provision  of  services  with respect to the management and
administration  of  employment  and human resources matters of the other Mexican
Borrowers.

                                       44
<PAGE>
                                   ARTICLE IV

                              CONDITIONS PRECEDENT
                              --------------------

     Section 4.1   Conditions to Initial Loans.  The agreement of each Lender to
                   ---------------------------
make  the  Initial  Loans  requested  to  be  made  hereunder  is subject to the
satisfaction,  immediately  prior  to  or  concurrently  with the making of such
Loans,  of  the  following  conditions  precedent:

          (a) Loan Documents.  The  Administrative  Agent shall have received in
              --------------
     form and  substance  satisfactory  to it (i) this  Agreement,  executed and
     delivered  by a duly  authorized  officer of each of the  Borrowers  with a
     counterpart  for each Lender,  (ii) for the account of each  Lender,  Notes
     conforming  to the  requirements  hereof and executed by a duly  authorized
     officer of each of the Borrowers, as applicable, (iii) the Pledge Agreement
     together with the original stock  certificates for the U.S. Borrowers other
     than  Holdings,  together with undated stock powers  endorsed in blank by a
     duly  authorized  officer of the relevant  U.S.  Borrower in whose name the
     stock  certificates  are registered,  (iv) a Blocked Account  Agreement for
     each U.S. bank account, (v) the Security Agreement,  executed and delivered
     by a duly  authorized  officer of each U.S.  Borrower,  (vi) the  Trademark
     Security Agreement,  executed and delivered by a duly authorized officer of
     each U.S.  Borrower,  (vii) a Mortgage  with respect to each parcel of U.S.
     real property owned by the Borrowers,  (viii) the Collateral  Assignment of
     Lease,  executed  and  delivered  by  a  duly  authorized  officer  of  MSN
     Communications, Inc., (ix) [reserved], (x) the Collateral Agency Agreement,
     executed and delivered by a duly authorized officer of each Borrower,  (xi)
     each  of the  amendments  to  the  Mexican  Mortgages,  each  executed  and
     delivered by a duly authorized officer of each Mexican Borrower,  (xii) the
     Stock Pledge Agreement,  together with the original stock  certificates for
     the Mexican  Borrowers and with other  required  instruments,  executed and
     delivered by a duly  authorized  officer of each Mexican  Borrower and each
     Stock Pledgor,  (xiii) the Corporate Parts Pledge Agreement,  together with
     the  original  corporate  parts  certificates  duly  assigned in  guaranty,
     executed and delivered by a duly authorized officer of each Corporate Parts
     Pledgor,  (xiv)  [reserved],  (xv) each  Endorsement  with  respect  to any
     insurance  of the  Borrowers,  (xvi) for the account of each  Lender,  each
     other Loan Document executed and delivered by a duly authorized  officer of
     each of the Borrowers,  and (xvii) the appropriate documents evidencing the
     termination  of the Liens on the Lucent  Collateral  other than the Mexican
     Mortgages;

          (b)  Drawdown   Certificate.   The  Administrative  Agent  shall  have
               ----------------------
     received,  with a copy for  each  Lender,  a  certificate  of the  relevant
     Borrowers,  dated the date of the Initial Loans,  substantially in the form
     of Exhibit  D, with  appropriate  insertions  and  attachments,  reasonably
        ----------
     satisfactory in form and substance to the Administrative Agent, executed by
     the President or any Vice President or any authorized  signatory of each of
     the relevant Borrowers;

          (c) Corporate  Proceedings of the U.S.  Borrowers.  The Administrative
              ---------------------------------------------
     Agent  shall  have  received,  with a copy for each  Lender,  a copy of the
     resolutions,   in  form  and  substance  reasonably   satisfactory  to  the
     Administrative  Agent,  of the  Board  of  Directors  of each  of the  U.S.
     Borrowers authorizing (i) the execution, delivery and performance by

                                       45
<PAGE>
     each of the U.S.  Borrowers of this Agreement and the other Loan Documents,
     (ii) the consummation of the transactions  contemplated  thereby, and (iii)
     the  granting  by it of the Liens  created  pursuant  to the U.S.  Security
     Documents,  certified by the  Secretary  or an Assistant  Secretary of each
     U.S.  Borrower as of the Closing Date, which  certificate  shall be in form
     and substance reasonably satisfactory to the Administrative Agent and shall
     state  that the  resolutions  thereby  certified  have  not  been  amended,
     modified, revoked or rescinded and are in full force and effect;

          (d) Each U.S. Borrower's  Incumbency  Certificate.  The Administrative
              ---------------------------------------------
     Agent shall have  received,  with a copy for each Lender,  a certificate of
     each of the U.S.  Borrowers,  dated the Closing Date, as to the  incumbency
     and signature of the officers of each of the U.S.  Borrowers  executing any
     Loan  Document,  reasonably  satisfactory  in  form  and  substance  to the
     Administrative  Agent,  executed by the  President and the Secretary or any
     Assistant Secretary of each of the U.S. Borrowers;

          (e)  Corporate  Proceedings  of each  of the  Mexican  Borrowers.  The
               -----------------------------------------------------------
     Administrative  Agent shall have received,  with a copy for each Lender,  a
     copy of the resolutions,  in form and substance reasonably  satisfactory to
     the Administrative  Agent, of the Board of Directors of each of the Mexican
     Borrowers  authorizing (i) the execution,  delivery and performance by each
     of the Mexican Borrowers of this Agreement and the other Loan Documents and
     (ii) the  granting  by it of the  Liens  created  pursuant  to the  Mexican
     Security  Documents,  which  certificate  shall  be in form  and  substance
     reasonably  satisfactory to the  Administrative  Agent and shall state that
     the resolutions thereby certified have not been amended,  modified, revoked
     or rescinded and are in full force and effect;

          (f) Each Mexican Borrower Incumbency  Certificate.  The Administrative
              ---------------------------------------------
     Agent shall have  received,  with a copy for each Lender,  a certificate of
     each of the Mexican Borrowers, dated the Closing Date, as to the incumbency
     and  signature of the officers of each of the Mexican  Borrowers  executing
     any Loan  Document,  reasonably  satisfactory  in form and substance to the
     Administrative  Agent,  executed by the President or any Vice President and
     the Secretary or any Assistant  Secretary of each of the Mexican Borrowers,
     including the appropriate  powers of attorney notarized by a Mexican notary
     authorizing  such  officers  to sign the Loan  Documents  on behalf of such
     Mexican Borrower;

          (g)  Organizational  Documents.  The  Administrative  Agent shall have
               -------------------------
     received,  with a copy for each Lender, (i) true and complete copies of the
     certificate  of  incorporation  and by-laws  (as to the Mexican  Borrowers,
     Estatutos  Sociales)  of each  Borrower,  certified  as of a recent date as
     complete and correct  copies thereof by the Secretary of State of the State
     of  Incorporation  for each  U.S.  Borrower  and by a Mexican  notary  with
     respect  to each  Mexican  Borrower  and (ii)  with  respect  to each  U.S.
     Borrower,  certificates of good standing,  certified as of the Closing Date
     by the  Secretary  of State of the  State of  Incorporation  for such  U.S.
     Borrower;

          (h) Fees.  The  Administrative  Agent  shall have  received  the fees,
              ----
     costs,  expenses,  and charges then due and payable by the Borrowers  under
     this Agreement and each Loan  Document,  including,  reimbursement  for any
     fees and  disbursements  of  counsel  then due and  payable as set forth in
     Section 11.5 and the  Arrangement  Fee to be received by it pursuant to the
     Cooperation and Fee Letter;

                                       46
<PAGE>
          (i) Legal Opinions. The Administrative Agent shall have received, with
              --------------
     a counterpart for each Lender,  the following executed legal opinions dated
     the  Closing  Date and  addressed  to the  Administrative  Agent,  the U.S.
     Collateral Agent, the Mexican Collateral Agent and each Lender:

               (i) the  executed  legal  opinion of Wilmer,  Cutler & Pickering,
          special  New York  counsel  to the  Borrowers,  in form and  substance
          satisfactory to the Administrative  Agent and covering the matters set
          forth on Exhibit E-1 with such changes  therein as the  Administrative
                   -----------
          Agent shall approve;

               (ii) the executed legal opinion of Gallastegui y Lozano,  Mexican
          counsel for Loan  Documents to the  Borrowers,  in form and  substance
          satisfactory to the Administrative  Agent and covering the matters set
          forth on Exhibit E-2 with such changes  therein as the  Administrative
                   -----------
          Agent shall approve;

               (iii)  the  executed   legal  opinion  of  Gonzalez   Calvillo  y
          Forastieri,  S.C., Mexican counsel for corporate legal opinions to the
          Borrowers,  in form and substance  satisfactory to the  Administrative
          Agent and  covering  the  matters  set forth on Exhibit  E-3 with such
                                                          ------------
          changes therein as the Administrative Agent shall approve;

               (iv) the executed  legal  opinion of Gardere Wynn Sewell & Riggs,
          LLC,   Texas   counsel  to  Holdings,   Telscape   USA,   Inc.,   TSCP
          International,  Inc., Telereunion,  Inc. and Interlink Communications,
          Inc., in form and substance  satisfactory to the Administrative  Agent
          and  covering  the matters set forth in Exhibit E-4 with such  changes
                                                  -----------
          therein as the Administrative Agent shall approve;

               (v)  the  executed  legal  opinion  of  Nida  &  Maloney,   P.C.,
          California   counsel  to  MSN   Communications,   Inc.  and  Interlink
          Communications,  Inc.,  in  form  and  substance  satisfactory  to the
          Administrative Agent and covering the matters set forth in Exhibit E-5
                                                                     -----------
          with such changes therein as the Administrative Agent shall approve;

               (vi) the executed  legal opinion of Nowalsky,  Bronston & Gothard
          LLP, special U.S.  telecommunications  regulatory  counsel to the U.S.
          Borrowers,  in form and substance  satisfactory to the  Administrative
          Agent and  covering  the  matters  set forth in Exhibit  E-6 with such
                                                          ------------
          changes therein as the Administrative Agent shall approve;

               (vii)  the  executed   legal  opinion  of  Cushing,   Morris  and
          Armbruster, LLP, Georgia and Florida counsel to the U.S. Borrowers, in
          form  and  substance  satisfactory  to the  Administrative  Agent  and
          covering  the  matters  set forth in  Exhibit  E-7 with  such  changes
                                                ------------
          therein as the Administrative Agent shall approve;

                                       47
<PAGE>
               (viii) the  executed  legal  opinion  of Gordon & Silver,  Nevada
          counsel to the U.S. Borrowers,  in form and substance  satisfactory to
          the Administrative Agent and covering the matters set forth in Exhibit
                                                                         -------
          E-8 with  such  changes  therein  as the  Administrative  Agent  shall
          ---
          approve;

               (ix) the executed legal opinion of Moore & Van Allen, PLLC, North
          Carolina  counsel  to  the  U.S.  Borrowers,  in  form  and  substance
          satisfactory to the Administrative  Agent and covering the matters set
          forth in Exhibit E-9 with such changes  therein as the  Administrative
                   -----------
          Agent shall approve;

          (j) Lien Searches/Actions to Perfect Liens. (i) The Lenders shall have
              --------------------------------------
     received  the results of a recent lien search in each of the  jurisdictions
     and offices where assets of the Borrowers are located or recorded, and such
     search shall reveal no Liens on any of the assets of the  Borrowers  except
     for  Permitted  Liens or Liens  for  which  the  Administrative  Agent  has
     received a duly executed termination  statement and (ii) the Administrative
     Agent  shall  have  received  evidence  in form  and  substance  reasonably
     satisfactory to it that all filings,  recordings,  registrations  and other
     actions,  including,  without  limitation,  the  filing  of  duly  executed
     financing statements on Form UCC-1, necessary or, in the reasonable opinion
     of the Administrative Agent,  desirable to perfect the Liens created by the
     Security  Documents  (other than the Third Party  Consents) shall have been
     completed   (or,  to  the  extent  that  any  such   filings,   recordings,
     registrations and other actions shall not have been completed, arrangements
     reasonably  satisfactory  to the  Administrative  Agent for the  completion
     thereof shall have been made);

          (k)  Financial   Statements.   The  Administrative  Agent  shall  have
               ----------------------
     received,  with a  copy  for  each  Lender  (i)  the  audited  consolidated
     financial  statements  for each of  Holdings  and PCom,  respectively,  for
     December 31, 1999, (ii) the unaudited  interim  combined and  consolidating
     financial   statements  for  each  of  Holdings  and  PCom  (prior  to  its
     acquisition  by  merger  by  Telscape)  for  each  quarterly  period  ended
     subsequent  to  the  date  of the  latest  financial  statements  delivered
     pursuant  to clause (i) of this  subsection  and (iii)  projections  of its
     balance sheet,  income  statement and cash flow projections for each of the
     succeeding  five years  ("Five-year  Projections")  prepared on a quarterly
     basis for the fiscal  years 2000 through  2003,  and on an annual basis for
     fiscal year 2004 and beyond;

          (l) Material  Adverse  Change.  There shall have  occurred no material
              -------------------------
     adverse  change in the  financial  and capital  markets  for  international
     issues  emanating  from Mexico  which  could  impair the  participation  of
     financial institutions hereunder;

          (m) No Litigation. No action, suit, proceeding or investigation of any
              -------------
     kind,  including  arbitration  proceedings and actions or proceedings of or
     before any  Governmental  Authority,  shall have been instituted or, to the
     knowledge  of  any of the  Borrowers,  threatened,  to  which  each  of the
     Borrowers is a party or is subject, or by which any of them or any of their
     Properties  are bound that, if determined  adversely to or against any such
     Person could  reasonably be expected to have a Material  Adverse Effect nor
     to any of the Borrowers' knowledge, shall there be any reasonable basis for
     any such action, suit,  proceeding or investigation except as identified in
     Schedule 3.6;
     ------------

                                       48
<PAGE>
          (n) Cooperation and Fee Letter.  The  Administrative  Agent shall have
              --------------------------
     received from the Borrowers the executed, valid and enforceable Cooperation
     and Fee Letter;

          (o) Mexican  Bank  Notices.  The Mexican  Collateral  Agent shall have
              ----------------------
     received  letters  executed  by the  Mexican  Borrowers  to each  financial
     institution in which it has an account in which such financial  institution
     is notified that such Mexican  Borrower has granted a security  interest in
     such account to the Mexican Collateral Agent;

          (p) Purchase  Order.  Borrowers  shall have committed to purchase from
              ---------------
     Vendor or its affiliates not less than  $10,000,000 of equipment,  software
     and  services  pursuant  to the Supply  Contracts,  in addition to any such
     equipment, software or services the purchase of which was financed in whole
     or in part pursuant to the Lucent Credit Agreement;

          (q) Service of Process.  The Administrative  Agent shall have received
              ------------------
     evidence  that each of the  Borrowers has appointed an agent for service of
     process in New York, New York, U.S.A.;

          (r) Political  Risk  Insurance.  The  Administrative  Agent shall have
              --------------------------
     received an  Endorsement  for  political  risk  insurance,  from an insurer
     reasonably  satisfactory to the Administrative Agent in connection with the
     Network in  compliance  with Section 5.14 in an amount of coverage not less
     than one-half the principal amount of the Initial Loans;

          (s) Due Diligence.  The  Administrative  Agent shall be satisfied with
              -------------
     its due diligence;

          (t)  Documentation.  All  documentation  in  connection  with any Loan
               -------------
     Document and the transactions  contemplated in any such Loan Document shall
     be in form and substance satisfactory to the Administrative Agent;

          (u) Other Certificates.  The Administrative  Agent shall have received
              ------------------
     such other documents, evidence, or opinions as it may reasonably request in
     connection with the transactions contemplated hereby;

          (v) Additional  Investment.  Holdings shall have obtained on terms and
              ----------------------
     conditions  satisfactory to the  Administrative  Agent,  commitments for an
     equity investment or debt  subordinated in form and substance  satisfactory
     to the Administrative Agent in the aggregate amount of $37,000,000 less the
     liquidation  amount of  outstanding  Class F Convertible  Senior  Preferred
     Stock of Holdings;

          (w)  Acknowledgement  of Concession  Commencement.  The Administrative
               --------------------------------------------
     Agent   shall  have   received   the   executed,   valid  and   enforceable
     Acknowledgement of Concession Commencement;

          (x) Third Party Consents. The Administrative Agent shall have received
              --------------------
     the  executed,  valid  and  enforceable  Consent  and  Agreement  for  each
     Contractual Obligation listed on Schedule 4.1(x);
                                      ---------------

                                       49
<PAGE>
          (y) No  Material  Adverse  Change.  Since June 30,  2000,  and without
              -----------------------------
     considering for purposes of this condition the items specifically disclosed
     in Schedule 3.2,  there shall have occurred no material  adverse  change in
        ------------
     the financial condition,  operations,  assets, liabilities, or prospects of
     Holdings  and its  Subsidiaries  taken  as a  whole  or of  Telereunion  or
     Telereunion International individually; and

          (z) Vendor  Repayment.  The  Borrowers  shall have repaid to Suppliers
              -----------------
     $1,500,000  paid  by  such  Suppliers  to  Mexican  taxing  authorities  in
     satisfaction  of value added taxes owed by Mexican  Borrowers  on equipment
     sold pursuant to Supply Contracts;

          (aa) Mexican Borrower Obligations. The Administrative Agent shall have
               ----------------------------
     received a certificate  executed by the Mexican  Borrowers as to the amount
     of the Initial Loan constituting  Mexican Borrower  Obligations pursuant to
     clause (ii) of the definition thereof;

          (bb) SCT  Authorizations.  The  Mexican  Collateral  Agent  shall have
               -------------------
     received evidence that the SCT Notice has been filed with the SCT.

          (cc) CFE Consent. The Mexican Collateral Agent shall have received the
               -----------
     CFE Consent.

Notwithstanding  the  foregoing,  the  obligations  of the Lenders to make Loans
hereunder  shall not become effective unless each of the foregoing conditions is
satisfied  at  or  prior to 3:00 p.m., New York City time, on September 30, 2000
(and,  in  the  event  such  conditions are not satisfied, the Commitments shall
terminate  at  such  time).

     Section  4.2   Condition to Each Loan. The agreement of each Lender to make
                    ----------------------
any  Loan requested to be made by it on any date (including, without limitation,
its  Initial  Loan),  is subject to the satisfaction of the following conditions
precedent:

          (a)  Representations  and Warranties.  Each of the representations and
               -------------------------------
     warranties made by the Borrowers in or pursuant to the Loan Documents shall
     be true and correct in all  material  respects on and as of such date (and,
     in the case of the representations and warranties made on the Closing Date,
     after giving effect to the transactions  contemplated  hereby) after giving
     effect to any  written  updates to  information  provided to the Lenders in
     compliance with the terms hereof as if made on and as of such date,  except
     to the extent such  representations  and warranties  expressly relate to an
     earlier date in which case such  representations  and  warranties  shall be
     true and correct in all material respects as of such earlier date;

          (b) No Default. No Default or Event of Default shall have occurred and
              ----------
     be continuing on such date or after giving effect to the Loan  requested to
     be made on such date;

          (c) Drawdown  Certificates and Applications.  The Administrative Agent
              ---------------------------------------
     shall have  received a Drawdown  Certificate  with respect to such Loan and
     Notes duly executed by the Borrowers in accordance with Section 2.5 hereof;

                                       50
<PAGE>
          (d) Liens.  At any time after each of the  Borrowers  is  required  to
              -----
     satisfy the requirement set forth in Section 5.9, the Administrative  Agent
     shall have a first  priority  security  interest in the  Collateral  to the
     extent  permitted by  applicable  law and subject to Permitted  Liens after
     obtaining and duly recording the Mexican Mortgages;

          (e) Mexican Security  Documents.  The Mexican Security  Documents have
              ---------------------------
     been filed for  registration  where they are required to be  registered  to
     become effective against third parties;

          (f) Acknowledgement of Indebtedness.  Each Mexican Borrower shall have
              -------------------------------
     executed a notarial  instrument  (or other kind of  instrument  which would
     permit  the  acknowledgement  of  indebtedness  to  be  registered  at  the
     corresponding Public Register with jurisdiction over the Mexican Mortgages)
     with respect to any Mexican Borrower Obligation acknowledging its liability
     for such Mexican Borrower Obligation;

          (g) [Reserved]
               --------

          (h) Supply Contracts.  The Supply Contracts shall be in full force and
              ----------------
     effect  and no  default or event of  default  shall  have  occurred  and be
     continuing thereunder;

          (i) Permits and  Approvals.  Except as otherwise  set forth in Section
              ----------------------
     3.21, the Borrowers  shall have the  Concession and all consents,  permits,
     approvals  and  licenses of any  Governmental  Authority  or other  Persons
     necessary on such date in connection with the Network.  The Borrowers shall
     also have  received  no notice  from any  Governmental  Authority  or other
     Persons that any such  consent,  permit,  approval or license is subject to
     revocation,  termination  or  modification  which,  would  have a  Material
     Adverse Effect on the ability of the Borrowers to operate the Network;

          (j) Consents,  Licenses and Approvals.  The Administrative Agent shall
              ---------------------------------
     have received with a copy for each Lender,  a certificate  of a Responsible
     Officer of the  Borrowers  (i)  attaching  copies,  if copies have not been
     provided on an earlier  date  pursuant  to this  Section,  of all  material
     consents and authorizations of and filings with any Governmental  Authority
     or any other Person that are set forth on Schedule 3.21 (as obtained),  and
                                               -------------
     each other  material  consent,  license,  permit or  authorization  that is
     required to be  obtained on or prior to such date or made by the  Borrowers
     in connection with (A) the Loans hereunder, (B) the execution,  delivery or
     performance  by each of the  Borrowers  of the  Loan  Documents  or (C) the
     validity or enforceability  with respect to or against the Borrowers of the
     Loan Documents or (D) the continuing  material  business  operations of the
     Borrowers as are reasonably requested by the Administrative Agent, and (ii)
     stating that such material consents,  authorizations  and filings,  and any
     other consent,  authorization or filing  previously  submitted  pursuant to
     this  Section,  (A) are in full force and  effect  and that all  applicable
     waiting  periods under any  Requirements  of Law shall have expired without
     any  action  being  taken  or  threatened  by  any  competent  Governmental
     Authority  which  would  restrain,  prevent or  otherwise  impose  material
     adverse  conditions  on  the  transactions  contemplated  hereby,  and  (B)
     constitute all of the consents,  licenses,  permits or authorizations  then
     required to be obtained by the Borrowers in connection  with their material
     business operations.  Each such material consent,  authorization and filing
     shall   be  in  form  and   substance   reasonably   satisfactory   to  the
     Administrative Agent;

                                       51
<PAGE>
          (k)  Notes.  The  Administrative  Agent  shall have  received  for the
               -----
     account of each  Lender a Note in the amount of the Loan it shall make with
     respect to any Mexican Borrower Obligation on the Borrowing Date;

          (l) Transfer Restriction. There shall be no moratorium or other action
              --------------------
     by a Governmental Authority which restricts the ability of the Borrowers to
     make payments  when due under any Loan Document and to transfer  Dollars to
     the United  States,  except for  administrative  requirements  which can be
     routinely satisfied; and

          (m)  Political  Risk  Insurance.  The  amount  of the  political  risk
               --------------------------
     insurance  coverage  shall have been  increased  to an amount not less than
     one-half of the aggregate principal amount of the Loans after giving effect
     to the making of any Loan requested to be made by any Lender on such date.

Each  borrowing  of  a  Loan  by  the  Borrowers  hereunder  shall  constitute a
representation  and  warranty  by  the Borrowers as of the date thereof that the
conditions  contained  in  clauses  (a)  and  (b)  of this Section 4.2 have been
satisfied.

                                    ARTICLE V

                              AFFIRMATIVE COVENANTS
                              ---------------------

          Holdings  with respect to itself and each of its Subsidiaries and each
of  the  Borrowers  with  respect  to  itself  hereby agree that, so long as the
Commitments  remain  in  effect  or  any  amount  is  owing to any Lender or the
Administrative  Agent  hereunder  or  under  any other Loan Document, unless the
Required  Lenders  shall  otherwise  consent  in  writing:

     Section  5.1   Financial  Statements.  Furnish  to the Administrative Agent
                    ---------------------
and  each  Lender:

          (a) as soon as  available,  but in any event within 105 days after the
     end of each fiscal year of Holdings, (i) a copy of the audited consolidated
     balance  sheet  of  Holdings  as at the end of such  year  and the  related
     audited consolidated statements of income and retained earnings and of cash
     flows for such year,  setting forth in each case, in  comparative  form the
     figures as of the end of and for the previous  year,  reported on without a
     "going  concern" or like  qualification  or exception,  or a  qualification
     arising out of the scope of the audit, by the  Accountants,  (ii) a copy of
     the consolidating  balance sheet of Holdings as at the end of such year and
     the related consolidating statements of income and retained earnings and of
     cash flows for such year,  setting forth in each case, in comparative  form
     the figures as of the end of and for the previous year, and (iii) a copy of
     the then current, updated Five-year Projections;

          (b) as soon as  available,  but in any event  not  later  than 50 days
     after the end of each of the first three  quarterly  periods of each fiscal
     year of Holdings,  (i) the unaudited consolidated and consolidating balance
     sheet of  Holdings  as at the end of such  quarter  and  (ii)  the  related
     unaudited consolidated and consolidating  statements of income and retained
     earnings  and of cash flows of Holdings for such quarter and the portion of
     the

                                       52
<PAGE>
     fiscal year through the end of such quarter, setting forth in each case, in
     comparative  form the  figures  as of the end of and for the  corresponding
     period in the previous year, certified by a Responsible Officer of Holdings
     as being fairly stated in all material respects (subject to normal year-end
     audit adjustments).

All  such  financial  statements  shall  be complete and correct in all material
respects  and  shall  be  prepared in reasonable detail, in accordance with GAAP
(subject  to  the  addition,  in  the  case  of  clause  (b)  of  year end audit
adjustments)  applied  consistently throughout the periods reflected therein and
with  prior  periods.

     Section  5.2   Certificates;  Other  Information.  Furnish  to each Lender:
                    ---------------------------------

          (a)  concurrently  with  the  delivery  of  the  financial  statements
     referred to in Section  5.1(a) and (b), a  certificate  of the  Accountants
     reporting  on  such  financial   statements  stating  that  in  making  the
     examination  necessary therefor no knowledge was obtained of any Default or
     Event of Default  having  occurred as of the end of the fiscal year covered
     by such financial statements, except as specified in such certificate;

          (b)  concurrently  with  the  delivery  of  the  financial  statements
     referred to in Section 5.1, a certificate of a Responsible  Officer of each
     of the Borrowers  stating that each of the Borrowers during such period has
     observed or  performed in all material  respects all of its  covenants  and
     other agreements,  and satisfied every condition in all material  respects,
     contained in this  Agreement  and the other Loan  Documents to be observed,
     performed or satisfied by it during such period,  and that such Responsible
     Officer has obtained no knowledge of any Default or Event of Default except
     as specified in such certificate;

          (c) promptly upon receipt thereof,  copies of all reports submitted to
     any of  the  Borrowers  by  independent  certified  public  accountants  in
     connection with each annual,  interim or special audit of the books of each
     of the Borrowers made by such accountants,  including,  without limitation,
     any  management  letter  commenting  on  each  of the  Borrowers'  internal
     controls  submitted by such  accountants  to management in connection  with
     their annual audit;

          (d) promptly upon filing  thereof,  copies of any filing that Holdings
     or any of its Subsidiaries files with the SEC; and

          (e) promptly,  such additional  financial and other information within
     the  possession of any of the Borrowers as any Lender may from time to time
     reasonably request through the Administrative Agent.

     Section  5.3   Payment of Obligations.  Pay, discharge or otherwise satisfy
                    ----------------------
at  or before maturity or before they became delinquent, as the case may be, all
its  material obligations of whatever nature including taxes and fees, except as
contemplated  by  this  Agreement  or  where  the  amount or validity thereof is
currently  being contested in good faith by appropriate proceedings and reserves
in  conformity with GAAP with respect thereto have been provided on the books of
any of the Borrowers or the failure to pay the same could not, in the aggregate,
reasonably  be  expected  to have a Material Adverse Effect, as the case may be.

                                       53
<PAGE>
     Section  5.4   Conduct  of  Business;  Maintenance of Existence; Compliance
                    ------------------------------------------------------------
with  Laws.  Continue  to  engage  in  business  of the same general type as now
----------
conducted  by or as contemplated in the Supply Contracts and preserve, renew and
keep  in  full  force and effect its corporate existence and take all reasonable
action to maintain all rights, privileges and franchises necessary or desirable,
in  any  material  respect  in  the  normal  conduct  of  its business except as
otherwise  permitted  pursuant  to  Section 6.2; comply in all material respects
with  all  Contractual  Obligations  and  Requirements  of  Law  (excluding, for
purposes  of  this  Section 5.4, Requirements of Law and Contractual Obligations
specifically  addressed  elsewhere  in this Article V) except where (a) any such
Contractual  Obligation  is  being  contested in good faith, a bona fide dispute
exists  with  respect  to  any  such Contractual Obligation or failure to comply
therewith  could not in the aggregate, reasonably be expected to have a Material
Adverse  Effect  and (b) the failure to comply with any such Requirements of Law
could  not,  in the aggregate, reasonably be expected to have a Material Adverse
Effect.

     Section  5.5   Maintenance  of  Property; Insurance.  (a) Keep all property
                    ------------------------------------
material  to  the  conduct  of  its business in good working order and condition
(normal  wear  and  tear and obsolescence excepted); (b) maintain insurance with
financially  sound and reputable insurance companies with an A.M. Best rating of
A- or better on such of its property and in at least such amounts and against at
least  such  risks  as  are  usually insured against in the same general area by
companies  engaged  in  the  same  or a similar business; and (c) furnish to the
Administrative Agent, upon written request, full information as to the insurance
carried.  In  addition, as soon as reasonably practicable after receipt from the
relevant  insurers  of  any  payment of any claim under any insurance policy for
loss  or damage to the Collateral, the Borrowers shall deposit all such proceeds
that  any  Borrower  receives  into  a separate segregated account with the U.S.
Collateral  Agent  for  the  benefit  of  the  Lenders  in  accordance  with the
Collateral  Agency  Agreement.  Subject  to the Collateral Agency Agreement, the
Borrowers  shall  be permitted to withdraw any amount on deposit in such account
for  the  sole  purpose of acquiring equipment of at least substantially similar
nature  or  value  to the affected Collateral from the Vendor or otherwise or to
prepay  Loans  outstanding  in  accordance  with Section 2.8(b).  If at any time
following  the  Closing Date, any insurance company providing insurance pursuant
to  clause  (b)  of this Section falls to a level below the required rating, the
Borrowers  shall,  as  soon as possible and in no event later than 30 days after
such  downgrading  of the required rating, replace such insurance with insurance
from  an  insurance  company  with  the  required  rating  acceptable  to  the
Administrative  Agent.

     Section 5.6   Inspection of Property; Books and Records; Discussions.  Keep
                   ------------------------------------------------------
proper  financial  records  in conformity with GAAP and all Requirements of Law;
and  permit  (a)  representatives  of  the Administrative Agent or any Lender to
visit  and inspect any of its properties and examine and make abstracts from any
of  its  books  and records at any reasonable time during normal business hours,
upon  advance  written  notice,  and  as  often  as  may  reasonably be desired;
provided,  that during the continuance of an Event of Default, no advance notice
shall  be  required,  and (b) upon advance written notice during normal business
hours,  representatives of the Administrative Agent or any Lender to discuss the
business,  operations,  properties  and  financial  and  other  condition of the
Borrowers  with  officers  and  employees  of  the  Borrowers  and  with  their
Accountants.

                                       54
<PAGE>
     Section  5.7   Notices.  Promptly  give  notice to the Administrative Agent
                    -------
and  each  Lender  of:

          (a) the occurrence of any Default or Event of Default;

          (b) any (i)  default  or event of default  by any  Borrower  under any
     Contractual  Obligation  to which any Borrower is bound and of which it has
     knowledge or notice or (ii)  litigation,  investigation or proceeding which
     may exist at any time between any Borrower and any  Governmental  Authority
     of which any of them has knowledge or notice,  which in either case, if not
     cured or resolved or if  adversely  determined,  as the case may be,  could
     reasonably be expected to have a Material Adverse Effect;

          (c)  any  pending  or  threatened  claim,   litigation  or  proceeding
     affecting any Borrower,  of which any Borrower has knowledge or notice,  in
     which  the  amount  involved  is  not  covered  by  insurance  or in  which
     injunctive  or  similar  relief is sought  and which,  in either  case,  if
     adversely  determined,  could  reasonably  be  expected  to have a Material
     Adverse Effect;

          (d) the following  events, as soon as possible and in any event within
     30 days  after any  Borrower  knows or has reason to know  thereof  (i) the
     occurrence or expected  occurrence of any Reportable  Event with respect to
     any Plan,  a  failure  to make any  required  contribution  to a Plan,  the
     creation of any Lien in favor of the PBGC or a Plan or any withdrawal from,
     or the termination, Reorganization or insolvency of, any Multiemployer Plan
     or (ii) the institution of proceedings or the taking of any other action by
     the  PBGC  or  the  Borrower  or  any  Commonly  Controlled  Entity  or any
     Multiemployer Plan with respect to the withdrawal from, or the termination,
     Reorganization  or Insolvency  of, any Plan, in each of cases (i) and (ii),
     where such event could  reasonably  be expected to have a Material  Adverse
     Effect; and

          (e) any other development or event of which any Borrower has knowledge
     or notice  which could  reasonably  be expected to have a Material  Adverse
     Effect.  Each notice pursuant to this Section 5.7 shall be accompanied by a
     statement of a Responsible  Officer setting forth details of the occurrence
     referred to therein and stating what action such Borrower  proposes to take
     with respect thereto.

          Section 5.8  Environmental  Laws.
                       -------------------

          (a) Comply with and use reasonable efforts to ensure compliance by all
     tenants and subtenants, if any, with, all applicable Environmental Laws and
     obtain and comply with and maintain,  and use reasonable  efforts to ensure
     that all tenants and  subtenants  obtain and comply with and maintain,  any
     and all Environmental  Permits required by applicable  Environmental  Laws,
     except  where the  failure to so comply with such laws or permits or obtain
     and  maintain  such  permits  could not  reasonably  be  expected to have a
     Material Adverse Effect.

                                       55
<PAGE>
          (b) Conduct and complete  all  investigations,  studies,  sampling and
     testing,  and all  remedial,  removal  and other  actions  required  by any
     Governmental  Authority under  Environmental  Laws and promptly comply with
     all lawful orders and directives of all Governmental  Authorities regarding
     Environmental  Laws, except to the extent that the failure to do any of the
     foregoing  could not  reasonably  be  expected  to have a Material  Adverse
     Effect.

     Section  5.9   Maintenance  of  Liens  of  the  Security  Documents.
                    ----------------------------------------------------

          (a) File each  Acknowledgement  of Indebtedness for registration  with
     the public registry where the Mexican  Mortgages are registered within five
     (5) Business Days following the execution thereof.

          (b) Undertake all actions  which are necessary or  appropriate  in the
     reasonable  judgment  of  the  Administrative  Agent  to (i)  maintain  the
     Lenders'  security  interest  in the  Collateral  (including  the  priority
     thereof) in full force and effect at all times,  (ii)  preserve and protect
     the Collateral, and (iii) protect and enforce each of the Borrower's rights
     and title, and the rights of the Lenders, to the Collateral. Subject to the
     prior written consent of the  Administrative  Agent, not to be unreasonably
     withheld  if the terms of the  proposed  agreement  are  reasonable  to the
     Borrowers,  the Borrowers may enter into  agreements  pursuant to which the
     Borrowers  sell,  lease or assign  rights or interests in fiber optic cable
     facilities  owned or operated by the  Borrowers  in exchange  for rights or
     interests  in other  fiber  optic cable  facilities  provided  that a first
     priority  Lien  on the  resulting  rights  or  interests  of the  Borrowers
     pursuant  to any such  agreement  is  granted to the  Administrative  Agent
     pursuant to Section 5.10.

     Section  5.10   Pledge  of  After  Acquired Property; Additional Borrowers.
                     ----------------------------------------------------------

          (a) If at any time  following  the Closing  Date,  any Borrower  shall
     acquire any real property or other property of any nature  whatsoever which
     is intended by the terms of the applicable  Security Document to be, but is
     not, subject to the Liens created by the Security Documents,  such Borrower
     shall,  as soon as  possible  and in no event  later than 30 days after the
     relevant  acquisition  date and, to the extent permitted by applicable law,
     grant to the  relevant  Collateral  Agent for the  ratable  benefit  of the
     Lenders a first  priority Lien subject to Permitted  Liens on such property
     as collateral security for, with respect to a Mexican Borrower, the Mexican
     Borrower Obligations, and with respect to a U.S. Borrower, the Obligations,
     pursuant to documentation  reasonably satisfactory in form and substance to
     the Administrative  Agent. Without limiting the foregoing,  with respect to
     each  Subsidiary of Holdings  which becomes a Material  Foreign  Subsidiary
     after the date hereof  (whether by  acquisition,  formation or  otherwise),
     promptly  upon such  Subsidiary  becoming  a Material  Foreign  Subsidiary,
     Holdings  shall,  or shall cause the Subsidiary of Holdings which holds the
     Capital Stock of such Material  Foreign  Subsidiary to, execute and deliver
     an  instrument  in  form  and  substance  reasonably  satisfactory  to  the
     Administrative Agent providing for the pledge of one hundred percent (100%)
     of the  issued  and  outstanding  Capital  Stock of such  Material  Foreign
     Subsidiary to the U.S.  Collateral Agent (or such other collateral agent or
     Person as the  Administrative  Agent shall  designate for such purpose) for
     the  benefit  of  the  Lenders  as  security  for  the

                                       56
<PAGE>
     Obligations and shall deliver to the U.S.  Collateral  Agent (or such other
     collateral agent or Person) the stock certificates  evidencing such Capital
     Stock  together with undated stock powers for each such  certificate,  duly
     executed in blank. In connection with any of the foregoing,  the Borrowers,
     at their own expense, shall execute,  acknowledge and deliver, or cause the
     execution,  acknowledgement and delivery of, and thereafter register,  file
     or record in an appropriate governmental office, any document or instrument
     (including  legal  opinions,   title  insurance,   consents  and  corporate
     documents)   and  take  all  such   actions   reasonably   deemed   by  the
     Administrative  Agent to be necessary or desirable to ensure the  creation,
     priority and perfection of such Lien.

          (b) (i) Holdings shall cause each new  Subsidiary of Holdings  created
     or acquired after the date hereof,  which Subsidiary is organized under the
     laws of the  United  States,  Mexico or any  political  subdivision  of the
     United States or Mexico,  promptly upon such  creation or  acquisition,  to
     execute an instrument, substantially in the form of the Accession Agreement
     in form and substance  reasonably  satisfactory to the Administrative Agent
     pursuant to which such new  Subsidiary  shall become a party hereto and the
     Lenders  agree to permit such  Subsidiary to be a Borrower  hereunder,  and
     (ii) Holdings  shall, or shall cause the Subsidiary of Holdings which holds
     the  Capital  Stock of such new  Subsidiary  to,  execute  and  deliver  an
     instrument  in  form  and   substance   reasonably   satisfactory   to  the
     Administrative  Agent  providing  for the  pledge of 100% of the issued and
     outstanding  Capital Stock of each new  Subsidiary  of Holdings  created or
     acquired  after  the  date  hereof  and  owned  by  Holdings  or one of its
     Subsidiaries to the U.S.  Collateral Agent or the Mexican  Collateral Agent
     with respect to Subsidiaries  incorporated in Mexico for the benefit of the
     Lenders,  and the Borrowers shall deliver to the U.S.  Collateral  Agent or
     the Mexican Collateral Agent the stock certificates evidencing such Capital
     Stock  together with undated stock powers for each such  certificate,  duly
     executed in blank.

     Section  5.11   Maintenance  of Permits and Approvals.  Obtain each permit,
                     -------------------------------------
consent, license or approval of any Governmental Authority or Person required in
connection with the operation of the Network or any part thereof or necessary in
the  conduct of its business at or before the time such permit, consent, license
or  approval  is required and comply in all material respects with the terms and
conditions  of, and otherwise maintain in full force and effect without material
adverse  modification,  any  such  permit,  consent,  license or approval or any
permit,  consent,  license  or  approval of any Governmental Authority or Person
material  in  the  transaction  of  its  business.

     Section  5.12   Supply Contracts.  Comply in all material respects with the
                     ----------------
terms  and  conditions  of  the  Supply  Contracts.

     Section  5.13   Use  of  Proceeds.  Use  the  proceeds  of the Loans in the
                     -----------------
manner  set  forth  in  Section  2.6.

     Section 5.14   Political Risk Insurance.  Prior to the Closing Date, obtain
                    -------------------------
political  risk  insurance  with  respect  to  the  Network  acceptable  to  the
Administrative Agent for the benefit of the Lenders; provided, however, that the
                                                     --------  -------
Borrowers  shall  be responsible for payment of the insurance premiums, exposure
fees  and  any  other  related  charges  for a minimum amount of one-half of the
aggregate  amount  of  Loans  made  by  the  Lenders  hereunder.

                                       57
<PAGE>
     Section  5.15   Vextro  Permit.  Within 90 days of the Closing Date, either
                     ---------------
(a) obtain the authorization of the SCT for the mortgage by Vextro of its Permit
or  (b)  cancel  such  Permit.

     Section  5.16   Conditions  Subsequent.  Within  thirty  (30)  days  of the
                     ----------------------
Closing  Date,  deliver,  or cause the delivery of, each of the following to the
Administrative  Agent, each duly executed by all parties thereto (other than the
Administrative  Agent)  and  in  form  and  substance  satisfactory  to  the
Administrative  Agent:  (a) the California Landlord's Waiver Agreements, (b) the
California  Consent,  and  (c)  each  Landlord Consent (with respect to leases),
Consent  and  Agreement  (with  respect to Contractual Obligations) and (d) each
other  document  described  on  Schedule  5.16.
                                --------------

     Section  5.17   US  Charter  de Mexico, S.A. de C.V.  Within 30 days of the
                     -----------------------------------
Closing  Date  either  (a) cause US Charter de Mexico S.A. de C.V. to execute an
Accession  Agreement to become a Mexican Borrower and to execute its endorsement
of  the  Notes  or  (b)  dissolve  such  company.

                                   ARTICLE VI

                               NEGATIVE COVENANTS
                               ------------------

          Holdings  with respect to itself and each of its Subsidiaries and each
of  the  Borrowers  with  respect  to  itself  hereby agree that, so long as the
Commitments  remain  in  effect  or  any  amount  is  owing to any Lender or the
Administrative  Agent  hereunder  or  under any other Loan Document outstanding,
each  shall  not,  directly  or  indirectly,  unless  the Required Lenders shall
otherwise  agree  in  writing:

     Section  6.1   Limitation  on  Liens.  Create,  incur,  assume or suffer to
                    ---------------------
exist  any  Lien upon any of its property, assets or revenues, whether now owned
or  hereafter  acquired,  except  for  the  following  ("Permitted  Liens"):
                                                         ----------------

          (a) Liens for taxes not yet due or which are being  contested  in good
     faith by  appropriate  proceedings,  provided that  adequate  reserves with
     respect   thereto  are   maintained   on  the  books  of  Holdings  or  its
     Subsidiaries, as the case may be, in conformity with GAAP;

          (b)  statutory   landlords'   liens  and  carriers',   warehousemen's,
     mechanics',  materialmen's,  repairmen's or other like Liens arising in the
     ordinary  course of business for sums which are not overdue for a period of
     more than 90 days or which are being contested in good faith by appropriate
     proceedings;

          (c) pledges or  deposits in  connection  with  workers'  compensation,
     unemployment  insurance and other social security  legislation and deposits
     securing  liability to insurance carriers under insurance or self-insurance
     arrangements;

                                       58
<PAGE>
          (d) deposits to secure the performance of bids, trade contracts (other
     than for borrowed money) leases,  statutory obligations,  surety and appeal
     bonds, performance bonds and other obligations of a like nature incurred in
     the ordinary course of business;

          (e) all easements, zoning restrictions, flowage rights, rights-of way,
     covenants, conditions, restrictions, reservations, licenses, agreements and
     other  similar  matters,  including  the  unrecorded  easements and similar
     agreements set forth in Schedule 6.1(e),  which, in the aggregate,  are not
                             ---------------
     substantial in amount and which do not in any case materially  detract from
     the use of the property  subject  thereto or materially  interfere with the
     ordinary conduct of the business of Holdings or such Subsidiaries;

          (f) Liens in existence on the date hereof  listed on Schedule  6.1(f),
                                                               ----------------
     provided that no such Lien is spread to cover any additional property after
     the Closing Date and that the amount of indebtedness  secured thereby shall
     not subsequently be increased;

          (g)  all  building  codes  and  zoning   ordinances  and  other  laws,
     ordinances,  regulations,  rules,  orders or determinations of any Federal,
     state, county,  municipal or other governmental  authority now or hereafter
     enacted;

          (h) Liens created pursuant to the Loan Documents;

          (i)  restrictions  on the transfer of assets imposed by the Concession
     as now in effect or by any Requirements of Law;

          (j) Liens on any  property  or asset  existing  thereon at the time of
     acquisition  of such property or asset and not created in  connection  with
     such  acquisition;  and provided  that the amount of  Indebtedness  secured
     thereby is not increased in connection  with such  acquisition and does not
     exceed the fair market value of property or asset;

          (k) Replacement or renewal of any Lien permitted above,  provided that
     such new Lien is limited to the  property or asset which was subject to the
     prior Lien immediately before such renewal or replacement;

          (l)  Liens on  fiber  optic  cable  facilities  which  are part of the
     Network  created  pursuant  to  sales,  lease or  assignments  of rights of
     interests in such fiber optic cable facilities so long as the condition set
     forth  in  Section  5.9(c)  is met  with  respect  to such  sale,  lease or
     assignment; and

          (m) With respect to PCom  Subsidiaries  only,  Purchase Money Liens on
     assets not a part of or relating to the Network and securing  only Purchase
     Money Indebtedness permitted under Section 6.13.

     Section  6.2   Limitation  on  Fundamental Changes.  Enter into any merger,
                    -----------------------------------
consolidation  or  amalgamation,  or  liquidate,  wind up or dissolve itself (or
suffer any liquidation or dissolution), or convey, sell, lease, assign, transfer
or  otherwise  dispose of, all or substantially all of its property, business or
assets,  except:

                                       59
<PAGE>
          (a) any Subsidiary of Holdings may be merged or  consolidated  with or
     into Holdings  (provided that Holdings shall be the continuing or surviving
     corporation)  or with or into any one or more  Subsidiaries  of Holdings or
     with or into another Person (provided that the Subsidiary of Holdings shall
     be the continuing or surviving corporation);

          (b) any Subsidiary of each of the Borrowers may sell, lease,  transfer
     or  otherwise  dispose  of  any  or  all  of  its  assets  (upon  voluntary
     liquidation  or otherwise) to the Borrowers or any other  Subsidiary of the
     Borrowers  so long as the effect of such  sale,  lease,  transfer  or other
     disposition will not dilute such assets without proper consideration; and

          (c)  Holdings  or  any   Subsidiary  of  Holdings  may  be  merged  or
     consolidated  with or into another  Person  provided  that Holdings or such
     Subsidiary  shall be the  continuing  or  surviving  corporation  and that,
     following  such  merger or  consolidation,  no  default or Event of Default
     would exist and be continuing hereunder.

     Section  6.3   Limitation  on  Investments,  Loans  and Advances.  Make any
                    -------------------------------------------------
advance,  loan,  extension of credit or capital contribution to, or purchase any
stock,  bonds,  notes,  debentures  or  other  securities  of  or  any  assets
constituting  a business unit of, or make any other investment in any Person (an
"Investment"),  except:
 ----------

          (a)  extensions  of  trade  credit  and   endorsements  of  negotiable
     instruments and other documents in the ordinary course of business;

          (b) Investments in Cash Equivalents;

          (c) Investments by any Borrower in another Borrower;

          (d) loans to  officers,  directors  and  employees  of the  Borrowers,
     Holdings and their  Subsidiaries  where cash is paid out to such  officers,
     directors,  and employees shall not exceed in the aggregate $500,000 at any
     one time;

          (e)  Investment  in  Telecommunications  companies in an amount not to
     exceed $10,000,000 per annum; and

          (f) acquisitions of Telecommunications equipment.

     Section  6.4   Limitation  on  Optional  Payments and Modifications of Debt
                    ------------------------------------------------------- ----
Instruments  and other Obligations.  (a) Make any optional payment or prepayment
----------------------------------
on  or  redemption,  defeasance or purchase of any Indebtedness unless otherwise
permitted  under  Article  II hereof, (b) amend, modify or change, or consent or
agree  to  any  amendment,  modification  or  change  to any of the terms of any
Indebtedness  (other  than  any such amendment, modification or change which (i)
would  extend  the  maturity  or  reduce  the amount of any payment of principal
thereof  or  would  reduce  the  rate or extend the date for payment of interest
thereon,  (ii)  does  not  in  any  way  adversely  affect  the interests of the
Administrative  Agent  or  the  Lenders hereunder, thereunder or under the other
Loan  Documents, or (iii) is of a technical or clarifying nature), or (c) amend,
modify  or  change, or consent or agree to any amendment, modification or change
to  the  articles  of  incorporation  (or such similar charter documents) of the
Borrowers  in  any  material  respect.

                                       60
<PAGE>
     Section  6.5   Limitation  on Transactions with Affiliates.  Enter into any
                    -------------------------------------------
transaction,  including,  without  limitation,  any  purchase,  sale,  lease  or
exchange  of property or the rendering of any service, with any Affiliate unless
such  transaction is (a) otherwise permitted under this Agreement, or (b) in the
ordinary  course  of  Holdings'  or such Subsidiary's business and upon fair and
reasonable  terms  no less favorable to Holdings or such Subsidiary, as the case
may  be,  than  it  would obtain in a comparable arm's-length transaction with a
Person  which is not an Affiliate; provided that the foregoing restriction shall
                                   -------- ----
not prohibit (i) transactions among the Borrowers and any Subsidiary thereof and
between Subsidiaries, or (ii) indemnification payments to officers and directors
of  any  Borrower  or  any  of  its  respective  Subsidiaries.

     Section 6.6   Limitation of Restricted Payments.  Declare or make, or agree
                   ---------------------------------
to  pay  or  make,  directly or indirectly, any Restricted Payment (or incur any
obligation  to  do  so),  except  (a)  each of the Borrowers may declare and pay
dividends  with respect to its Capital Stock payable solely in additional shares
of  its  common  stock  that  are  pledged  pursuant  to the Pledge Agreement as
provided  therein,  (b)  Subsidiaries  may  declare  and  pay dividends to their
shareholders  with  respect  to their Capital Stock ratably to each Borrower and
other  Person  then  holding  Capital  Stock  of  such  Subsidiary (based on the
ownership  interest  of  each  such  shareholder  at such time without regard to
class),  (c)  Subsidiaries may make payments to their shareholders on account of
the  redemption of their Capital Stock ratably to each Borrower and other Person
then  holding  Capital Stock of such Subsidiary (based on the ownership interest
of  each  such  shareholder  at  such  time  without  regard to class), (d) each
Borrower  may  declare  and pay dividends to the other Borrowers with respect to
their  Capital Stock, (e) each Borrower may make any payment on any Indebtedness
owed  to another Borrower but solely to the extent permitted pursuant to Article
VIII,  (f) if at the time thereof and after giving effect thereto no Default has
occurred  and is continuing, each of the Borrowers may make a payment in cash on
the  date  that  any  amount is due and payable with respect to any Indebtedness
listed  on  Schedule  6.6 in an amount not exceeding the amount due and owing or
            -------------
(g) Holdings may declare and pay Permitted  Preferred Cash  Dividends;  provided
                                                                        --------
that any Restricted  Payment otherwise  permitted pursuant to this Section shall
not be permitted  unless the Borrower shall have delivered to the Administrative
Agent, prior to such Restricted  Payment, a certificate  signed by a Responsible
Officer  setting forth the amount of such Restricted Payment and certifying that
all conditions to such  Restricted  Payment are satisfied.

     Section 6.7   Limitation on Changes in Fiscal Year.  Without the consent of
                   ------------------------------------
the  Required  Lenders,  which  shall  not  be unreasonably withheld, permit the
fiscal  year  of  the  Borrowers  to  end  on  a  day  other  than  December 31.

     Section 6.8   Limitation on Issuance of Capital Stock.  Without the consent
                   ---------------------------------------
of  the  Required  Lenders,  sell,  assign, transfer or otherwise dispose of any
Capital  Stock  pledged  as  Collateral; or, without the consent of the Required
Lenders,  which shall not be unreasonably withheld, otherwise issue and sell any
Capital  Stock  or  beneficial  interest therein (including, without limitation,
preferred  stock)  of  any Borrower other than Holdings, where such issuance and
sale  would  result  in  any  Persons  (other than the Borrowers) holding in the
aggregate  in  excess  of  five  percent  of  such  Borrower.

                                       61
<PAGE>
     Section  6.9   Conduct  of Business.  Engage in any business other than the
                    --------------------
business  of  telecommunications  and  businesses  which  are  related  thereto.

     Section 6.10   Amendment of Material Contracts.  Without the consent of the
                    -------------------------------
Required  Lenders,  amend,  modify  or  supplement  a  material  term  of  (a) a
Contractual Obligation in connection with the construction, operation, ownership
and  maintenance of the Network or the business derived from the Network, or (b)
any  other  Contractual Obligation, the amendment or modification of which could
reasonably  be  expected  to  have  a  Material  Adverse  Effect.

     Section  6.11   Additional  Bank Accounts.  Open, establish or maintain any
                     -------------------------
deposit  account, investment account or any other account with any bank or other
financial  institution,  other  than  the  accounts  set forth in Schedule 3.28,
                                                                  -------------
except  with  the prior written consent of the Administrative Agent, which shall
not  be  unreasonably  withheld,  and  subject to such conditions thereto as the
Administrative  Agent  may  establish  in  accordance  with  Section  5.10.

     Section  6.12   Infrastructure  Build  Out.  Commit  to  build or construct
                     --------------------------
telecommunications  infrastructure in any city other than Atlanta (Georgia), Los
Angeles  (California),  Houston  (Texas),  Miami  (Florida),  or  San  Diego
(California);  provided however, that Holdings or any Subsidiary of Holdings may
commit to build out or construct telecommunications infrastructure in any of the
Additional  Approved Cities, in each case (a) as contemplated in, and consistent
with,  the  Approved  Build-Out Plan and for each such Additional Approved City,
subject to delivery to the Administrative Agent, at least three (3) months prior
to  entering  into  any  such  commitment or commencing any such build-out, of a
fully  funded  plan (including evidence showing that Holdings or such Subsidiary
has  obtained  all  financing required or contemplated by the Approved Build-Out
Plan for such city) in connection with such Additional Approved city, all to the
reasonable satisfaction of the Administrative Agent, and (b) only for so long as
and  to  the  extent  that,  at the time of any such commitment and after giving
effect  thereto, no Default has occurred and is continuing, and, with respect to
each  of the financial covenants set forth in Article VII, (i) Borrowers were in
full compliance therewith as of the most recent date such financial covenant was
(is  being)  measured, without requiring any waiver thereof or amendment thereto
to  enable  such compliance, and (ii) no Default could reasonably be expected to
exist  as  of  the next date on which such financial covenant is to be measured.

     Section 6.13   Limitation on Indebtedness.  Create, incur, assume or permit
                    --------------------------
to  exist  any Indebtedness other than (a) Indebtedness of the Mexican Borrowers
of  up  to  two  million  seven  hundred  fifty thousand Dollars ($2,750,000) in
respect  of  Financing Lease Obligations, (b) Purchase Money Indebtedness of the
PCom  Subsidiaries  in  an  aggregate  amount  of  up  to  fifty million Dollars
($50,000,000)  for  the  purchase  of  assets  not  a part of or relating to the
Network,  and  (c)  Indebtedness  existing  on the Closing Date and described in
Schedule  6.13.
--------------

     Section  6.14   Limitation  on  Sale of Collateral.  Without the consent of
                     ----------------------------------
the  Required  Lenders,  sell, assign (by operation of law or otherwise), lease,
transfer  or  otherwise  dispose of, or grant any option with respect to, any of
the  Collateral,  except  that  Borrowers  and  their  Subsidiaries may (a) sell
inventory  or  obsolete  or  unnecessary equipment, in each case in the ordinary
course  of  business;  and (b) make other sales or dispositions of assets (other
than the Capital Stock of any Subsidiary) if all of the following conditions are

                                       62
<PAGE>
met:  (i) the market value of assets sold or otherwise disposed of in any single
transaction  or  series of related transactions does not exceed $250,000 and the
aggregate  market  value  of  assets sold or otherwise disposed of in any fiscal
year  does  not  exceed  $1,500,000; (ii) the consideration received is at least
equal  to  the  fair market value of such assets; (iii) the Net Proceeds of such
asset  sale  or  other disposition are applied to the Obligations or are used to
acquire  replacement property, in each case as set forth in Section 2.8(b)(iii);
and  (iv)  no  Default  shall  then  exist  or  result  from  such sale or other
disposition.

                                   ARTICLE VIII

                              SUBORDINATION; WAIVER
                              ---------------------

     Section  8.1   Subordination.
                    -------------

     (a)     Generally.  The  Subordinated  Claims  shall  be  and  hereby  are
             ---------
expressly  made subordinate and junior in right of payment to all Obligations to
the  extent and in the manner provided in these Subordination Provisions.  These
Subordination  Provisions  are  made  for  the  benefit  of  the Secured Parties
including  the  Collateral  Agents,  and the Collateral Agents are express third
party  beneficiaries hereof, with the same effect as if their names were written
as  such  in  this  Agreement.  Any  Secured Party or all of them may proceed to
enforce these Subordination Provisions.  Each Borrower waives any and all notice
of  the creation or accrual of any Obligation and notice of acceptance and proof
of reliance upon these Subordination Provisions by any Secured Party.  Moreover,
each  Borrower  agrees:

               (i) to be bound by these Subordination Provisions;

               (ii) that each  Obligation  shall  conclusively be deemed to have
          been  created,   contracted,  and  incurred  in  reliance  upon  these
          Subordination Provisions; and

               (iii) that all  dealings  between  any  Borrower  and the Secured
          Parties  shall be deemed to have been  consummated  in  reliance  upon
          these Subordination Provisions.

          (b) Binding on Transferees,  Etc. These Subordination Provisions shall
              ----------------------------
     be binding upon any transferee or assignee of any Subordinated Claim.

          (c) Legend. Each note or other instrument  evidencing any Subordinated
              ------
     Claim (or, if none, the relevant Subordinated  Agreement) shall contain the
     following legend, conspicuously noted on the face thereof:

                                       63
<PAGE>
          THIS [NAME OF INSTRUMENT OR AGREEMENT] IS SUBJECT TO THE SUBORDINATION
          PROVISIONS SET FORTH IN ARTICLE VIII TO THE CREDIT AGREEMENT, DATED AS
          OF  SEPTEMBER  29,  2000,  AMONG  TELEREUNION  S.A. DE C.V., A MEXICAN
          CORPORATION,  TELEREUNION  INTERNATIONAL,  S.A.  DE  C.V.,  A  MEXICAN
          CORPORATION,  TELSCAPE INTERNATIONAL,  INC., A TEXAS CORPORATION,  AND
          THE OTHER BORROWERS  LISTED ON SCHEDULE 1.0 THERETO AND THE ADDITIONAL
          BORROWERS FROM TIME TO TIME PARTY THERETO,  GENERAL  ELECTRIC  CAPITAL
          CORPORATION,  IN ITS CAPACITY AS  ADMINISTRATIVE  AGENT AND LENDER, AS
          WELL AS THE SEVERAL  LENDING  INSTITUTIONS  THAT FROM TIME TO TIME ARE
          PARTY THERETO.

     Section  8.2   Turnover  of  Improper  Payments.  If  any  payment  or
                    --------------------------------
distribution  of  any character (whether in cash, securities, or other property)
shall  be  received by any Borrower in contravention of any of the terms hereof,
such  Borrower  shall  promptly  deliver  such  payment  or  distribution to the
Administrative  Agent.  The  Administrative  Agent  and  each  Secured  Party is
irrevocably authorized to supply any required endorsement or assignment that may
have  been  omitted.  Until  so  delivered,  such  Borrower  shall (a) hold such
improper  payment  or  distribution in trust for the Secured Parties and (b) not
commingle  such  payment  or  distribution  with  other funds or property of any
Borrower.  The  foregoing  obligation shall survive, and shall not be in any way
affected  by,  the  result  of  any  Proceeding.

     Section  8.3   Obligations  Absolute;  Waivers.
                    -------------------------------

          (a) No Prejudice or Impairment.  The  liabilities of any Borrower with
              --------------------------
     respect to the Obligations or the Subordination  Provisions shall remain in
     full force and effect  without  regard  to,  and shall not be  impaired  or
     affected by:

               (i)  any act or failure to act on the part of any Borrower;

               (ii) any renewal, extension, accrual, or indulgence in respect of
          any payment or prepayment of any  Obligation or any part thereof or in
          respect of any other amount payable to any Secured Party;

               (iii) any amendment,  modification,  or waiver of, or addition or
          supplement to, or deletion from, or compromise,  release,  consent, or
          other  action in respect of, any of the terms of any Loan  Document or
          any other agreement that may be made relating to any Obligation;

               (iv) any  exercise or  non-exercise  by any Secured  Party of any
          right,  power,  privilege,  or  remedy  under  or in  respect  of  any
          Obligation  or these  Subordination  Provisions,  or any waiver of any
          such right, power,  privilege,  or remedy or of any default in respect
          of  such  Obligation,   any  Loan  Document,  or  these  Subordination
          Provisions;

                                       64
<PAGE>
               (v) any  receipt by any  Secured  Party of any  security,  or any
          failure by such  Secured  Party to perfect a security  interest in, or
          any release by such Secured  Party of, any security for the payment of
          any Obligation;

               (vi) any merger or consolidation of any Borrower into or with any
          other  Person,  or any sale,  lease,  or transfer of any or all of the
          assets  of any  Borrower  to any other  Person,  with or  without  the
          consent of any Secured Party;

               (vii) absence of any notice to, or knowledge by, the Borrowers of
          the  existence or occurrence of any of the matters or events set forth
          in the foregoing clauses (i) through (vi); or

               (viii) any other circumstance whatsoever.

     (b) Waivers. The Borrowers unconditionally waive:
         -------

               (i) notice of any of the matters referred to in Section 8.5(a);

               (ii) to the extent  permitted  by law,  all  notices  that may be
          required,  whether by statute, rule of law, or otherwise,  to preserve
          intact any rights of any Secured Party against any Borrower, including
          any:

                     (A) demand,  presentment,  protest,  or proof of notice of
               nonpayment under any Obligation; and

                     (B) notice of any  failure  on the part of any  Borrower to
               perform  and  comply  with  any  covenant,  agreement,  term,  or
               condition  of any Loan  Document;

               (iii) any condition to the enforcement, assertion, or exercise by
          any Secured Party of any right, power,  privilege, or remedy conferred
          in any Loan Document or otherwise;

               (iv) any  requirement  of  diligence  on the part of any  Secured
          Party;

               (v) any  requirement on the part of any Secured Party to mitigate
          damages resulting from any default under any Loan Document;

               (vi) any notice of any sale,  transfer,  or other  disposition of
          any Collateral by any Secured Party;

               (vii) any defense  based on the  adequacy of a remedy at law that
          might be asserted as a bar to the remedy of  specific  performance  of
          any provision of this Agreement or the Notes;

               (viii) the defense that any claim  asserted by any Secured  Party
          pursuant  to any  provision  of this  Agreement  or the  Notes  is res
          judicata as a result of any decision rendered in any prior proceeding;
          and

               (ix) any other  matter  that  could  result  in a defense  to the
          enforcement of any provision of this Agreement or the Notes.

                                       65
<PAGE>
          (c)  Reinstatement.  The  obligations  of the  Borrowers  under  these
               -------------
     Subordination  Provisions shall continue to be effective, or be reinstated,
     as  the  case  may  be,  if at any  time  any  payment  in  respect  of any
     Obligation,  or any other  payment to any Secured  Party in its capacity as
     such,  is  rescinded  or must  otherwise  be  restored  or returned by such
     Secured Party upon the occurrence of any Proceeding, or upon or as a result
     of the appointment of a receiver,  intervenor or conservator of, or trustee
     or  similar  officer  for,  any  Borrower  or any  substantial  part of its
     property, or otherwise, all as though such payment had not been made.

          (d)  Modifications,  Etc., of the  Obligations.  Each Borrower  hereby
               -----------------------------------------
     irrevocably consents and assents to:

               (i)  any  renewal,  extension,  or  postponement  of the  time of
          payment  of  any  Obligation  or any  other  indulgence  with  respect
          thereto;

               (ii) any increase in the amount of any Obligation;

               (iii) any  substitution,  exchange,  or release of collateral for
          any Obligation;

               (iv)  the  addition  or  release  of  any  Person   primarily  or
          secondarily liable for any Obligation; and

               (v) the provisions of any  agreement,  instrument,  security,  or
          other  writing  evidencing,  amending,   supplementing,  or  otherwise
          modifying any Obligation.

     Section 8.4   Subrogation.  No Borrower shall have any subrogation or other
                   -----------
right as the holder of an Obligation, and each Borrower hereby waives all rights
to  exercise  subrogation  rights  and  all rights of reimbursement or indemnity
whatsoever  and  all rights of recourse to any security for any Obligation until
the  Obligations  shall  have  been  Indefeasibly  Paid.

     Section  8.5   Limitation  on Actions.  Each Borrower agrees and undertakes
                    ----------------------
that:

          (a) Generally.  Except as provided in Section 8.2 hereof,  no Borrower
              ---------
     shall:

               (i) demand,  sue for,  or accept  from any other  Borrower or any
          other Person any payment or collateral in respect of any  Subordinated
          Claim;

               (ii) take any action to enforce any of its rights or exercise any
          of its remedies in respect of any Subordinated Claim or any collateral
          therefor,  including  any  action  to  foreclose  on any  asset of any
          Borrower; or

               (iii) commence,  prosecute, or participate in any administrative,
          legal, or equitable  action against any Borrower to enforce payment of
          any Subordinated Claim;

                                       66
<PAGE>
          (b) Rights of the Secured  Parties Upon a Violation.  If any Borrower,
              -----------------------------------------------
     in violation of any provision herein set forth, shall commence,  prosecute,
     or  participate  in any suit,  action,  case,  or  proceeding  against  any
     Borrower:

               (i)  any  Borrower  may  interpose  as  a  defense  or  plea  the
          provisions  set forth herein,  and any Secured Party may intervene and
          interpose  such  defense or plea in its own name or in the name of any
          Borrower;  and (ii) any Secured Party shall, in any event, be entitled
          to  restrain  the  enforcement  of  the  payment   provisions  of  any
          Subordinated Agreement in its own name or in the name of any Borrower,
          as the case may be, in the same suit,  action,  case, or proceeding or
          in any independent suit, action, case, or proceeding.

          (c) No Collateral for any Subordinated  Claim. No Borrower shall take,
              -----------------------------------------
     obtain, or hold (or permit anyone acting on its behalf to take,  obtain, or
     hold)  any   assets  of  any   Borrower,   whether   as  a  result  of  any
     administrative,  legal, or equitable action, or otherwise,  in violation of
     the provisions of these Subordination Provisions.

     Section  8.6   Proceedings.
                    -----------

          (a) No  Commencement by any Borrower.  No Borrower shall commence,  or
              --------------------------------
     join with any other  creditor or creditors  of any Borrower in  commencing,
     any Proceeding.

          (b) Rights of the Secured Parties in a Proceeding.  Each Secured Party
              ---------------------------------------------
     is hereby irrevocably authorized (but not required) in any Proceeding:

               (i) to enforce claims comprising  Subordinated Claims in the name
          of any Borrower by proof of debt, proof of claim, suit, or otherwise;

               (ii) to collect any assets of any Borrower  distributed, divided,
          or applied by way of dividend or payment,  and any securities  issued,
          in each case on account of Subordinated  Claims, and apply the same to
          Senior Claims; provided that if any Secured Party receives any payment
          in excess of its  Obligation,  it shall  either pay such excess to the
          Borrowers as directed in the Proceeding or interplead such excess with
          a court of competent jurisdiction;

               (iii) to vote claims comprising Subordinated Claims to  accept or
          reject any plan of partial or  complete  liquidation,  reorganization,
          arrangement, composition, or extension; and

               (iv) to  take  generally  any  action  in  connection  with  such
          Proceeding that any Borrower might otherwise take. Each Borrower shall
          cooperate fully with each Secured Party and perform all acts requested
          by any  Secured  Party to enable  any  Secured  Party to  enforce  any
          Subordinated  Claim as  aforesaid  on  behalf of such  Secured  Party,
          including  filing  appropriate  proofs  of  claim  and  executing  and
          delivering  all necessary  powers of attorney,  assignments,  or other
          instruments.

                                       67
<PAGE>
          (c) Inquiry by a Borrower.  After the  commencement of any Proceeding,
              ---------------------
     any  Borrower  may inquire in writing to any  Secured  Party  whether  such
     Secured Party has  exercised the rights set forth in Section  8.6(b) hereof
     with respect to such Borrower's Subordinated Claim. If, within a reasonable
     time after receipt of such inquiry, no Secured Party:

               (i)  files a proof of claim  with  respect  to such  Subordinated
          Claim and furnishes a copy thereof to such Borrower; or

               (ii)  informs such  Borrower in writing  that such Secured  Party
          intends to  exercise  its right to assert such  Subordinated  Claim on
          behalf of such  Secured  Party in the manner  provided in Section 8(b)
          hereof,  such  Borrower  may (but shall not be required to) proceed to
          file a proof of claim with respect to its Subordinated  Claim and take
          such further steps with respect thereto,  not inconsistent  with these
          Subordination Provisions, as such Borrower may deem proper.

          (d) Effect of a Proceeding.  No ruling made or decision reached in any
              ----------------------
     Proceeding shall:

               (i) be considered a full and fair determination of the rights and
          obligations  of any  Secured  Party  or  Borrower  pursuant  to  these
          Subordination Provisions; or

               (ii) in any way  prevent  any Secured  Party from  enforcing  its
          fights  under  these  Subordination  Provisions  in a  court  of  law,
          arbitral tribunal, or otherwise.

     Section  8.7   Termination.  These Subordination Provisions shall terminate
                    -----------
on  the  date  that  the  Obligations  are  Indefeasibly  Paid.

     Section  8.8   Understanding of Waivers.  Each Borrower warrants and agrees
                    ------------------------
that  the waivers set forth in this Article VIII are made with fill knowledge of
their  significance  and consequences.  If any of such waivers are determined to
be  contrary  to  any  applicable  law  or  public policy, such waivers shall be
effective  only  to  the  maximum  extent  permitted  by  law.

     Section  8.9   Unlimited  Liability.  The  Obligations  of  the  Borrowers
                    --------------------
hereunder  shall  be  in  addition  to  any  obligations of the Borrowers to the
Lenders  heretofore  given  or  hereafter to be given to the Lenders unless such
other  obligations  are  expressly  modified or terminated in writing or repaid.
The liability of the Borrowers to the Lenders shall at all times be deemed to be
the  aggregate  liability of the Borrowers under the terms of this Agreement and
of  any  other  obligations heretofore or hereafter incurred by the Borrowers to
the  Lenders  and  not  expressly  terminated  or modified in writing or repaid.

                                       68
<PAGE>
                                   ARTICLE IX

                                EVENTS OF DEFAULT
                                -----------------

          If  any  of  the  following  events  shall  occur  and be continuing:

          (a) The Borrowers shall fail to pay any principal of any Loan when due
     in accordance with the terms hereof; or

          (b) the  Borrowers  shall fail to pay any interest on any Loan, or any
     other amount  payable  hereunder,  within five Business Days after any such
     interest or other amount  becomes due in accordance  with the terms hereof;
     or

          (c) Any representation or warranty made or deemed made by any Borrower
     herein  or in  any  other  Loan  Document  or  which  is  contained  in any
     certificate,  document or financial or other  statement  furnished by it at
     any time under or in connection  with this Agreement or any such other Loan
     Document shall prove to have been  incorrect in any material  respect on or
     as of the date made or deemed made or furnished; or

          (d) Any Borrower shall default in the observance or performance of any
     covenant or other agreement  contained in Sections  5.2(f),  5.4, 5.5, 5.9,
     5.10, 5.15 or 5.16, Article VI, or Article VII; or

          (e) Any Borrower shall default in the observance or performance of any
     covenant or other  agreement  contained in this Agreement or any other Loan
     Document  (other  than as provided  in  paragraphs  (a) through (d) of this
     Section),  and such default shall  continue  unremedied  for a period of 30
     days; or

          (f) Any  Borrower  shall (i) default in any payment of principal of or
     interest  on any  Indebtedness  (other than the Loans) or in the payment of
     any  Guarantee  Obligation,  beyond  the  period of grace (not to exceed 30
     days),  if any,  provided in the  instrument or agreement  under which such
     Indebtedness  or Guarantee  Obligation was created;  or (ii) default in the
     observance or performance of any other  agreement or condition  relating to
     any  such  Indebtedness  or  Guarantee   Obligation  or  contained  in  any
     instrument or agreement  evidencing,  securing or relating thereto,  or any
     other event shall occur or condition  exist, the effect of which default or
     other event or condition is to cause, or to permit the holder or holders of
     such  Indebtedness  or  beneficiary  or  beneficiaries  of  such  Guarantee
     Obligation  (or a trustee  or agent on behalf of such  holder or holders or
     beneficiary  or  beneficiaries)  to cause  with the  giving  of  notice  if
     required,  such  Indebtedness to become due prior to its stated maturity or
     such Guarantee  Obligation to become  payable;  provided  however,  that no
                                                     --------  -------
     Default or Event of Default  shall  exist under this  paragraph  unless the
     aggregate  amount of  Indebtedness  or Guarantee  Obligations in respect of
     which any default or other event or condition referred to in this paragraph
     shall have occurred shall be equal to at least $500,000; or

                                       69
<PAGE>
          (g) (i) Any  Borrower  shall  commence any case,  proceeding  or other
     action (A) under any existing or future law of any  jurisdiction,  domestic
     or  foreign,  relating  to  bankruptcy,   quiebra,   insolvency,   concurso
     mercantil,  reorganization  or relief of debtors,  seeking to have an order
     for relief  entered with respect to or seeking to adjudicate it as bankrupt
     or  insolvent,   or  seeking   reorganization,   arrangement,   adjustment,
     winding-up,  liquidation,  dissolution,  composition  or other  relief with
     respect to it or its  debts,  or (B)  seeking  appointment  of a  receiver,
     trustee, custodian, conservator or other similar official for it or for all
     or any substantial part of its assets, or any Borrower shall make a general
     assignment  for the  benefit  of its  creditors;  or (ii)  there  shall  be
     commenced  against any Borrower any case,  proceeding  or other action of a
     nature referred to in clause (i) above which (A) results in the entry of an
     order for relief or any such  adjudication  or appointment  and (B) remains
     undismissed,  unvacated,  undischarged or unbonded for a period of 30 days;
     or (iii) there shall be entered any order for the  issuance of a warrant of
     attachment,  execution,  distraint  or similar  process  against all or any
     substantial  part of the assets of any  Borrower  which shall not have been
     vacated, discharged, or stayed or bonded pending appeal within 30 days from
     the entry thereof or (iv) any Borrower shall take any action in furtherance
     of, or indicating its consent to, approval of, or  acquiescence  in, any of
     the acts set forth in clause (i), (ii), or (iii) above; or (v) any Borrower
     shall  generally  not, or shall be unable to, or shall admit in writing its
     inability to, pay its debts as they become due; or

          (h) (i) Any Borrower shall engage in any "prohibited  transaction" (as
     defined in Section 406 of ERISA or Section 4975 of the Code)  involving any
     Plan of such Borrower, (ii) any accumulated funding deficiency" (as defined
     in Section 302 of ERISA),  whether or not waived,  shall exist with respect
     to any Plan or any  Lien in  favor  of the PBGC or a Plan of such  Borrower
     shall  arise on the  assets  of the  Borrower  or any  Commonly  Controlled
     Entity,   (iii)  a  Reportable  Event  shall  occur  with  respect  to,  or
     proceedings  shall commence to have a trustee appointed (or a trustee shall
     be appointed) to  administer,  or to  terminate,  any Single  Employer Plan
     which  Reportable  Event or commencement of proceedings or appointment of a
     trustee is, in the reasonable  opinion of the Required  Lenders,  likely to
     result in the  termination  of such Plan for purposes of Title IV of ERISA,
     (iv) any Single  Employer Plan shall  terminate for purposes of Title IV of
     ERISA, (v) the Borrowers or any Commonly Controlled Entity shall, or in the
     reasonable opinion of the Required Lenders is likely to, incur any material
     liability  in  connection  with a withdrawal  from,  or the  Insolvency  or
     Reorganization of, a Multiemployer Plan, or (vi) any other similar event or
     condition  shall occur or exist with respect to a Plan that could result in
     a  liability  (other  than in the  ordinary  course),  and in each  case in
     clauses (i) through (vi) above, such event or condition,  together with all
     other such events or conditions,  if any,  could  reasonably be expected to
     have a Material Adverse Effect; or

          (i) The  provisions  contained  in  Article  VIII  shall  cease  to be
     enforceable in accordance with their terms; or

          (j) One or more  judgments  or decrees  shall be entered  against  any
     Borrower  involving  individually a liability of $500,000 or more (not paid
     or fully  covered by insurance  or with respect to which  coverage has been
     denied by the  insurers),  and all such judgments or decrees shall not have
     been vacated,  discharged,  stayed or bonded  pending appeal within 30 days
     from the entry thereof; or

                                       70
<PAGE>
          (k) (i) Any of the Security  Documents shall cease, for any reason, to
     be in full  force  and  effect  or  fail to  provide  the  Liens,  security
     interests, rights, title, interest, remedies, powers or privileges intended
     to be created therein,  or any of the Borrowers shall so assert in writing,
     (ii)  there  shall be a default  or event of  default  under  any  Security
     Document,  or (iii) any Lien created by any of the Security Documents shall
     cease to be enforceable  and of the same effect and priority,  purported to
     be created thereby; or

          (l) Other than as  otherwise  described on Schedule  3.21 hereof,  the
                                                     --------------
     Borrowers shall fail to have in full force and effect any consent,  permit,
     approval or license (or any material  portion thereof) (i) material for the
     transaction of its business, which failure has a Material Adverse Effect or
     (ii) required for the transactions contemplated hereby; or

          (m) An event of default on the part of Holdings or any Borrower  shall
     exist and be  continuing  under the Supply  Contracts,  or  Holdings or any
     Borrower  shall  terminate or purport to terminate a Supply  Contract other
     than as a result of a breach by the Vendor of its  obligations  thereunder;
     or

          (n)  Expropriation,  condemnation,  confiscation or nationalization by
     any Governmental  Authority of any Borrower or of all or a material part of
     the assets or capital of any  Borrower  for a period of longer  than thirty
     (30) days if the result of such expropriation,  condemnation,  confiscation
     or nationalization has a Material Adverse Effect; or

          (o) Any Change in Control shall occur; or

          (p) Any termination,  revocation,  impairment in a material manner, or
     the failure to renew the  Concession  or  issuance of any final  resolution
     that concludes that any Borrower is in serious breach of the Concession; or

          (q)  Vesting  of tax liens of  $500,000  or more as the  result of any
     Borrower's failure to pay taxes when due (except in the event of good faith
     challenge by appropriate proceedings,  provided that adequate reserves with
     respect  thereto are maintained on the books of the Borrowers,  as the case
     may be, in conformity with GAAP); or

          (r) Adverse event affecting (i) a Contractual Obligation in connection
     with the construction,  operation, ownership and maintenance of the Network
     or the business derived from the Network,  if the result of such would be a
     Material Adverse Effect, or (ii) any other Contractual  Obligation,  if the
     result of such would be a Material Adverse Effect;

then,  and in any such event, (A) if such event is an Event of Default specified
in  clause  (i),  (ii) or (iii) of paragraph (g) of this Section with respect to
any  Borrower, automatically the Commitments shall immediately terminate and the
Loans  hereunder  (with  accrued  interest  thereon) and all other amounts owing
under  this  Agreement shall immediately become due and payable, and (B) if such
event is any other Event of Default, either or both of the following actions may
be  taken:  (i)  with  the  consent  of the Required Lenders, the Administrative
Agent may, or upon the request of the Required Lenders, the Administrative Agent
shall,  by  notice  to

                                       71
<PAGE>
the  Borrowers declare the Commitments to be terminated forthwith, whereupon the
Commitments  shall  immediately  terminate;  and  (ii)  with  the consent of the
Required  Lenders,  the  Administrative  Agent  may,  or upon the request of the
Required  Lenders,  the  Administrative  Agent shall by notice to the Borrowers,
declare  the  Loans  hereunder  (with  accrued  interest  thereon) and all other
amounts  owing  under  this Agreement to be due and payable forthwith, whereupon
the same shall immediately become due and payable.  Except as expressly provided
above in this Section, presentment, demand, protest and all other notices of any
kind  are  hereby  expressly  waived.

                                    ARTICLE X

                            THE ADMINISTRATIVE AGENT
                            ------------------------

     Section  10.1   Appointment.  Each Lender hereby irrevocably designates and
                     -----------
appoints  the  Administrative  Agent  as  the  agent  of  such Lender under this
Agreement  and  the  other Loan Documents and each Lender irrevocably authorizes
the Administrative Agent, in such capacity, to enter into any such Loan Document
on  its  behalf,  to take such action on its behalf under the provisions of this
Agreement  and  the other Loan Documents and to exercise such powers and perform
such  duties as are expressly delegated to the Administrative Agent by the terms
of  this Agreement and the other Loan Documents, together with such other powers
as  are  reasonably  incidental  thereto.  Notwithstanding  any provision to the
contrary  elsewhere  in  this Agreement, the Administrative Agent shall not have
any  duties  or responsibilities, except those expressly set forth herein or any
fiduciary  relationship  with  any  Lender, and no implied covenants, functions,
responsibilities,  duties,  obligations  or  liabilities shall be read into this
Agreement  or  any  other  Loan  Document  or  otherwise  exist  against  the
Administrative  Agent.

     Section  10.2   Delegation of Duties.  The Administrative Agent may execute
                     --------------------
any  of  its  duties  under  this  Agreement  and the other Loan Documents by or
through  agents  or attorneys-in-fact and shall be entitled to advice of counsel
concerning  all  matters  pertaining  to  such duties.  The Administrative Agent
shall  not  be  responsible  for  the  negligence or misconduct of any agents or
attorneys-in-fact  selected  by  it  with  reasonable  care.

     Section  10.3   Exculpation  Provisions.  Neither  the Administrative Agent
                     -----------------------
nor  any  of  its  officers,  directors, employees, agents, attorneys-in-fact or
Affiliates  shall  be  (i) liable for any action lawfully taken or omitted to be
taken  by  it  or  such Person under or in connection with this Agreement or any
other  Loan  Document  (except  for its or such Person's own gross negligence or
willful  misconduct) or (ii) responsible in any manner to any of the Lenders for
any recitals, statements, representations or warranties made by the Borrowers or
any officer thereof contained in this Agreement or any other Loan Document or in
any certificate, report, statement or other document referred to or provided for
in,  or  received  by the Administrative Agent under or in connection with, this
Agreement  or any other Loan Document or for the value, validity, effectiveness,
genuineness,  enforceability  or sufficiency of this Agreement or any other Loan
Document  or  for any failure of any of the Borrowers to perform its obligations
hereunder  or  thereunder.  The  Administrative  Agent  shall  not  be under any
obligation  to  any  Lender  to  ascertain or to inquire as to the observance or
performance  of  any  of  the  agreements  contained  in, or conditions of, this
Agreement  or  any  other  Loan Document, or to inspect the properties, books or
records  of  the  Borrowers.

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<PAGE>
     Section  10.4   Reliance by Administrative Agent.  The Administrative Agent
                     --------------------------------
shall  be  entitled  to  rely  and shall be fully protected in relying, upon any
Note,  writing,  resolution,  notice,  consent,  certificate, affidavit, letter,
telecopy,  telex  or  teletype  message,  statement,  order or other document or
conversation  believed  by it to be genuine and correct and to have been signed,
sent  or  made by the proper Person or Persons and upon advice and statements of
legal  counsel  (including,  without  limitation,  counsel  to  the  Borrowers),
independent  accountants and other experts selected by the Administrative Agent.
The  Administrative  Agent may deem and treat the payee of any Note as the owner
thereof  for  all purposes unless a written notice of assignment, negotiation or
transfer  thereof  shall  have  been  filed  with the Administrative Agent.  The
Administrative Agent shall be fully justified in failing or refusing to make any
action  under  this  Agreement  or any other Loan Document unless it shall first
receive  such  advice  or concurrence of the Required Lenders or all Lenders, as
the case may be, as it deems appropriate or it shall first be indemnified to its
satisfaction  by the Lenders against any and all liability and expense which may
be  incurred  by  it  by reason of taking or continuing to take any such action.
The  Administrative Agent shall in all cases be fully protected in acting, or in
refraining  from  acting,  under  this  Agreement and the other Loan Document in
accordance  with  a  request of the Required Lenders or all Lenders, as the case
may be, and such request and any action taken or failure to act pursuant thereto
shall  be  binding  upon  all  the  Lenders and all future holders of the Loans.

     Section  10.5   Notice  of  Default.  The Administrative Agent shall not be
                     -------------------
deemed  to have knowledge or notice of the occurrence of any Default or Event of
Default  unless the Administrative Agent has received notice (in accordance with
Section  11.2)  from  a  Lender  or  the  Borrowers referring to this Agreement,
describing  such  Default  or Event of Default and stating that such notice is a
"notice of default".  In the event that the Administrative Agent receives such a
notice,  the Administrative Agent shall give notice thereof to the Lenders.  The
Administrative  Agent  shall  take  such  action with respect to such Default or
Event  of Default as shall be reasonably directed by the Required Lenders or all
Lenders,  as  the case may be; provided that unless and until the Administrative
Agent  shall  have  received  such directions, the Administrative Agent may (but
shall not be obligated to) take such action, or refrain from taking such action,
with  respect  to such Default or Event of Default as it shall deem advisable in
the  best  interests  of  the  Lenders.

     Section  10.6   Non-Reliance  on  Administrative  Agent  and Other Lenders.
                     ----------------------------------------------------------
Each Lender expressly acknowledges that neither the Administrative Agent nor any
of  its  officers, directors, employees, agents, attorneys-in-fact or Affiliates
has  made  any  representations  or  warranties  to  it  and  that no act by the
Administrative Agent hereafter taken, including any review of the affairs of the
Borrowers,  shall  be deemed to constitute any representation or warranty by the
Administrative  Agent  to  any  Lender.  Each  Lender  represents  to  the
Administrative  Agent  that  it has, independently and without reliance upon the
Administrative  Agent  or  any  other  Lender,  and  based on such documents and
information  as  it  has  deemed  appropriate,  made  its  own  appraisal of and
investigation  into  the  business,  operations,  property,  financial and other
condition  and  creditworthiness  of  the Borrowers and made its own decision to
make  its  Loans  hereunder  and  enter  into  this Agreement.  Each Lender also
represents  that  it  will,  independently  and  without  reliance  upon  the
Administrative  Agent  or  any  other  Lender,  and  based on such documents and
information  as  it shall deem appropriate at the time, continue to make its own
credit  analysis,

                                       73
<PAGE>
appraisals and decisions in taking or not taking action under this Agreement and
the  other  Loan Documents, and to make such investigation as it deems necessary
to  inform  itself as to the business, operations, property, financial and other
condition  and  creditworthiness  of the Borrowers.  Except for notices, reports
and  other  documents  expressly  required to be furnished to the Lenders by the
Administrative  Agent hereunder or furnished to the Administrative Agent for the
account  of  or  with  a  copy  or  counterpart  for  any  of  the  Lenders, the
Administrative  Agent  shall  not have any duty or responsibility to provide any
Lender with any credit or other information concerning the business, operations,
property,  condition  (financial or otherwise), prospects or creditworthiness of
the  Borrowers which may come into the possession of the Administrative Agent or
any  of  its  officers,  directors,  employees,  agents,  attorneys-in-fact  or
Affiliates.

     Section  10.7   Indemnification.  The  Lenders  agree  to  indemnify  the
                     ---------------
Administrative  Agent  in  its capacity as such (to the extent not reimbursed by
the  Borrowers  and  without limiting the obligation of the Borrowers to do so),
ratably  according  to  their respective Commitment Percentages in effect on the
date  on which indemnification is sought (or, if indemnification is sought after
the  date  upon  which the Commitments shall have terminated and the Loans shall
have  been paid in full, ratably in accordance with their Commitment Percentages
immediately  prior  to  such  date),  from  and against any and all liabilities,
obligations,  losses,  damages,  penalties,  actions,  judgments,  suits, costs,
expenses  or  disbursements  of  any  kind  whatsoever  which  may  at  any time
(including,  without limitation, at any time following the payment of the Loans)
be  imposed  on, incurred by or asserted against the Administrative Agent in any
way  relating  to or arising out of, the Commitments, this Agreement, any of the
other  Loan  Documents or any documents contemplated by or referred to herein or
therein  or  the transactions contemplated hereby or thereby or any action taken
or  omitted  by  the Administrative Agent under or in connection with any of the
foregoing;  provided  that  no  Lender  shall  be  liable for the payment of any
portion  of  such liabilities, obligations, losses, damages, penalties, actions,
judgments,  suits,  costs,  expenses  or  disbursements  resulting  from  the
Administrative  Agent's  gross negligence or willful misconduct.  The agreements
in  this  Section  shall  survive the payment of the Loans and all other amounts
payable  hereunder.

     Section  10.8   Administrative  Agent  in  Its  Individual  Capacity.  The
                     ----------------------------------------------------
Administrative  Agent and its Affiliates may make loans to, accept deposits from
and  generally engage in any kind of business with each of the Borrowers and its
respective  Affiliates  as though it were not the Administrative Agent hereunder
and  under  the  other Loan Documents.  With respect to the Loans made by it, it
shall  have  the  same rights and powers under this Agreement and the other Loan
Documents  as  any  Lender  and  may exercise the same as though it were not the
Administrative  Agent,  and the terms "Lender" and "Lenders" shall include it in
its  individual  capacity.

     Section  10.9   Successor  Administrative  Agent.  The Administrative Agent
                     --------------------------------
may  resign  as  Administrative  Agent upon 10 days' prior written notice to the
Lenders  and  the  Borrowers.  If  the  Administrative  Agent  shall  resign  as
Administrative Agent under this Agreement and the other Loan Documents, then the
Required  Lenders shall appoint from among the Lenders a successor agent for the
Lenders, which successor agent shall be subject to the approval of the Borrowers
if  no  Default or Event of Default shall have occurred and be continuing (which
approval  shall  not  be  unreasonably withheld), whereupon such successor agent
shall  succeed  to

                                       74
<PAGE>
the  rights,  powers  and  duties  of  the  Administrative  Agent,  and the term
"Administrative  Agent"  shall  mean  such  successor  agent effective upon such
appointment  and  approval, and the former Administrative Agent's rights, powers
and  duties  as  Administrative  Agent shall be terminated, without any other or
further  act  or  deed on the part of such former Administrative Agent or any of
the  parties  to this Agreement or any holders of the Loans.  After any retiring
Administrative  Agent's  resignation  as Administrative Agent, the provisions of
this  Article  X  shall  inure  to the benefit of such retiring Person as to any
actions taken or omitted to be taken by it while it was the Administrative Agent
under  this  Agreement  and  the  other  Loan  Documents.

                                   ARTICLE XI

                                  MISCELLANEOUS
                                  -------------

     Section  11.1   Amendments  and  Waivers.  Neither  this  Agreement nor any
                     ------------------------
other  Loan  Document,  nor  any  terms  hereof  or  thereof  may  be  amended,
supplemented  or  modified  except  in  accordance  with  the provisions of this
Section.  The Required Lenders may, or, with the written consent of the Required
Lenders,  the  Administrative  Agent may, from time to time, (a) enter into with
any  Borrower written amendments, supplements or modifications hereto and to the
other  Loan Documents for the purpose of adding any provisions to this Agreement
or  the other Loan Documents or changing in any manner the rights of the Lenders
or  of  the  Borrowers  hereunder  or  thereunder, (b) release collateral or (c)
waive,  on  such  terms  and  conditions  as  the  Required  Lenders  or  the
Administrative Agent, as the case may be, may specify in such instrument, any of
the requirements of this Agreement or the other Loan Documents or any Default or
Event  of  Default  and its consequences; provided, however, that no such waiver
                                          --------- -------
and no such amendment, supplement or modification shall (i) reduce the amount or
extend  the  scheduled date of maturity of any Loan made by any Lender or of any
installment thereof, or reduce the stated rate of any interest thereon or reduce
the  fee  payable  hereunder  to  any Lender or extend the scheduled date of any
payment  thereof  or increase the aggregate amount or extend the expiration date
of  any  Lender's  Commitments, in each case without the written consent of each
Lender  directly  affected thereby, (ii) amend, modify or waive any provision of
this  Section  11.1  or  reduce  the  percentages specified in the definition of
Required Lenders or consent to the assignment or transfer by any Borrower of any
of its respective rights and obligations under this Agreement and the other Loan
Documents  or  release  all or substantially all of the Collateral, in each case
without  the written consent of all the Lenders, or (iii) amend, modify or waive
any  provision  of  Article  X  without  the  written  consent  of  the  then
Administrative  Agent.  Any  such  waiver  and any such amendment, supplement or
modification  shall  apply  equally  to each of the Lenders and shall be binding
upon  any Borrower, the Lenders, the Administrative Agent and all future holders
of  the  Loans.  In  the  case of any waiver, the Borrowers, the Lenders and the
Administrative  Agent  shall  be  restored  to their former positions and rights
hereunder  and  under  the  other  Loan  Documents,  and any Default or Event of
Default  waived  shall  be deemed to be cured and not continuing; no such waiver
shall  extend  to  any subsequent or other Default or Event of Default or impair
any  right  consequent  thereon.

     Section  11.2   Notices.  All  notices, requests and demands to or upon the
                     -------
respective  parties  hereto  to  be  effective shall be in writing (including by
facsimile  transmission  followed  by  other  delivery,)  and,  unless otherwise
expressly  provided herein, shall be deemed to have been duly given or made when
delivered,  or,  in  the  case  of  telecopy  notice,  when  received, addressed

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<PAGE>
to  the  addresses  set  forth  on  Schedule  11.2  of  the  Borrowers  and  the
                                    --------------
Administrative Agent by messenger or by mail, or to such other address as may be
hereafter  notified  in  writing by the respective parties hereto; provided that
                                                                   --------
any notice, request or demand to or upon the Administrative Agent or the Lenders
pursuant  to  subsection  2.2,  2.4,  2.8  or  2.12 shall not be effective until
received.

     Section  11.3   No Waiver; Cumulative Remedies.  No failure to exercise and
                     ------------------------------
no  delay  in exercising, on the part of the Administrative Agent or any Lender,
any  right,  remedy,  power  or  privilege  hereunder  or  under  the other Loan
Documents  shall  operate  as  a  waiver thereof nor shall any single or partial
exercise  of  any right, remedy, power or privilege hereunder preclude any other
or further exercise thereof or the exercise of any other right, remedy, power or
privilege.  The  rights,  remedies,  powers  and  privileges herein provided are
cumulative  and  not  exclusive  of  any rights, remedies, powers and privileges
provided  by  law.

     Section  11.4   Survival.  All  covenants,  agreements, representations and
                     --------
warranties  made  hereunder,  in  the  other Loan Documents and in any document,
certificate  or  statement  delivered  pursuant hereto or in connection herewith
shall  be  considered  to  have been relied upon by the other parties hereto and
shall survive the execution and delivery of this Agreement and the making of the
Loans  hereunder regardless of any investigation made by any such other party or
on  its  behalf  and notwithstanding that the Administrative Agent or any Lender
may  have  had notice or knowledge of any Default or incorrect representation or
warranty  at  the  time  any credit is extended hereunder, and shall continue in
full force and effect as long as the principal of or any accrued interest on any
Loan  or any fee or any other amount payable under this Agreement is outstanding
and  unpaid  and so long as the Commitments have not expired or terminated.  The
provisions of Sections 2.14, 2.15, 2.16 and 11.5 and Article X shall survive and
remain  in  full  force  and  effect  regardless  of  the  consummation  of  the
transactions  contemplated hereby, the repayment of the Loans, the expiration or
termination  of  the  Commitments  or  the  termination of this Agreement or any
provision  hereof.

     Section  11.5   Payment,  Expenses  and  Taxes.  The  Borrowers jointly and
                     ------------------------------
severally  agree  (a) to pay or reimburse the Agents for all of their reasonable
out-of-pocket  costs  and expenses incurred in connection with the Loans and the
Commitments,  legal  due diligence in connection therewith, and the development,
preparation  and execution of, and any amendment, supplement or modification to,
consent to, or waiver of, the breach of any provision of, this Agreement and the
other  Loan Documents and any other documents prepared in connection herewith or
therewith,  and  the  consummation  and  administration  of  the  transactions
contemplated  hereby  and thereby, including, without limitation, the reasonable
fees  and  disbursements  of counsel to the Agents, (b) to pay or reimburse each
Lender  and  each  Agent  for  all its reasonable costs and expenses incurred in
connection  with  the  enforcement  or  preservation  of  any  rights under this
Agreement,  the  other  Loan  Documents and any such other documents prepared in
connection  herewith or therewith, including, without limitation, the reasonable
fees and disbursements of counsel to the Lenders and the Agents, (c) to pay, and
indemnify  and  hold  harmless  each  Lender  and  each  Agent from, any and all
recording  and  filing  fees  and  any  and  all liabilities with respect to, or
resulting  from any delay in paying, stamp, excise, mortgage recording and other
similar  taxes,  if  any,  which  are  payable  or  determined  to be payable in
connection  with  the execution and delivery of, or administration 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,

                                       76
<PAGE>
the  other  Loan  Documents  and  any  such  other documents, and (d) to pay and
indemnify and hold harmless each Lender and each Agent from and against, any and
all  other  liabilities  (excluding  taxes  other  than  Non-Excluded  Taxes and
excluding  Excess  Withholding  Taxes), obligations, losses, damages, penalties,
actions,  judgments,  suits,  costs,  expenses  or  disbursements of any kind or
nature  whatsoever  with  respect  to  the  execution,  delivery,  enforcement,
performance  and  administration of this Agreement, the other Loan Documents, or
the  use  of the proceeds of the Loans, and any such other documents, including,
without  limitation,  any  of  the  foregoing  relating  to  the  violation  of,
noncompliance  with  or  liability under any Environmental Law applicable to the
operations  of the Borrowers or any of the Properties (all the foregoing in this
clause  (d),  collectively,  the  "Indemnified Liabilities"), provided, that the
                                   -----------------------    --------
Borrowers  shall  have  no  obligation hereunder to any Agent or any Lender with
respect  to Indemnified Liabilities arising from the gross negligence or willful
misconduct  of  any  such  Agent  or  any  such Lender or for special, indirect,
consequential or punitive damages.  The agreements in this Section shall survive
repayment  of  the  Loans  and  all  other  amounts  payable  hereunder.

     Section  11.6   Successors  and  Assigns;  Participations  and Assignments.
                     ----------------------------------------------------------

          (a) This  Agreement  shall be binding upon and inure to the benefit of
     the Borrowers,  the Lenders,  the Administrative Agent and their respective
     successors  and assigns,  except that none of the  Borrowers  may assign or
     transfer any of its rights or obligations  under this Agreement without the
     prior written  consent of each Lender and any assignment or transfer by any
     Lender of its  rights  or  obligations  under  this  Agreement  or any Loan
     Document  must be made in  compliance  with  this  Section  11.6  (and  any
     purported assignment in violation of this Section shall be null and void).

          (b) Any  Lender  may,  without  the  consent of the  Borrowers  or the
     Administrative   Agent,   at  any  time  sell  to  one  or  more  financial
     institutions   or  other  entities  ("Loan   Participants")   participating
                                           -------------------
     interests in any Loan owing to such Lender,  any  Commitment of such Lender
     or any other  interest  of such Lender  hereunder  and under the other Loan
     Documents.  In the event of any such  sale by a Lender  of a  participating
     interest to a Loan  Participant,  (i) such Lender's  obligation  under this
     Agreement to the other parties to this  Agreement  shall remain  unchanged,
     (ii) such  Lender  shall  remain  solely  responsible  for the  performance
     thereof,  (iii)  such  Lender  shall  remain the holder of any such Loan or
     other  interest for all purposes  under this  Agreement  and the other Loan
     Documents,  (iv) the Borrowers and the Administrative  Agent shall continue
     to deal  solely  and  directly  with such  Lender in  connection  with such
     Lender's  rights and  obligations  under this  Agreement and the other Loan
     Documents,  and (v) no Loan Participant under any participation  shall have
     any right to approve any  amendment or waiver of any  provision of any Loan
     Document,  or any  consent to any  departure  by the  Borrowers  therefrom,
     except with respect to the matters described in clauses (i) and (ii) of the
     proviso to the second  sentence of Section 11.1. The Borrowers  agree that,
     while an Event of Default  shall have occurred and be continuing if amounts
     outstanding  under this  Agreement  are due or  unpaid,  or shall have been
     declared  or shall have become due and payable  upon the  occurrence  of an
     Event of  Default,  each Loan  Participant  shall,  to the  maximum  extent
     permitted  by  applicable  law,  be  deemed to have the right of set off in
     respect of its participating interest in amounts owing under this Agreement
     to the same  extent as if the  amount of its  participating  interest  were
     owing directly to it as a Lender under this

                                       77
<PAGE>
     Agreement;  provided, that, in purchasing such participating interest, such
                 --------
     Participant  shall be deemed to have  agreed to share with the  Lenders the
     proceeds  thereof as provided  in Section  11.7(a) as fully as if it were a
     Lender hereunder. The Borrowers also agree that each Loan Participant shall
     be entitled to the benefits of Sections 2.14, 2.15 and 2.16 with respect to
     its participation in the Commitments and the Loans outstanding from time to
     time as if it were a Lender,  provided  that,  in the case of Section  2.15
     such Loan  Participant  shall have complied with the  requirements  of said
     Section and provided,  further,  that no Loan Participant shall be entitled
     to  receive  any  greater  amount  pursuant  to any such  Section  than the
     transferor  Lender would have been entitled to receive in  connection  with
     the  same  event  or   circumstance   in  respect  of  the  amount  of  the
     participation   transferred  by  such   transferor   Lender  to  such  Loan
     Participant had no such transfer occurred.

          (c) Any Lender may at any time and from time to time assign,  with the
     consent of the Administrative Agent in the case of an assignment other than
     to another Lender or an Affiliate  thereof (which in each case shall not be
     unreasonably  withheld),  to any other Lender or to a Registered Entity (an
     "Assignee")  all or any  part of its  rights  and  obligations  under  this
      --------
     Agreement  and the other  Loan  Documents  pursuant  to an  Assignment  and
     Acceptance,  substantially  in the  form  of  Exhibit  F  executed  by such
                                                   ----------
     Assignee,  such assigning Lender and in the case of an Assignee that is not
     then a Lender or an Affiliate thereof,  and delivered to the Administrative
     Agent  for  its  acceptance  and  recording  in  the  Register.  Upon  such
     execution, delivery, acceptance and recording, from and after the effective
     date  determined  pursuant  to  such  Assignment  and  Acceptance,  (i) the
     Assignee  thereunder shall be a party hereto and, to the extent provided in
     such Assignment and Acceptance,  shall have the rights and obligations of a
     Lender  hereunder  with a  Commitment  as set forth  therein,  and (ii) the
     assigning  Lender   thereunder  shall,  to  the  extent  provided  in  such
     Assignment  and  Acceptance,  be released from its  obligations  under this
     Agreement (and, in the case of an Assignment and Acceptance covering all or
     the remaining portion of an assigning Lender's rights and obligations under
     this  Agreement,  such  assigning  Lender  shall cease to be a party hereto
     except as to Sections 2.14, 2.15 and 8.5).

          (d) The  Administrative  Agent,  on  behalf  of the  Borrowers,  shall
     maintain at the address of the Administrative  Agent referred to in Section
     11.2 a  copy  of  each  Assignment  and  Acceptance  delivered  to it and a
     register (the "Register") for the recordation of the names and addresses of
                    --------
     the  Lenders and the  Commitments  of, and  principal  amounts of the Loans
     owing to, each Lender from time to time.  The entries in the Register shall
     be conclusive,  in the absence of manifest  error,  and the Borrowers,  the
     Administrative  Agent and the Lenders shall treat each Person whose name is
     recorded  in the  Register  as the  owner  of a Loan  or  other  obligation
     hereunder as the owner  thereof for all purposes of this  Agreement and the
     other  Loan  Documents,  notwithstanding  any notice to the  contrary.  Any
     assignment  of any  Loan or  other  obligation  hereunder  (whether  or not
     evidenced by a Note) shall be effective only upon appropriate  entries with
     respect thereto being made in the Register. The Register shall be available
     for  inspection by the Borrowers or any Lender at any  reasonable  time and
     from time to time upon reasonable prior notice.

                                       78
<PAGE>
          (e) Upon its receipt of an Assignment  and  Acceptance  executed by an
     assigning  Lender and an Assignee  (and, in the case of an Assignee that is
     not  then a Lender  or an  affiliate  thereof,  the  Administrative  Agent)
     together  with,  except in the case of an  assignment  pursuant  to Section
     2.18, payment to the Administrative  Agent of a registration and processing
     fee of $3,500,  the  Administrative  Agent shall (i)  promptly  accept such
     Assignment  and  Acceptance  and  (ii)  on the  effective  date  determined
     pursuant thereto record the information  contained  therein in the Register
     and give notice of such  acceptance and  recordation to the Lenders and the
     Borrowers.  No assignment shall be effective for purposes of this Agreement
     unless it has been recorded in the Register as provided in this clause.

          (f) The  Borrowers  authorize  each  Lender  to  disclose  to any Loan
     Participant  or  Assignee  (each,  a  "Transferee")   and  any  prospective
                                            ----------
     Transferee,  subject  to the  provisions  of  Section  11.15,  any  and all
     financial  information in such Lender's possession concerning the Borrowers
     and their  Affiliates  which  has been  delivered  to such  Lender by or on
     behalf  of the  Borrowers  pursuant  to this  Agreement  or which  has been
     delivered  to such Lender by or on behalf of the  Borrowers  in  connection
     with such Lender's credit  evaluation of the Borrowers and their Affiliates
     prior to becoming a party to this Agreement.

          (g) The parties to this Agreement  acknowledge  that the provisions of
     this  subsection  concerning  assignments of Loans and Notes relate only to
     absolute  assignments and that such provisions do not prohibit  assignments
     creating security interests,  including,  without limitation, any pledge or
     assignment  by a Lender of any Loan or Note to any Federal  Reserve Bank in
     accordance with applicable law,  provided that no such assignment,  whether
     to a Federal Reserve Bank or other entity,  shall release a Lender from any
     of its obligations hereunder or substitute any such Federal Reserve Bank or
     other  entity  for such  Lender as a party  hereto  or  permit an  absolute
     assignment to occur other than in accordance  with such  provisions of this
     subsection.

     Section  11.7   Adjustments;  Set-off.
                     ---------------------

          (a) If any Lender (a "Benefited Lender") shall at any time receive any
                                ----------------
     payment of all or part of its Loans,  or interest  thereon,  or receive any
     collateral  in respect  thereof  (whether  voluntary or  involuntarily,  by
     set-off  pursuant  to events or  proceedings  of the nature  referred to in
     Article IX, or otherwise except as to Sections 2.18 and 11.6), in a greater
     proportion  than any such  payment to or  collateral  received by any other
     Lender,  if any,  in respect  of such other  Lender's  Loans,  or  interest
     thereon,  such  Benefited  Lender  shall  purchase  for cash from the other
     Lenders  a  participating  interest  in such  portion  of each  such  other
     Lender's  Loan or shall provide such other Lenders with the benefits of any
     such collateral,  or the proceeds  thereof,  as shall be necessary to cause
     such  Benefited  Lender to share the  excess  payment or  benefits  of such
     collateral or proceeds ratably with each of the Lenders; provided, however,
                                                              --------  -------
     that if all or any portion of such excess payment or benefits is thereafter
     recovered from such Benefited Lender, such purchase shall be rescinded, and
     the purchase price and benefits  returned,  to the extent of such recovery,
     but without interest.

                                       79
<PAGE>
          (b) In addition to any rights and remedies of the Lenders  provided by
     law,  each  Lender  shall  have the  right,  without  prior  notice  to the
     Borrowers,  any such notice being expressly  waived by the Borrowers to the
     extent  permitted  by  applicable  law,  upon any amount  becoming  due and
     payable by the  Borrowers  hereunder  (whether at the stated  maturity,  by
     acceleration  or  otherwise) to set-off and  appropriate  and apply against
     such  amount any and all  deposits  (general  or  special,  time or demand,
     provisional or final), in any currency, and any other credits, indebtedness
     or  claims,  in any  currency,  in each case  whether  direct or  indirect,
     absolute or  contingent,  matured or unmatured at any time held or owing by
     such  Lender or any  branch or agency  thereof  to or for the credit or the
     account  of the  Borrowers.  Each  Lender  agrees  promptly  to notify  the
     Borrowers  and  the  Administrative   Agent  after  any  such  set-off  and
     application  made by such  Lender,  provided  that the failure to give such
     notice shall not affect the validity of such set-off and application.

     Section 11.8   Counterparts.  This Agreement may be executed by one or more
                    ------------
of  the  parties  to  this  Agreement  on  any  number  of separate counterparts
(including  by  facsimile  transmission),  and  all  of  said counterparts taken
together  shall  be  deemed to constitute one and the same instrument.  A set of
the  copies  of  this Agreement signed by all the parties shall be maintained by
the  Borrowers  and  the  Administrative  Agent.

     Section  11.9   Severability.  Any  provision  of  this  Agreement which is
                     ------------
prohibited  or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without, to
the  extent  permitted  by law, invalidating the remaining provisions hereof and
any  such  prohibition or unenforceability in any jurisdiction shall not, to the
extent  permitted  by  law, invalidate or render unenforceable such provision in
any  other  jurisdiction.  The parties shall endeavor in good faith negotiations
to replace the invalid, illegal or unenforceable provision with valid provisions
the  economic  effect  of  which is as close as possible to that of the invalid,
illegal  or  unenforceable  provision.

     Section  11.10   Integration.  This  Agreement and the other Loan Documents
                      -----------
represent  the  entire  agreement of the Borrowers, the Administrative Agent and
the Lenders with respect to the subject matter hereof and thereof, and there are
no  promises,  undertakings, representations or warranties by the Administrative
Agent  or  any  Lender  relative  to  the  subject  matter hereof or thereof not
expressly  set  forth  or  referred  to  herein  or in the other Loan Documents.

     Section  11.11   Governing  Law.  THIS  AGREEMENT  AND  THE  RIGHTS  AND
                      --------------
OBLIGATIONS  OF  THE  PARTIES  HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD
TO ANY CONFLICT OF LAW PROVISION OR RULE THAT WOULD CAUSE THE APPLICATION OF THE
LAWS  OF  ANY  JURISDICTION  OTHER  THAN  THE  STATE  OF  NEW  YORK.

     Section  11.12   Submission  to  Jurisdiction;  Waivers.
                      --------------------------------------

               (a) Each of the Borrowers,  the Administrative  Agent and each of
          the Lenders hereby irrevocably and unconditionally:

                    (i) submits for itself and its  property in any legal action
               or  proceeding  relating  to this  Agreement  and the other  Loan
               Documents  to  which  it  is a  party,  or  for  recognition  and
               enforcement   of  any   judgment   in  respect   thereof  to  the
               non-exclusive  general jurisdiction of the courts of the State of
               New York,  the  courts of the United  States of  America  for the
               Southern  District  of New York,  and  appellate  courts from any
               thereof; and

                                       80
<PAGE>
                    (ii)  consents  that any such  action or  proceeding  may be
               brought in such courts and waives any  objection  that it may now
               or hereafter  have to the venue of any such action or  proceeding
               in any such court or that such action or  proceeding  was brought
               in an  inconvenient  court and  agrees  not to plead or claim the
               same.

               (b) Each of the Borrowers hereby irrevocably and unconditionally:

                    (i) consents to the  appointment of CT  Corporation  System,
               1633  Broadway,  New York,  New York 10019,  as its process agent
               (together with any successor  process agent, the "Process Agent")
                                                                 -------------
               upon  which  service of  process  in New York,  New York,  may be
               served  in any  legal  action or  proceeding  instituted  in such
               courts.  To the extent  permitted by applicable  law, each of the
               Borrowers  agrees that service of process may be made  personally
               or by mailing or  delivering a copy of the summons and  complaint
               or other legal  process in any legal action or  proceeding to the
               Borrowers,  as the case may be, in care of the applicable Process
               Agent  and  such  agent  is  hereby  authorized  to  receive  and
               acknowledge  the same for and on behalf of the Borrowers,  as the
               case may be, and to admit service with respect  thereto.  Service
               upon  the  applicable  Process  Agent  shall be  deemed  in every
               respect effective  service of process upon the Borrowers,  as the
               case may be, and shall be legal and binding  upon the  Borrowers,
               as the case may be, for all purposes  notwithstanding any failure
               to mail  copies of such legal  process to the  Borrowers,  or any
               failure on the part of the Borrowers,  to receive the same.  Each
               of the  Borrowers  further  agrees  that it will not  revoke  the
               appointment of the applicable Process Agent so long as any of the
               Notes  remain   outstanding  or  until  the  appointment,   which
               appointment each of the Borrowers similarly agrees not to revoke,
               of a successor  Process Agent  acceptable  to the  Administrative
               Agent such  acceptance not to be  unreasonably  withheld and such
               successor's acceptance of such appointment. Each of the Borrowers
               agrees  that it  will  at all  times  continuously  maintain  the
               applicable  Process  Agent to  receive  service of process in the
               State of New York on behalf of itself, and, in the event that for
               any reason such  Process  Agent shall cease to be the  applicable
               Process Agent,  each of the Borrowers  shall  promptly  appoint a
               successor  Process Agent acceptable to the  Administrative  Agent
               (such acceptance not to be unreasonably  withheld) for service of
               process  in the State of New York and shall  promptly  deliver to
               the Administrative Agent a copy of such successor Process Agent's
               acceptance or  acknowledgment  of that  appointment.  Each of the
               Borrowers will take any and all reasonable action, including, the
               filing  of any and all  documents  and  instruments  that  may be
               necessary to continue the  appointment of the applicable  Process
               Agent in full force and effect;

                                       81
<PAGE>
                    (ii) agrees that  nothing  herein  shall affect the right to
               effect service of process in any other manner permitted by law or
               shall limit the right to sue in any other jurisdiction; and

                    (iii) waives,  to the maximum  extent not  prohibited by law
               any right it may have to claim or recover in any legal  action or
               proceeding referred to in this subsection any special, exemplary,
               punitive or consequential damages.

     Section  11.13   Acknowledgements.  Each  of  the  Borrowers  hereby
                      ----------------
acknowledges  that:

          (a) it has been advised by counsel in connection with the negotiation,
     execution and delivery of this Agreement and the other Loan Documents;

          (b) neither the Administrative  Agent nor any Lender has any fiduciary
     relationship  with or duty to the Borrowers arising out of or in connection
     with  this  Agreement  or  any  of  the  other  Loan  Documents,   and  the
     relationship between the Administrative Agent and Lenders, on one hand, and
     the  Borrowers,  on the other hand, in connection  herewith or therewith is
     solely that of creditor and debtor; and

          (c) no joint venture is created  hereby or by the other Loan Documents
     or otherwise exists by virtue of the transactions contemplated hereby among
     the Lenders or among the Borrowers and the Lenders.

     Section  11.14   Waivers  of Jury Trial.  THE BORROWERS, THE ADMINISTRATIVE
                      ----------------------
AGENT AND THE LENDERS HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY JURY
IN  ANY  LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER LOAN
DOCUMENT  AND  FOR  ANY  COUNTERCLAIM WITH RESPECT THERETO TO THE FULLEST EXTENT
PERMITTED  BY  APPLICABLE  LAW.

     Section 11.15   Confidentiality.  Each of the Administrative Agent and each
                     ---------------
Lender  agrees to keep confidential all non-public information provided to it by
or  on  behalf  of the Borrowers or any Subsidiary thereof that is designated by
the  Borrowers  or  any Subsidiary as confidential; provided that nothing herein
                                                    -------- ----
shall  prevent  the  Administrative Agent or any Lender from disclosing any such
information  (a)  to  the  Administrative  Agent or any other Lender, (b) to any
Transferee  or prospective Transferee which agrees to comply with the provisions
of  this  Section  11.15,  (c)  to  the employees, directors, agents, attorneys,
accountants  and other professional advisors of such Lender for purposes related
to  the transactions contemplated by the Loan Documents, (d) upon the request or
demand of any Governmental Authority having jurisdiction over the Administrative
Agent  or  such  Lender,  (e)  in  response  to  any order of any court or other
Governmental  Authority  or  as may otherwise be required pursuant to applicable
law or regulation, (f) which has been publicly disclosed other than in breach of
this  Section  11.15,  or  (g)  in  connection  with  the exercise of any remedy
hereunder  or  under  any  other  Loan  Document.

                                       82
<PAGE>
    Section  11.16   Judgment  Currency.
                      ------------------

          (a) If for the purposes of enforcing the  obligations  of any Borrower
     under this Agreement or the Note or any other Loan Document it is necessary
     to convert a sum due from the  Borrowers in Dollars into another  currency,
     the parties  hereto agree,  to the fullest  extent  permitted by applicable
     law,  that the rate of exchange  used shall be that at which in  accordance
     with normal banking procedures the Lenders could purchase Dollars with such
     currency at or about 11:00 A.M.  (New York City time) on the  Business  Day
     preceding  that on which  final  judgment is given.  To the fullest  extent
     permitted by applicable  law, the  obligations in respect of any sum due to
     the Administrative  Agent or any Lender under this Agreement or the Note or
     any other Loan Document shall,  notwithstanding any adjudication  expressed
     in a currency other than Dollars,  be discharged only to the extent that on
     the  Business Day  following  receipt by the  Administrative  Agent or such
     Lender  of any  sum  adjudged  to be so  due in  such  other  currency  the
     Administrative  Agent or such Lender may in accordance  with normal banking
     procedures  purchase  Dollars  with such  other  currency  if the amount of
     Dollars  so  purchased  is  less  than  the  sum   originally  due  to  the
     Administrative Agent or such Lender in Dollars, the Borrowers,  jointly and
     severally,  agree to the fullest extent  permitted by applicable  law, as a
     separate obligation and notwithstanding any such adjudication, to indemnify
     the  Administrative  Agent or such  Lender  against  such loss,  and if the
     amount of  Dollars  so  purchased  exceeds  the sum  originally  due to the
     Administrative  Agent  or such  Lender,  the  Administrative  Agent or such
     Lender shall remit such excess to the Borrowers.

          (b) All amounts due under this Agreement, the Notes and the other Loan
     Documents shall be payable in Dollars.

     Section 11.17   Use of English Language.  Any translation of this Agreement
                     -----------------------
into  another  language  shall  have  no  interpretive effect.  All documents or
notices  to  be delivered pursuant to or in connection with this Agreement shall
be  in  the  English  language  or, if any such document or notice is not in the
English  language,  accompanied  by  an  English  translation  thereof, then the
English  language  version  of  any  such  document  or notice shall control for
purposes  hereof.

     Section  11.18   Headings.  Article  and  Section headings and the Table of
                      --------
Contents used herein are for convenience of reference only, are not part of this
Agreement  and  shall  not  affect  the  construction  of,  or  be  taken  into
consideration  in  interpreting,  this  Agreement.

                                       83
<PAGE>
     IN  WITNESS  WHEREOF,  the  parties hereto have caused this Agreement to be
duly  executed  and delivered by their proper and duly authorized officers as of
the  day  and  year  first  above  written.

ADMINISTRATIVE  AGENT:
---------------------
                               GENERAL  ELECTRIC  CAPITAL  CORPORATION
                               as  Administrative  Agent

                               By:
                                   -----------------------------------
                                   Name:     E.  Keith  Min
                                   Title:    Attorney-in-fact

<PAGE>
U.S.  BORROWERS
---------------
                               TELSCAPE  INTERNATIONAL,  INC.

                               By:
                                   -----------------------------------
                                    Name:     Peter  Alexander
                                    Title:     President

                               TELEREUNION,  INC.

                               By:
                                   -----------------------------------
                                    Name:     Peter  Alexander
                                    Title:     President

                               TELSCAPE  USA,  INC.

                               By:
                                   -----------------------------------
                                    Name:     Peter  Alexander
                                    Title:     President

                               MSN  COMMUNICATIONS,  INC.

                               By:
                                   -----------------------------------
                                    Name:     Peter  Alexander
                                    Title:     President

                               INTERLINK  COMMUNICATIONS,  INC.

                               By:
                                   -----------------------------------
                                    Name:     Peter  Alexander
                                    Title:     President

<PAGE>
                               TSCP  INTERNATIONAL,  INC.

                               By:
                                   -----------------------------------
                                    Name:     Peter  Alexander
                                    Title:     President

                               DC  COMMUNICATIONS,  INC.,

                               By:
                                   -----------------------------------
                                    Name:     Peter  Alexander
                                    Title:     President

                               ENABLECOMMERCE.COM,

                               By:
                                   -----------------------------------
                                    Name:     Peter  Alexander
                                    Title:     President

                               POINTE  COMMUNICATIONS  CORPORATION,

                               By:
                                   -----------------------------------
                                    Name:     Peter  Alexander
                                    Title:     President

                               POINTE  COMMUNICATIONS  CORPORATION,
                               a  Delaware  subsidiary

                               By:
                                   -----------------------------------
                                    Name:     Peter  Alexander
                                    Title:     President

<PAGE>
                               POINTECOM  INCORPORATED,

                               By:
                                   -----------------------------------
                                    Name:     Peter  Alexander
                                    Title:     President

                               GALATEL,  INC.,

                               By:
                                   -----------------------------------
                                    Name:     Peter  Alexander
                                    Title:     President

                               INTERNATIONAL  DIGITAL
                               TELECOMMUNICATIONS  SYSTEMS,  INC.,

                               By:
                                   -----------------------------------
                                    Name:     Peter  Alexander
                                    Title:     President

                               RENT-A-LINE  TELEPHONE  COMPANY,  LLC,

                               By:
                                   -----------------------------------
                                    Name:     Peter  Alexander
                                    Title:     President

                               POINTE  LOCAL  EXCHANGE  COMPANY,

                               By:
                                   -----------------------------------
                                    Name:     Peter  Alexander
                                    Title:     President

<PAGE>
                               OVERLOOK COMMUNICATIONS
                               INTERNATIONAL, INC.,

                               By:
                                   -----------------------------------
                                    Name:     Peter  Alexander
                                    Title:     President

                               TOPS  CORPORATION,

                               By:
                                   -----------------------------------
                                    Name:     Peter  Alexander
                                    Title:     President

                               WORLDLINK  COMMUNICATIONS,  INC.,

                               By:
                                   -----------------------------------
                                    Name:     Peter  Alexander
                                    Title:     President

                               PHOENIX  DATANET,  INC.,

                               By:
                                   -----------------------------------
                                    Name:     Peter  Alexander
                                    Title:     President

<PAGE>
                               MEXICAN  BORROWERS:
                               ------------------

                               TELEREUNION  S.A.  DE  C.V.,

                               By:
                                   -----------------------------------
                                    Name:
                                    Title:

                               TELEREUNION  INTERNATIONAL,  S.A.  DE  C.V.

                               By:
                                   -----------------------------------
                                    Name:
                                    Title:

                               VEXTRO  DE  M  XICO  S.A.  DE  C.V.

                               By:
                                   -----------------------------------
                                    Name:
                                    Title:

                               SERVICIOS  CORPORATIVOS  TELSCAPE  DE
                               MEXICO,  S.A  .  DE  C.V.

                               By:
                                   -----------------------------------
                                    Name:
                                    Title:

                               TELSCAPE  DE  M  XICO,  S.A.  DE  C.V.

                               By:
                                   -----------------------------------
                                    Name:
                                    Title:

<PAGE>
                               N.S.I.  S.A.  DE  C.V.

                               By:
                                   -----------------------------------
                                    Name:
                                    Title:

                               LAN  AND  WAN  S.A.  DE  C.V.

                               By:
                                   -----------------------------------
                                    Name:
                                    Title:

                               M.S.  NOTICIAS  Y  TELECOMUNICACIONES,
                               S.A.  DE  C.V.

                               By:
                                   -----------------------------------
                                    Name:
                                    Title:

                               SERVICIOS  DE  COMUNICACION  POPULAR,
                               S.  DE  R.L.

                               By:
                                   -----------------------------------
                                    Name:
                                    Title:

                               ENABLE  COMMERCE  DE  M  XICO,  S.A.  DE
                               C.V.

                               By:
                                   -----------------------------------
                                    Name:
                                    Title:

<PAGE>
Credit  Agreement
                                                                     Exhibit A-1

                       Form of Note for the U.S. Borrowers
                       -----------------------------------

<PAGE>
                                                                     Exhibit A-2

           Form of Note for Eurodollar Loans for the Mexican Borrowers
           -----------------------------------------------------------

<PAGE>
                                                                     Exhibit A-3

              Form of Note for ABR Loans for the Mexican Borrowers
              ----------------------------------------------------

<PAGE>
                                                                     Exhibit B-1

                   Form of Mexican Telecommunications Mortgage
                   -------------------------------------------

<PAGE>
                                                                     Exhibit B-2

                       Form of Mexican Industrial Mortgage
                       -----------------------------------

<PAGE>
                                                                     Exhibit B-3

                               Form of SCT Letter
                               ------------------

<PAGE>
                                                                       Exhibit C

                           Form of Security Agreement
                           --------------------------

<PAGE>
                                                                       Exhibit D

                          Form of Drawdown Certificate
                          ----------------------------

<PAGE>
                                                                     Exhibit E-1

                  Form of Opinion of Wilmer, Cutler & Pickering
                  ---------------------------------------------

<PAGE>
                                                                     Exhibit E-2

                     Form of Opinion of Gallastegui y Lozano
                     ---------------------------------------

<PAGE>
                                                                     Exhibit E-3

             Form of Opinion of Gonzalez Calvillo y Forastieri, S.C.
             -------------------------------------------------------

<PAGE>
                                                                     Exhibit E-4

              Form of Opinion of Gardere Wynne Sewell & Riggs, LLC
              ----------------------------------------------------

<PAGE>
                                                                     Exhibit E-5

                     Form of Opinion of Nida & Maloney, P.C.
                     ---------------------------------------

<PAGE>
                                                                     Exhibit E-6

              Form of Opinion of Nowalsky, Bronston & Gothard, LLP
              ----------------------------------------------------

<PAGE>
                                                                     Exhibit E-7

               Form of Opinion of Cushing, Morris and Armbruster,
               --------------------------------------------------
                  Florida and Georgia Counsel to the Borrowers
                  --------------------------------------------

<PAGE>
                                                                     Exhibit E-8

     Form of Opinion of Moore & Van Allen, PLLC, North Carolina Counsel to the
     -------------------------------------------------------------------------
                                    Borrowers
                                    ---------

<PAGE>
                                                                     Exhibit E-9

       Form of Opinion of Gordon & Silver, Nevada Counsel to the Borrowers
       -------------------------------------------------------------------

<PAGE>
                                                                       Exhibit F

                        Form of Assignment and Acceptance
                        ---------------------------------

<PAGE>
                                                                       Exhibit G

                            Form of Pledge Agreement
                            ------------------------

<PAGE>
                                                                       Exhibit H

                       Form of Collateral Agency Agreement
                       -----------------------------------

<PAGE>
                                                                       Exhibit I

                         Form of Stock Pledge Agreement
                         ------------------------------

<PAGE>
                                                                       Exhibit J

                      Form of Trademark Security Agreement
                      ------------------------------------

<PAGE>
                                                                       Exhibit K

                               Form of Endorsement
                               -------------------

<PAGE>
                                                                       Exhibit L

                     Form of Collateral Assignment of Lease
                     --------------------------------------

<PAGE>
                                                                       Exhibit M

                            Form of Landlord Consent
                            ------------------------

<PAGE>
                                                                       Exhibit N

                           Form of Accession Agreement
                           ---------------------------

<PAGE>
                                                                       Exhibit O

                        Form of Blocked Account Agreement
                        ---------------------------------

<PAGE>
                                                                       Exhibit P

               Form of Landlord's Waiver Agreement (Mountain View)
               ---------------------------------------------------

<PAGE>
                                                                       Exhibit Q

                           Form of California Consent
                           --------------------------

<PAGE>
                                                                          ------
                                                                       Exhibit R

                    Form of Telereunion Cash Pledge Agreement
                    -----------------------------------------

<PAGE>
                                                                          ------
                                                                       Exhibit S

                          Form of Consent and Agreement
                          -----------------------------

<PAGE>
                                                                       Exhibit T

                        Form of Account Control Agreement
                        ---------------------------------

<PAGE>
                                                                       Exhibit U

                    Form of Corporate Parts Pledge Agreement
                    ----------------------------------------

<PAGE>
                                CREDIT AGREEMENT

                                  SCHEDULE 1.0

                                 Other Borrowers
                                 ---------------
Other  U.S.  Borrowers
----------------------

1)     Telereunion,  Inc.,  a  Delaware  corporation

2)     Telscape  USA,  Inc.,  a  Texas  corporation

3)     MSN  Communications,  Inc.,  a  California  corporation

4)     Interlink  Communications,  Inc.,  a  Delaware  corporation

5)     TSCP  International,  Inc.,  a  Texas  corporation

6)     DC  Communications,  Inc.,  a  Texas  corporation

7)     EnableCommerce.com,  a  Delaware  corporation

8)     Pointe Communications Corporation, a Nevada corporation (formerly Charter
       Communications)

9)     Pointe  Communications  Corporation, a Delaware corporation (a subsidiary
       of  Pointe  Communications  Corporation,  a  Nevada  corporation)

10)    PointeCom  Incorporated,  a  Delaware  corporation  (a  subsidiary of the
       subsidiary  Pointe  Communications  Corporation, a  Delaware corporation)

11)    Galatel,  Inc.,  a  Georgia  corporation

12)    International  Digital  Telecommunications  Systems,  Inc.,  a  Florida
       corporation

13)    Rent-A-Line  Telephone  Company,  LLC,  a  Georgia  corporation

14)    Pointe  Local  Exchange  Company,  a  Georgia  corporation

15)    Overlook  Communications  International,  Inc.,  a  North  Carolina
       corporation

16)    Tops  Corporation,  a  Nevada  corporation

17)    Worldlink  Communications,  Inc.,  a  Georgia  corporation

18)    Phoenix  Datanet,  Inc.,  a  Texas  corporation

<PAGE>
Other  Mexican  Borrowers
-------------------------

1)     Vextro  de  Mexico  S.A.  de  C.V.,  a  Mexican  corporation

2)     Servicios  Corporativos  Telscape  de  Mexico,  S.A.  de  C.V., a Mexican
       corporation

3)     Telscape  de Mexico, S.A. de C.V. (formerly Integracion de Redes, S.A. de
       C.V.),  a  Mexican  corporation

4)     N.S.I.  S.A.  de  C.V.,  a  Mexican  corporation

5)     Lan  and  Wan  S.A.  de  C.V.,  a  Mexican  corporation

6)     MS  Noticias  y  Telecomunicaciones,  S.A. de C.V., a Mexican corporation

7)     Servicios  de  Comunicacion  Popular,  S.  de R.L., a Mexican corporation

8)     Enable  Commerce  de  Mexico,  S.A.  de  C.V.,  a  Mexican  corporation

9)     US  Charter  de  Mexico,  S.A.  de  C.V.,  a  Mexican  corporation

<PAGE>
                                CREDIT AGREEMENT

                                  SCHEDULE 1.1

                                   Commitments
                                   -----------

                                                             Commitment
Lender                                                         Amount
------                                                         ------

GE Capital Corporation                                       $60,000,000

<PAGE>
                                   SCHEDULE 3.2

                                 ADVERSE CHANGES

The  financial  projections and the financial condition of the Company have been
negatively  affected  by  the  following  events  since  June  30,  2000:

     (i) The Mexican network was expected to be complete and operational  during
     the second  quarter of 2000.  however,  due to delays in  construction  and
     interconnection with Telmex, the network became only partially  operational
     during the third  quarter  and is not  expected  to be  complete  until the
     fourth  quarter  of 2000.  This delay has had a  significant  impact on the
     gross  margins  earned  in the  prepaid  calling  card  and  the  wholesale
     businesses.

     (ii) The completion of the Competitive  Local Exchange  Carrier network and
     marketing of such services was delayed by approximately  one quarter due to
     delay in the completion of the build out and delay in the implementation of
     the Operating Support System necessary to provision customers.

     (iii) The non-CLEC one plus  business in the United  States was closed as a
     result of negative operating results.

Borrowers acknowledge that nothing in the disclosures in this Schedule 3.2 shall
be  deemed  to  alter  the Borrowers' obligations under the Agreement, including
specifically  those  of  Holdings  with  respect  to  the covenants contained in
Article VII, or limit the Lenders' or Administrative Agent's rights and remedies
under  the  Agreement.

<PAGE>
                                  SCHEDULE 5.16

Additional  Conditions  Subsequent:

       Blocked  Account  Agreement  with
       Chase  Manhattan  Bank

       Blocked  Account  Agreement  with
       Summit  (?)  Bank

       Blocked  Account  Agreement  with
       Bank  of  America,  N.A.

       Pledge  of  shares  in  BCH  (?)

<PAGE>
                                    EXHIBITS

Exhibit  A-1     Form  of  Note  for  the  U.S.  Borrowers

Exhibit  A-2     Form  of  Note  for  Eurodollar Loans for the Mexican Borrowers

Exhibit  A-3     Form  of  Note  for  ABR  Loans  for  the  Mexican  Borrowers

Exhibit  B-1     Form  of  Mexican  Telecommunications  Mortgage

Exhibit  B-2     Form  of  Mexican  Industrial  Mortgage

Exhibit  B-3     Form  of  SCT  Notice

Exhibit  C       Form  of  Security  Agreement

Exhibit  D       Form  of  Drawdown  Certificate

Exhibit  E-1     Form of Opinion of Wilmer, Cutler & Pickering, special New York
                 counsel  to  the  Borrowers

Exhibit  E-2     Form  of  Opinion  of Gallastegui y Lozano, Mexican counsel for
                 Loan  Documents  to  the  Borrowers

Exhibit E-3      Form  of  Opinion  of  Gonzalez  Calvillo  y  Forastieri, S.C.,
                 Mexican counsel for Corporate Legal Opinions to  the  Borrowers

Exhibit  E-4     Form  of  Opinion  of  Gardere Wynne Sewell & Riggs, LLC, Texas
                 counsel  to Holdings, Telscape USA, Inc., TSCP International,
                 Inc., Telereunion, Inc.  and  Interlink  Communications,  Inc.

Exhibit  E-5     Form  of Opinion of Nida & Maloney, P.C., California counsel to
                 MSN  Communications,  Inc.  and  Interlink Communications, Inc.

Exhibit  E-6     Form  of  Opinion of Nowalsky, Bronston & Gothard, LLP, special
                 U.S.  telecommunications  regulatory  counsel  to  the  U.S.
                 Borrowers

Exhibit  E-7     Form  of  Opinion of Cushing, Morris & Armbruster, LLP, Florida
                 and  Georgia  Counsel  to  the  U.S.  Borrowers

Exhibit  E-8     Form  of  Opinion  of  Moore  & Van Allen, PLLC, North Carolina
                 Counsel  to  the  U.S.  Borrowers

Exhibit  E-9     Form  of  Opinion of Gordon & Siver, Nevada Counsel to the U.S.
                 Borrowers

<PAGE>
Exhibit  F       Form  of  Assignment  and  Acceptance

Exhibit  G       Form  of  Pledge  Agreement

Exhibit  H       Form  of  Collateral  Agency  Agreement

Exhibit  I       Form  of  Stock  Pledge  Agreement

Exhibit  J       Form  of  Trademark  Security  Agreement

Exhibit  K       Form  of  Endorsement

Exhibit  L       Form  of  Collateral  Assignment  of  Lease

Exhibit  M      Form  of  Landlord  Consent

Exhibit  N      Form  of  Accession  Agreement

Exhibit  O      Form  of  Blocked  Account  Agreement

Exhibit  P      Form  of  Landlord's  Waiver  Agreement  (Mountain  View)

Exhibit  Q      Reserved

Exhibit  R      Reserved

Exhibit  S      Form  of  Consent  and  Agreement

Exhibit  T      Form  of  Account  Control  Agreement

Exhibit  U      Form  of  Corporate  Parts  Pledge  Agreement

                                    SCHEDULES

Schedule  1.0   Other  Borrowers

Schedule  1.1   Commitments

Schedule  3.2   Adverse  Changes

Schedule  3.3   Defaults  Under  Contractual  Obligations

Schedule  3.4   Other  Consents,  Permits  and  Authorizations

Schedule  3.6   Litigation

<PAGE>
Schedule  3.8   Real  Property

Schedule  3.9   Intellectual  Property

Schedule  3.11  Taxes

Schedule  3.21A Permits, Authorizations, Approvals and Licenses Necessary in
                the  Conduct  of  its  Business  as  Currently  Conducted

Schedule  3.21  Permits,  Authorizations, Approvals and Licenses Necessary to
                Construct  the  Network

Schedule  3.23  ERISA

Schedule  3.25  Jurisdiction  of Incorporation and Principal Executive Office

Schedule  3.27  Insurance

Schedule  3.28  Accounts

Schedule 4.1(x) Third  Party  Consents

Schedule  5.16  Conditions  Subsequent

Schedule 6.1(e) Easements,  Etc.

Schedule 6.1(f) Permitted  Liens

Schedule  6.6   Unrestricted  Obligations

Schedule  6.13  Indebtedness

Schedule  11.2  Notice  Addresses

<PAGE>
<TABLE>
<CAPTION>
                                        TABLE  OF  CONTENTS

                                                                                     PAGE
<S>              <C>                                                                  <C>
ARTICLE I        INTERPRETATION OF THIS AGREEMENT; DEFINITIONS . . . . . . . . . . . . 1

  Section 1.1    Defined Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

  Section 1.2    Time Periods . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23

  Section 1.3    Accounting Terms and Determinations . . . . . . . . . . . . . . . . .24

  Section 1.4    Construction . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24

  Section 1.5    Schedules and Exhibits . . . . . . . . . . . . . . . . . . . . . . . 24

  Section 1.6    UCC Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .24

  Section 1.7    Administrative Agent's Discretion . . . . . . . . . . . . . . . . . .24

ARTICLE II       LOANS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .24

  Section 2.1    Agreement to Lend . . . . . . . . . . . . . . . . . . . . . . . . . .24

  Section 2.2    Procedure for Borrowing . . . . . . . . . . . . . . . . . . . . . . .25

  Section 2.3    Commitment and Other Fees . . . . . . . . . . . . . . . . . . . . . .26

  Section 2.4    Termination or Reduction of Commitments . . . . . . . . . . . . . . .26

  Section 2.5    The Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .26

  Section 2.6    Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28

  Section 2.7    Amortization of Loans . . . . . . . . . . . . . . . . . . . . . . . .28

  Section 2.8    Optional and Mandatory Prepayments . . . . . . . . . . . . . . . . . 28

  Section 2.9    Interest Rates and Payment Dates . . . . . . . . . . . . . . . . . . 30

  Section 2.10   Computation of Interest and Fees . . . . . . . . . . . . . . . . . . 30

  Section 2.11   Inability to Determine Interest Rate . . . . . . . . . . . . . . . . 31

  Section 2.12   Pro Rata Treatment and Payments . . . . . . . . . . . . . . . . . . .31

  Section 2.13   Illegality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32

  Section 2.14   Requirements of Law . . . . . . . . . . . . . . . . . . . . . . . . .33

  Section 2.15   Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .34

  Section 2.16   Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .37

  Section 2.17   Change of Lending Office;  Filing of Certificates or Documents. . . .38

  Section 2.18   Replacement Lenders . . . . . . . . . . . . . . . . . . . . . . . . .38

ARTICLE III      REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . . . 39

  Section 3.1    Financial Condition . . . . . . . . . . . . . . . . . . . . . . . . .39

  Section 3.2    No Change . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .39

  Section 3.3    Existence; Compliance with Law and Agreements . . . . . . . . . . . .39

                                      -i-
<PAGE>
                                        TABLE  OF  CONTENTS
                                            (CONTINUED)

                                                                                     PAGE

  Section 3.4    Power; Authorization; Enforceable Obligations . . . . . . . . . . . .39

  Section 3.5    No Legal Bar . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40

  Section 3.6    No Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . .40

  Section 3.7    No Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40

  Section 3.8    Ownership of Property; Liens . . . . . . . . . . . . . . . . . . . . 41

  Section 3.9    Intellectual Property . . . . . . . . . . . . . . . . . . . . . . . .41

  Section 3.10   No Burdensome Restrictions . . . . . . . . . . . . . . . . . . . . . 41

  Section 3.11   Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .41

  Section 3.12   Federal Regulations . . . . . . . . . . . . . . . . . . . . . . . . .41

  Section 3.13   Availability and Transfer of Foreign Currency . . . . . . . . . . . .41

  Section 3.14   Investment Company Act; Other Regulations . . . . . . . . . . . . . .41

  Section 3.15   Purpose of Loans . . . . . . . . . . . . . . . . . . . . . . . . . . 42

  Section 3.16   Environmental Matters . . . . . . . . . . . . . . . . . . . . . . . .42

  Section 3.17   Mexican Security Documents . . . . . . . . . . . . . . . . . . . . . 42

  Section 3.18   True and Complete Disclosure . . . . . . . . . . . . . . . . . . . . 43

  Section 3.19   Submission to Law and Jurisdiction . . . . . . . . . . . . . . . . . 43

  Section 3.20   Supply Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . 43

  Section 3.21   Permits and Approvals . . . . . . . . . . . . . . . . . . . . . . . .43

  Section 3.22   U.S. Security Documents . . . . . . . . . . . . . . . . . . . . . . .43

  Section 3.23   ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .44

  Section 3.24   Solvency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44

  Section 3.25   Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44

  Section 3.26   US Charter de Mexico, S.A. de C.V. . . . . . . . . . . . . . . . . . 44

  Section 3.27   Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .44

  Section 3.28   Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44

  Section 3.29   Servicio Corporativos . . . . . . . . . . . . . . . . . . . . . . . .45

ARTICLE IV       CONDITIONS PRECEDENT . . . . . . . . . . . . . . . . . . . . . . . . 45

  Section 4.1    Conditions to Initial Loans . . . . . . . . . . . . . . . . . . . . .45

  Section 4.2    Condition to Each Loan . . . . . . . . . . . . . . . . . . . . . . . 50

ARTICLE V        AFFIRMATIVE COVENANTS . . . . . . . . . . . . . . . . . . . . . . . .52

  Section 5.1    Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . 52

                                      -ii-
<PAGE>
                                        TABLE  OF  CONTENTS
                                            (CONTINUED)

                                                                                     PAGE

  Section 5.2    Certificates; Other Information . . . . . . . . . . . . . . . . . . .53

  Section 5.3    Payment of Obligations . . . . . . . . . . . . . . . . . . . . . . . 54

  Section 5.4    Conduct of Business; Maintenance of Existence; Compliance with Laws .54

  Section 5.5    Maintenance of Property; Insurance . . . . . . . . . . . . . . . . . 54

  Section 5.6    Inspection of Property; Books and Records; Discussions . . . . . . . 54

  Section 5.7    Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .55

  Section 5.8    Environmental Laws . . . . . . . . . . . . . . . . . . . . . . . . . 55

  Section 5.9    Maintenance of Liens of the Security Documents . . . . . . . . . . . 56

  Section 5.10   Pledge of After Acquired Property; Additional Borrowers . . . . . . .56

  Section 5.11   Maintenance of Permits and Approvals . . . . . . . . . . . . . . . . 57

  Section 5.12   Supply Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . 57

  Section 5.13   Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . .57

  Section 5.14   Political Risk Insurance. . . . . . . . . . . . . . . . . . . . . . .58

  Section 5.15   Vextro Permit. . . . . . . . . . . . . . . . . . . . . . . . . . . . 58

  Section 5.16   Conditions Subsequent. . . . . . . . . . . . . . . . . . . . . . . . 58

  Section 5.17   US Charter de Mexico, S.A. de C.V. . . . . . . . . . . . . . . . . . 58

ARTICLE VI       NEGATIVE COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . 58

  Section 6.1    Limitation on Liens . . . . . . . . . . . . . . . . . . . . . . . . .58

  Section 6.2    Limitation on Fundamental Changes . . . . . . . . . . . . . . . . . .59

  Section 6.3    Limitation on Investments, Loans and Advances . . . . . . . . . . . .60

  Section 6.4    Limitation on Optional Payments and Modifications
                 of Debt Instruments and other Obligations . . . . . . . . . . . . . .60

  Section 6.5    Limitation on Transactions with Affiliates . . . . . . . . . . . . . 61

  Section 6.6    Limitation of Restricted Payments . . . . . . . . . . . . . . . . . .61

  Section 6.7    Limitation on Changes in Fiscal Year . . . . . . . . . . . . . . . . 61

  Section 6.8    Limitation on Issuance of Capital Stock . . . . . . . . . . . . . . .61

  Section 6.8    Limitation on Issuance of Capital Stock TC "  Section 6.8
                 Limitation on Issuance of Capital Stock" \l "2". . . . . . . . . . . 61

  Section 6.9    Conduct of Business . . . . . . . . . . . . . . . . . . . . . . . . .62

  Section 6.10   Amendment of Material Contracts . . . . . . . . . . . . . . . . . . .62

  Section 6.11   Additional Bank Accounts . . . . . . . . . . . . . . . . . . . . . . 62

                                     -iii-
<PAGE>
                                        TABLE  OF  CONTENTS
                                            (CONTINUED)

                                                                                     PAGE

  Section 6.12   Infrastructure Build Out . . . . . . . . . . . . . . . . . . . . . . 62

  Section 6.13   Limitation on Indebtedness . . . . . . . . . . . . . . . . . . . . . 62

  Section 6.14   Limitation on Sale of Collateral . . . . . . . . . . . . . . . . . . 62

ARTICLE VII      FINANCIAL CONDITION COVENANTS . . . . . . . . . . . . . . . . . . . .63

  Section 7.1    Ratio of Consolidated Total Debt to Total Capitalization . . . . . . 63

  Section 7.2    Maximum Leverage Ratio . . . . . . . . . . . . . . . . . . . . . . . 63

  Section 7.3    Capital Expenditures . . . . . . . . . . . . . . . . . . . . . . . . 63

  Section 7.4    Ratio of Consolidated EBITDA
                 to Consolidated Debt Service Obligations . . . . . . . . . . . . . . 64

  Section 7.5    Minimum Revenues . . . . . . . . . . . . . . . . . . . . . . . . . . 64

  Section 7.6    Minimum Consolidated EBITDA . . . . . . . . . . . . . . . . . . . . .64

  Section 7.7    Fixed Charge Coverage Ratio . . . . . . . . . . . . . . . . . . . . .65

ARTICLE VIII     SUBORDINATION; WAIVER . . . . . . . . . . . . . . . . . . . . . . . .65

  Section 8.1    Subordination . . . . . . . . . . . . . . . . . . . . . . . . . . . .65

  Section 8.2    Turnover of Improper Payments . . . . . . . . . . . . . . . . . . . .66

  Section 8.3    Obligations Absolute; Waivers. . . . . . . . . . . . . . . . . . . . 66

  Section 8.4    Subrogation . . . . . . . . . . . . . . . . . . . . . . . . . . . . .68

  Section 8.5    Limitation on Actions . . . . . . . . . . . . . . . . . . . . . . . .68

  Section 8.6    Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . .69

  Section 8.7    Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . .70

  Section 8.8    Understanding of Waivers . . . . . . . . . . . . . . . . . . . . . . 70

  Section 8.9    Unlimited Liability . . . . . . . . . . . . . . . . . . . . . . . . .70

ARTICLE IX       EVENTS OF DEFAULT . . . . . . . . . . . . . . . . . . . . . . . . . .71

ARTICLE X        THE ADMINISTRATIVE AGENT . . . . . . . . . . . . . . . . . . . . . . 74

  Section 10.1   Appointment . . . . . . . . . . . . . . . . . . . . . . . . . . . . .74

  Section 10.2   Delegation of Duties . . . . . . . . . . . . . . . . . . . . . . . . 74

  Section 10.3   Exculpation Provisions . . . . . . . . . . . . . . . . . . . . . . . 74

  Section 10.4   Reliance by Administrative Agent . . . . . . . . . . . . . . . . . . 75

  Section 10.5   Notice of Default . . . . . . . . . . . . . . . . . . . . . . . . . .75

  Section 10.6   Non-Reliance on Administrative Agent and Other Lenders . . . . . . . 75

  Section 10.7   Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . .76

                                      -iv-
<PAGE>
                                        TABLE  OF  CONTENTS
                                            (CONTINUED)

                                                                                     PAGE

  Section 10.8   Administrative Agent in Its Individual Capacity . . . . . . . . . . .76

  Section 10.9   Successor Administrative Agent . . . . . . . . . . . . . . . . . . . 76

ARTICLE XI       MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . .77

  Section 11.1   Amendments and Waivers . . . . . . . . . . . . . . . . . . . . . . . 77

  Section 11.2   Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .77

  Section 11.3   No Waiver; Cumulative Remedies . . . . . . . . . . . . . . . . . . . 78

  Section 11.4   Survival . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78

  Section 11.5   Payment, Expenses and Taxes . . . . . . . . . . . . . . . . . . . . .78

  Section 11.6   Successors and Assigns; Participations and Assignments . . . . . . . 79

  Section 11.7   Adjustments; Set-off . . . . . . . . . . . . . . . . . . . . . . . . 81

  Section 11.8   Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82

  Section 11.9   Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82

  Section 11.10  Integration . . . . . . . . . . . . . . . . . . . . . . . . . . . . .82

  Section 11.11  Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . .82

  Section 11.12  Submission to Jurisdiction; Waivers . . . . . . . . . . . . . . . . .82

  Section 11.13  Acknowledgements . . . . . . . . . . . . . . . . . . . . . . . . . . 84

  Section 11.14  Waivers of Jury Trial . . . . . . . . . . . . . . . . . . . . . . . .84

  Section 11.15  Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . .84

  Section 11.16  Judgment Currency . . . . . . . . . . . . . . . . . . . . . . . . . .84

  Section 11.17  Use of English Language . . . . . . . . . . . . . . . . . . . . . . .85

  Section 11.18  Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
</TABLE>

                                      -v-
<PAGE>LOAN AND SECURITY AGREEMENT

     This  LOAN  AND  SECURITY  AGREEMENT  (this  "Agreement"),  is  dated as of
                                                   ---------
September         ,  2000  (the  "Closing  Date"),  by and between the following
           -------
parties:

LENDER/SECURED  PARTY:         NTFC  CAPITAL CORPORATION, a Delaware corporation
                               with  offices  at  501  Corporate  Centre  Drive,
                               Franklin,  Tennessee  37067  (the "Lender");  and
                                                                  ------

BORROWER/DEBTOR:               POINTE  COMMUNICATIONS  CORPORATION,  a  Nevada
                               corporation  with its principal place of business
                               at  1325 Northmeadow Parkway, Suite 110, Roswell,
                               Georgia  30076  (the  "Borrower").
                                                      --------

     This  Agreement  includes the general terms and conditions contained herein
and  all  the  exhibits  and  schedules  attached  hereto,  all  of  which  are
incorporated  herein.  In  the event of a conflict between the general terms and
conditions  and  any schedule, the additional terms and conditions stated in the
schedule  shall  control.

     By  executing  this  Agreement,  the  Lender  agrees  to  make loans to the
Borrower,  and  the  Borrower  agrees  to  borrow from the Lender and to provide
collateral  to  secure  such  loans,  all  on the terms and conditions set forth
herein.

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

LENDER:                                 BORROWER:
------                                  --------

NTFC  CAPITAL  CORPORATION              POINTE  COMMUNICATIONS  CORPORATION

BY:                                     BY:
   ------------------------------          ------------------------------
TITLE:                                  TITLE:
      ---------------------------             ---------------------------
DATE:                                   DATE:
     ----------------------------            ----------------------------

<PAGE>
<TABLE>
<CAPTION>
                                      TABLE OF CONTENTS

                                                                                         Page
<S>          <C>                                                                           <C>
ARTICLE 1:   DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
     1.01.   Certain Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
     1.02    Accounting Principles; Subsidiaries. . . . . . . . . . . . . . . . . . . . . .10
     1.03    UCC Terms. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11
     1.04    General Construction; Captions. . . . . . . . . . . . . . . . . . . . . . . . 11
     1.05    References to Documents and Laws. . . . . . . . . . . . . . . . . . . . . . . 11

ARTICLE 2:   LOANS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11
     2.01    Commitment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
     2.02.   Note and Payment Terms. . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
     2.03.   Procedures for Borrowing. . . . . . . . . . . . . . . . . . . . . . . . . . . 13
     2.04.   Prepayments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .14
     2.05    Computation of Interest. . . . . . . . . . . . . . . . . . . . . . . . . . . .14
     2.06    Payments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
     2.07    Indemnity. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .15
     2.08    Use of Proceeds. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .15
     2.09    Fees. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
     2.10    Lender's Expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .15
     2.11    Increased Costs and Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . .16

ARTICLE 3:   COLLATERAL AND SECURITY AGREEMENT. . . . . . . . . . . . . . . . . . . . . . .17
     3.01.   Grant of Security Interest. . . . . . . . . . . . . . . . . . . . . . . . . . 17
     3.02    Priority of Security Interests. . . . . . . . . . . . . . . . . . . . . . . . 18
     3.03    Further Documentation; Pledge of Instruments. . . . . . . . . . . . . . . . . 18
     3.04    Further Identification of Collateral. . . . . . . . . . . . . . . . . . . . . 18
     3.05    Remedies. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
     3.06    Standard of Care. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
     3.07    Advances to Protect Collateral. . . . . . . . . . . . . . . . . . . . . . . . 19
     3.08    License to Use. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
     3.09    Guarantees. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
     3.10    Collateral Assignment of Nortel Purchase Agreement. . . . . . . . . . . . . . 19
     3.11    Release of Security Interest. . . . . . . . . . . . . . . . . . . . . . . . . 20

ARTICLE 4:   REPRESENTATIONS AND WARRANTIES. . . . . . . . . . . . . . . . . . . . . . . . 20
     4.01.   Organization and Qualification. . . . . . . . . . . . . . . . . . . . . . . . 20
     4.02.   Authority and Authorization. . . . . . . . . . . . . . . . . . . . . . . . . .20
     4.03.   Execution and Binding Effect. . . . . . . . . . . . . . . . . . . . . . . . . 20
     4.04    Governmental Authorizations. . . . . . . . . . . . . . . . . . . . . . . . . .20
     4.05    Regulatory Authorizations. . . . . . . . . . . . . . . . . . . . . . . . . . .20
     4.06    Material Agreement; Absence of Conflicts. . . . . . . . . . . . . . . . . . . 21

                                     i
<PAGE>
     4.07    No Restrictions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .21
     4.08    Financial Statements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
     4.09    Financial Accounting Practices. . . . . . . . . . . . . . . . . . . . . . . . 21
     4.10    Accurate and Complete Disclosure. . . . . . . . . . . . . . . . . . . . . . . 21
     4.11    No Event of Default; Compliance with Material Agreements. . . . . . . . . . . 22
     4.12    Litigation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
     4.13    Rights to Property; Intellectual Property. . . . . . . . . . . . . . . . . . .22
     4.14    Financial Condition. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .22
     4.15    Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .22
     4.16    No Material Adverse Change. . . . . . . . . . . . . . . . . . . . . . . . . . 22
     4.17    No Regulatory Event. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .22
     4.18.   Trade Relations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .22
     4.19.   No Brokerage Fees. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .23
     4.20.   Margin Stock; Regulation U. . . . . . . . . . . . . . . . . . . . . . . . . . 23
     4.21.   Investment Company; Public Utility Holding Company. . . . . . . . . . . . . . 23
     4.22.   Personal Holding Company; Subchapter S. . . . . . . . . . . . . . . . . . . . 23
     4.23.   ERISA. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .23
     4.24.   Environmental Warranties. . . . . . . . . . . . . . . . . . . . . . . . . . . 23
     4.25.   Security Interests. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
     4.26.   Place of Business. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .24
     4.27.   Location of Collateral. . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
     4.28.   Clear Title To Collateral. . . . . . . . . . . . . . . . . . . . . . . . . . .24
     4.29.   Assumed Names. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .24
     4.30.   Transactions with Affiliates. . . . . . . . . . . . . . . . . . . . . . . . . 24
     4.31.   Nortel Purchase Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . .24

ARTICLE 5:   CONDITIONS OF CLOSING. . . . . . . . . . . . . . . . . . . . . . . . . . . . .24
     5.01.   Borrower's, Telscape's and the other Guarantors' Certificate. . . . . . . . . 24
     5.02.   Opinions of Counsel. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .25
     5.03.   Closing Documents. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .25

ARTICLE 6:   CONDITIONS OF LENDING. . . . . . . . . . . . . . . . . . . . . . . . . . . . .26
     6.01.   Conditions for Initial Advance. . . . . . . . . . . . . . . . . . . . . . . . 26
     6.02.   Conditions for All Advances. . . . . . . . . . . . . . . . . . . . . . . . . .26
     6.03.   Affirmation of Representations and Warranties. . . . . . . . . . . . . . . . .27
     6.04.   Deadline for Funding Conditions. . . . . . . . . . . . . . . . . . . . . . . .27

ARTICLE 7:   AFFIRMATIVE COVENANTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . .28
     7.02.   Other Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .29
     7.03    Notice of Pension Related Events. . . . . . . . . . . . . . . . . . . . . . . 30
     7.04    Inspection Rights. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .30
     7.05.   Preservation of Corporate Existence and Qualification. . . . . . . . . . . . .30
     7.06.   Continuation of Business. . . . . . . . . . . . . . . . . . . . . . . . . . . 30
     7.07.   Insurance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .30

                                     ii
<PAGE>
     7.08.   Payment of Taxes, Charges, Claims and Current Liabilities. . . . . . . . . . .31
     7.09.   Financial Accounting Practices. . . . . . . . . . . . . . . . . . . . . . . . 32
     7.10.   Compliance with Laws. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
     7.11.   Use of Proceeds. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .32
     7.12    Government Authorizations; Regulatory Authorizations, Etc.. . . . . . . . . . 32
     7.13.   Contracts and Franchises. . . . . . . . . . . . . . . . . . . . . . . . . . . 33
     7.14.   Consents. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
     7.15.   Financial Covenants. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .33
     7.16.   Construction and Storage. . . . . . . . . . . . . . . . . . . . . . . . . . . 33
     7.17    Upgrade of Equipment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
     7.18    Further Assurances - Guarantors. . . . . . . . . . . . . . . . . . . . . . . .33

ARTICLE 8:   NEGATIVE COVENANTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
     8.01.   Restrictions on Indebtedness, Liens and Sale of Collateral. . . . . . . . . . 34
     8.02    Limitation on Contingent Obligations. . . . . . . . . . . . . . . . . . . . . 34
     8.03.   Prohibition of Mergers, Acquisitions, Name, Office or Business Changes, Etc. .34
     8.04    Termination of Nortel Purchase Agreement. . . . . . . . . . . . . . . . . . . 35
     8.05.   Removal of Collateral. . . . . . . . . . . . . . . . . . . . . . . . . . . . .35
     8.06.   Assumed Names. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .36
     8.07.   Limitation on Investments, Advances and Loans. . . . . . . . . . . . . . . . .36
     8.08.   Limitation on Equity Payments. . . . . . . . . . . . . . . . . . . . . . . . .36
     8.09.   Capital Expenditures. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
     8.10.   Limitation on Leases. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
     8.11.   Transactions with Affiliates. . . . . . . . . . . . . . . . . . . . . . . . . 37
     8.12.   Infrastructure Build Out. . . . . . . . . . . . . . . . . . . . . . . . . . . 37
     8.13.   Restrictions on Dividends and Related Transactions. . . . . . . . . . . . . . 37

ARTICLE 9:   EVENTS OF DEFAULT AND REMEDIES. . . . . . . . . . . . . . . . . . . . . . . . 38
     9.01.   Events of Default. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .38
     9.02    Consequences of an Event of Default. . . . . . . . . . . . . . . . . . . . . .40
     9.03    Exercise of Rights. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
     9.04.   Rights of Secured Party; Possession or Sale of Collateral. . . . . . . . . . .41
     9.05.   Notices, Etc. Waived. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
     9.06.   Additional Remedies. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .41
     9.07    Application of Proceeds. . . . . . . . . . . . . . . . . . . . . . . . . . . .42
     9.08    Discontinuance of Proceedings. . . . . . . . . . . . . . . . . . . . . . . . .42
     9.09.   Power of Attorney. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .42
     9.10.   Regulatory Matters. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43

ARTICLE 10:  GENERAL CONDITIONS/MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . . . 43
     10.01   Modifications and Waivers. . . . . . . . . . . . . . . . . . . . . . . . . . .43
     10.02.  Advances Not Implied Waivers. . . . . . . . . . . . . . . . . . . . . . . . . 43
     10.03.  Deviation from Covenants. . . . . . . . . . . . . . . . . . . . . . . . . . . 44

                                     iii
<PAGE>
     10.04   Holidays. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
     10.05   Records. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .44
     10.06.  Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .44
     10.07   FCC and PUC Approval. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
     10.08.  Lender Sole Beneficiary. . . . . . . . . . . . . . . . . . . . . . . . . . . .45
     10.09.  Lender's Review of Information. . . . . . . . . . . . . . . . . . . . . . . . 45
     10.10.  No Joint Venture. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
     10.11.  Severability. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
     10.12.  Rights Cumulative. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .46
     10.13.  Duration; Survival. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
     10.14.  Governing Law. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .46
     10.15.  Counterparts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
     10.16.  Successors and Assigns. . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
     10.17.  Participation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .47
     10.18.  Time of Essence. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .47
     10.19.  Disclosures and Confidentiality. . . . . . . . . . . . . . . . . . . . . . . .47
     10.20.  Jurisdiction and Venue. . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
     10.21.  Jury Waiver. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .49
     10.22.  Limitation on Liability. . . . . . . . . . . . . . . . . . . . . . . . . . . .49
     10.23.  Borrower Waivers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
     10.24.  Schedules. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .50
     10.25.  Agreement to Govern. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .50
     10.26.  Entire Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
</TABLE>

                                     iv
<PAGE>
                    SCHEDULES TO LOAN AND SECURITY AGREEMENT
                    ----------------------------------------

Schedule  1.01          Borrower  Information  and  Defined  Terms
Schedule  1.02          Business  Plan
Schedule  2.01          Maximum  Loan  Amount
Schedule  2.02          Payment  Terms  and  Governing  Law
Schedule  2.09          Fees
Schedule  4.04          Required  Consents
Schedule  4.05          Regulatory  Authorizations
Schedule  4.06          Permitted  Conflicts  and  Restrictions
Schedule  4.07          Restrictions  on  Loans
Schedule  4.08          Financial  Statements
Schedule  4.12          Pending  Litigation
Schedule  4.25          UCC  Filing  Offices
Schedule  4.26          Principal  Offices  and  Location  of  Collateral
Schedule  4.29          Assumed  Names
Schedule  4.30          Transactions  with  Affiliates
Schedule  4.31          Nortel  Purchase  Agreement
Schedule  6.02          Post-Closing  Items
Schedule  7.07          Insurance
Schedule  7.15          Financial  Covenants
Schedule  8.01          Permitted  Specific  Encumbrances

                     EXHIBITS TO LOAN AND SECURITY AGREEMENT
                     ---------------------------------------

Exhibit  A     Form  of  Note
Exhibit  B     Form  of  Borrowing  Certificate
Exhibit  C     Form  of  Opinion  of  Counsel  for  Borrower
Exhibit  D     Form  of  Opinion  of  Regulatory  Counsel  for  Borrower
Exhibit  E     Form  of  Landlord's  Consent
Exhibit  F     Form  of  Certificate  of  Financial  Condition
Exhibit  G     Form  of  Telscape  Guaranty  Agreement
Exhibit  H     Form  of  Significant  Subsidiary  Guaranty  Agreement
Exhibit  I     Form  of  Collateral  Assignment  of  Purchase  Agreement

<PAGE>
                           LOAN AND SECURITY AGREEMENT
                           ---------------------------

     THIS  LOAN  AND SECURITY AGREEMENT ("Agreement") is dated as of the Closing
                                          ---------                      -------
Date  set  forth  on Schedule 1.01 hereto, by and between the entity or entities
----                 -------------
described  on  Schedule  1.01 hereto (collectively, "Borrower") and NTFC CAPITAL
               --------------                        --------
CORPORATION,  a  Delaware  corporation ("Lender"), with offices at 501 Corporate
                                         ------
Centre  Drive,  Franklin,  Tennessee  37067.

                              B A C K G R O U N D:
                              -------------------

     A.     Borrower  has  entered into a certain purchase agreement with Nortel
Networks,  Inc.,  as described on Schedule 4.31 hereto, providing for Borrower's
                                  -------------
purchase  of  certain telecommunications equipment and the license of associated
software, all as described therein, and has requested Lender to extend credit to
Borrower  to  finance such purchase and license and to make credit available for
the  purchase  of  additional  telecommunications  equipment,  in  each  case as
described  herein.

     B.     Lender  is  willing to extend such credit to Borrower upon the terms
and  conditions  set  forth  in  this  Agreement.

     NOW,  THEREFORE,  in  consideration  of  the  premises  and  of  the mutual
covenants herein contained and intending to be legally bound hereby, the parties
hereto  agree  as  follows:

                             ARTICLE 1: DEFINITIONS
                             ----------------------

     1.01.     Certain  Definitions.  Certain terms are defined on Schedule 1.01
               --------------------                                -------------
hereto  or  elsewhere in this Agreement or the Schedules hereto . In addition to
other  words  and  terms  defined  in  the  preamble hereof or elsewhere in this
Agreement,  or on the Schedules hereto, the following words and terms shall have
the  following  meanings  unless  the  context  otherwise  clearly  requires:

     "Additional Approved Cities":  Chicago (Illinois), Dallas (Texas), New York
      --------------------------
City  (New  York),  San  Francisco  (California)  and  San  Juan  (Puerto Rico).

     "Advance(s)": any advance or loan of funds (including Capitalized Interest)
      ----------
made  by  Lender  to  Borrower  pursuant  to  this  Agreement.

     "Affiliate":  as  applied  to  any  Person,  any  other  Person directly or
      ----------
indirectly controlling, controlled by, or under common control with such Person.
For  purposes  of  this  definition  and  the  definition  of  "Control"  and of
"Subsidiary,"  a  Person shall be deemed to control another Person if such first
Person  possesses,  directly or indirectly, the power to direct, or to cause the
direction  of, the management and policies of such other Person, whether through
ownership of voting securities, by contract or otherwise.  The "Affiliates" of a
Person  shall  also  include  any  Person that owns of record or beneficially at
least 10% of such Person's outstanding capital stock having the right to vote on
the  election  of  the  Person's  directors.

     "Approved  Build-Out  Plan":  the  original  business  plan  titled
      -------------------------
"Pointecom-Telscape  5 Year  --  Combined v4.xls" provided to the Lender in May,
2000,  with  such  changes  as may be required thereto to reflect, in connection
with  infrastructure build-out in all the Additional Approved Cities, a need for
obtaining  aggregate  additional  financing (exclusively for application to such
infrastructure  build-out)  after  the  Closing  Date  in the form of (i) equity
contributions  in an aggregate amount of at least $9,000,000 and (ii) additional
financing  (in  the  form  of  equity  contributions  or  Indebtedness expressly
permitted  under  this  Agreement)  in  an  aggregate  amount, including without
duplication of any equity financing required pursuant to clause (i) above, of at
least  $21,000,000,  in each case as such business plan may from time to time be
modified  or  superseded  subject  to  the  Lender's  written  consent.

<PAGE>
     "Basic Agreements": a collective reference to this Agreement, the Note, the
      ----------------
Security  Documents,  and  the  Guaranty  Agreements.

     "Borrowing Certificate": a certificate substantially in the form of Exhibit
      ---------------------                                              -------
B  hereto.
-

     "Borrowing  Date": any Business Day on which an Advance is made to Borrower
      ---------------
hereunder.

     "Business  Day":  a day other than a Saturday, Sunday or other day on which
      -------------
commercial  banks  in Nashville, Tennessee, are authorized or required by law to
close.

     "Business Plan": the business plan of Telscape attached as Schedule 1.02 to
      -------------                                             -------------
this  Agreement.

     "Calendar  Quarter":  each  three-month  period starting on each January 1,
      -----------------
April  1,  July  1,  and  October  1.

     "Capital  Stock":  any  and  all  shares, interests, participations, social
      --------------
parts  or  other  equivalents  (however  designated)  of  capital  stock  of  a
corporation,  any and all equivalent ownership interests in a Person (other than
a  corporation)  and  any  and  all  warrants  or options to purchase any of the
foregoing.

     "Capitalized Interest": the accrued but unpaid interest on any Advance that
      --------------------
accrues  during  the  Capitalized  Interest  Period, if any Capitalized Interest
Period  is  defined  on  Schedule  2.02 hereto, and is added to and deemed to be
                         --------------
principal  due  under  any  Note,  in  accordance  with  Section 2.02(b) hereof.
                                                         ---------------

     "Capitalized  Interest  Period":  as  defined  on  Schedule  2.02  hereto.
      -----------------------------                     --------------

     "Carrier":  any  inter-exchange  carrier  or  other  provider  of
      -------
telecommunications  long distance service or any local exchange company or other
provider  of  local  telecommunications  service.

     "Cash Equivalents":  (a) securities issued or directly and fully guaranteed
      ----------------
or  insured  by  the  United States Government, or any agency or instrumentality
thereof,  having  maturities  of  not  more  than  one  year  from  the  date of
acquisition;  (b)  marketable  general  obligations  issued  by any state of the
United  States  of America or any political subdivision of any such state or any
public  instrumentality or agency thereof maturing within one year from the date
of  acquisition  thereof and, at the time of acquisition thereof having a credit
rating  of  "A" or better from either Standard & Poor's Ratings Group or Moody's
Investors  Service, Inc.; (c) certificates of deposit, time deposits, eurodollar
time deposits, overnight bank deposits or bankers' acceptances having maturities
of not more than one year from the date of acquisition thereof of the Lender, or
of any U.S. domestic commercial bank the long-term debt of which is rated at the
time  of  acquisition thereof at least A or the equivalent thereof by Standard &
Poor's  Ratings  Group  or  A  or  the  equivalent  thereof by Moody's Investors
Service,  Inc.,  and  having  capital and surplus in excess of $500,000,000; (d)
repurchase  obligations  with  a term of not more than seven days for underlying
securities of the types described in clauses (a), (b) and (c) above entered into
with  any  bank  meeting  the  qualifications specified in clause (c) above; (e)
commercial  paper  rated  at the time of acquisition thereof at least A-2 or the
equivalent  thereof  by Standard & Poor's Ratings Group or P-2 or the equivalent
thereof  by Moody's Investors Service, Inc., or carrying an equivalent rating by
a  nationally recognized rating agency, if both of the two named rating agencies
cease  publishing ratings of investments, and in either case maturing within 270
days  after  the  date  of  acquisition thereof; (f) interests in any investment
company which invests solely in instruments of the type specified in clauses (a)
through  (e) above; and (g) other investment installments approved in writing by
the Lender and offered by any financial institution which has a combined capital
and  surplus  of  not  less  than  $500,000,000.

                                        2
<PAGE>
     "Certificate  of Financial Condition": a certificate in the form of Exhibit
      -----------------------------------                                -------
F  hereto,  executed  by  Borrower  and  Telscape.
-

     "Change in Control":  (a) with respect to Borrower and any Subsidiary other
      -----------------
than Interlink Communications, Inc. ("Interlink"), the acquisition by any Person
or Persons other than Telscape or its Subsidiaries in the aggregate of more than
five  (5%) percent of the Capital Stock of Borrower or such Subsidiary or of the
Capital Stock of Borrower or such Subsidiary having the ordinary voting power to
elect  the  Board  of  Directors  or  the  governing  body  of  Borrower or such
Subsidiary,  (b) with respect to Interlink, the acquisition by another Person of
Capital Stock owned beneficially or of record by Telscape, and, (c) with respect
to  Telscape,  the  acquisition by another Person or Persons in the aggregate of
either  (i)  twenty-five (25%) percent of such Capital Stock or (ii) such lesser
amount  of  such Capital Stock which would result in a change of Control or upon
the  occurrence  of specified events would result in a change in Control and, in
any  case,  the  entering  into of contractual or other arrangements which would
have  the effect of a change of Control in Borrower or any Subsidiary, except as
permitted  pursuant  to  Section  8.03.

     "Closing  Date":  as  defined  on  Schedule  1.01  hereto.
      -------------                     --------------

     "Code":  the  Internal  Revenue Code of 1986, as amended from time to time.
      ----

     "Collateral":  as  defined  in  Section  3.01  hereof.
      ----------                     -------------

     "Commitment":  as  defined  in  Section  2.01  hereof.
      ----------                     -------------

     "Communications Law": any and all of (i) the Communications Act of 1934, as
      ------------------
amended  and  any  similar  or  successor  federal  statute,  and  the rules and
regulations  of  the  FCC  thereunder;  and  (ii)  any  state  law governing the
provision  of  telecommunications services, and the rules and regulations of the
PUC,  all  as  the  same  may  be  in  effect  from  time  to  time.

     "Concession":  the  concession  to  install,  operate  and exploit a public
      ----------
telecommunications network in the Federal District and the States of Guanajuato,
Jalisco,  Mexico,  Nuevo  Leon,  Puebla,  Tamaulipas  and Veracruz, granted to
Telereunion  by the Government of Mexico through Secretaria de Comunicaciones y
Transportes  (Secretary of Communications and Transportation), a Mexican federal
government  agency  (the "SCT"), as evidenced by the Concession Title (Titulo de
Concesion),  dated  June  3,  1998  issued  by  the  SCT.

     "Consent":  a  consent  to  a  collateral assignment of the Nortel Purchase
      -------
Agreement,  a  consent  to  a  collateral  assignment  of  any  Vendor  Purchase
Agreement,  a Landlord Consent, and an agreement from each incumbent provider of
collocation  space  under  any  collocation  and interconnection agreements with
Borrower  or  any Subsidiary where Collateral will be located, including without
limitation,  from  incumbent  local  exchange  carriers  where Collateral may be
located  under  collocation  or  other  arrangements.

                                        3
<PAGE>
     "Contingent  Obligation":  as  to any Person, any obligation of such Person
      ----------------------
guaranteeing,  directly  or  indirectly,  any Indebtedness, leases, dividends or
other  obligations  ("primary  obligations")  of  any other Person (the "primary
obligor")  in  any  manner,  whether  directly or indirectly, including, without
limitation,  any  obligation  of  such Person, whether or not contingent, (a) to
purchase  any  such  primary  obligation  or any property constituting direct or
indirect  security therefor; (b) to advance or supply funds (i) for the purchase
or payment of any such primary obligation or (ii) to maintain working capital or
equity  capital of the primary obligor or otherwise to maintain the net worth or
solvency  of  the  primary  obligor;  (c)  to  purchase  property, securities or
services  primarily  for  the  purpose of assuring the owner of any such primary
obligation of the ability of the primary obligor to make payment of such primary
obligation;  or  (d)  otherwise  to  assure  or  hold harmless the owner of such
primary  obligation  against  loss  in  respect  thereof.

     "Contractual  Obligation":  as to any Person, any provision of any security
      -----------------------
issued  by  such  Person  or  of  any  agreement,  instrument, or other material
undertaking  to  which  such  Person  is  a  party  or by which it or any of its
property  is  bound.

     "Control":  the  possession, directly or indirectly, of power to direct (or
      -------
cause  the  direction  of)  management  or  policies  of another Person (whether
through  ownership of securities or partnership or other ownership interests, by
contract  or  otherwise).  "Controlled  by" and "under common Control with" have
meanings  correlative  thereto.

     "Conversion  Date":  as  defined  on  Schedule  2.02  hereto.
      ----------------                     --------------

     "Default":  any of the conditions or occurrences specified in Section 9.01,
      -------                                                      ------------
whether  or  not any requirement for the giving of notice, the lapse of time, or
both,  or  any  other  condition  has  been  satisfied.

     "Default  Rate":  a  rate  of  interest  equal  to  the lesser of (i) three
      -------------
percentage  points  over  the Interest Rate or (ii) the maximum permissible rate
under  applicable  law  in  effect  at  any  time.

     "Domestic  Subsidiary": any direct or indirect Subsidiary of Telscape which
      --------------------
is  incorporated  under  the laws of the United States, one of the states of the
United  States,  or  under  any  territory or protectorate of the United States.

     "EBITDA":  for any fiscal period, Telscape's actual operating earnings from
      ------
ongoing operations on a consolidated basis, before interest, taxes, depreciation
and  amortization  for  the  fiscal  period.

     "Environmental  Law":  any  current  or future federal, state and local law
      ------------------
(including common law), statute, regulation, ordinance, rulings, codes, judicial
order,  administrative  order  or  terms  of  licenses  or permits applicable to
environmental  conditions (including, without limitation, conditions relating to
ambient  air,  surface  water,  groundwater, land surface or subsurface strata),
including,  without  limitation,  all  such  laws  governing  the  employment,
generation,  use,  storage,  disposal  or  transportation  of toxic or hazardous
substances  or  wastes  (including,  without  limitation, asbestos and petroleum
products),  the Comprehensive Environmental Response, Compensation and Liability
Act,  the  Resource  Conservation  and Recovery Act, the Superfund Amendment and
Reauthorization  Act  of  1986,  the Toxic Substances Control Act, the Clean Air
Act,  the  Water  Pollution Control Act, the Hazardous Waste Management Act, the
Mineral  Lands  and Leasing Act, the Surface Mining Control and Reclamation Act,
U.S.  Department  of Transportation Regulations, and all similar state and local
laws  and  regulations,  all  as  now  or  hereafter  amended.

                                        4
<PAGE>
     "ERISA":  the  Employee  Retirement Income Security Act of 1974, as amended
      -----
from  time  to  time,  and  any  successor  statute.

     "Equipment":  the  equipment  defined  in  Section  3.01  hereof.
      ---------                                 -------------

     "Equity  Payment":  any  distribution  of  earnings  or  capital  to  any
      ---------------
stockholder of Telscape, Borrower or any Subsidiary, any management fee or other
fee  paid  to  any  stockholder  of  Telscape,  Borrower  or  any Subsidiary not
reasonably  related  to services actually performed, or any redemption of equity
ownership  interests in Telscape, Borrower or any Subsidiary, either directly or
indirectly,  whether in cash or property or in obligations of Telscape, Borrower
or  any  Subsidiary.

     "Event  of  Default":  any  of the events specified in Section 9.01 hereof,
      ------------------                                    ------------
provided  that  any  requirement for the giving of notice, the lapse of time, or
both,  or  any  other  condition,  under  Section  9.01  or  otherwise, has been
                                          -------------
satisfied.

     "FCC":  the  Federal  Communications  Commission  of  the  United States of
      ---
America,  and  any  successor,  in  whole  or  in  part,  to  its  jurisdiction.

     "Financing  Termination  Date":  as  defined  on  Schedule  2.02  hereto.
      ----------------------------                     --------------

     "First  Borrowing  Date":  the  date  of  the  first  borrowing by Borrower
      ----------------------
hereunder.

     "GAAP":  subject  to  Section  1.02  hereof,  generally accepted accounting
      ----                 -------------
principles  in  the United States of America (as such principles may change from
time  to  time) applied on a consistent basis (except for changes in application
in  which  Telscape's  independent certified public accountants concur), applied
both  to  classification  of  items  and  amounts.

     "General  Intangibles":  as  defined  in  Section  3.01  hereof.
      --------------------                     -------------

     "Governmental  Actions":  actions  by  any  Governmental  Authority.
      ---------------------

     "Governmental  Authority":  the  federal government, any state or political
      -----------------------
subdivision  thereof,  any  city  or municipal entity, and any entity exercising
executive,  legislative,  judicial, regulatory or administrative functions of or
pertaining  to  government.

     "Guarantor":  Telscape and certain of Borrower's and Telscape's Significant
      ---------
Subsidiaries  guaranteeing the Obligations of Borrower hereunder pursuant to the
provisions  of  Section 3.09 of this Agreement and any other Person guaranteeing
                ------------
the  Obligations,  in  whole  or  in  part,  of  Borrower  hereunder.

     "Guaranty" or "Guaranties": one or more of the Guaranty Agreements required
      -------------------------
of  Telscape,  and certain of Borrower's and Telscape's Significant Subsidiaries
pursuant  to  the  provisions  of  Section  3.09  of  this  Agreement.
                                   -------------

     "Indebtedness":  as  to  any Person, at a particular time, (a) indebtedness
      ------------
for borrowed money or for the deferred purchase price of property or services in
respect  of  which such Person is liable, contingently or otherwise, as obligor,
guarantor  or  otherwise, or in respect of which such Person otherwise assures a
creditor  against  loss;  (b)  obligations under leases which shall have been or
should  be,  in  accordance  with GAAP, recorded as capital leases in respect of
which  obligations such Person is liable, contingently or otherwise, as obligor,
guarantor or otherwise, or in respect of which obligations such Person assures a
creditor  against loss; (c) obligations of such Person to purchase or repurchase
accounts  receivable,  chattel paper or other payment rights sold or assigned by
such  Person;  and  (d) indebtedness or obligations of such Person under or with
respect  to  letters  of  credit,  notes,  bonds  or  other  debt  instruments.

                                        5
<PAGE>
     "Initial  Payment  Date":  as  defined  on  Schedule  2.02  hereto.
      ----------------------                     --------------

     "Interest  Only  Period":  as  defined  on  Schedule  2.02  hereto.
      ----------------------                     --------------

     "Interest  Payment  Date":  as  defined  on  Schedule  2.02  hereto.
      -----------------------                     --------------

     "Interest  Rate":  as  defined  on  Schedule  2.02  hereto.
      --------------                     --------------

     "Landlord Consent": a consent substantially in the form of Exhibit E hereto
      ----------------                                          ---------
or  in  other  form  acceptable to Lender, to be executed by the owner/landlord,
sublessor and/or licensor (including carriers) of any real property where any of
the  Collateral  is  to  be  located.

     "Law":  any  law (including common law), constitution, statute, regulation,
      ---
rule,  ordinance,  order,  injunction, writ, decree or award of any governmental
body  or court of competent jurisdiction or of any arbitrator (including but not
limited to ERISA, the Code, the UCC, any applicable tax law, product safety law,
occupational  safety or health law, Communications Law, Environmental Law and/or
securities  laws).

     "Lender's  Expenses":  as  defined  in  Section  2.10  hereof.
      ------------------                     -------------

     "Lien":  any  mortgage,  pledge,  hypothecation, lien (statutory or other),
      ----
judgment  lien,  security  interest,  security  agreement,  charge  or  other
encumbrance,  or other security arrangement of any nature whatsoever, including,
without  limitation,  any  installment contract, conditional sale or other title
retention arrangement, any sale of accounts receivable or chattel paper, and any
assignment,  deposit  arrangement or lease intended as, or having the effect of,
security  and  the filing of any financing statement under the UCC or comparable
law  of  any  jurisdiction.

     "Loans":  the  loans  and  loan facilities described in Section 2.01 hereof
      -----                                                  ------------
and  all  Advances  pursuant  hereto.

     "Loan  Documents":  a collective reference to this Agreement, the Note, the
      ---------------
Security  Documents,  the  Guaranty  Agreements,  and  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.

     "Lucent Credit Agreement":  Credit Agreement dated as of September 29, 2000
      -----------------------
among  Telereunion  S.A.  de  C.V.,  Telereunion  International,  S.A.  de C.V.,
Telscape  International,  Inc.,  the  other  borrowers to be listed therein, any
additional borrowers from time to time, General Electric Capital Corporation, as
Administrative  Agent,  and  the lenders from time to time party thereto, in the
form  executed  as  of  the  Closing  Date.

                                        6
<PAGE>
     "Material Adverse Effect": or "Material Adverse Change": a material adverse
      -----------------------       -----------------------
effect  on,  or  material  adverse  change  in  (i)  the business, operations or
financial  condition  of  the  Borrower  or  Telscape;  (ii)  the ability of the
Borrower  or  Telscape to perform its obligations under this Loan Agreement, the
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.

     "Maturity  Date":  the  date  defined on Schedule 2.02 hereto, on which all
      --------------                          -------------
principal,  interest,  premium,  expenses, fees, penalties and other amounts due
under  the  Note  shall  be  finally  due  and  payable.

     "Network":  the  telecommunications  network  to  be  built and operated by
      -------
Telscape  and  its  Subsidiaries in order to provide telecommunications services
pursuant  to  the  Concession.

     "New  Equity":  The  amount  of proceeds in excess of $37,000,000 (less the
      -----------
liquidation  amount of outstanding Class F Convertible Senior Preferred Stock of
Telscape)  raised  from  the  sale  by Telscape subsequent to the date hereof of
Capital  Stock  of  Telscape or debt subordinated to the Obligations in form and
substance  satisfactory  to  Lender.

     "Note":  collectively,  one  or more promissory notes issued by Borrower to
      ----
Lender  pursuant to this Agreement, and all extensions, renewals, modifications,
replacements,  amendments,  restatements  and  refinancings  thereof.

     "Nortel":  Nortel  Networks,  Inc.,  a  Delaware  corporation.
      ------

     "Nortel  Equipment":  the  equipment  and licensed or sub-licensed software
      -----------------
manufactured  or  supplied  by Nortel to Borrower with respect to which Advances
hereunder  are  used  directly  or  indirectly  to  finance the acquisition cost
thereof  at  any  time pursuant to the Nortel Purchase Agreement or any purchase
order  issued  by  Borrower  to  Nortel or otherwise, including installation and
construction  services  provided  by  Nortel  pursuant  thereto.

     "Nortel  Purchase  Agreement":  the Nortel Purchase Agreement identified on
      ---------------------------
Schedule  4.31  hereto, together with any amendments or supplements thereto, and
--------------
any other purchase agreement between Nortel and Borrower and all purchase orders
and  invoices  issued  pursuant  thereto, all subject to the approval of Lender.

     "Obligations": all indebtedness, liabilities and obligations of Borrower to
      -----------
Lender  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, 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 on, the
Note, and any expenses of collection or protection of Lender's rights, including
reasonable  attorneys'  fees.

     "Organizational  Documents": with respect to a corporation, the articles of
      -------------------------
incorporation  and  by-laws  of such corporation; with respect to a partnership,
the  certificate  of  partnership  (or  limited  partnership, as applicable) and
partnership  agreement,  together with the analogous documents for any corporate
or partnership general partner; with respect to a limited liability company, the
articles  of  organization  and  operating  agreement  of such limited liability
company; and in any case, any other document governing the formation and conduct
of  business  by  such  entity.

                                        7
<PAGE>
     "Payment  Date":  as  defined  on  Schedule  2.02  hereto.
      -------------                     --------------

     "Payment  Schedule":  as  defined  on  Schedule  2.02  hereto.
      -----------------                     --------------

     "PBGC": the Pension Benefit Guaranty Corporation established under Title IV
      ----
of  ERISA  or  any  other  governmental  agency,  department  or instrumentality
succeeding  to  its  functions.

     "Permits":  all  consents,  licenses,  notices,  approvals, authorizations,
      -------
filings,  orders,  registrations,  and  permits  required  by  any  Governmental
Authority  for  the  construction  and  operation  of  the  Equipment (excluding
Regulatory  Authorizations),  issued  or  obtained  as  and  when  required  in
accordance  with  all  Requirements  of  Law.

     "Permitted  Encumbrances":  the  Liens permitted under Section 8.01 hereof.
      -----------------------                               ------------

     "Permitted  Preferred  Cash  Dividends":  cash  dividends  with  respect to
      -------------------------------------
classes  D,  E or F of Telscape International, Inc. Convertible Senior Preferred
Stock, payable solely out of proceeds of New Equity, at any time after the first
anniversary  of the Closing Date (as defined in the Lucent Credit Agreement), so
long as (i) Borrower shall fully comply with the prepayment obligations found in
Section  2.04(b)  hereof,  and  (ii) at the time thereof and after giving effect
----------------
thereto, no Default or Event of Default has occurred and is continuing, and with
respect  to  each  of  the  financial  covenants  set  forth in Article VII, (A)
Telscape  is  in  full  compliance therewith as of the most recent date on which
such financial covenant was (or is being) measured, without requiring any waiver
thereof  or  amendment  thereto to enable such compliance, and (B) no Default or
Event  of  Default  could reasonably be expected to exist as of the next date on
which  each  financial  covenant  is  to  be  measured.

     "Person":  an  individual,  corporation,  limited  liability  company,
      ------
partnership, business or other trust, unincorporated association, joint venture,
joint-stock  company,  Governmental  Authority  or  any  other  entity.

     "Plan":  any  employee  pension benefit plan to which Section 4021 of ERISA
      ----
applies  and (i) which is maintained for employees of Telscape, the Borrower, or
any  Significant  Subsidiary  or  (ii)  to  which Telscape, the Borrower, or any
Significant  Subsidiary made, or was required to make, contributions at any time
within  the  preceding  five  years.

     "Proceeds":  as  defined  in  Section  3.01  hereof.
      --------                     -------------

     "PUC":  the  public  utilities  commission  for  the  state  or  any  other
      ---
jurisdiction  in  which Borrower operates its telecommunications business or any
portion of the Equipment is located, or any successor agency, and any successor,
in  whole  or  in part, to its functions or jurisdictions, and any other Persons
specified  as  such  on  Schedule  1.01  hereto.
                         --------------

     "Purchase  Agreement":  individually  and collectively, the Nortel Purchase
      -------------------
Agreement  and  any  Vendor  Purchase  Agreement.

     "Regulatory  Authorizations":  all  approvals,  authorizations,  licenses,
      --------------------------
filings,  notices,  registrations, consents, permits, exemptions, registrations,
qualifications, designations, declarations, or other actions or undertakings now
or hereafter made by, to or in respect of any telecommunications governmental or
other  regulatory  authority, including, without limitation, any certificates of
public  convenience  and  all  grants,  approvals,  licenses,  filings  and
registrations  from  or  to  the  FCC  or  PUC  or  under any Communications Law
necessary  in  order  to enable Borrower to own, construct, maintain and operate
the  Equipment,  and  any  authorizations  specified  on  Schedule  1.01 hereto.
                                                          --------------

                                        8
<PAGE>
     "Regulatory Event": any of the following events: (i) Lender becomes subject
      ----------------
to  regulation  as  a  "carrier,"  a  "telephone company," a "common carrier," a
"public  utility"  or  otherwise  under  any  applicable  law  or  governmental
regulation,  federal,  state  or  local,  solely as a result of the transactions
contemplated  by  this  Agreement  and  the other Loan Documents; (ii) Borrower,
Telscape  or  any  Significant  Subsidiary  becomes subject to regulation by any
Governmental  Authority  in  any  way  that  is  materially  different  from the
regulation  existing  at  the  Closing  Date and that could materially adversely
affect  the  Borrower's,  Telscape's  or any Significant Subsidiary's ability to
perform  its  material  obligations  under the Loan Documents or Lender's rights
thereunder;  or  (iii)  the  FCC  or  PUC  issues  an order revoking, denying or
refusing to renew, or recommending the revocation, denial or non-renewal of, any
Regulatory  Authorization.

     "Reportable  Event":  (i)  a  reportable event described in Section 4043 of
      -----------------
ERISA  and  regulations  thereunder; (ii) a withdrawal by a substantial employer
from  a  Plan  to  which  more  than one employer contributes, as referred to in
Section  4063(b)  of  ERISA;  or  (iii)  a cessation of operations at a facility
causing  more  than 20% of Plan participants to be separated from employment, as
referred  to  in  Section  4062(f)  of  ERISA.

     "Required  Consents":  the  Governmental Authority approvals or consents of
      ------------------
other  Persons  required with respect to the execution, delivery and performance
of  this  Agreement  and the other Loan Documents by the Borrower, Telscape, and
the  Significant  Subsidiaries,  as  described  in  Section  4.04  hereto.
                                                    -------------

     "Requirement  of  Law":  as  to any Person, the Organizational Documents of
      --------------------
such  Person,  and  any  law, treaty, rule or regulation, or determination of an
arbitrator  or  a court or other Governmental Authority, in each case applicable
to  or  binding  upon such Person or any of its properties or transactions or to
which  such  Person or any of its property or transactions is subject, including
without  limitation,  all  applicable  common  law and equitable principles, all
provisions  of  all applicable state and federal constitutions, statutes, rules,
regulations  and  orders  of  governmental  bodies,  all  Permits  or Regulatory
Authorizations  issued  to  Borrower,  all  Communications  Laws,  and  all
Environmental  Laws.

     "Responsible  Officer": with respect to a corporation, its President or any
      --------------------
Vice  President or Treasurer; with respect to a partnership, its general partner
(or  the  President,  any  Vice  President or Treasurer of any corporate general
partner,  as  applicable); with respect to a limited liability company, a member
or  manager  (or the President, any Vice President or Treasurer of any corporate
member  or manager), or the President or any Vice President of any other Person.

     "Restricted  Payment":  means  (a)  any  dividend  or  other  distribution
      -------------------
(whether in cash, securities or other property other than dividends of preferred
stock  of  Telscape paid to holders of such preferred stock) with respect to any
shares of any class of Capital Stock of Telscape or its Subsidiaries, or (b) any
payment  (whether  in cash, securities or other property), including any sinking
fund  or  similar  deposit,  on account of the purchase, redemption, retirement,
acquisition,  cancellation  or  termination  of  any  any shares of any class of
Capital  Stock  of  Telscape  or  any Subsidiary or any option, warrant or other
right to acquire any such shares of Capital Stock of Telscape or any Subsidiary.

     "Security  Documents":  this  Agreement,  the  Consents,  all  financing
      -------------------
statements,  and  any  other  documents  granting, evidencing, or perfecting any
security  interest  or  Lien with respect to or securing any of the Obligations.

                                        9
<PAGE>
     "Significant  Subsidiaries":  with  regard  to  Telscape  or  Borrower,  as
      -------------------------
applicable  (i)  a  direct  or indirect Subsidiary having assets or revenues (as
applicable)  of  at  least  5%  of  Telscape's  consolidated  assets or revenues
(whichever  applies  first)  as  of  the  Closing Date, as of the end of each of
Telscape's  fiscal  years  thereafter,  or  as  of  the end of Telscape's fiscal
quarter  immediately preceding any Borrowing Date, (ii) any Guarantor which is a
direct  or  indirect  Subsidiary  of  Telscape  or Borrower, and (iii) Borrower.

     "Site(s)":  any  of  the  sites  where  Equipment  is  or is to be located.
      -------

     "Software" and "Software Licenses": any software now or hereafter owned by,
      --------------------------------
or  licensed  to,  Borrower  or  with  respect to which Borrower has or may have
license  or  use  rights.

     "Subsidiary":  as to any Person, any corporation or other entity that is an
      ----------
Affiliate of such Person and of which shares of stock or equity interests having
ordinary  voting  power with respect to the election of one or more directors or
other  managers of such corporation are at the time directly or indirectly owned
or  controlled  by  such Person (regardless of any contingency which does or may
suspend  or  dilute  the  voting  rights  of such class of stock). References to
"Subsidiary" shall refer to a Subsidiary of Telscape, unless otherwise provided.

     "System":  Telscape's  complete  telecommunications  network  or  system
      ------
constructed  and/or  operated  by  Telscape  (either directly or indirectly by a
Subsidiary  or  Affiliate  of  Telscape),  of  which the Equipment forms a part.

     "Telecommunications":  voice,  video,  data  and  internet  services.
      ------------------

     "Telscape":  Telscape  International,  Inc.,  a  Texas corporation, and its
      --------
successors.

     "UCC":  the Uniform Commercial Code as the same may from time to time be in
      ---
effect  in  the  State  of  New  York, or the Uniform Commercial Code of another
jurisdiction,  to the extent it may be required to apply to any item or items of
Collateral.

     "Vendor": any manufacturer  or  supplier of Vendor Equipment or licensor or
      ------
supplier  of  Software,  in  each  case  other  than  Nortel.

     "Vendor  Equipment":  any  equipment,  upgrades,  switches  and licensed or
      -----------------
sub-licensed  Software  manufactured,  or  supplied  to  Borrower,  by a Vendor.

     "Vendor  Purchase  Agreement":  any  purchase  agreement, together with any
      ---------------------------
amendments  or supplements thereto, between a Vendor and Borrower or an assignor
of Borrower and all purchase orders and invoices issued pursuant thereto for the
sale  of  Vendor  Equipment,  all  subject  to the approval of Lender, not to be
unreasonably  withheld  or  delayed.

     1.02.     Accounting  Principles;  Subsidiaries.  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, and all
accounting  or financial terms shall have the meanings ascribed to such terms by
GAAP  unless  otherwise  provided  herein.  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
Telscape  and its properties and activities shall be deemed to refer to Telscape
and  its  consolidated  Subsidiaries  collectively  unless  otherwise  expressly
provided.

                                       10
<PAGE>
     1.03.     UCC  Terms.  Except  as  otherwise provided or amplified (but not
               ----------
limited)  herein, terms used in this Agreement that are defined in the UCC shall
have  the  same  meanings  herein.

     1.04.     General  Construction;  Captions. All definitions and other terms
               --------------------------------
used  in  this  Agreement shall be equally applicable to the singular and plural
forms thereof, and all references to any gender shall include all other genders.
The  words  "hereof,"  "herein" and "hereunder" and words of similar import when
used  in  this Agreement shall refer to this Agreement as a whole and not to any
particular  provision  of  this Agreement, and section, subsection, schedule and
exhibit  references  are  to  this  Agreement  unless  otherwise  specified. The
captions  and  table  of contents in this Agreement and the other Loan Documents
are  for convenience only, and in no way limit or amplify the provisions hereof.

     1.05.     References  to  Documents  and  Laws.  All  defined  terms  and
               ------------------------------------
references  in  this  Agreement  or the other Loan Documents with respect to any
agreements,  notes, instruments, certificates or other documents shall be deemed
to  refer  to  such  documents  and  to any amendments, modifications, renewals,
extensions,  replacements, restatements, substitutions and supplements of and to
such documents. All references to statutes and related regulations shall include
any  amendments  thereof  and  any  successor  statutes  and  regulations.

                                ARTICLE 2: LOANS
                                ----------------

     2.01.     Commitment.  Subject to the terms and conditions herein provided,
               ----------
and  so  long  as  no  Default  has occurred and is continuing hereunder, Lender
agrees  to  lend  to Borrower from time to time before the Financing Termination
Date,  an  aggregate principal amount, plus Capitalized Interest, if any, in the
maximum amount set forth on Schedule 2.01 hereto as the maximum principal amount
                            -------------
(the  "Commitment").  If Borrower or Nortel should terminate the Nortel Purchase
       ----------
Agreement  at  any  time  prior  to  the  Financing  Termination  Date, then the
Commitment  shall  automatically  terminate,  subject  to Lender's right to make
further  Advances  hereunder,  including,  but  not  limited  to, Advances under
Section  2.03.  All  amounts  advanced  hereunder  shall  be used solely for the
--------------
purchase  of  Nortel  Equipment to be installed in the United States and related
services from Nortel, and amounts not exceeding the amount (if any) specified on
Schedule  2.01  may  be used for legal fees, charges, expenses and closing costs
--------------
and  other  expenses  incurred  by Borrower or incurred by Lender and payable by
Borrower  under  Section  2.10;  provided,  however,  that,  notwithstanding the
foregoing,  the  Borrower  may  use  up  to 33% of the Commitment to finance the
origination  fee  set forth on Schedule 2.09 and, subject to approval of Lender,
to finance or refinance any Vendor Equipment installed or to be installed in the
United  States  and  related  services.

     2.02.     Note  and  Payment  Terms.
               -------------------------

          (a)     Promissory  Note.  The  Loans  shall  be evidenced by the Note
                  ----------------
substantially  in the form of Exhibit A hereto, with appropriate insertions. The
                              ---------
Note  shall  be  executed by Borrower, payable to the order of Lender, and shall
evidence  the  obligation  of  Borrower  to repay all principal amounts advanced
under  or  pursuant  to  this  Agreement,  together  with interest and all other
amounts  due thereunder. The Note shall be dated the Closing Date, have a stated
maturity  that is the Maturity Date, and bear interest at the Interest Rate from
the First Borrowing Date until the Note or any amount thereunder is paid in full
(whether  on  the  Maturity  Date,  by acceleration or otherwise). All schedules
attached  to  the  Note shall be deemed a part thereof. Any such schedule may be
amended by Lender from time to time to reflect changes in the amounts includable
thereon,  but the failure to attach or amend any schedule shall not diminish the
obligation  of  Borrower  to  repay  all  amounts  due hereunder or on the Note.

                                       11
<PAGE>
          (b)     Capitalized  Interest  Period. 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 set forth on Schedule 2.02 hereto of such interest shall be
                                  -------------
capitalized,  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 Period in excess of
the  maximum aggregate amount of Capitalized Interest set forth on Schedule 2.02
                                                                   -------------
hereto  shall be paid by Borrower quarterly in arrears, on the last Business Day
of  the  Calendar  Quarter  in  which  such  limit  is  exceeded.

          (c)     Interest  Payments. Following the Capitalized Interest Period,
                  ------------------
interest  shall  continue  to  accrue on the principal amount outstanding on the
Note (including Capitalized Interest) at the Interest Rate and shall be payable,
in arrears, on each Interest Payment Date. Interest only shall be payable during
the  Interest  Only Period, and thereafter all accrued interest shall be payable
with  the  principal  payments  described  below.

          (d)     Principal  Payments.  On  the  Conversion Date, the Note shall
                  -------------------
automatically convert to a term note, and all principal amounts due with respect
to the Note (including Capitalized Interest) shall be payable in installments in
accordance  with  the  Payment  Schedule  set  forth  on  Schedule  2.02 hereto,
                                                          --------------
commencing on the Initial Payment Date and on each Payment Date thereafter until
the  Maturity Date.  The amount of each such principal installment payment shall
be  calculated, at the outset, by taking the applicable percentage (as described
on  Schedule  2.02 hereto) of the amount of all principal amounts outstanding on
    --------------
the  Conversion  Date  (including Capitalized Interest); provided, however, that
the  principal  payment  amounts shall be recalculated by Lender if any Advances
are  made  hereunder after the Conversion Date, based on the aggregate amount of
all  Advances  (including  Capitalized  Interest) made at any time. Borrower and
Lender  understand  that this payment schedule is intended to amortize fully the
principal  amount  of  the  Note  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 Note and all accrued but
unpaid  interest  and all other outstanding amounts due thereunder shall be paid
on  the  Maturity  Date.

          (e)     Late Payments and Default Rate. Notwithstanding the foregoing,
                  ------------------------------
if  Borrower  shall  fail to pay within 10 days after the due date any principal
amount  or  interest  or  other amount payable under this Agreement or under the
Note,  Borrower  shall  pay  to  Lender,  to  defray the administrative costs of
handling  such  late payments, an amount equal to interest on the amount unpaid,
to  the  extent  permitted under applicable law, at the Default Rate (instead of
the  Interest  Rate),  from  the  due  date until such overdue principal amount,
interest or other unpaid amount is paid in full (both before and after judgment)
whether  or  not any notice of default in the payment thereof has been delivered
under  Section  9.01  hereof.  In  addition,  but  without duplication, upon the
occurrence  and  during  the continuance of an Event of Default, all outstanding
amounts  hereunder  shall  bear  interest  at  the  Default Rate (instead of the
Interest  Rate)  until  such  amounts are paid in full, such Event of Default is
cured  by  Borrower,  or  such  Event of Default is waived in writing by Lender.

                                       12
<PAGE>
          (f)     Excess  Interest.  Notwithstanding  any provision of the Note,
                  ----------------
this  Agreement  or any other Loan Document to the contrary, it is the intent of
Lender and Borrower that Lender or any subsequent holder of the Note shall never
be  entitled  to  receive, collect, reserve or apply, as interest, any amount in
excess  of  the  maximum  rate of interest permitted to be charged by applicable
Law,  as  amended  or  enacted  from  time  to time. In the event Lender, or any
subsequent  holder of the Note, ever receives, collects, reserves or applies, as
interest,  any  such excess, such amount which would be excessive interest shall
be  deemed  a  partial  prepayment  of principal and treated as such, or, if the
principal indebtedness and all other amounts due are paid in full, any remaining
excess  funds shall immediately be applied to any other outstanding indebtedness
of  Borrower  due  to  Lender,  and  if  none  is  outstanding, shall be paid to
Borrower.  In determining whether or not the interest paid or payable, under any
specific  contingency,  exceeds  the  highest  lawful  rate, Borrower and 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  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 and performed in full
prior  to  the  end  of  the  full contemplated term hereof, and if the interest
received  for  the  actual period of existence hereof exceeds the maximum lawful
rate,  Lender  or any subsequent holder of any Note shall refund to Borrower the
amount  of such excess or credit the amount of such excess against the principal
portion of the indebtedness, as of the date it was received, and, in such event,
Lender  shall  not  be  subject  to  any  penalties  provided  by  any  laws for
contracting  for,  charging,  reserving  or  receiving interest in excess of the
maximum  lawful  rate.

     2.03.     Procedures  for  Borrowing.
               --------------------------

     (a)      Timing of Advances.  Advances shall not be made more than once per
              ------------------
calendar month, and all Advances in any calendar month shall be made on the same
Borrowing  Date.  Each  Advance  (other  than the last  Advance)  shall be in an
aggregate principal amount of not less than $250,000. No amounts may be borrowed
hereunder  on  or  after  the  Financing  Termination  Date.  Lender  is  hereby
authorized to retain from each Advance all amounts of Lender's  Expenses accrued
and unpaid by Borrower,  for which  invoices have been sent to Borrower prior to
such Advance. In any event, all outstanding legal fees, charges and expenses not
paid by Borrower prior to any Borrowing Date shall be paid before any Advance is
made or concurrently with such Advance.

     (b)      Borrowing Certificates.  To request an Advance hereunder, Borrower
              ----------------------
shall  send to  Lender,  at least  five  Business  Days  prior to the  requested
Borrowing Date, a completed Borrowing Certificate,  along with invoices and such
other  supporting  documentation  as Lender may  reasonably  request.  Lender is
hereby  authorized to add to any Borrowing  Certificate  all amounts  payable by
Borrower to Lender in respect of legal fees,  charges  and  expenses  arising or
incurred by Lender, to the extent such fees, charges and expenses have then been
incurred or charged and may be paid from proceeds of the Loans.

     (c)      Transmission of Advances.  Advances shall be made by wire transfer
              ------------------------
to the account(s) specified in the applicable Borrowing Certificate, except that
(i) proceeds of the Loans may be transmitted,  at Lender's  option,  directly to
any  Nortel  or  Vendor  account  for  payment  of any  unpaid  Nortel or Vendor
invoices,  and (ii)  Advances  shall be made to Borrower only to the extent that
Borrower  provides  Lender with  satisfactory  evidence  that the amount of such
Advance will be paid to Nortel or the Vendor. No further  authorization shall be
necessary for any such direct disbursements, and each such Advance shall satisfy
pro tanto the obligations of Lender under this Agreement.

     (d)      Borrowing Dates. Advances shall be made by Lender on the Borrowing
              ---------------
Date  specified in the  applicable  Borrowing  Certificate if all conditions for
such  Advance  have  been  satisfied,  or on  such  later  Business  Date as all
conditions for such Advance shall have been satisfied, as determined by Lender.

                                       13
<PAGE>
     (e)      Advances  After Default.  At its option,  after the occurrence and
              -----------------------
continuance of a Default, Lender may but shall not be obligated to make advances
of portions of the Loans to any Person (including  without limitation Nortel and
any Vendor,  supplier,  subcontractor  and  materialman)  to whom Lender in good
faith determines payment is due with respect to the Equipment,  and any proceeds
so  disbursed  by Lender  shall be deemed  disbursed as of the date on which the
Person to whom payment is made receives the same. No further  authorization from
Borrower shall be necessary to warrant such direct  advances,  and the execution
of this Agreement by Borrower shall, and hereby does,  constitute an irrevocable
authorization and power of attorney so to advance proceeds  hereunder.  All such
Advances shall satisfy pro tanto the  obligations of Lender  hereunder and shall
be secured by the Security Documents as fully as if made directly to Borrower.

     2.04.     Prepayments.
               -----------

          (a)     Voluntary  Prepayments.  The  Borrower  may, at its option, at
                  ----------------------
any  time  and  from time to time, prepay the Loans in whole or in part, upon at
least  five Business Days prior written notice to Lender specifying the date and
amount of prepayment, in a minimum amount of $50,000, plus the premium described
below,  and  all  accrued  but  unpaid  interest  thereon.  Such notice shall be
irrevocable  and  the principal amount specified in such notice shall be due and
payable  on  the  date  specified  together  with accrued interest on the amount
prepaid. Any such prepayment shall be subject to a prepayment premium equal to a
percentage  of the amount prepaid as follows: 3% if the prepayment is made on or
before  the  first anniversary of the Closing Date; 2% if the prepayment is made
after  the  first  anniversary  but  on  or before the second anniversary of the
Closing  Date;  1% if the prepayment is made after the second anniversary but on
or  before  the  third anniversary of the Closing Date, and without a premium if
the prepayment is made after the third anniversary of the Closing Date.  Amounts
prepaid  may  not  be borrowed again and shall be applied as provided in Section
2.04(c).  Excess  interest payments under Section 2.02(g), prepayments made from
insurance  proceeds  pursuant  to  Section  6.03,  or  prepayments made with any
condemnation  proceeds  shall  not  be  subject  to  a  prepayment premium.  The
prepayment  premium  shall  not  be  required  for  amounts  paid pursuant to an
acceleration  of  the  obligations  after the occurrence of an Event of Default.

          (b)     Mandatory Prepayment. If and on each occasion that Telscape or
                  --------------------
any  Subsidiary  shall  make  any Permitted Preferred Cash Dividends, the record
date  for  which  shall  occur  during  the  period  from  and  after  the first
anniversary of the Closing Date and before the second anniversary of the Closing
Date,  then,  on  or  before  the  record date for such Permitted Preferred Cash
Dividends,  the  Borrower  shall  make  a  prepayment  on  the Loans, out of the
proceeds  of  the  New Equity raised in connection with such Permitted Preferred
Cash  Dividends,  in  an  amount equal to the amount of such Permitted Preferred
Cash  Dividends.

          (c)     Application  of  Prepayments. Any prepayments shall be applied
                  ----------------------------
first  to  interest,  then  to  premium,  then  to  expenses,  and  then  to the
installments  of  principal  in  reverse  chronological  order.

     2.05.     Computation  of  Interest.  Interest shall be calculated daily on
               -------------------------
the  basis  of  a  360-day year for the actual days elapsed in the period during
which  it  accrues.

     2.06.     Payments.  All  payments and prepayments to be made in respect of
               --------
principal,  interest,  prepayment  premiums,  or other amounts due from Borrower
hereunder  or  under the Note shall be payable on or before 1:00 p.m., Nashville
time, on the day when due, without presentment, demand, protest or notice of any
kind,  all  of  which  are hereby expressly waived, and an action therefor shall
immediately  accrue. Such payments shall be made to Lender at Lender's office at
501  Corporate  Centre  Drive, Franklin, Tennessee 37067, or such other location
specified  in writing by Lender, in immediately available funds, without setoff,
recoupment,  counterclaims  or  any  other  deduction  of  any  nature.

                                       14
<PAGE>
     2.07.     Indemnity. Borrower hereby indemnifies Lender against any losses,
               ---------
claims,  penalties, expenses, actions, suits, obligations, liabilities and Liens
(and  all  costs  and expenses, including reasonable attorneys' fees incurred in
connection  therewith),  that Lender has sustained or incurred or may sustain or
incur  in connection with any of the Collateral, or the enforcement, performance
or  administration  of the Loan Documents, or as a consequence of any default by
Borrower in the performance or observance of any covenant or condition contained
in  this  Agreement  or  the  Loan  Documents, including without limitation, the
breach  of  any  representation or warranty, any failure of Borrower to pay when
due  (by  acceleration  or  otherwise) any principal, interest, fee or any other
amount  due  hereunder  or under the Note, and any failure of Borrower to comply
with  all applicable Requirements of Law (collectively, "Claims"), except to the
extent  of any Claims proximately caused by Lender's gross negligence or willful
misconduct.  Borrower's obligations under this Section 2.07 shall be part of the
Obligations  and  shall  be secured by the Collateral. Borrower agrees that upon
written  notice  by  Lender  of  the assertion of any Claims, Borrower shall, at
Lender's  option, either assume full responsibility for, or reimburse Lender for
the  reasonable  costs  and expenses of, the defense thereof. Neither Lender nor
Borrower shall have any liability for consequential or incidental damages of any
nature.  The  provisions  of  this Section 2.07 shall survive the termination of
this  Agreement and payment of the Obligations; however, upon the payment of the
other  Obligations,  Lender  shall  release  its  Lien  on  the  Collateral.

     2.08.     Use  of Proceeds. The proceeds of the Advances hereunder shall be
               ----------------
used  by  Borrower only for the purposes and in the amounts described in Section
2.01  hereof,  and  no  amounts  repaid  may  be  reborrowed.

     2.09.     Fees.  Borrower  shall  pay Lender the fees described on Schedule
               ----                                                     --------
2.09  hereto  in  connection  with  this  Agreement.

     2.10.     Lender's Expenses. 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  Obligations  or  the  other  Loan Documents, including, without
limitation, reasonable 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  the  Loans 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  legal  fees  and
disbursements,  audit  fees  and charges, and all out-of-pocket expenses; (c) to
pay,  indemnify, and 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,  any 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 20 days
after the date of demand until paid in full. All Lender's Expenses, and interest
thereon,  shall  be  part  of  the  Obligations  and  shall  be  secured  by the
Collateral.  The  agreements in this Section 2.10 shall survive repayment of all
other  Obligations  not  constituting  Lender's Expenses.  All Lender's Expenses
that  are  outstanding  on  any Borrowing Date shall be paid before or with such
Advance.  If Borrower has not paid to Lender the amount of all Lender's Expenses
billed  to  Borrower  at  least  five  Business Days 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. 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  Borrower's  legal  fees  or similar expenses.

                                       15
<PAGE>
     2.11.     Increased  Costs  and  Taxes.  (a)     If,  due to either (i) the
               ----------------------------
introduction  of  or  any  change (other than any change by way of imposition or
increase  of  reserve requirements, in the case of Variable Rate Advances) in or
in  the  interpretation of any law or regulation or (ii) the compliance with any
guideline  or  request  from  any  central  bank or other governmental authority
(whether  or  not  having  the force of law), there shall be any increase in the
cost  to  Lender  of agreeing to make or making, funding or maintaining Variable
Rate  Advances,  then  the  Borrower shall from time to time, upon demand by the
Lender,  pay  to  the  Lender  additional  amounts sufficient to compensate such
Lender  for  such  increased  cost.  A  certificate  as  to  the  amount of such
increased cost, submitted to the Borrower by the Lender, shall be conclusive and
binding  for  all  purposes,  absent  manifest  error.

     (b)       If  the  Lender  determines  that  compliance  with  any  law  or
regulation  or  any  guideline  or  request  from  any  central  bank  or  other
governmental authority (whether or not having the force of law) affects or would
affect the  amount of capital  (or the rate of return on  capital)  required  or
expected  to be  maintained  by the Lender or any  corporation  controlling  the
Lender  and that the  amount  of  commitment,  or  offer or  agreement,  to lend
hereunder and other  commitments,  or offers or agreements,  of this type, then,
upon notice by the Lender,  the Borrower  shall  immediately  pay to the Lender,
from time to time as specified by the Lender,  additional  amounts sufficient to
compensate the Lender,  or such corporation in the light of such  circumstances,
to the extent that the Lender reasonably determines such increase in capital (or
reduction  in rate of return)  to be  allocable  to the  existence  of  Lender's
commitment,  or offer or agreement,  to lend  hereunder.  Such notice as to such
amounts submitted and delivered to the Borrower by the Lender shall set forth in
summary fashion the basis of such allocation and shall be conclusive and binding
for all purposes, absent manifest error.

     (c)       Any  and all  payments  by  Borrower  hereunder  or  under a Note
executed by Borrower  shall be made, in accordance  with Section 2.11,  free and
                                                         ------------
clear of and without deduction for any and all present or future taxes,  levies,
imposts, deductions,  charges or withholdings,  and all liabilities with respect
thereto (all such taxes, levies, imposts, deductions,  charges, withholdings and
liabilities in respect of payments hereunder or under the Note being hereinafter
referred  to as  "Taxes").  If  Borrower  shall be required by law to deduct any
                  -----
Taxes from or in respect of any sum payable hereunder or under any Note executed
by Borrower to Lender, (i) the sum payable by Borrower shall be increased as may
be  necessary  so that,  after  Borrower  and  Lender  have  made  all  required
deductions  (including  deductions  applicable to additional  sums payable under
this  Section  2.11),  Lender  receives an amount equal to the sum it would have
received had no such  deductions  been made,  (ii) Borrower  shall make all such
deductions,  and  (iii)  Borrower  shall  pay the full  amount  deducted  to the
relevant  taxation  authority or other  authority in accordance  with applicable
law.

     (d)      In  addition,  Borrower  shall pay any  present  or future  stamp,
documentary,  excise,  property or similar  taxes,  charges or levies that arise
from  any  payment  made  hereunder  or under  the  Note or from the  execution,
delivery or registration  of,  performance  under, or otherwise with respect to,
this Agreement or the Note (hereinafter referred to as "Other Taxes").
                                                        -----------

                                       16
<PAGE>
     (e)      Borrower shall indemnify  Lender for and hold it harmless  against
the full  amount of Taxes and Other  Taxes,  and for the full amount of taxes of
any kind  imposed by any  jurisdiction  on amounts  payable  under this  section
imposed on or paid by Lender and any liability (including  penalties,  additions
to tax, interest and expenses)  arising therefrom or with respect thereto.  This
indemnification  shall be made within 30 days from the date Lender makes written
demand therefor.

     (f)       Within  30 days  after  the date of any  payment  of  Taxes,  the
Borrower shall furnish to Lender, at its address referred to above, the original
or a certified copy of a receipt evidencing such payment.

     (g)      In the event that Lender determines in its reasonable  discretion,
that it has  actually  and  finally  realized  a refund of or  credit  for taxes
withheld  or  paid  pursuant  to  this  section,   which  credit  or  refund  is
identifiable  by Lender as being a result of taxes  withheld in connection  with
sums payable  hereunder or under any other Loan Document,  Lender shall promptly
notify Borrower and shall remit to Borrower, the amount of such refund or credit
allocable  to  payments  made  hereunder  or under  the  other  Loan  Documents;
provided,  however, that in the event of any subsequent disallowance of any such
           -------
refund or credit on account of which Lender has made a payment  pursuant to this
paragraph, the amount so disallowed shall be deemed to be a Tax for which Lender
shall be  entitled to  indemnification  under of this  section,  but only to the
extent of any payment by such Lender pursuant to this paragraph.

                  ARTICLE 3: COLLATERAL AND SECURITY AGREEMENT
                  --------------------------------------------

     3.01.     Grant  of  Security  Interest.  The  Borrower  (as debtor) hereby
               -----------------------------
assigns  to  Lender  as  collateral,  and  grants to Lender (as secured party) a
continuing  security  interest  in  and  to,  all of Borrower's right, title and
interest  in and to the following kinds and types of property, 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"):

          (a)     All  Nortel  Equipment financed or refinanced with proceeds of
an  Advance  and all Vendor Equipment financed or refinanced with proceeds of an
Advance, and in each case any and all additions, substitutions, and replacements
to or of any of the foregoing, together with all attachments thereto (other than
attachments  (i) not financed or refinanced with proceeds of an Advance or which
are not required to be attached thereto by the terms of this Agreement, and (ii)
which  are  not  an  integral part of the Collateral, and are severable from the
Collateral  without  damaging  the  functionality  or  value  of  the  remaining
Collateral),  and  all components, parts, improvements, upgrades, and accessions
installed  thereon  or affixed thereto, including installation services provided
by  Nortel  or  any  other  Vendor  in  connection  therewith  (collectively,
"Equipment")  and the Borrower's rights under each Nortel Purchase Agreement and
each  Vendor  Purchase  Agreement  relating  to  such  Equipment;

          (b)     All general intangibles and intangible property (including all
contracts  and  contract rights) constituting part of, or provided by or through
Nortel  or  any  Vendor  in  connection  with,  the Equipment, including without
limitation  insurance  proceeds  and  amounts  due  under  insurance  policies,
licenses,  license  rights,  rights in intellectual property, Software, Software
Licenses,  computer  programming  (including source codes, object codes, and all
other  embodiments  of computer programming or information), refunds, warranties
and  indemnification  rights,  and  all  amounts owed at any time to Borrower by
Lender  or  Nortel or by a Vendor in connection with a Vendor Purchase Agreement
relating  to  Equipment  (collectively,  "General  Intangibles");

                                       17
<PAGE>
          (c)     All  proceeds  and products of any of the foregoing, including
without  limitation  (i)  any  and  all  proceeds  of  any insurance, indemnity,
warranty  or  guaranty payable to Borrower from time to time with respect to any
of  the  Collateral;  (ii) any and all payments (in any form whatsoever) made or
due  and  payable  to  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 Authority (or any Person acting under
color  of  governmental  authority);  and  (iii)  any  and all cash proceeds and
non-cash  proceeds  in  the  form  of equipment, inventory, contracts, accounts,
general intangibles, chattel paper, documents, instruments, securities, or other
proceeds,  but  excluding any revenues or accounts receivable paid to or due the
Borrower as a result of the operation of the Collateral in the Borrower's normal
course  of  business  (collectively,  "Proceeds").

     3.02.     Priority of Security Interests. The security interests granted by
               ------------------------------
Borrower  to  Lender are and shall be continuing and indefeasible first-priority
security  interests  in the Collateral, subject to no Liens except for Permitted
Encumbrances  to  the  extent  provided  in  Section  8.01.
                                             -------------

     3.03.     Further  Documentation;  Pledge  of  Instruments. At any time and
               ------------------------------------------------
from  time  to time, upon the written request of Lender, and at the sole expense
of  Borrower, Borrower shall promptly execute, deliver and record any documents,
instruments,  agreements  and  amendments,  and take all such further action, as
Lender  may  reasonably  deem  desirable  in obtaining the full benefits of this
Agreement  and  of  the  rights  and  powers  herein granted, including, without
limitation,  the filing of any financing statements or amendments under the UCC.
Borrower  also  hereby authorizes Lender to file any such financing statement or
amendment thereto, without the signature of Borrower, or with a copy or telecopy
of  Borrower's  signature,  to  the  extent  permitted  by applicable law, or to
execute  any  financing  statement or amendment thereof on behalf of Borrower as
Borrower's  attorney-in-fact.  If any amount payable under or in connection with
any  of  the  Collateral  shall be or become evidenced by any promissory note or
other  instrument  or  any  certificated  securities,  such  note, instrument or
certificate shall be immediately pledged and delivered to Lender hereunder, duly
endorsed in a manner satisfactory to Lender.  Lender acknowledges and recognizes
that  Borrower's assignment of or grant of a security interest in its Regulatory
Authorizations  may  be  subject  to  restrictions  imposed by the FCC or PUC on
Borrower's  ability  to  assign  its  interest  in  or  transfer  control of any
Regulatory  Authorizations.  Likewise,  Lender  acknowledges and recognizes that
Borrower's  assignment  of or grant of a security interest in any state or local
franchises  or  licenses  may  be  subject  to  similar government restrictions.
Borrower  acknowledges, however, that the value of the Regulatory Authorizations
is  a  critical  part of Lender's collateral package, and agrees to use its best
efforts  to  effect  the transfer of such Regulatory Authorizations to Lender or
its  designee  upon  the  occurrence  of  an  Event  of  Default.

     3.04.     Further  Identification  of Collateral. Borrower shall furnish to
               --------------------------------------
Lender  from  time  to  time  statements  and  schedules further identifying and
describing  the  Collateral  and  such  other  reports  in  connection  with the
Collateral  as  Lender  may  reasonably  request,  all  in  reasonable  detail.

     3.05.     Remedies.  Lender  shall  have  all  the rights and remedies of a
               --------
secured  party  under  the  UCC,  and  shall be entitled to exercise any and all
remedies  available  under  Article 9 hereof or otherwise available at law or in
equity  upon  the  occurrence  of  an  Event  of  Default.

                                       18
<PAGE>
     3.06.     Standard  of  Care.  Lender  shall  be  deemed  to have exercised
               ------------------
reasonable  care in the custody and preservation of any of the Collateral in its
possession  if  it  takes  such  action for that purpose as Borrower requests in
writing,  but  Lender's  failure  to  comply  with any such request shall not of
itself be deemed a failure to exercise reasonable care, and no failure of Lender
to  preserve or protect any rights with respect to such Collateral against prior
parties,  or  to  do any act with respect to the preservation of such Collateral
not  so  requested by Borrower, shall be deemed a failure to exercise reasonable
care  in  the  custody  or  preservation  of  such  Collateral.

     3.07.     Advances  to  Protect  Collateral.  All insurance expense and all
               ---------------------------------
expenses  of  protecting,  storing, warehousing, insuring, handling, maintaining
and  shipping the Collateral (including, without limitation, all rent payable by
Borrower  to  any  landlord  of  any premises where any of the Collateral may be
located)  and  any and all taxes shall be borne and paid by Borrower. Lender may
(but shall not be obligated to) make advances to preserve, protect or obtain any
of  the  Collateral,  including  advances  to  cure  defaults  under  any  lease
agreements  for  Sites or advances to pay taxes, insurance and the like, and all
such advances shall become part of the Obligations owing to Lender hereunder and
shall  be  payable  to  Lender on demand, with interest thereon from the date of
such  advance  until  paid  at  the  Default  Rate in effect on the date of such
advance.

     3.08.     License to Use. Lender is hereby granted a license or other right
               --------------
to  use after and during the continuance of an Event of Default, without charge,
Borrower's  labels, patents, copyrights, rights of use of any name, trade names,
trademarks  and  advertising  matter,  or any tangible or intangible property or
rights  of a similar nature as it pertains to the Collateral, in advertising for
sale  and  selling  any Collateral, and Borrower's rights under all licenses and
franchise  agreements  with  respect  to  the Collateral shall inure to Lender's
benefit.

     3.09.     Guarantees.  Payment  of the Borrower's Obligations shall also be
               ----------
unconditionally  guaranteed  by  Telscape,  pursuant  to  the  form  of Guaranty
Agreement attached as Exhibit G to this Agreement, and by each existing and each
                      ---------
future  Significant Subsidiary which is a Domestic Subsidiary. In the event that
the  Guarantors  (excluding Telscape) have assets or revenues (as applicable) in
the  aggregate  on  a  non-consolidated  basis  of  less  than 90% of Telscape's
domestic  consolidated  assets  or  revenues (whichever applies first) as of the
Closing Date, as of the end of each of Telscape's fiscal years thereafter, or as
of  the  end  of  Telscape's  fiscal quarter immediately preceding any Borrowing
Date,  then  Borrower  shall  cause  additional  direct  or  indirect  Domestic
Subsidiaries of Telscape designated by the Borrower and acceptable to the Lender
to  execute and deliver Guaranty Agreements in the form attached as Exhibit H to
                                                                    ---------
this  Agreement  so that the domestic assets and revenues (as applicable) in the
aggregate  on  a  non-consolidated  basis  of  all  of the Guarantors (excluding
Telscape)  that  are also Domestic Subsidiaries (including each newly-designated
Significant  Subsidiary)  exceeds 90% of Telscape's domestic consolidated assets
and  90%  of  Telscape's  domestic  consolidated  revenues,  as  applicable.

     3.10.     Collateral  Assignment  of  Nortel  Purchase  Agreement.  On  the
               -------------------------------------------------------
Closing  Date, the Borrower shall assign to the Lender, as additional collateral
security,  all  of the Borrower's right, title and interest in and to the Nortel
Purchase  Agreement  pursuant  to  the form of Collateral Assignment of Purchase
Agreement  attached  as Exhibit I to this Agreement and shall obtain the consent
of  Nortel to that assignment. Borrower shall make future collateral assignments
to  the  Lender  of any additional purchase agreements subsequently entered into
with  Nortel  and  shall  use  its reasonable efforts to deliver consents to the
Lender  from  Nortel  for  those  subsequent assignments within 10 business days
after  the  effective  date  of  each  subsequent  purchase  agreement  using
substantially  the  same  forms  as  attached  as  exhibits  to  this Agreement.

                                       19
<PAGE>
     3.11.     Release  of  Security  Interest.  Upon the payment of all amounts
               -------------------------------
due  under  the  Notes  and  all  of Lender's Expenses, Lender shall release its
security interest in the Collateral and any indemnity obligations of Borrower to
Lender  which  survive  the  payment  thereafter  shall  become  unsecured
notwithstanding  any  other  provision  in  this  Loan  Agreement.

                    ARTICLE 4: REPRESENTATIONS AND WARRANTIES
                    -----------------------------------------

     Borrower  hereby  represents  and  warrants  to  Lender  as  follows:

     4.01.     Organization  and Qualification.  Each of Telscape, the Borrower,
               -------------------------------
and  each Subsidiary is duly organized, validly existing and in good standing as
a  corporation  under  the  laws  of  its  state  of organization. Telscape, the
Borrower,  and  each  Subsidiary  is  duly  qualified to do business and in good
standing  in  each  jurisdiction  in which the failure to receive or retain such
qualification  would  have  a  Material  Adverse  Effect.

     4.02.     Authority and Authorization.  Each of Telscape, the Borrower, and
               ---------------------------
each  Significant Subsidiary has all requisite corporate right, power, authority
and  legal  right  to  execute and deliver and perform its obligations under the
Loan  Documents  to which it is a party, to make and secure (as the case may be)
the  borrowings  provided  for herein, and to execute and deliver and to perform
its  obligations  under  the  Loan  Documents  to  which it is a party.  Each of
Telscape's, the Borrower's and each Significant Subsidiary's execution, delivery
and  performance  of  the Loan Documents to which it is a party Basic Agreements
have  been duly and validly authorized by all necessary corporate proceedings on
the  part  of  Telscape,  the  Borrower,  and  each  Significant  Subsidiary.

     4.03.     Execution  and  Binding Effect. This Agreement, the Note, and all
               ------------------------------
other  Basic  Agreements  have  been  or  will  be duly and validly executed and
delivered  by  Telscape,  the  Borrower,  and  each  Significant  Subsidiary, as
applicable,  and constitute or, when executed and delivered, will constitute the
legal,  valid  and  binding  obligations  of  Telscape,  the  Borrower, and each
Significant  Subsidiary,  as  applicable,  enforceable  in accordance with their
respective  terms,  except  as such enforceability may be limited by bankruptcy,
insolvency,  reorganization,  receivership,  moratorium  or other laws affecting
creditors'  rights  generally.

     4.04.     Governmental  Authorizations.  Except for the consents identified
               ----------------------------
on  Schedule  4.04  hereto (the "Required Consents"), no authorization, consent,
    --------------               -----------------
approval,  license,  exemption  or  other  action  by,  and  no  registration,
qualification,  designation,  declaration  or  filing  with,  any  Governmental
Authority  (other  than  the  filing  of  financing  statements and continuation
statements)  is  or  will  be  necessary  in  connection  with the execution and
delivery  of  this Agreement, the Note, or any other Loan Documents by Telscape,
the  Borrower,  or  any  Significant  Subsidiary;  the  consummation  of  the
transactions herein or therein contemplated; the performance of or compliance by
Telscape,  the  Borrower,  and  each  Significant  Subsidiary with the terms and
conditions  hereof  or  thereof;  or  the  legality, validity and enforceability
hereof  or  thereof.

     4.05.     Regulatory  Authorizations.  Telscape,  the  Borrower,  and  the
               --------------------------
Significant  Subsidiaries  collectively  hold  all  authorizations,  permits and
licenses  required  by  the  FCC,  the  PUC,  or  any Communications Law for the
construction and operation of the System, and all such Regulatory Authorizations
are  in  full force and effect, are subject to no further administrative (except
as set forth in Schedule 4.05) or judicial review, and are therefore final.  The
                -------------
Lender will not by reason of the execution, delivery and performance (other than
the  enforcement  of  remedies)  of  any of the Loan Documents be subject to the
regulation  or  control  of  either  the  FCC  or  the  PUC.  The  Regulatory
Authorizations  are  described  on  Schedule  4.05.
                                    --------------

                                       20
<PAGE>
     4.06.     Material  Agreement; Absence of Conflicts. Except as set forth on
               -----------------------------------------
Schedule  4.06  hereof,  the execution and delivery of this Agreement, the Note,
--------------
and  the  other  Loan  Documents; the consummation of the transactions herein or
therein  contemplated;  and  the performance of or compliance with the terms and
conditions  hereof  or  thereof  by Telscape, the Borrower, and each Significant
Subsidiary will not (a) materially violate any applicable Law; (b) conflict with
or  result  in  a  breach  of or a default under the Organizational Documents of
Telscape,  the  Borrower,  or  any  Subsidiary,  or conflict with or result in a
material  breach  of  or  default  under  any  agreement  or instrument to which
Telscape,  the  Borrower, or any Subsidiary is a party or by which Telscape, the
Borrower,  or  any  Subsidiary or its properties are bound; or (c) result in the
creation  or  imposition  of  any Lien upon any property (now owned or hereafter
acquired)  of  Telscape,  the  Borrower,  or any Subsidiary, except as otherwise
contemplated  by  this  Agreement.

     4.07.     No  Restrictions.  None  of  Telscape,  the  Borrower,  or  any
               ----------------
Significant  Subsidiary  is not a party or subject to any contract, agreement or
restriction  in  its  Organizational  Documents  that  materially  and adversely
affects  its  business  or  the  use  or  ownership  of any of its properties or
operation  of its business. Except as set forth on Schedule 4.07 hereof, none of
                                                   -------------
Telscape,  the  Borrower,  or  any  Subsidiary  is not a party or subject to any
contract  or  agreement  which  restricts  its  right  or  ability  to  incur
Indebtedness.  None  of Telscape, the Borrower, or any Subsidiary has not agreed
or  consented  to  cause  or  permit  in  the  future  (upon  the happening of a
contingency  or otherwise) any of the Collateral, whether now owned or hereafter
acquired,  to  be  subject  to  a  Lien  that  is  not  a Permitted Encumbrance.

     4.08.     Financial  Statements.  The  Borrower has furnished to Lender the
               ---------------------
most recent annual or quarterly financial statements of Telscape, certified by a
Responsible Officer of Telscape, including balance sheets and related statements
of  income  and  retained earnings and statements of cash flows, as described on
Schedule  4.08  hereof.  Such financial statements (including the notes thereto)
--------------
present fairly the financial condition of Telscape on a consolidated basis as of
the  end of such fiscal period and the results of its operations and the changes
in  its  financial position for the fiscal period then ended, all in  conformity
with  GAAP  applied  on  a  basis  consistent  with that of the preceding fiscal
period. Any projections and pro forma financial statements delivered by Borrower
to  Lender  were  prepared  in  good  faith,  based  on  reasonable assumptions,
including  (without  limitation)  the  cost  of  capital,  but Borrower makes no
representation  as  to  the  accuracy  of  any  such  projections.

     4.09.     Financial  Accounting Practices.  Each of Telscape, the Borrower,
               -------------------------------
and  each  Subsidiary  has  made  and kept books, records and accounts which, in
reasonable detail, accurately and fairly reflect its respective transactions and
dispositions  of  its  assets,  and  each  of  Telscape,  the Borrower, and each
Subsidiary shall 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  (i)  to  permit  preparation of financial statements in
conformity  with GAAP and (ii) 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.

     4.10.     Accurate  and  Complete Disclosure. No representation or warranty
               ----------------------------------
made  by  Borrower  under  this Agreement and no statement made by Telscape, the
Borrower,  or  any  Subsidiary  in any financial statement, certificate, report,
exhibit  or  document  furnished  by  Telscape, the Borrower, or a Subsidiary to
Lender  pursuant  to  or  in  connection with this Agreement (including, without
limitation, any filings with the Securities Exchange Commission, the FCC, or the
PUC)  is  or was false or misleading as of the date made in any material respect
(including  the  omission  of  any  material  information necessary to make such
representation,  warranty  or  statement  not  misleading); it being understood,
however,  that  Telscape,  the  Borrower,  and  the  Subsidiaries  make  no
representations  as  to any projections furnished to Lender.  There are no facts
that  evidence  or  create a Material Adverse Effect, or, so far as Borrower can
now  foresee,  will  evidence or create a Material Adverse Effect, which has not
been set forth in the financial statements referred to in Section 4.08 hereof or
                                                          ------------
otherwise  disclosed  in  writing  to  Lender prior to the First Borrowing Date.

                                       21
<PAGE>
     4.11.     No  Event  of  Default;  Compliance with Material Agreements.  No
               ------------------------------------------------------------
event has occurred and is continuing and no condition exists which constitutes a
Default  or an Event of Default after giving effect to the Advance to be made on
the First Borrowing Date. As of the date hereof, none of Telscape, the Borrower,
or  any  Subsidiary  is  in  violation of any term of its material agreements or
instruments  to  which  it is a party or by which it or its properties is bound.

     4.12.     Litigation.  Except  as  set  forth in Schedule 4.12, there is no
               ----------                             -------------
action,  suit  or  proceeding  pending  or,  to  the  knowledge of Telscape, the
Borrower,  or  a  Subsidiary  threatened by or before any Governmental Authority
against  or  affecting  Telscape,  the Borrower, any Subsidiary, or any of their
properties,  rights or licenses which if adversely decided would have a Material
Adverse  Effect.

     4.13.     Rights to Property; Intellectual Property.  The Borrower has good
               -----------------------------------------
and  marketable title to the Collateral, subject only to Permitted Encumbrances.
Each  of  Telscape,  the Borrower and their respective Subsidiaries has good and
marketable title to all personal and real property purported to be owned by them
as reflected in the most recent balance sheet referred to in Section 4.08 hereof
                                                             ------------
(except  as  sold  or otherwise disposed of in the ordinary course of business).
Each  of  Telscape,  the  Borrower  and  their  respective  Subsidiaries owns or
possesses  the right to use all patents, trademarks, service marks, trade names,
copyrights,  know-how,  franchises, software and software licenses necessary for
the  operation  of  their business, free from burdensome restrictions other than
such  defects  in  title or limitations in rights to use that individually or in
the  conjunction  with  each  other  do not or will not cause a Material Adverse
Effect.

     4.14.     Financial  Condition.  Telscape's  financial  condition  is
               --------------------
accurately  described  in  the  Certificate  of  Financial Condition executed by
Telscape  and  the  Borrower  pursuant  to  this  Agreement.

     4.15.     Taxes.  Telscape's,  the  Borrower's,  and  each  Significant
               -----
Subsidiary's  federal  tax  identification  number is set forth on Schedule 1.01
                                                                   -------------
hereto.  Except  as  disclosed on Schedule 4.15 hereto, all tax returns required
                                  -------------
to  be  filed  by  Telscape,  the Borrower, or any Subsidiary have been properly
prepared,  executed  and  filed,  and  all  taxes,  assessments,  fees and other
governmental  charges  upon  Telscape, the Borrower, and each Subsidiary or upon
any  of  its  properties, incomes, sales or franchises which are shown to be due
and payable thereon have been paid, other than taxes or assessments the validity
or  amount  of which Telscape, the Borrower, or the Subsidiary is determining or
contesting  in good faith or for which Telscape, the Borrower, or the Subsidiary
has  filed  appropriate extensions. The reserves and provisions for taxes on the
books  of  Telscape, the Borrower, and each Subsidiary are adequate for all open
years  and  for  its  current  fiscal  period.

     4.16.     No  Material  Adverse  Change.  Since  the  date of the financial
               -----------------------------
statements referenced in Section 4.08, there has been no Material Adverse Change
                         ------------
except  as  disclosed  on  Schedule  4.16.

     4.17.     No  Regulatory  Event.  No  Regulatory  Event has occurred and is
               ---------------------
continuing.

     4.18.     Trade  Relations.  There  exists no actual or, to Telscape's, the
               ----------------
Borrower's  or  any Subsidiary's knowledge, threatened termination, cancellation
or  limitation  of,  or any modification or change in, the business relationship
between  Telscape,  the  Borrower,  or any Subsidiary and any Carrier, any labor
organizations,  any  customer,  or  any  group  thereof  whose  agreements  with
Telscape,  the  Borrower, or any Subsidiary or use of the System individually or
in  the aggregate are material to the business of Telscape, the Borrower, or any
Subsidiary, or with any material Supplier, and there exists no present condition
or state of facts or circumstances which would have a Material Adverse Effect or
prevent  Telscape,  the Borrower, or any Subsidiary from conducting its business
after  the  consummation  of  the  transactions  contemplated by this Agreement.

                                       22
<PAGE>
     4.19.     No  Brokerage  Fees.  No  brokerage  or  other fee, commission or
               -------------------
compensation  is  to be paid by Telscape, the Borrower, or any Subsidiary to any
Person  in  connection  with  the  Loans  to be made hereunder other than to the
Lender.  The  Borrower  hereby  indemnifies  Lender  against  any claims brought
against  Lender  for  brokerage  fees  or  commissions of any Person based on an
agreement  with  Telscape, the Borrower, or any Subsidiary and agrees to pay all
expenses  incurred  by  Lender  in  connection with the defense of any action or
proceeding  brought  to  collect  any  such  brokerage  fees  or  commissions.

     4.20.     Margin  Stock;  Regulation  U.  The  Borrower  is  not  engaged
               -----------------------------
principally, or as one of its important activities, in the business of extending
credit  for  the  purpose of purchasing or carrying margin stock.  The making of
the Advances and the use of the proceeds thereof will not violate Regulations G,
U  or  X  of  the  Board  of  Governors  of  the  Federal  Reserve  System.

     4.21.     Investment Company; Public Utility Holding Company.  The Borrower
               --------------------------------------------------
is  not  an  "investment  company"  or  a  "company  controlled by an investment
company"  within  the meaning of the Investment Company Act of 1940, as amended,
or  a "holding company," or a "subsidiary company" of a "holding company," or an
"affiliate"  of  a  "holding company" or of a "subsidiary company" of a "holding
company,"  within the meaning of the Public Utility Holding Company Act of 1935,
as  amended.

     4.22.     Personal  Holding  Company;  Subchapter S.  The Borrower is not a
               -----------------------------------------
"personal  holding company" as defined in Section 542 of the Code.  The Borrower
is  not  a  "Subchapter  S"  corporation  within  the  meaning  of  the  Code.

     4.23.     ERISA.  (i)  With  respect  to any Plan, to Borrower's knowledge,
               -----
there is no Reportable Event currently under consideration by the PBGC which may
reasonably  result  in  any  material  liability to the PBGC with respect to any
Plan,  (ii)  no Plan has been terminated, (iii) no trustee has been appointed by
any  United  States District Court to administer any Plan, (iv) the PBGC has not
instituted  proceedings  to  terminate  any  Plan  or  to  appoint  a trustee to
administer  any  such  Plan,  (v)  neither  Telscape,  the  Borrower,  nor  any
Significant  Subsidiary  has  withdrawn, completely or partially, from any Plan,
and  (vi)  neither  Telscape,  the  Borrower, nor any Significant Subsidiary has
incurred  secondary  liability for withdrawal liability payments under any Plan.

     4.24.     Environmental  Warranties.  Telscape,  the  Borrower,  and  each
               -------------------------
Subsidiary  is in compliance with all Environmental Laws applicable to Telscape,
the  Borrower,  or  any  Subsidiary,  or its business or to the real or personal
property owned, leased or operated by Telscape, the Borrower, or any Subsidiary.
None of Telscape, the Borrower, or any Subsidiary has received notice of, nor is
aware  of,  any  violations  or alleged violations, or any liability or asserted
liability,  under  any  such  Environmental  Laws, with respect to Telscape, the
Borrower,  any  Subsidiary,  or  their  business  or  properties.

                                       23
<PAGE>
     4.25.     Security  Interests.  The  provisions  of  Article  3  hereof are
               -------------------                        ----------
effective to create in favor of Lender a legal, valid and enforceable Lien on or
security interest in all of the Collateral, and, when the recordings and filings
described  on Schedule 4.25 hereto have been properly made in the public offices
              -------------
listed  on  said  Schedule  4.25,  this  Agreement  will  create  a  perfected
                  --------------
first-priority  security  interest  in  all right, title, estate and interest of
Borrower  in the Collateral, and subject to no other Liens, except for Permitted
Encumbrances.  All  action  necessary  or  desirable to protect and perfect such
security interest in each item of the Collateral will have been duly taken prior
to  the  First Borrowing Date. The recordings and filings shown on said Schedule
                                                                        --------
4.25  are  all the actions necessary or advisable in order to establish, protect
---
and  perfect  the  interest  of  Lender  in  the  Collateral.

     4.26.     Place  of  Business.  The  chief  executive office of Borrower is
               -------------------
identified  on Schedule 4.26 hereto.  The Borrower's principal place of business
               -------------
in  the  state(s)  where the Equipment is located is identified on Schedule 4.26
                                                                   -------------
hereto.  The Borrower's records concerning the Collateral are kept at one or all
of  these  addresses.

     4.27.     Location of Collateral. The Collateral is and will be kept at the
               ----------------------
locations  identified  on Schedule 4.26 hereto or such other locations as may be
                          -------------
permitted  under  Section  8.04.
                  -------------

     4.28.     Clear  Title  To  Collateral.  The  Borrower is the sole owner of
               ----------------------------
each  item of the Collateral, having good and marketable title thereto, free and
clear  of any and all Liens, claims or rights of others, except for the security
interest  granted  herein  to  Lender  and  the  other  Permitted  Encumbrances.

     4.29.     Assumed  Names.  Except as set forth on Schedule 4.29 hereto, the
               --------------                          -------------
Borrower  does  not  conduct business under any assumed names or trade names and
has  not  conducted business under any other names or any assumed names or trade
names  at  any  time  prior  to  the  date  hereof.

     4.30.     Transactions  with  Affiliates.  No  Affiliate  and no officer or
               ------------------------------
director  of Telscape, the Borrower, or any Subsidiary or any individual related
by  blood,  marriage,  adoption or otherwise to any such officer or director, or
any  Person  in  which  any such officer, director or individual related thereto
owns  any beneficial interest, is a party to any agreement, contract, commitment
or  transaction  with  Telscape,  the  Borrower,  or  any  Subsidiary or has any
material  interest  in  any material property used by Telscape, the Borrower, or
any  Subsidiary,  except  as  set  forth  on  Schedule  4.30  hereto.
                                              --------------

     4.31.     Nortel  Purchase  Agreement.  The  Nortel  Purchase Agreement for
               ---------------------------
Nortel  Equipment  already  acquired has been duly executed and delivered by the
Borrower  and  Nortel;  is  in  full  force  and effect; and a true, correct and
complete  copy  thereof  (including  all  annexes,  attachments  and  amendments
thereto)  has  been  delivered  to  Lender, and there are no other side letters,
waivers  or  other  agreements  affecting  the  terms  thereof.

                        ARTICLE 5: CONDITIONS OF CLOSING
                        --------------------------------

     On  or  before  the  Closing Date, the following conditions shall have been
satisfied:

     5.01.     Borrower's,  Telscape's  and the Other Guarantors' Certificate. A
               --------------------------------------------------------------
certificate of Telscape, the Borrower, and each Significant Subsidiary signed by
a  duly  authorized  Responsible  Officer,  certifying  as to (i) true copies of
Organizational  Documents of Telscape, the Borrower, and each other Guarantor in
effect on such date; (ii) true copies of all corporate action taken by Telscape,
the Borrower, and each other Guarantor relative to this Agreement, the Note, and
the other Loan Documents; (iii) the names, true signatures and incumbency of the
Responsible  Officers  of  Telscape,  the  Borrower,  and  each  other Guarantor
authorized  to  execute and deliver this Agreement, the Note, and the other Loan
Documents;  as  applicable  (iv)  a  Certificate of Good Standing (or equivalent
certificate) for Telscape, the Borrower, and each other Guarantor duly issued by
the  Secretary  of State of each state in which Telscape, the Borrower, and each
other  Guarantor  is organized and with respect to the Borrower in each state in
which  Collateral  is  located.

                                       24
<PAGE>
     5.02.     Opinions  of  Counsel.  Lender  shall have received the following
               ---------------------
opinions,  all  dated  as  of  the  Closing  Date  and  in  form  and  substance
satisfactory  to  Lender:

          (a)     A  written  opinion  of counsel to Telscape, the Borrower, and
each  other  Guarantor,  substantially  in  the  form  of  Exhibit  C  hereto;
                                                           ----------

          (b)     A  written  opinion of regulatory counsel for Borrower and the
Guarantors,  substantially  in  the  form  of  Exhibit  D  hereto;  and
                                               ----------

     5.03.     Closing  Documents.  Lender  shall  have  received  the following
               ------------------
documents,  all  in  form  and  substance  satisfactory  to  Lender:

          (a)     Agreement.  This  Agreement,  duly  executed  by  Borrower;
                  ---------

          (b)     Note.  The  Note,  duly  executed  by  Borrower;
                  ----

          (c)     Financing Statements. All UCC-1 financing statements necessary
                  --------------------
to  perfect  the  Liens granted hereby, each duly executed by Borrower, and duly
recorded  in  all  the  offices  identified  on  Schedule  4.25  hereto;
                                                 --------------

          (d)     Collateral  Assignment  of Purchase Agreement.  The Collateral
                  ---------------------------------------------
Assignment of Purchase Agreement, duly executed by the Borrower, and the consent
to  Collateral  Assignment  of  Purchase  Agreement,  duly  executed  by Nortel;

          (e)     Insurance.  Policies and certificates of insurance required by
                  ---------
Section  7.07,  accompanied by evidence of the payment of the premiums therefor;
-------------

          (f)     Financial  Statements.  The  financial statements described in
                  ---------------------
Section  4.08  hereof;
-------------

          (g)     [INTENTIONALLY  OMITTED].
                  ------------------------

          (h)     Certificate of Financial Condition. A Certificate of Financial
                  ----------------------------------
Condition,  duly executed by a Responsible Officer of Telscape and the Borrower.

          (i)     Pre-Closing  Lien  Searches.  Lien  searches  from  all
                  ---------------------------
jurisdictions reasonably determined by Lender to be appropriate, effective as of
a  date  reasonably  close to the Closing Date, reflecting no other Liens (other
than  Permitted  Encumbrances)  on  any  of  the  Collateral.

          (j)     Guaranty  Agreements.  A  Guaranty Agreement, duly executed by
                  --------------------
Telscape  and  each  Significant  Subsidiary  which  is  a  Domestic Subsidiary.

                                       25
<PAGE>
                        ARTICLE 6: CONDITIONS OF LENDING
                        --------------------------------

     6.01.     Conditions  for Initial Advance. On or before the First Borrowing
               -------------------------------
Date,  the  following  conditions  shall have been met to Lender's satisfaction:

          (a)     Post-Closing  Lien  Searches.  Lender  shall  have  received
                  ----------------------------
satisfactory results of Lien searches in all jurisdictions reasonably determined
by  Lender  to  be appropriate, reflecting the filing of financing statements in
favor  of  Lender  pursuant  hereto  and  no  other  Liens  other than Permitted
Encumbrances.

          (b)     Required  Consents.  Lender  shall  have received satisfactory
                  ------------------
evidence  of  Borrower's  obtaining  the  Required  Consents.

     6.02.     Conditions for All Advances. The obligation of Lender to make any
               ---------------------------
Advance  hereunder  is  subject  to  Borrower's  performance  of its obligations
hereunder  on  or before the date of such Advance and to the satisfaction of the
following  further  conditions  on or before the Borrowing Date for any Advance,
including  the  first  Advance:

          (a)     Filings,  Registrations  and  Recordings.  Any  financing
                  ----------------------------------------
statements  or  other  recordings  required  hereunder  shall have been properly
filed,  registered  or  recorded in each office in each jurisdiction required in
order  to  create  in  favor  of  Lender  a perfected first-priority Lien on the
Collateral, subject to no other Lien (other than Permitted Encumbrances); Lender
shall have received acknowledgment copies of all such filings, registrations and
recordings  stamped  by  the  appropriate  filing officer; and Lender shall have
received  results  of  searches of such filing offices and satisfactory evidence
that  any other Liens (other than Permitted Encumbrances) on the Collateral have
been duly released and that all necessary filing fees, recording fees, taxes and
other  expenses  related to such filings, registrations and recordings have been
paid  in  full.

          (b)     Borrowing  Certificate.  Lender  shall  have  received  a duly
                  ----------------------
executed  Borrowing  Certificate  in the form of Exhibit B, including a detailed
                                                 ---------
itemization  of  all costs of goods and services to be paid with the proceeds of
the  Advance and accompanied by supporting documentation satisfactory to Lender.

          (c)     Reporting  Requirements.  Borrower  shall have provided Lender
                  -----------------------
with  all  relevant  reports  and  information  required under Article 7 hereof.
                                                               ---------

          (d)     No Regulatory Event. No Regulatory Event (in either Borrower's
                  -------------------
or  Lender's  reasonable determination) shall have occurred and be continuing or
would  exist  upon  the  consummation of transactions to occur on such Borrowing
Date.

          (e)     No Default or Event of Default. No Default or Event of Default
                  ------------------------------
shall  have  occurred  and be continuing or would exist upon the consummation of
transactions  to  occur  on  such  Borrowing  Date.

          (f)     No  Material  Adverse Change. No Material Adverse Change shall
                  ----------------------------
have  occurred or would occur after giving effect to such Advance since the date
of the last financial statements delivered to Lender pursuant to Section 4.08 or
                                                                 ------------
7.01  hereof.
----

          (g)     Representations  and  Warranties.  The  representations  and
                  --------------------------------
warranties  contained in Article 4 hereof shall be true in all material respects
                         ---------
on  and  as  of  the  date  of  each  such  Advance  hereunder.

                                       26
<PAGE>
          (h)     Lender's  Expenses.  All  closing  costs  and  other  Lender's
                  ------------------
Expenses  shall have been paid in full (or shall be paid first from such Advance
as  provided  in  Section  2.03  hereof).
                  -------------

          (i)     Opinions.  Lender  shall  have  received  from  Borrower  such
                  --------
opinions  of  counsel  for Borrower as may be reasonably acceptable to Lender in
form  and  substance  with respect to the perfection of the Liens created by the
Security  Documents  in  each  jurisdiction where Collateral is located or to be
located.

          (j)     Details,  Proceedings  and  Documents.  All  legal details and
                  -------------------------------------
proceedings  in  connection with the transactions contemplated by this Agreement
shall  be  reasonably satisfactory to Lender, and Lender shall have received all
such  counterpart  originals  or certified or other copies of such documents and
proceedings  in  connection  with  such  transactions,  in  form  and  substance
reasonably  satisfactory  to  Lender,  as  Lender may from time to time request.

          (k)     Consents. Lender shall have received Consents duly executed by
                  --------
all  parties  and  in  form  satisfactory  to  Lender.

          (l)     Fees.  Lender  shall  have  received  the  fee(s) described in
                  ----
Section  2.09  hereof.
-------------

          (m)     Purchase Agreements. Lender shall have received a copy of each
                  -------------------
executed Nortel Purchase Agreement and/or Vendor Purchase Agreement with respect
to  which  proceeds  of  an Advance shall be used to acquire Nortel Equipment or
other Equipment, and Lender shall have reviewed and approved the Equipment to be
acquired  with  proceeds  of an Advance, together with the collateral assignment
and  consent  specified  in  Section  3.10  of  this  Agreement.
                             -------------

          (n)     Post-Closing  Items.  The  post-closing  items  described  on
                  -------------------
Schedule  6.02  hereto, if any, shall have been completed in the time permitted,
--------------
and  Borrower  shall  have  provided  Lender with satisfactory evidence thereof.

     6.03.     Affirmation  of  Representations  and  Warranties.  Any Borrowing
               -------------------------------------------------
Certificate  or  other  request  for  any  Advance  hereunder shall constitute a
representation  and  warranty  that  (a)  the  representations  and  warranties
contained  in  Article 4 hereof are true and correct in all material respects on
               ---------
and as of the date of such request with the same effect as though made on and as
of  the  date of such request and (b) on the date of such request, no Default or
Event of Default has occurred and is continuing,  exists, or will occur or exist
after  giving effect to such Advance (for this purpose such Advance being deemed
to  have  been  made  on the date of such request). Failure of Lender to receive
notice  from  Borrower  to  the  contrary  before  such  Advance  is  made shall
constitute  a  further  representation  and  warranty  by  Borrower that (x) the
representations  and  warranties  of Borrower contained in the first sentence of
this  Section  6.03  are  true and correct on and as of the date of such Advance
      -------------
with  the  same  effect as though made on and as of the date of such Advance and
(y)  on the date of the Advance, no Default or Event of Default has occurred and
is  continuing,  exists  or  will  occur  or  exist  after giving effect to such
Advance.

     6.04.     Deadline  for Funding Conditions. Lender shall have no obligation
               --------------------------------
to  make  any Advances hereunder if all of the conditions set forth in Article 5
                                                                       ---------
and  in  Sections  6.01  and  6.02 hereof have not been fully satisfied, and the
         -------------------------
first  Advance made hereunder, within the period of 12 calendar months following
the  Closing  Date.

                                       27
<PAGE>
                        ARTICLE 7: AFFIRMATIVE COVENANTS
                        --------------------------------

     Borrower hereby agrees that, as long as the commitment hereunder remains in
effect,  the Note remains outstanding or unpaid, or any other amount is owing to
Lender  hereunder  or  under  any of the Loan Documents, Borrower shall keep and
perform  fully  each  and  all  of  the  following  covenants:

     7.01.     Reporting  and  Information  Requirements.
               -----------------------------------------

          (a)     Annual Audit Reports. As soon as practicable, and in any event
                  --------------------
within  105 days after the close of each fiscal year of Telscape, Borrower shall
furnish  or  cause  to be furnished to Lender audited consolidated statements of
income,  cash  flow, and retained earnings for Telscape for the preceding fiscal
year  and  Telscape's  consolidated  balance sheet as of the close of the fiscal
year,  and  notes  to  each,  all  in  reasonable  detail  and  setting forth in
comparative  form  the corresponding figures for the preceding fiscal year, with
such  statements  and  balance  sheet  to  be certified without qualification by
independent  certified  public  accountants  of  recognized regional or national
standing  selected  by  Telscape  and  reasonably  satisfactory  to  Lender.

          (b)     Quarterly Reports. Within 50 days after the end of each fiscal
                  -----------------
quarter,  the  Borrower  shall  furnish  to  Lender  (i)  unaudited consolidated
statements  of  income,  cash  flow,  and retained earnings for Telscape for the
preceding  fiscal  quarter  and  for the period from the beginning of Telscape's
then  current  fiscal  year  to  the end of the fiscal quarter, and an unaudited
consolidated  balance sheet of Telscape as of the end of the fiscal quarter, all
in  reasonable  detail  and  certified  by  a Responsible Officer of Telscape as
presenting fairly the financial position of Telscape as of the end of the fiscal
quarter  and  the  results  of  its  operations and the changes in its financial
position  for  fiscal  quarter, in conformity with GAAP (except for accompanying
notes  thereto),  subject  to year-end audit adjustments, and (ii) upon Lender's
request,  an  aging  of  accounts  payable  and  accounts  receivable.

          (c)     Consolidating  Financial  Statements.  As soon as practicable,
                  ------------------------------------
and  in  any  event  within  105  days  after  the  close of each fiscal year of
Telscape,  Borrower  shall  furnish or cause to be furnished to Lender unaudited
statements  of income for the preceding fiscal year and unaudited balance sheets
as  of  the  close  of the fiscal year for each Significant Subsidiary, together
with  a  consolidating  statement  of  income  and balance relating to Telscape.

          (d)     Compliance  Certificates. Within 50 days after the end of each
                  ------------------------
Calendar Quarter, Borrower shall deliver to Lender a certificate dated as of the
end  of  such  Calendar  Quarter, signed on behalf of Borrower and Telscape by a
Responsible  Officer  of  Borrower  and Telscape (i) stating that as of the date
thereof  no  Event of Default has occurred and is continuing or exists or, if an
Event  of Default has occurred and is continuing or exists, specifying in detail
the  nature  and period of existence thereof and any action with respect thereto
taken  or contemplated to be taken by Borrower; (ii) stating that the signer has
personally  reviewed  this  Agreement  and the Guaranty Agreements and that such
certificate  is  based on an examination made by or under the supervision of the
signer  sufficient  to  assure  that  such  certificate  is  accurate; and (iii)
calculating  and  certifying  Telscape's compliance with the financial covenants
set  forth  in  Section  7.15  hereof.
                -------------

          (e)     Accountants'  Certificate.  Each set of audited statements and
                  -------------------------
balance sheets delivered pursuant to Section 7.01(a) hereof shall be accompanied
                                     ---------------
by a certificate or report dated the date of such statement and balance sheet by
the  accountants  who  certified  such  statements and balance sheet, stating in
substance  that  they  have  reviewed  this  Agreement  and  that, in making the
examination  necessary  for  their  certification  of the statements and balance
sheets,  they  did  not  become  aware  of any Default or, if they did become so
aware,  the certificate or report shall state the nature and period of existence
thereof.

                                       28
<PAGE>
          (f)     Projections. If requested by Lender, Borrower shall deliver to
                  -----------
Lender  within 30 days prior to the beginning of each fiscal year projections of
the anticipated income, expenses, cash flow, assets and liabilities for Telscape
for  each  month of that year, prepared in good faith and in a manner and format
consistent  with other financial statements provided by Borrower and Telscape to
Lender.  The  Borrower  shall  cause  the  projections  to  present  fairly  the
anticipated  financial  condition  of  Telscape  and  shall  be  certified  by a
Responsible  Officer  of  Telscape.  Upon  Lender's  request,  or  following any
material  change  in  Telscape's  financial  condition or business, such reports
shall  be provided to Lender quarterly, within 30 days prior to the beginning of
each  Calendar  Quarter.

          (g)     Other  Reports  and Information.  Promptly upon their becoming
                  -------------------------------
available  to  Telscape  or  the  Borrower, the Borrower shall deliver to Lender
copies  of  (i)  all  regular  or  special  reports  or  effective  registration
statements  which  Telscape  or  the  Borrower  shall  file  with  Governmental
Authorities,  the  FCC  or  the PUC (or any successor thereto) or any securities
exchange;  (ii)  financial  statements,  material reports, and other information
distributed  by  Telscape  or  the  Borrower  to  its creditors or the financial
community  in  general;  and  (iii)  all  press releases issued by or concerning
Telscape,  the  Borrower,  or  the  System.

          (h)     Further  Information.  The  Borrower  will promptly furnish to
                  --------------------
Lender  such other information (including any report by independent auditors) in
such  form  as  Lender  may  reasonably  request.

     7.02.     Other  Notices.  Promptly  upon a Responsible Officer of Borrower
               --------------
becoming  aware  of  any  of  the  following,  Borrower shall give Lender notice
thereof,  together with a written statement of a Responsible Officer of Borrower
setting  forth  the details thereof and any action with respect thereto taken or
contemplated  to  be  taken  by  Borrower:

          (a)     a  Default  or  Event  of  Default;

          (b)     any  Material  Adverse  Change;

          (c)     a  default  or  breach  by  Telscape,  the  Borrower,  or  any
Subsidiary  under  any other contractual obligation to which it is a party or by
which  it  or  its  properties  is  bound, if the consequences of such breach or
default  are  material  to  the  business,  operations or financial condition of
Telscape,  the  Borrower,  or  a  Significant  Subsidiary;

          (d)     any event that Borrower reasonably determines would constitute
a  Regulatory  Event;

          (e)     the commencement,  existence or threat of any proceeding by or
before  any  Governmental  Authority  against  Telscape,  the  Borrower,  or any
Subsidiary  which,  if  adversely decided, would have a Material Adverse Effect;

          (f)     Borrower's receipt of any notice of violation of, or liability
under,  any Environmental Laws affecting Telscape, the Borrower, any Significant
Subsidiary,  or  any  of  its  properties;  or

          (g)     any Change in Control or any material change in the management
of  Telscape,  the  Borrower,  or  any  Significant  Subsidiary.

                                       29
<PAGE>
     7.03.     Notice  of  Pension-Related  Events.  The Borrower shall promptly
               -----------------------------------
furnish  Lender  with  written  notice  upon  the  receipt  by  Borrower  or the
administrator  of  any Plan of any notice, correspondence or other communication
from  the  PBGC, the IRS, the Secretary of Treasury, the Department of Labor, or
any other Person, as the case may be, relating to (i) any Reportable Event, (ii)
any  funding  deficiency  with  respect to any Plan, (iii) any liability, either
primary  or  secondary,  with respect to complete or partial withdrawal from any
Plan,  (iv)  proceedings  to  terminate  any  Plan,  or (v) the appointment of a
trustee  for  any  Plan.  Such  notice  shall  be  accompanied  by any pertinent
documents, including, but not limited to, the relevant notice, correspondence or
other  communication  and  a  statement  of  a  Responsible  Officer of Borrower
describing  the  event  or  the  action  taken  and  the  reasons  therefor.

     7.04.     Inspection  Rights.  The  Borrower  shall  upon  reasonable prior
               ------------------
written  notice  (but  no less than 72 hours) permit Lender's employees to visit
and  inspect  the  Collateral; to examine the books and records of Telscape, the
Borrower,  and  each  Subsidiary  and take copies and extracts therefrom; and to
discuss  their respective affairs with their officers, employees and independent
engineers  at  such  times  and  as often as Lender may reasonably request.  The
Borrower hereby authorizes such officers, employees and independent engineers to
discuss  with  Lender  the  affairs  of  the  Borrower.

     7.05.     Preservation  of  Corporate  Existence  and  Qualification.  The
               ----------------------------------------------------------
Borrower  shall  maintain  its  and  each  of  its  Subsidiary's existence, good
standing,  and  rights  in  full  force  and  effect  in  its  jurisdiction  of
organization.  The  Borrower  shall  and  shall  have  each  of its Subsidiaries
qualify  to do business and remain qualified and in good standing and obtain all
necessary authorizations to do business in each jurisdiction in which failure to
receive  or  retain  such  would  have  a  Material  Adverse  Effect.

     7.06.     Continuation of Business.  The Borrower shall continue to operate
               ------------------------
and  maintain the System and shall acquire and maintain in full force and effect
all  rights, privileges, franchises and licenses necessary for the operation and
maintenance  of  the  System,  including  (without  limitation)  any  license or
authorization  required  by  the  FCC  or  any  PUC.

     7.07.     Insurance.
               ---------

          (a)     The  Borrower  shall  provide  and  maintain  or  cause  to be
maintained  at  all  times  insurance  in such forms and covering such risks and
hazards  relating  to  the  Collateral and in such amounts and with an insurance
corporation  with  a Best rating of "A" or above, licensed to do business in the
states  where  the  System  and  Borrower are located, as may be satisfactory to
Lender,  as  shown  on Schedule 7.07 hereto, and otherwise as may be required by
                       -------------
the  Security  Documents.

          (b)     Borrower  shall  cause  (i)  all  liability insurance policies
relating  to  the  Collateral  to name Lender as an additional insured; (ii) all
physical  damage  insurance  policies  to contain a lender's or mortgagee's loss
payable provision acceptable to Lender with respect to the Collateral; (iii) all
insurance  policies  relating  to  the Collateral to provide that no assignment,
cancellation,  modification,  reduction in amount, or adverse change in coverage
thereof  shall  be  effective  until at least 30 days after receipt by Lender of
written  notice  thereof; (iv) all insurance policies to insure the interests of
Lender  with  respect to the Collateral regardless of any breach of or violation
by Borrower of any warranties, declarations or conditions contained therein; and
(v)  all  insurance  policies  relating to the Collateral to provide that Lender
shall  have no obligation or liability for premiums, commissions, assessments or
calls  in connection with such insurance. Lender shall be under no obligation to
verify  the  adequacy  or  existence  of  any insurance coverage. Borrower shall
furnish  Lender  copies of, or acceptable certificates with respect to, all such
policies prior to the Closing Date and shall provide to Lender, at least 30 days
prior to each policy expiration date, evidence of the insurance being maintained
by  Borrower in compliance with this Section 7.07(b). Certificates for insurance
                                     ---------------
required  under  subsection (i) above shall be in ACORD Form 27 (attached hereto
at  Schedule  7.07),  and  all  certificates  shall  be satisfactory in form and
    --------------
substance  to  Lender.

                                       30
<PAGE>
          (c)     If  the  Collateral  is  partially  or  totally  damaged  or
destroyed,  Borrower  shall  give  prompt  notice  to  Lender, and all insurance
proceeds relating to the Collateral, less the costs of collection thereof, shall
be paid to or retained by Lender. Settlements, adjustments or compromises of any
claims  for  loss,  damage  or  destruction  to  the Collateral shall be made by
Borrower  and  Lender  as  long  as  no  Event  of  Default  has occurred and is
continuing,  and  otherwise  shall  be  made  solely  by Lender. Borrower hereby
authorizes  and  directs  any  affected  insurance  company to pay such proceeds
directly  to  Lender and to rely on Lender's statement as to whether an Event of
Default  has  occurred.  Borrower shall pay all costs of collection of insurance
proceeds  payable  on  account  of  such damage or destruction. If no Default or
Event  of  Default  has occurred and is continuing on the date the Collateral is
partially  or  totally  damaged  or  destroyed,  Lender  shall make available to
Borrower  the  proceeds of any physical damage insurance actually paid to Lender
in  respect  of  such  damage  or destruction of the Collateral (after deducting
therefrom  any sums retained by Lender in reimbursement for costs of collection)
to  pay  the  cost  of restoration, and Borrower shall proceed promptly with the
work  of  restoration of the Collateral and shall pursue the work of restoration
diligently to completion. If any Default or Event of Default has occurred and is
continuing  either on the date of such damage or destruction or on the date such
insurance  proceeds  are paid, or if any Default or Event of Default shall occur
prior to completion of such work of restoration, then Lender, at its option, may
apply  such  insurance  proceeds  in  payment of any of the Obligations, in such
order  as  Lender  may  elect  in  its  sole  discretion. Any insurance proceeds
remaining  after  completion of work or restoration shall, at Lender's election,
be  applied  in  accordance  with Section 2.04(c) hereof (but without prepayment
                                  ---------------
premium)  or paid over to Borrower. Upon completion of any restoration, Borrower
shall deliver to Lender a certificate stating that the restoration has been duly
completed  and  accounting  for  the  use  of  any  insurance  proceeds  in such
restoration.

     7.08.     Payment  of  Taxes,  Charges,  Claims  and  Current  Liabilities.
               ----------------------------------------------------------------
Borrower  shall  and  shall  cause each of its Subsidiaries to pay or discharge:

          (a)     on or prior to the date on which penalties thereto accrue, all
taxes, assessments and other government charges or levies imposed upon it or any
of  its  properties  or  income (including such as may arise under Section 4062,
Section  4063 or Section 4064 of ERISA, or any similar provision of law), except
for  filed  extensions;

          (b)     on  or  prior  to  the  date  when  due,  all lawful claims of
materialmen,  mechanics,  carriers,  warehousemen,  and other like persons which
could  result  in  creation  of  a  Lien  on  the  Collateral;  and

          (c)     on  or  prior  to  the  date when due, all other lawful claims
which,  if  unpaid,  might  result  in  the creation of a Lien on the Collateral
(other  than  Permitted  Encumbrances) or which, if unpaid, might give rise to a
claim  entitled  to  priority  over  general creditors of Borrower or any of its
Significant  Subsidiaries  in  a  case under Title 11 (Bankruptcy) of the United
States  Code,  as  amended,  or  in  any insolvency proceeding or dissolution or
winding-up  involving  Borrower  or  its  Significant  Subsidiary.

                                       31
<PAGE>
     Notwithstanding  the  foregoing,  the Borrower and each Subsidiary shall be
entitled  (a)  to  contest or appeal the requirements of any Law or Governmental
Authority  or  the payment of any tax, assessment, charge, levy or claim, or any
judgment entered against the Borrower or any Subsidiary and (b) to be delinquent
in  the  filing of the tax returns and payment of taxes as disclosed in Schedule
4.15  (collectively, in this Section 7.08, all such matters described in clauses
                             ------------
(a)  and (b) of this sentence are referred to as the "requirements"), as long as
                                                      ------------
(i)  such  requirements  are  being  contested  (or for the matters disclosed in
Schedule  4.15,  pursued)  in  good  faith by appropriate proceedings diligently
conducted;  (ii)  the  Borrower  and/or  the Subsidiary has given Lender written
notice  of  such  requirements  and  the intent to contest them, with supporting
reasons  for  such  contest,  before  the  addition of any interest or penalties
(except  for  the  matters  disclosed  on Schedule 4.15) that may accrue on such
requirements;  (iii)  the Borrower and/or the Subsidiary maintains adequate cash
reserves  and  makes  other appropriate provisions as may be required by GAAP to
provide  for  any  liability arising from such requirements; (iv) the contesting
of,  or failure to comply with, such requirements does not in any way jeopardize
the Borrower's and each of its Subsidiaries' ability or authority to operate all
or  any  part  of the Collateral or the continuing priority of Lender's security
interests  in the Collateral; (vi) the contesting of, or failure to comply with,
such  requirements  does  not  have  a  Material  Adverse  Effect; and (vii) any
foreclosure,  attachment,  execution,  sale  or  similar  proceeding against the
Borrower, the Subsidiary, or any of their properties in connection with any such
requirements is duly stayed by posting of a bond or security deposit or by other
action  sufficient  under  applicable  law to stay such foreclosure, attachment,
execution,  sale  or  other  proceedings.

     7.09.     Financial  Accounting  Practices.  The  Borrower  shall and shall
               --------------------------------
cause  its  Subsidiaries  to make and keep 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 (i) to permit preparation of financial
statements  in  conformity  with  GAAP  and  (ii) 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.

     7.10.     Compliance  with  Laws. Borrower shall comply and shall have each
               ----------------------
of  its  Subsidiaries  comply  in  all  respects with all Laws applicable to the
Borrower and such Subsidiary provided that Borrower shall not be deemed to be in
violation  of this Section 7.10 as a result of any failure to comply which would
                   ------------
not  result  in  any  liability  or  exposure to Lender or any fines, penalties,
injunctive  relief  or  other  civil  or  criminal  liabilities  which,  in  the
aggregate,  would  materially  affect  the  business,  operations  or  financial
condition  of  the  Borrower or the Subsidiary or the ability of the Borrower or
any  Significant Subsidiary to perform its obligations under this Agreement, the
Note,  or  a  Guaranty  Agreement.

     7.11.     Use of Proceeds.  The Borrower shall use the proceeds of Advances
               ---------------
hereunder  only  as  set  forth  in  Section  2.01  hereof.
                                     -------------

     7.12.     Government  Authorizations;  Regulatory Authorizations, Etc.  The
               -----------------------------------------------------------
Borrower  shall  and shall have each of its Subsidiaries at all times obtain and
maintain  in  force  all Regulatory Authorizations and all other authorizations,
permits, consents, approvals, licenses, exemptions and other actions by, and all
registrations,  qualifications,  designations,  declarations  and  other filings
with,  any  Governmental  Authority  necessary  in connection with execution and
delivery  of this Agreement, the Note, the Guaranty Agreements, the consummation
of  the  transactions  herein  or  therein  contemplated,  the performance of or
compliance  with  the  terms  and conditions hereof or thereof, or to ensure the
legality,  validity  and  enforceability  hereof  or  thereof.

                                       32
<PAGE>
     7.13.     Contracts and Franchises.  The Borrower shall and shall have each
               ------------------------
of  its  Subsidiaries comply with all agreements or instruments to which it is a
party  or by which it or any of its properties (now owned or hereafter acquired)
may be subject or bound and shall maintain any and all franchises it may have or
hereafter  acquire,  provided  that  the  Borrower  shall not be deemed to be in
violation  of  this  Section  7.13 as a result of any failure to comply with any
                     -------------
agreement  if  such  failure  would  not  have  Material  Adverse  Effect.

     7.14.     Consents.  The  Borrower  shall  obtain such Landlord's Consents,
               --------
and other third party consents as Lender shall reasonably request to protect its
Liens  and  its  access  to  the  Collateral.

     7.15.     Financial  Covenants.  The  Borrower shall cause Telscape and the
               --------------------
Subsidiaries  to  comply with the financial covenants set forth on Schedule 7.15
                                                                   -------------
hereto.

     7.16.     Construction  and  Storage. The Collateral shall be installed and
               --------------------------
equipped  in  full  compliance  with  the  Requirements  of  Law  affecting  the
Collateral,  except  to  the  extent  a  failure  to  so comply would not have a
Material  Adverse Effect on the construction or operation of the Collateral. All
Equipment  financed  with  the  proceeds  of  the Loans shall be safeguarded and
stored  until installed in appropriate storage facilities owned or leased by the
Borrower.  In  the  event  of  any  cessation  of  construction for more than 15
successive calendar days, the Borrower shall make adequate provision, reasonably
acceptable to Lender, for the protection of all materials stored on site against
deterioration,  loss  or  damage.

     7.17.     Upgrade  of  Equipment.  The  Borrower  shall update the Software
               ----------------------
used  in  the  Equipment  within  two  releases of the most current batch change
supplement  release.  The  Borrower shall maintain the Equipment in good working
order  in  accordance  with  established  maintenance  procedures  such that the
Equipment  performs  to  published  specifications  and  shall  upgrade  its
functionality  to  include batch change supplements releases generally available
to  customers  of Nortel or the applicable Vendor, as the case may be, and batch
change  supplements  upgrades  included  in  the  original purchase price of the
Purchase  Agreement  in  the  form  in  effect  on the date of the Closing Date.

     7.18.     Further  Assurances  -  Guarantors.  (a)     If and to the extent
               ----------------------------------
requested  by  the  Lender from time to time, execute and deliver such documents
and  take  such  other action, and cause each of its Subsidiaries to execute and
deliver  such  documents  and  take  such  other  action, as may be necessary or
reasonably  requested  by  the  Lender,  in order to assure and confirm that all
obligations  under  this  Agreement, the Note or any of the other Loan Documents
are  at  all  times  guaranteed on terms satisfactory to Lender by Guaranties as
required  by  Section  3.09.

          (b)     Promptly  upon  the  designation by the Borrower or one of its
Domestic  Subsidiaries  as a Subsidiary, within 10 days thereafter, the Borrower
will  cause  such  Subsidiary  to  enter into a Guaranty and will deliver to the
Lender,  upon the request of the Lender in its sole discretion, a signed copy of
a  favorable  opinion  of  counsel  for  the  Subsidiary as to such Guaranty and
related  documents  inform  and  substance  satisfactory  to  Lender.

                          ARTICLE 8: NEGATIVE COVENANTS
                          -----------------------------

     Borrower hereby agrees that, as long as the Commitment hereunder remains in
effect, the Note remains outstanding and unpaid, or any other amount is owing to
Lender  hereunder or under any of the Loan Documents, the Borrower shall not and
shall  allow  not any of its Subsidiaries directly or indirectly to do or permit
to  exist  any  of  the  following  without  prior  written  consent  of Lender:

                                       33
<PAGE>
     8.01.     Restrictions  on Indebtedness, Liens and Sale of Collateral.  (a)
               -----------------------------------------------------------
Create,  incur,  assume  or  suffer to exist at any one time any Indebtedness in
excess  of  $50,000  in  the  aggregate, except for (i) Indebtedness incurred by
Borrower  or  any of its Subsidiaries in the ordinary course of business so long
as  immediately  before,  and  after  giving  effect  to, the incurrence of such
Indebtedness,  (1)  Telscape  is  in compliance with the financial covenants set
forth  on Schedule 7.15 hereto, and (2) no Default or Event of Default hereunder
          -------------
shall  have  occurred and be continuing at the time of, or as a result from, the
incurrence  of  such  Indebtedness, (ii) trade payables incurred in the ordinary
course of business, (iii) any Indebtedness set forth on Schedule 8.01 hereto, so
                                                        -------------
long  as  the  amount  of such scheduled indebtedness does not exceed the amount
outstanding  on  the  Closing  Date, as set forth on Schedule 8.01, and (iv) any
                                                     -------------
Loans  under  the  Lucent Credit Agreement; or (b) create or suffer to exist any
Lien  on the Collateral, or any part thereof, whether superior or subordinate to
the  Lien  of the Security Documents, or assign, or any other assets or property
of  Borrower  or  any  Subsidiary,  or  convey,  sell or otherwise dispose of or
encumber its interest in the Collateral, or any part thereof (including, without
limitation,  execution  of  any  lease), nor permit any such action to be taken,
except for the following permitted dispositions and encumbrances (the "Permitted
                                                                       ---------
Encumbrances"):  (i)  the Lien created hereby; (ii) Liens for taxes not yet due,
------------
or  which  are  being  contested in good faith and by appropriate proceedings in
accordance  with  Section  7.08  hereof;  (iii)  carriers',  warehousemen's,
                  -------------
mechanics',  materialmen's,  repairmen's  or  other  like  Liens  arising in the
ordinary  course  of  business which are overdue for a period not longer than 30
days  or  which are being contested in good faith and by appropriate proceedings
in  accordance  with  Section  7.08  hereof;  (iv)  pledges  or liens not on the
                      -------------
Collateral  in connection with workers' compensation, unemployment insurance and
other  social  security  legislation;  (v) deposits to secure the performance of
bids,  trade  contracts  (other  than  for  borrowed  money),  leases, statutory
obligations, surety and appeal bonds, performance bonds and other obligations of
a  like  nature  incurred  in  the  ordinary course of business; (vi) easements,
rights-of-way,  restrictions  and  other  similar  encumbrances  that  are  not
substantial  in amount, and which do not in any case materially detract from the
value  of the property subject thereto or interfere with the ordinary conduct of
the  business of the Borrower or the applicable Subsidiary; (vii) judgment liens
which  may  not  be on any of the Collateral with respect to which execution has
been  stayed  within 10 days by appropriate judicial proceedings and the posting
of adequate security which may not be any of the Collateral; and (viii) specific
liens,  if  any,  identified on Schedule 8.01 hereto. Any of the foregoing Liens
                                -------------
shall  remain  "Permitted  Encumbrances" as long as they are being contested, if
applicable,  by  the  Borrower or its Subsidiary in compliance with Section 7.08
                                                                    ------------
hereof.

     8.02.     Limitation  on  Contingent  Obligations.  Agree  to,  or  assume,
               ---------------------------------------
guarantee,  endorse  or  otherwise in any way be or become responsible or liable
for,  directly or indirectly, any Contingent Obligation except for those created
or  contemplated  by  the  Loan  Documents.

     8.03.     Prohibition  of  Mergers,  Acquisitions, Name, Office or Business
               -----------------------------------------------------------------
Changes,  Etc.
-------------

          (a)     Enter  into  any  merger,  consolidation  or  amalgamation, or
liquidate,  wind  up  or  dissolve  itself  (or  suffer  any  liquidation  or
dissolution),  or convey, sell, lease, assign, transfer or otherwise dispose of,
all  or  substantially  all  of its property, business or assets, except for the
following (a "Permitted Transaction") if immediately after giving effect thereto
no  Default or Event of Default would exist and be continuing hereunder: (i) any
Subsidiary  of  Telscape  may  be  merged  or consolidated with or into Telscape
(provided  that  Telscape  shall  be the continuing or surviving corporation) or
with  or  into  any one or more Subsidiaries of Telscape or with or into another
Person  (provided  that  the  Subsidiary  of Telscape shall be the continuing or
surviving  corporation,  and  shall  remain  a Subsidiary of Telscape), (ii) any
Subsidiary of the Borrower may sell, lease, transfer or otherwise dispose of any
or  all  of its assets (upon voluntary liquidation or otherwise) to the Borrower
or  any  other  Subsidiary  of  the Borrower so long as the effect of such sale,
lease,  transfer or other disposition will not dilute such assets without proper
consideration;  and  (iii) the Borrower or any Subsidiary of the Borrower may be
merged  or  consolidated  with  or into another Person provided that Borrower or
such  Subsidiary  shall be the continuing or surviving corporation and in either
case  a Subsidiary of Telscape, provided, however, in each Permitted Transaction
                                -----------------
involving  a  Subsidiary  which  is  a Guarantor the surviving (if not already a
Guarantor)  or  transferee entity (if not already a Guarantor) must execute as a
condition  to  the  consummation  of the Permitted Transaction such documents as
requested  by Lender to evidence its assumptions of the Subsidiary's obligations
under  its  Guaranty  and deliver such other certificates and opinions as Lender
may  reasonably  require.

                                       34
<PAGE>
          (b)     Without  the  consent of the Lender, sell, assign, transfer or
otherwise  dispose  of  any  Capital  Stock  of  any Subsidiary; or, without the
consent of the Lender, which shall not be unreasonably withheld, otherwise issue
and  sell  any  Capital Stock or beneficial interest therein (including, without
limitation,  preferred  stock)  of  any  Subsidiary where such issuance and sale
would  result in any Persons (other than Telscape or any Significant Subsidiary)
holding  in  the  aggregate  in  excess  of  five  percent  of  such Subsidiary.

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

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

          (e)     Amend,  restate  or otherwise modify, or violate any terms of,
its  Organizational  Documents  in  a manner adverse to Lender without the prior
written  consent  of  Lender.

          (f)     Become  or agree to become a general or limited partner in any
general  or limited partnership, or a member in a limited liability company or a
joint  venturer in any joint venture, except that the Borrower or Subsidiary may
become so involved in the aforementioned types of entities if such entity is, or
thereupon  becomes,  a  Subsidiary  of  the  Borrower.

          (g)     Without the consent of the Lender, amend, modify or supplement
a  material  term  of  (a)  a  Contractual  Obligation  in  connection  with the
construction,  operation,  ownership  and  maintenance  of  the  Network  or the
business  derived from the Network, or (b) any other Contractual Obligation, the
amendment  or  modification  of  which  could  reasonably  be expected to have a
Material  Adverse  Effect..

          (h)     Engage  in  any  business  other  than  the  business  of
Telecommunications  and  businesses  which  are  related  thereto.

     8.04.     Termination  of  Nortel  Purchase  Agreement. Fail to satisfy its
               --------------------------------------------
purchase  obligations  under a Purchase Agreement prior to the completion of the
installation  of the subject Equipment or terminate any Purchase Agreement prior
to  the  completion  of  the  installation  of  the  subject  Equipment.

     8.05.     Removal  of  Collateral.  Remove  or  permit  the  removal of any
               -----------------------
material  part of the Collateral from the locations identified on Schedule 4.25,
                                                                  -------------
without  giving  Lender  30  days prior written notice of such move and ensuring
that any steps Lender may deem necessary to continue the perfection and priority
of  Lender's  security  interest  in  the  Collateral  shall  have  been  taken.

                                       35
<PAGE>
     8.06.     Assumed  Names.  Transact or engage in business under any assumed
               --------------
name,  fictitious  name,  tradestyle  or  "d/b/a"  except  those  identified  on
Schedule  4.29,  without  giving  Lender at least 30 days' prior written notice.
--------------

     8.07     Limitation  on  Investments,  Advances  and  Loans.     Make  any
              --------------------------------------------------
advance,  loan,  extension of credit or capital contribution to, or purchase any
stock,  bonds,  notes,  debentures  or  other  securities  of  or  any  assets
constituting  a business unit of, or make any other investment in any Person (an
"Investment"),  except:
 ----------

          (a)  extensions  of  trade  credit  and  endorsements  of  negotiable
instruments  and  other  documents  in  the  ordinary  course  of  business;

          (b)  Investments  in  Cash  Equivalents;

          (c)  Investments  by  Borrower  or  any  Subsidiary in Telscape or any
Subsidiary  of  Telscape;

          (d)  loans  to  officers,  directors  and  employees  of the Borrower,
Telscape and their Subsidiaries where cash paid out to such officers, directors,
and  employees shall not exceed in the aggregate $500,000 outstanding at any one
time;

          (e)  Investment  in  Telecommunications  companies in an amount not to
exceed  $10,000,000  per  annum;  and

          (f)  acquisitions  of  Telecommunications  equipment.

     8.08     Limitation on Equity Payments. Declare or make, or agree to pay or
              -----------------------------
make, directly or indirectly, any Restricted Payment (or incur any obligation to
do  so),  except  (a)  each of the Subsidiary may declare and pay dividends with
respect  to  its Capital Stock payable solely in additional shares of its common
stock, (b) Subsidiaries may declare and pay dividends to their shareholders with
respect  to  their  Capital Stock ratably to Telscape, each Subsidiary and other
Person  then  holding  Capital  Stock of such Subsidiary (based on the ownership
interest  of  each  such  shareholder at such time without regard to class), (c)
Subsidiaries  may  make  payments  to  their  shareholders  on  account  of  the
redemption of their Capital Stock ratably to Telscape, each Subsidiary and other
Person  then  holding  Capital  Stock of such Subsidiary (based on the ownership
interest  of  each  such  shareholder at such time without regard to class), (d)
Subsidiaries  may  declare  and pay dividends to each other and to Telscape with
respect  to  their  Capital Stock, or (e) Telscape may declare and pay Permitted
Preferred  Cash  Dividends;  provided  that  any  Restricted  Payment  otherwise
                             --------
permitted  pursuant  to  this Section shall not be permitted unless the Borrower
shall  have  delivered  or  caused  to  be  delivered  the Lender, prior to such
Restricted  Payment, a certificate signed by a Responsible Officer setting forth
the amount of such Restricted Payment and certifying that all conditions to such
Restricted  Payment  are  satisfied.

     8.09     Capital  Expenditures.  Directly  or  indirectly make or commit to
              ---------------------
make  any expenditure in respect of the purchase or other acquisition (including
installment purchases or capital leases) of fixed or capital assets in excess of
an  aggregate  of $1 million during each 12-month period during the term of this
Agreement,  other than (for so long as such expenditures do not violate Schedule
                                                                        --------
7.15) (i) replacements and maintenance properly charged to current operations or
----
(ii)  expenditures  in  accordance  with  the  Business  Plan.

                                       36
<PAGE>
     8.10     Limitation on Leases. Except as otherwise permitted under Sections
              --------------------                                      --------
8.01  or  8.08,  enter  into  any  agreement,  or  be or become liable under any
----      ----
agreement,  not  in  existence as of the date hereof and reflected on Telscape's
consolidated  financial  statements,  for  the lease, hire or use of any real or
personal  property  in  excess  of $500,000 in the aggregate, including, without
limitation,  capital  or  operating  leases,  except  that  the  Borrower or its
Subsidiaries may, in the ordinary course of business and on term standard in the
industry,  enter  into leases or agreements (i) for the use of real property for
the  System  or sales offices; (ii) for office space, office equipment, vehicles
or  tools;  and  (iii)  for  the  location  and  storage  of  the  Collateral.

     8.11     Transactions  with Affiliates. Except as permitted by Section 8.07
              -----------------------------                         ------------
or as described in Schedule 4.30 hereto, enter into any transactions, including,
                   -------------
without  limitation,  any loans or advances, any repayment of loans or advances,
or  the purchase, sale or exchange of property or the rendering of any services,
with  any  Affiliate;  or otherwise pay any fees or expenses to, or reimburse or
assume  any  obligation  for  the reimbursement of any expenses incurred by, any
Affiliate.

     8.12     Infrastructure  Build  Out.  Commit  to  build  or  construct
              --------------------------
telecommunications  infrastructure in any city other than Atlanta (Georgia), Los
Angeles  (California),  Houston  (Texas),  Miami  (Florida),  or  San  Diego
(California);  provided however, that Borrower or any Subsidiary of Borrower may
commit to build out or construct telecommunications infrastructure in any of the
Additional  Approved  Cities, in each case (a) as contemplated in and consistent
with,  the  Approved  Build-Out Plan and for each such Additional Approved City,
subject  to  delivery to the Lender, at least three (3) months prior to entering
into  any  such  commitment  or commencing any such build-out, of a fully funded
plan  (including  evidence showing that Borrower or such Subsidiary has obtained
all  financing required or contemplated by the Approved Build-Out Plan) for such
city  in  connection  with  such Additional Approved City, all to the reasonable
satisfaction  of the Lender, and (b) only for so long as and to the extent that,
at  the  time of any such commitment and after giving effect thereto, no Default
or Event of Default has occurred and is continuing, and, with respect to each of
the  financial  covenants  set  forth  in  Article  VII (i) Telscape was in full
compliance  therewith as of the most recent date such financial covenant was (or
is being) measured, without requiring any waiver thereof or amendment thereto to
enable such compliance, and (ii) no Default or Event of Default could reasonably
be  expected to exist as of the next date on which such financial covenant is to
be  measured

     8.13     Restrictions  on  Dividends  and  Related Transactions.  Create or
              ------------------------------------------------------
otherwise  cause  or  permit  to  exist  or  become effective any encumbrance or
restriction on the ability of any Subsidiary of Telscape (i) to pay dividends or
make any other distributions on or in respect of its capital stock; (ii) to make
loans  or  advances,  or  to  pay  any Indebtedness or other obligation owed, to
Telscape,  Borrower  or  any Subsidiary of Telscape; or (iii) to transfer any of
its  property  or  assets  to  Telscape, Borrower or any Subsidiary of Telscape,
except  for  encumbrances  or  restrictions existing under or by reason of:  (1)
this Agreement; (2) applicable law, (3) customary non-assignment provisions with
respect  to  any  contract  or  any  lease  governing  a leasehold interest of a
Subsidiary,  or  (4)  under  agreements  listed  on  Schedule  8.13.
                                                     --------------

                                       37
<PAGE>
     8.14     Limitation  on  Sale  of  Collateral.  Without  the consent of the
              ------------------------------------
Lender,  sell,  assign  (by  operation  of law or otherwise), lease, transfer or
otherwise  dispose  of,  or grant any option with respect to, any of its assets,
except  that Telscape and its Subsidiaries may (a) sell inventory or obsolete or
unnecessary  equipment not constituting Collateral, in each case in the ordinary
course  of  business;  and (b) make other sales or dispositions of assets (other
than  Collateral or the Capital Stock of any Subsidiary) if all of the following
conditions  are  met:  (i) the market value of assets sold or otherwise disposed
of  in  any single transaction or series of related transactions does not exceed
$250,000  and the aggregate market value of assets sold or otherwise disposed of
in  any  fiscal year does not exceed $1,500,000; (ii) the consideration received
is  at  least  equal  to  the  fair  market  value of such assets; (iii) the Net
Proceeds  of such asset sale or other disposition are applied to the obligations
under  the  Lucent Credit Agreement or are used to acquire replacement property,
in each case as set forth in Section 2.8(b)(iii) of the Lucent Credit Agreement;
and  (iv)  no  Default  shall  then  exist  or  result  from  such sale or other
disposition.

                    ARTICLE 9: EVENTS OF DEFAULT AND REMEDIES
                    -----------------------------------------

     9.01.     Events  of Default. An Event of Default shall mean the occurrence
               ------------------
or  existence of one or more of the following events or conditions (whatever the
reason  for such Event of Default and whether voluntary, involuntary or effected
by  operation  of  Law):

          (a)     Payment  Default. If Borrower fails to pay any sum, whether of
                  ----------------
principal  or  interest  on  the  Note  or any prepayment premiums, or any other
amount  due hereunder or under the Note within three business days after written
notice  from  Lender  that  such  amount  became  due;

          (b)     False  Statement. If any statement, representation or warranty
                  ----------------
made by Telscape, the Borrower, or any Guarantor in any Loan Document or made in
any  financial  statement, certificate, report, exhibit or document furnished to
Lender  pursuant  to  any Loan Document, proves to have been untrue, incomplete,
false  or misleading in any material respect as of the time when made (including
any  omission  of  material  information  necessary to make such representation,
warranty  or  statement  not  misleading), (i) such untruth, falsity, misleading
statement,  or  omission  shall  not  have  been  corrected  or  remedied to the
satisfaction  of Lender within 10 calendar days after the earlier of Telscape's,
the  Borrower's,  or  the  Guarantor's  knowledge  thereof or receipt of written
notice  thereof from Lender and (ii) the Lender relied on such untruth, falsity,
misleading  statement,  or  omission  to  its  detriment;

          (c)     Covenant Defaults. If the Borrower defaults in the performance
                  -----------------
or  observance  of any covenant or agreement in this Agreement, and such default
continues  for  a  period  of  30  calendar days after the earlier of Borrower's
knowledge  thereof  or receipt of written notice from Lender thereof, except for
specific  Defaults  listed elsewhere in this Section 9.01, as to which no notice
                                             ------------
or  cure  period  shall  apply  unless  specified;

          (d)     Failure  of  Conditions.  If  the  Borrower  fails to meet any
                  -----------------------
condition  of lending under Article 6 hereof and such condition is not waived by
                            ---------
Lender;

          (e)     Undischarged  Judgments.  If  one  or  more  judgments for the
                  -----------------------
payment  of  money  has  been  entered  against  Telscape,  the Borrower, or any
Subsidiary  in  an  amount in excess of $500,000, and such judgment or judgments
have remained undischarged and unstayed for a period of 30 calendar days, unless
the  validity  thereof  is  contested  in  compliance  with Section 7.08 hereof;
                                                            ------------

          (f)     Attachments,  etc.  If  a  writ  or  warrant  of  attachment,
                  -----------------
garnishment,  execution,  distraint  or  similar process has been issued against
Telscape,  the  Borrower,  any  Subsidiary, or any of their properties which has
remained  undischarged  and  unstayed for a period of 30 consecutive days and is
not  being  contested  in  compliance  with  Section  7.08  hereof;
                                             -------------

                                       38
<PAGE>
          (g)     Default  Under  Third Party Agreements. If a default, or event
                  --------------------------------------
or  condition which with notice or lapse of time or both would become a default,
occurs  that  gives the creditor the right to accelerate in respect of any other
obligation  of  Telscape,  the  Borrower  or  any  Subsidiary for borrowed money
(including  lease  obligations)  in  the amount of $500,000 in the aggregate, or
under  any  two  or  more  such  other  obligations  of  any  amount;

          (h)     Dissolution; Discontinuance of Business, Etc. If Telscape, the
                  --------------------------------------------
Borrower,  or  any Guarantor discontinues its usual business, dissolves, has its
Organizational  Document revoked, winds up or liquidates itself or its business;

          (i)     Involuntary  Bankruptcy  or  Receivership  Proceedings.  If  a
                  ------------------------------------------------------
receiver,  custodian,  liquidator,  or  trustee  of  Telscape, the Borrower, any
Subsidiaries, or of any of their property is appointed by the order or decree of
any court or agency or supervisory authority having jurisdiction; or an order is
entered  adjudicating  Telscape,  the Borrower, or any Subsidiary as bankrupt or
insolvent; or any of the property of Telscape, the Borrower or any Subsidiary is
sequestered  by  court  order;  or  a  petition  is  filed against Telscape, the
Borrower,  or  any  Subsidiary  under  any  state  or  federal  bankruptcy,
reorganization,  arrangement,  insolvency,  readjustment  of  debt, dissolution,
liquidation,  or  receivership law of any jurisdiction, whether now or hereafter
in  effect;

          (j)     Voluntary  Bankruptcy.  If  Telscape,  the  Borrower,  or  any
                  ---------------------
Subsidiary  takes  affirmative steps to prepare to file, or files, a petition in
voluntary  bankruptcy  or  to seek relief under any provision of any bankruptcy,
reorganization,  arrangement,  insolvency, readjustment of debt, dissolution, or
liquidation  law  of  any  jurisdiction,  whether now or hereafter in effect, or
consents  to  the  filing  of  any  petition  against  it  under  any  such law;

          (k)     Assignments  for  Benefit of Creditors, Etc.  If Telscape, the
                  -------------------------------------------
Borrower, or any Subsidiary makes an assignment for the benefit of creditors, or
admits  in  writing its inability to pay its debts generally as they become due,
or  consents  to the appointment of a receiver, trustee, or liquidator of itself
or  of  all  or  any  part  of  its  properties;

          (l)     Non-compliance  with  Governmental Requirements.  If Telscape,
                  -----------------------------------------------
the Borrower, or any Significant Subsidiary fails to comply with any requirement
of any Governmental Authority within 10 calendar days after notice in writing of
such  requirement  shall  have  been  given  to  Telscape,  the Borrower, or the
Significant  Subsidiary by such Governmental Authority, or such longer period of
time  permitted  Telscape,  the  Borrower, or the Significant Subsidiary by such
Governmental  Authority;

          (m)     Regulatory Authorizations.  If any Regulatory Authorization in
                  -------------------------
connection with this Agreement or any other Loan Document or any such Regulatory
Authorization  now or hereafter necessary or advisable to make this Agreement or
the other Loan Documents legal, valid, enforceable and admissible in evidence or
to  permit  Telscape, the Borrower, or any Significant Subsidiary to conduct its
business  is  not  obtained  or has ceased to be in full force and effect or has
been modified or amended or has been held to be illegal or invalid or is revoked
or  terminated,  and  is  not  being contested by Telscape, the Borrower, or the
Significant  Subsidiary  in  compliance  with Section 7.08 hereof and Lender has
                                              ------------
reasonably  determined  in  good faith (which determination shall be conclusive)
that  such  event or occurrence may have a Material Adverse Effect or a material
adverse  effect  on  Lender's  rights  under  this  Agreement  or any other Loan
Documents;

                                       39
<PAGE>
          (n)     Damage  or Destruction. If the proceeds of any physical damage
                  ----------------------
insurance actually paid in respect of the partial or total damage or destruction
of  the Collateral are insufficient to cover the cost of the restoration thereof
or  if  Lender  determines  that such damage or destruction is so extensive that
repair  or  restoration  cannot be expected within a time period short enough to
prevent  a  Material  Adverse  Effect;

          (o)     Consents.  If  Borrower  fails to provide any Consent required
                  --------
hereunder  and Lender determines in its sole and reasonable discretion that such
failure  results  in  a  material impairment of Lender's security for the Loans;

          (p)     Change  in  Control.  If  any  Change  in Control should occur
                  -------------------
without  Lender's  prior written consent, which may be withheld in Lender's sole
and  absolute  discretion;

          (q)     ERISA  Defaults.  If,  with respect to any Plan, (i) there has
                  ---------------
occurred  a  Reportable  Event being considered by the PBGC which may reasonably
result  in  any  material liability to the PBGC with respect to any Plan; (ii) a
Plan  has been terminated; (iii) a trustee has been appointed by a United States
District  Court  to  administer  a  Plan;  (iv)  a  PBGC or any other person has
instituted proceedings to terminate a Plan or to appoint a trustee to administer
any such Plan; (v) either Telscape, the Borrower, any Significant Subsidiary, or
any Affiliate has withdrawn, completely or partially, from any Plan; (vi) either
Telscape,  the  Borrower,  any  Significant  Subsidiary,  or  any  Affiliate has
incurred  secondary  liability for withdrawal liability payments under any Plan;
or  (vii)  a  Plan  has failed to meet the minimum funding standards established
under  the  Code  or  ERISA;

          (r)     Defaults  Under  Other  Loan  Documents.  If  any  default,
                  ---------------------------------------
misrepresentation  or  breach  should occur under any Security Document or other
Loan  Document  and is not cured or waived within the time permitted therein, or
any  such  Loan  Documents  should  cease to be in full force and effect, or any
party  thereto  should  assert any unenforceability of, or deny liability on, or
admit  inability  to  perform  under,  any  such  Loan  Document;  or

          (s)     Repudiation  of  Guaranty.  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.

          (t)     Sale of Guarantor.  Any Guarantor (other than Telscape) ceases
                  ------------------
to  be  a  Subsidiary  of  Telscape.

     9.02.     Consequences  of  an  Event  of  Default. If any Event of Default
               ----------------------------------------
shall  occur  and be continuing or shall exist, Lender shall be under no further
obligation  to make Advances hereunder, any remaining commitment hereunder shall
immediately  terminate,  with  no  further  notice, and Lender may, by notice to
Borrower,  declare  the  unpaid  principal  amount of the Note, interest accrued
thereon  and  all other amounts owing by Borrower hereunder or under the Note to
be  immediately  due and payable without presentment, demand, protest or further
notice  of  any  kind,  all  of which are hereby expressly waived, and an action
therefor  shall  immediately accrue. Such consequences shall occur automatically
upon  the  occurrence of an Event of Default under Section 9.01 (h), (i), (j) or
                                                   -----------------------------
(k),  without  any notice or demand. Upon the occurrence of an Event of Default,
---
Lender  may,  in its sole discretion, exercise any and all remedies available to
it  under  this Article 9 or under any of the Loan Documents or under applicable
                ---------
law  without  further  notice  or  period  of  grace  or  opportunity  to  cure.

                                       40
<PAGE>
     9.03.     Exercise  of Rights. Subject to any requirements for FCC or other
               -------------------
governmental  approval  upon the occurrence of any Event of Default, the rights,
powers  and privileges provided in this section and all other remedies available
to  Lender under this Agreement or by statute or by rule of law may be exercised
by Lender at any time from time to time, whether or not the Obligations shall be
due  and payable and whether or not Lender shall have instituted any foreclosure
or other action for the enforcement of this Agreement or the Note. No failure to
exercise  nor  any delay in exercising on the part of Lender, any right, remedy,
power  or  privilege  hereunder  or  under any of the other Loan Documents shall
operate  as  a  waiver  thereof, nor shall any single or partial exercise of any
right,  power  or privilege hereunder or thereunder preclude any other or future
exercise thereof or the exercise of any other right, remedy, power or privilege.

     9.04.     Rights  of  Secured  Party;  Possession  or  Sale  of Collateral.
               ----------------------------------------------------------------
Without  limiting  the  generality  of  the foregoing, Lender shall have all the
rights  and  remedies  of a secured party under the UCC, and Lender may, without
demand and without advertisement or notice, all of which Borrower waives, at any
time  or  times,  sell  and  deliver  any or all Collateral held by or for it at
public  or  private sale, for cash, upon credit or otherwise, at such prices and
upon  such  terms  as  Lender  deems  advisable,  in its sole discretion, and/or
collect,  or  enforce  the  collection  of,  the  Collateral.  Lender may be the
purchaser  at any such sale. Upon the occurrence of an Event of Default and upon
Lender's  request,  Borrower  shall  assemble,  at  its  own expense, any or all
Equipment  and  other  Collateral at a convenient place acceptable to Lender and
shall  pay to Lender or reimburse Lender for, on demand, all costs of collection
of  all  amounts  due,  and  enforcement  of  all  rights  hereunder,  including
reasonable  attorneys'  fees  and legal expenses, and expenses of any repairs to
any  realty  or  other  property to which any of such Collateral may be affixed.
Upon an Event of Default, Lender may, to the full extent permitted by applicable
law, without notice, advertisement, hearing or process of law of any kind, enter
upon any premises where any of the Collateral may be located and take possession
of  and  remove  such  Collateral.

     9.05.     Notices,  Etc.  Waived.  Except  as  expressly  provided  in this
               ----------------------
Article  9,  Borrower  hereby  expressly waives, to the full extent permitted by
----------
applicable  law,  presentment, demand, protest, any and all notices of any kind,
advertisements,  hearing  or  process  of law in connection with the exercise by
Lender  of  any  of  its  rights and remedies upon the occurrence of an Event of
Default. If any notification of intended disposition of any of the Collateral is
required by law, such notification shall be deemed reasonably and properly given
if  given  in  accordance with Section 10.06 hereto at least 10 days before such
                               -------------
disposition.

     9.06.     Additional  Remedies.  Lender's  remedies upon the occurrence and
               --------------------
during the continuance of an Event of Default shall include, in addition to, and
not  in  lieu of, such remedies as are available at law or in equity or provided
for  in  any  of  the  Loan  Documents,  the  following:

          (a)     Foreclosure;  Receivership.  Lender  shall be entitled to file
                  --------------------------
one  or  more  suits  at  law  or in equity to collect the Obligations and/or to
foreclose  on Lender's Liens on and security interests created by this Agreement
or the Security Documents. Lender may apply or require Borrower to apply for any
necessary  transfers,  assignments,  orders,  consents or licenses in connection
with  the  operation  or  abandonment of the Collateral or any part thereof, and
Lender  shall  also  be  entitled  as  a  matter of right and without notice and
without  requiring bond (notice and bond being hereby waived), without regard to
the  solvency  or  insolvency of Borrower at the time of application and without
regard to the value of the Collateral at that time, to have a receiver appointed
by  a  court  of competent jurisdiction in order to manage, protect and preserve
the  Collateral and to continue the operation of the business of Borrower and to
collect  all  revenues  and profits thereof and apply the same to the payment of
all  expenses  and  other  charges  of such receivership until the sale or other
final disposition of the Collateral. Borrower hereby consents to the appointment
of  such  receiver.

                                       41
<PAGE>
          (b)     Right  to  Cure.  If Borrower fails in any material respect to
                  ---------------
perform  or  comply with any of its agreements contained herein or in any of the
other  Loan  Documents, Lender may take whatever actions it may deem appropriate
to  perform  or  comply  or  otherwise cause performance or compliance with such
agreement,  all  at  the  risk,  cost  and  expense  of  Borrower.

          (c)     Setoff.  If  the unpaid principal amount of the Note, interest
                  ------
accrued  thereon,  or  any other amount owing by Borrower hereunder or under the
Note  shall  have  become due and payable (by acceleration or otherwise), Lender
shall  have the right, in addition to all other rights and remedies available to
it,  without  notice to Borrower, to setoff against and to appropriate and apply
to  such  due  and payable amounts any debt owing to and any other funds held in
any manner for the account of Borrower by Lender. Such right shall exist whether
or  not Lender shall have given notice or made any demand hereunder or under the
Note,  whether  or  not  such  debt  owing  to  or funds held for the account of
Borrower  is  or  are  matured  or unmatured, and regardless of the existence or
adequacy  of  any  collateral,  guaranty  or any other security, right or remedy
available  to  Lender.  Borrower  hereby  consents to and confirms the foregoing
arrangements  and  confirms  Lender's  rights  of  setoff.

     9.07.     Application  of  Proceeds.  Any proceeds of any of the Collateral
               -------------------------
received  by  Lender  through sale or disposition of the Collateral or otherwise
may  be  applied  by  Lender  toward  the  payment of the Obligations, including
expenses  in connection with the Collateral (including reasonable fees and legal
expenses)  in  such  order of application as Lender may from time to time elect.

     9.08.     Discontinuance  of  Proceedings.  If  Lender  should  proceed  to
               -------------------------------
enforce any right or remedy under this Agreement or any other Loan Document and,
then,  discontinue or abandon such proceeding for any reason, all rights, powers
and  remedies  of  Lender  hereunder shall continue as if no such proceeding had
been  taken.

     9.09.     Power of Attorney. For the purpose of carrying out the provisions
               -----------------
and  exercising the rights, powers and privileges granted by the Loan Documents,
including,  without  limitation,  this  Article  9,  Borrower hereby irrevocably
                                        ----------
constitutes and appoints Lender its true and lawful attorney-in-fact to execute,
acknowledge  and deliver any instruments and do and perform any acts such as are
referred  to  in the Loan Documents, including, without limitation, this Article
                                                                         -------
9,  in  the  name  and  on  behalf  of  Borrower,  from time to time in Lender's
-
reasonable  discretion  after  the  occurrence  and during the continuance of an
Event  of Default, in accordance with the Loan Documents and any statute or rule
of law. This power of attorney is a power coupled with an interest and cannot be
revoked.  Borrower hereby ratifies all that said attorney-in-fact shall lawfully
do  or  cause  to  be  done  by  virtue and in accordance with the terms hereof.
Without  limiting  the  generality  of  the  foregoing,  Lender  may,  after the
occurrence  and  during the continuance of an Event of Default, do the following
without  notice  to  or  assent  by  Borrower to accomplish the purposes of this
Agreement:

          (a)     upon  failure  of  Telscape,  the  Borrower,  or  any of their
Subsidiaries  to  timely  pay or discharge taxes or Liens levied or placed on or
threatened  against  the  Collateral, effect any repairs or any insurance called
for by the terms of this Agreement or any other Loan Document and pay all or any
part  of  the  premiums  therefor  and  the  costs  thereof;

                                       42
<PAGE>
          (b)     (i)  direct any party liable for any payment on any Collateral
to  make payment of any and all monies due and to become due thereunder directly
to Lender or as Lender shall direct; (ii) in the name of Borrower, its own name,
or otherwise, take possession of, endorse and collect any checks, drafts, notes,
acceptances  or  other  instruments  for  the  payment  of  monies  due under or
otherwise  receive  payment  of  and  receipt for any and all monies, claims and
other  amounts due and to become due at any time in respect of or arising out of
any  Collateral;  (iii) sign and endorse any invoices, freight or express bills,
bills  of  lading,  storage  or  warehouse  receipts,  drafts  against  debtors,
assignments,  verifications  and notices in connection with the Collateral; (iv)
commence  and prosecute any suits, actions or proceedings at law or in equity in
any  court of competent jurisdiction to collect all or any of the Collateral and
to  enforce  any  other right in respect of any Collateral; (v) defend any suit,
action  or  proceeding  brought  against Telscape, the Borrower, or any of their
Subsidiaries  with  respect to any Collateral; (vi) settle, compromise or adjust
any  suit,  action  or  proceeding  described above upon commercially reasonable
terms under the circumstances and, in connection therewith, give such discharges
or releases as Lender may reasonably deem appropriate; and (vii) generally sell,
use, operate, transfer, pledge, make any agreement with respect to, or otherwise
deal  with  any  of the Collateral as fully and completely as though Lender were
the  absolute  owner  thereof  for  all  purposes,  and,  at Lender's option and
Borrower's  expense,  at  any time or from time to time after the occurrence and
during  the  continuance  of an Event of Default, all other acts and things that
Lender  reasonably  deems  necessary  to  protect,  preserve or realize upon the
Collateral and Lender's security interest therein, in order to effect the intent
of  this  Agreement and the other Loan Documents all as fully and effectively as
Borrower  might  do.

     9.10.     Regulatory  Matters.  Notwithstanding  any  provision  to  the
               -------------------
contrary  contained  herein,  Lender will not exercise any right or remedy under
this  Agreement  that requires prior FCC or PUC approval without first obtaining
such  approval.  If  counsel to Lender reasonably determines that the consent of
the  FCC  or  PUC  is required in connection with any of the actions that may be
taken  by  Lender  in  the  exercise of its rights hereunder or under any of the
other Loan Documents, then Borrower, at its sole cost and expense, agrees to use
its  best  efforts  to  secure  such consent and to cooperate with Lender in any
action  commenced  by  Lender  to  secure  such consent. Upon the occurrence and
during  the continuation of an Event of Default, Borrower shall promptly execute
and/or  cause  the  execution of all applications, certificates, instruments and
other documents and papers that may be required in order to obtain any necessary
governmental  consent,  approval  or  authorization  and,  if  Borrower fails or
refuses  to execute such documents, the clerk of the court with jurisdiction may
execute  such  documents  on  behalf  of  Borrower.

                  ARTICLE 10: GENERAL CONDITIONS/MISCELLANEOUS
                  --------------------------------------------

The  following  conditions  shall  be  applicable  throughout  the  term of this
Agreement:

     10.01.     Modifications  and  Waivers.  This  Agreement,  the  other  Loan
                ---------------------------
Documents,  or  any  provision  thereof may not be changed, waived or terminated
orally,  but  only  by an instrument in writing signed by the party against whom
enforcement  of the change, waiver or termination is sought. No action or course
of  dealing  on  the  part  of Lender or its officers, employees, consultants or
agents, nor any failure or delay by Lender with respect to exercising any right,
power  or  privilege of Lender under the Note, this Agreement, or any other Loan
Document,  shall  operate  as  a waiver thereof, except as otherwise provided in
this  Agreement.  Any  waiver  shall be effective only to the extent and for the
instance  specifically  identified  in  such  writing and shall not be deemed to
imply  any  future  waivers  or other waivers. No amendment to any Loan Document
shall  be effective without written agreement signed by the parties to such Loan
Document.

     10.02.     Advances  Not  Implied  Waivers.  No  waiver of the requirements
                -------------------------------
contained  in any Loan Document shall be effective unless in writing duly signed
by  Lender.  No  Advance  hereunder  shall  constitute  a  waiver  of any of the
conditions  of  Lender's  obligation  to make further Advances nor, in the event
Borrower  is  unable  to  satisfy  any  such condition, shall any waiver of such
condition  have  the  effect of precluding Lender from thereafter declaring such
inability  to  be  an  Event  of Default as herein provided. Any Advance made by
Lender  and  any sums expended by Lender pursuant to the Loan Documents shall be
deemed  to  have  been  made  pursuant  to  this  Agreement, notwithstanding the
existence  of  an uncured Default or Event of Default. No Advance at a time when
an  Event  of Default exists shall constitute a waiver of any right or remedy of
Lender  existing  by  reason  of  such  Event  of  Default,  including,  without
limitation,  the  right to accelerate the maturity of the Indebtedness evidenced
by  the  Note  or  to  foreclose the Lien on the Collateral or to refuse to make
further  advances  hereunder.

                                       43
<PAGE>
     10.03.     Deviation  from  Covenants.  The  procedure  to  be  followed by
                --------------------------
Borrower  to  obtain  the  consent of Lender to any deviation from the covenants
contained  in  this  Agreement  or  any other Loan Document shall be as follows:

          (a)     Borrower  shall  send a written notice to Lender setting forth
(i)  the  covenant(s)  relevant to the matter, (ii) the requested deviation from
the  covenant(s) involved, and (iii) the reason for the requested deviation from
the  covenant(s);  and

          (b)     Lender,  within  a reasonable time, will send a written notice
to  Borrower,  permitting  or  refusing  the  request,  but in no event will any
deviation  from  the  covenants  of this Agreement or any other Loan Document be
effective  without the express prior written consent of Lender. Lender's failure
to  provide  such  written  notice  shall  be  deemed a refusal of such request.

     10.04.     Holidays.  Except  as  otherwise  provided  herein, whenever any
                --------
payment  or  action  to  be  made  or taken hereunder or under the Note shall be
stated  to  be  due on a day which is not a Business Day, such payment or action
shall  be made or taken on the next following Business Day and such extension of
time shall be included in computing interest or fees, if any, in connection with
such  payment  or  action.

     10.05.     Records.  From time to time, Lender may send Borrower statements
                -------
of the unpaid principal amount of the Note, the unpaid interest accrued thereon,
the  Interest  Rate  or  rates  applicable  to such unpaid principal amount, the
duration of such applicability, and the amount remaining available on any Loans,
and  each statement shall be deemed correct and conclusively binding on Borrower
(absent  manifest  error)  unless  Borrower  notifies  Lender of an error in the
statement  in  writing  within  30  days  after  the  date any such statement is
provided  to  Borrower.

     10.06.     Notices.  All  notices,  requests, demands, directions and other
                -------
communications  (collectively,  "notices") required under the provisions of this
Agreement  or  any  other  Loan  Document  shall  be  in  writing  (including
communication  by  facsimile  transmission) unless otherwise expressly permitted
hereunder  and  shall  be  sent  by hand, by registered or certified mail return
receipt  requested, by overnight courier service maintaining records of receipt,
or by facsimile transmission with confirmation in writing mailed first-class, in
all  cases  with  charges  prepaid,  and any such properly given notice shall be
effective  upon  the  earlier of receipt or (i) when delivered by hand, (ii) the
third  Business Day after being mailed, (iii) the following Business Day if sent
by  overnight  courier  service,  or  (iv)  when  sent by facsimile, answer back
received.  All  notices  shall  be  addressed  as  follows:

     If  to  Borrower:   Pointe  Communications  Corporation
                         1325  Northmeadow  Parkway,  Suite  110
                         Roswell,  Georgia  30076
                         Attention:  Chief  Financial  Officer
                         Telecopy:  (770)  319-2834

                                       44
<PAGE>
     If  to  Lender:     NTFC  Capital  Corporation
                         501  Corporate  Centre  Drive
                         Franklin,  Tennessee  37067
                         Attention:  Manager,  Credit
                         Telecopy:  (615)  771-6626

     With  a  copy  to:  NTFC  Capital  Corporation
                         501  Corporate  Centre  Drive
                         Franklin,  Tennessee  37067
                         Attention:  Legal  Department
                         Telecopy:  (615)  771-6187

                               and

                         TFS  Portfolio  Management
                         10  Riverview  Drive
                         Danbury,  Connecticut  06810

     All  notices  shall  be  sent to the applicable party at the address stated
above or in accordance with the last unrevoked written direction from such party
to  the  other  party  hereto,  given  in  accordance  with  the  terms  hereof.

     10.07.     FCC  and  PUC  Approval.  The exercise of any rights or remedies
                -----------------------
hereunder or under any other Loan Document by Lender that may require FCC or PUC
approval shall be subject to obtaining such approval. Pending the receipt of any
PUC  or FCC approval, Borrower shall not do anything to delay, hinder, interfere
with,  or  obstruct the exercise of Lender's rights or remedies hereunder or the
obtaining  of  such  approvals.

     10.08.     Lender  Sole  Beneficiary.  All  conditions of the obligation of
                -------------------------
Lender to make any Advances hereunder are imposed solely and exclusively for the
benefit  of  Lender  and  its assigns and no other Person shall have standing to
require  satisfaction  of  such  conditions in accordance with their terms or be
entitled  to  assume that Lender will refuse to make any Advances in the absence
of strict compliance with any or all such conditions.  No Person shall under any
circumstances  be  deemed  to be a beneficiary of such conditions, any or all of
which  may be freely waived in whole or in part by Lender at any time if, in its
sole  discretion,  it  deems it advisable to do so. Inspections and approvals of
the  System,  and  the  workmanship  and  materials  used  therein,  impose  no
responsibility or liability of any nature whatsoever on Lender. No Person shall,
under any circumstances, be entitled to rely upon such inspections and approvals
by  Lender  for  any  reason.  Lender's sole obligation hereunder is to make the
Advances  if  and  to  the  extent  required  by  this  Agreement  or the Notes.

     10.09.     Lender's Review of Information. Borrower acknowledges and agrees
                ------------------------------
that  any  review  or  analysis  by  Lender  of financial information, operating
information,  marketing  data,  or other information provided to Lender by or on
behalf  of  Borrower  at  any time is and shall be conducted solely for Lender's
benefit  and internal use and that Lender is under no duty or obligation to make
the  results  of  such review or analysis available to Borrower. Borrower is not
relying,  and  will  not  rely,  on  Lender  for  financial  or business advice.

                                       45
<PAGE>
     10.10.     No  Joint  Venture.  Nothing  in any of the Loan Documents or in
                ------------------
this  Agreement  shall  be  deemed  to constitute any kind of partnership, joint
venture,  or  fiduciary  relationship  between  Lender  and  Borrower.

     10.11.     Severability.  The  provisions of this Agreement are intended to
                ------------
be  severable.  If  any  provision of this Agreement or the other Loan Documents
shall  be held invalid or unenforceable in whole or in part in any jurisdiction,
such  provision  shall, as to such jurisdiction, be ineffective to the extent of
such invalidity or unenforceability without in any manner affecting the validity
or  enforceability thereof in any other jurisdiction or the remaining provisions
hereof  or  thereof  in  any  jurisdiction.

     10.12.     Rights  Cumulative. All rights, powers and remedies herein given
                ------------------
to  Lender  are  cumulative  and  not  alternative,  and  are in addition to all
statutes  or  rules  of  law.

     10.13.     Duration;  Survival.  All  representations  and  warranties  of
                -------------------
Borrower  contained  herein  or  made  in  connection herewith shall survive the
making  of  and  shall  not  be  waived  by  the  execution and delivery of this
Agreement  and  the  other  Loan  Documents, any investigation by Lender, or the
making  of  any  Advances  hereunder.  All  covenants and agreements of Borrower
contained herein shall continue in full force and effect from and after the date
hereof  so  long  as  it  may  borrow hereunder and until payment in full of the
Notes, interest thereon, all fees and all other Obligations of Borrower. Without
limitation,  it  is understood that all obligations of Borrower to make payments
to or indemnify Lender shall survive the payment in full of the Notes and of all
other  Obligations.

     10.14.     Governing  Law. This Agreement, the Notes, and each of the other
                --------------
Loan  Documents  shall be governed by, construed and enforced in accordance with
the  internal  laws  of the state of New York, except to the extent, if any, set
forth  on  Schedule  2.02  hereto  and  except  to  the  extent that the laws of
           --------------
jurisdictions  where  the  Collateral is located may be required to apply to the
Collateral.

     10.15.     Counterparts.  This  Agreement  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  instrument.

     10.16.     Successors and Assigns. This Agreement shall be binding upon and
                ----------------------
inure  to the benefit of Lender and Borrower and their respective successors and
assigns;  provided, however, that Borrower may not assign or transfer any of its
          -----------------
rights  or  obligations hereunder or under the other Loan Documents (in whole or
in  part)  without  the  prior  written  consent  of  Lender. Lender may assign,
transfer  or  pledge  any  of  its respective rights or obligations hereunder or
under the other Loan Documents without notice to or the prior written consent of
Borrower.  Upon  receipt  of  written  notice  from  Lender  of such assignment,
Borrower  shall  promptly acknowledge receipt thereof in writing. If Borrower is
given  written  notice  of any assignment, it shall perform its obligations with
respect to this Agreement for the ratable benefit of the applicable assignee(s),
and,  if  so  directed,  shall  pay  all  amounts due or to become due hereunder
directly  to the applicable assignee(s) or to any other party designated by such
assignee(s).  Borrower  shall  not assert against any such assignee any set-off,
defense  or  counterclaim  that  Borrower  may have against Lender or any person
other than such assignee. Borrower shall also execute and deliver to Lender such
documentation  as  any  such assignee may reasonably require, including (without
limitation)  amended  promissory  notes,  acknowledgments of, or consents to the
assignment  which  may  require  Borrower  to  make  certain  representations or
affirmations  as  to  some  of  the  basic terms and covenants contained herein.
Lender  shall  not  be  relieved of its obligations hereunder as a result of any
such  sale,  assignment,  transfer,  grant  or  pledge,  unless  such  assignee
specifically  assumes  all or part of Lender's future obligations hereunder in a
writing,  a  copy of which shall be delivered to Borrower; in which event, after
the  date  of such assignment, Borrower's obligations to any such assignee shall
be  proportionately  as  set forth herein with respect to Lender. Borrower shall
not look to Lender to perform any of such assignee's obligations hereunder which
arise  after  the  date  thereof.  Any  assignee  shall  be  entitled to rely on
Borrower's agreements as stated herein, as applicable, and shall be considered a
third  party beneficiary thereof. Except to the extent otherwise required by the
context of this Agreement, the word "Lender," when used in this Agreement, shall
mean  and  include any holder of any Note originally issued to Lender hereunder.
Any  such  holder  of  any  Note shall be bound by and have the benefits of this
Agreement  the  same  as  if  such  holder  had  been  a  signatory  hereto.

                                       46
<PAGE>
     10.17.     Participation.  Lender shall have the right to enter into one or
                -------------
more  participation  agreements,  syndication  agreements, or similar agreements
with  one  or  more participating lenders or other parties approved by Lender on
such terms and conditions as Lender shall deem advisable. Borrower shall furnish
a  sufficient  number  of  copies  of reports and certificates to Lender so that
Lender and each participating lender shall receive a copy of each such document.

     10.18.     Time  of  Essence. Time is of the essence of this Agreement, the
                -----------------
Note  and  the  other  Loan  Documents.

     10.19.     Disclosures  and  Confidentiality.
                ---------------------------------

          (a)     Borrower  agrees  that it will obtain Lender's 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.  Borrower will not
distribute  any  such  materials  in the absence of such prior written approval.

          (b)     Borrower  agrees  that  it  will  not, directly or indirectly,
disclose  to  any  third  party  the  terms  of  this  Agreement, the other Loan
Documents,  prior  or  future  correspondence relating thereto, the transactions
contemplated hereby, or any other information regarding Lender or its Affiliates
learned  by  Borrower  during the course of negotiation thereof. The term "third
party"  shall  exclude  only  Borrower,  its  employees, its senior lenders, its
Affiliates, and their respective attorney(s) and certified public accountant(s).
This  Section  10.19(b) shall not restrict the disclosure of information if such
      -----------------
disclosure  is  required by law, by order of any court, or by the order, rule or
regulation  of  any  administrative  agency,  including (without limitation) any
requirements of the FCC, any PUC, or any state or federal securities commissions
(the "Commissions"); provided, however, that, except for disclosures required by
      -----------    --------  -------
the  FCC,  PUC or Commissions, Borrower shall provide Lender with advance notice
of  any  such  required  disclosure  of  information  so that Lender may seek an
appropriate protective order and/or waive compliance with this section. Borrower
shall  not oppose any action taken by Lender to obtain an appropriate protective
order  or  other  reliable  assurance  that  the  information  will  be accorded
confidential treatment. The obligations set forth in this Section 10.19(b) shall
                                                          ----------------
survive  the  termination  of  this  Agreement.

          (c)     The  disclosure  of  information  by either Lender or Borrower
will  not be restricted under this Agreement if such information (i) has been or
becomes  published or is now, or in the future, in the public domain through (A)
no  fault  of  the parties, (B) disclosure other than unauthorized disclosure by
the  party  to  whom  the  information  is disclosed, or (C) disclosure to third
parties  by  the  disclosing party without similar restriction; (ii) is property
(other  than  proposal  letters,  commitment  letters,  or  other correspondence
between  Lender  and Borrower) within the legitimate possession of the receiving
party  prior  to disclosure hereunder; (iii) subsequent to disclosure hereunder,
is  lawfully  received  from  a  third  party  having  rights  therein  without
restriction  of the third party's or receiving party's rights to disseminate the
information  and  without  notice  of  any  restriction  against  its  further
disclosure;  (iv)  is disclosed with the written approval of the other party; or
(v)  is  or  becomes  publicly  available  free  of  any  obligation  to keep it
confidential.

                                       47
<PAGE>
          (d)     Borrower  authorizes Lender to discuss with and furnish to any
Affiliate  of  Lender,  to  any  government  or  self-regulatory  agency  with
jurisdiction  over  Lender,  to  any  other  Governmental  Authority,  or to any
assignee,  successor, participant, successor, or prospective assignee, successor
or  participant,  all financial statements, audit reports, and other information
pertaining  to  Telscape,  the  Borrower, and/or their Subsidiaries whether such
information  was provided by Borrower or prepared or obtained by Lender or third
parties.  Neither Lender nor any of its employees, officers, directors or agents
makes  any  representation  or warranty to any existing or prospective assignee,
successor  or  participant  regarding  any  audit reports or other analyses that
Lender  may  distribute,  whether  such  information was provided by Borrower or
prepared  or obtained by Lender or third parties, nor shall Lender or any of its
employees,  officers,  directors  or  agents be liable to any Person receiving a
copy  of  such  reports  or analyses for any inaccuracy or omission contained in
such  reports  or  analyses  or  relating  thereto.

          (e)     Every  reference  in this Agreement to disclosures of Borrower
to  Lender (except the financial statements), to the extent that such references
refer  or  are  intended to refer to disclosures at or prior to the execution of
this  Agreement,  shall  be deemed strictly to refer only to written disclosures
delivered  to  Lender  concurrently  with  the  execution  of this Agreement and
referred  to  specifically  in  the Loan Documents. The parties intend that such
disclosures  are  to  be  limited to those presented in an orderly manner at the
time  of  executing this Agreement and are not to be deemed to include expressly
or  impliedly  any disclosures that previously may have been delivered from time
to time to Lender, except to the extent that such previous disclosures are again
presented  to  Lender  in  writing  concurrently  with  the  execution  of  this
Agreement.

     10.20.     Jurisdiction  and  Venue.  (a)  The  Borrower hereby irrevocably
                ------------------------
and  unconditionally:

               (i)  submits for itself and its  property in any legal  action or
          proceeding  relating to this Agreement and the other Loan Documents to
          which  it is a  party,  or  for  recognition  and  enforcement  of any
          judgment in respect thereof to the non-exclusive  general jurisdiction
          of the  courts  of the  State of New York,  the  courts of the  United
          States of America for the Southern District of New York, and appellate
          courts from any thereof; and

               (ii) consents  that any such action or proceeding  may be brought
          in such courts and waives any  objection  that it may now or hereafter
          have to the venue of any such action or  proceeding  in any such court
          or that such  action or  proceeding  was  brought in any  inconvenient
          court and agrees not to plead or claim the same.

     (b) The Borrower hereby irrevocably and unconditionally:

                                       48
<PAGE>
          (i)  consents  to  the  appointment  of CT  Corporation  System,  1633
     Broadway, New York, New York 10019, as its process agent (together with any
     successor process agent, the "Process Agent") upon which service of process
                                   -------------
     in New York,  New  York,  may be  served  in any  legal  action  proceeding
     instituted in such courts.  To the extent  permitted by applicable law, the
     Borrower  agrees  that  service of  process  may be made  personally  or by
     mailing or  delivering  a copy of the summons and  complaint or other legal
     process in any legal  action or  proceeding  to the Borrower in care of the
     Process  Agent  and  such  agent  is  hereby   authorized  to  receive  and
     acknowledge the same for and on behalf of the Borrower and to admit service
     with respect  thereto.  Service  upon the Process  Agent shall be deemed in
     every respect  effective  service of process upon the Borrower and shall be
     legal and binding upon the Borrower  for all purposes  notwithstanding  any
     failure  to mail  copies of such  legal  process  to the  Borrower,  or any
     failure on the part of the  Borrower  to  receive  the same.  The  Borrower
     further agrees that it will not revoke the appointment of the Process Agent
     so long as any of the Note remains  outstanding  or until the  appointment,
     which  appointment  the  Borrower  similarly  agrees  not to  revoke,  of a
     successor  Process  Agent  acceptable  to the Lender  and such  successor's
     acceptance  of such  appointment.  The Borrower  agrees that it will at all
     times continuously maintain the Process Agent to receive service of process
     in the State of New York on behalf of  itself,  and,  in the event that for
     any reason such  Process  Agent shall  cease to be the Process  Agent,  the
     Borrower shall promptly appoint a successor Process Agent acceptable to the
     Lender for  service of process in the State of New York and shall  promptly
     deliver to the Lender a copy of such successor  Process Agent's  acceptance
     or acknowledgement of that appointment.  The Borrower will take any and all
     reasonable  action,  including,  the  filing of any and all  documents  and
     instruments  that may be  necessary  to  continue  the  appointment  of the
     Process Agent in full force and effect;

          (ii)  agrees  that  nothing  herein  shall  affect the right to effect
     service of process in any other manner  permitted by law or shall limit the
     right to sue in any other jurisdiction; and

          (iii) waives,  to the maximum  extent not prohibited by law any rights
     it may have to claim or recover in any legal action or proceeding  referred
     to in this  subsection any special,  exemplary,  punitive or  consequential
     damages.

     10.21.     Jury  Waiver. BORROWER AND LENDER HEREBY KNOWINGLY AND WILLINGLY
                ------------
WAIVE  THEIR RIGHTS TO DEMAND A JURY TRIAL IN ANY ACTION OR PROCEEDING INVOLVING
THIS  AGREEMENT,  ANY  OTHER LOAN DOCUMENT, THE OBLIGATIONS, OR ANY RELATIONSHIP
BETWEEN  LENDER  AND  BORROWER.  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.

     10.22.     Limitation  on  Liability. LENDER, BORROWER AND GUARANTORS SHALL
                -------------------------
HAVE NO LIABILITY UNDER OR IN CONNECTION WITH THIS AGREEMENT 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 OTHER LOAN DOCUMENTS, OR THE OBLIGATIONS.
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.

                                       49
<PAGE>
     10.23.     Borrower Waivers. To the full extent permitted by law and except
                ----------------
as  set  forth  herein, Borrower hereby waives (i) presentment, demand, protest,
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 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 Borrower for payment of the Obligations 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
Borrower  until  termination of this Agreement and the execution by Borrower and
by  any  person  whose Loans to 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  Obligations;  and  (vi)  notice  of acceptance hereof.
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  Borrower.

     10.24.     Schedules. The Schedules and Exhibits attached to this Agreement
                ---------
are  an  integral  part  hereof  and  are  hereby made a part of this Agreement.

     10.25.     Agreement  to  Govern. In case of any conflict between the terms
                ---------------------
of  this  Agreement  and  any  of  the  other  Loan Documents, the terms of this
Agreement  shall  govern.

     10.26.     Entire  Agreement. This Agreement, the other Loan Documents, and
                -----------------
other  documents,  agreements  and  certificates  executed  by  the  parties
contemporaneously  herewith or subsequent hereto constitute the entire agreement
of the parties and supersede all prior understandings and agreements, written or
oral, between the parties hereto relating to the subject matter hereof. Borrower
is not entering into this Agreement in reliance on statements or representations
made  by  any  Person  other  than  as  set  forth  herein.

    END OF GENERAL TERMS AND CONDITIONS. NEXT PAGE IS SCHEDULE 1.01 [SIGNATURES
                                                      -------------
                           APPEAR ON THE COVER PAGE.]

                                       50
<PAGE>
                                  SCHEDULE 1.01
                         TO LOAN AND SECURITY AGREEMENT

                     BORROWER INFORMATION AND DEFINED TERMS
                     --------------------------------------

CLOSING DATE:       September  29,  2000

BORROWER:           Pointe  Communications  Corporation, a  Nevada corporation

TAX IDENTIFICATION
NUMBER:             84-1097751

CHIEF
EXECUTIVE OFFICES:  1325  Northmeadow  Parkway,  Suite  110
                    Roswell,  Georgia  30076

REGULATORY
AUTHORIZATIONS:     The term  "Regulatory  Authorizations"  shall  include:  the
                    various  telecommunications  services permits,  licenses and
                    authorizations   issued  to  the  borrower  and  Significant
                    Subsidiaries  by  regulatory   authorities,   set  forth  on
                    Schedule 4.05 to the Loan and Security Agreement.

NORTEL
NETWORKS,  INC.:    Master Purchase  Agreement  dated November 2, 1999,  between
                    Pointe Communications Corporation and Nortel Networks, Inc.

TAX IDENTIFICATION NUMBERS OF:

(Guarantor)
Telscape  International,  Inc.--     75-2433637

(Significant  Subsidiary  Guarantors)
Telscape  U.S.A.,  Inc.     76-0499077
MSN  Communications,  Inc.     33-0707658
Interlink  Communications,  Inc.   77-0483223
TSCP  International,  Inc.     76-0577773
Pointecom,  Incorporated:  58-2440272
Galatel,  Inc.  58-2559588
Pointe  Local  Exchange  Company:  58-2539217
Overlook  Communications  International  Corporation     58-2028264
Rent-A-Line  Telephone  Company,  LLC     58-2297158
Tops  Corporation     76-0460301

<PAGE>
                                                                SCHEDULE 1.02 TO
                                                                ----------------
                                                     LOAN AND SECURITY AGREEMENT
                                                     ---------------------------

                                  BUSINESS PLAN
                                  -------------

<PAGE>
                                                                SCHEDULE 2.01 TO
                                                                ----------------
                                                     LOAN AND SECURITY AGREEMENT
                                                     ---------------------------

                               MAXIMUM LOAN AMOUNT
                               -------------------

Maximum  Principal Amount (including Capitalized Interest):          $16,000,000

Maximum  Amount  for  Lender's  Expenses:                            $    50,000

<PAGE>
                                                                SCHEDULE 2.02 TO
                                                                ----------------
                                                     LOAN AND SECURITY AGREEMENT
                                                     ---------------------------
                                                                          PAGE 2

                         PAYMENT TERMS AND GOVERNING LAW
                         -------------------------------

INITIAL
BORROWING  DATE:    The first Borrowing Date on which the Lender disburses funds
                    at the request of the Borrower,  as evidenced by a borrowing
                    certificate  executed by the Borrower under the terms of the
                    Loan.

FINANCING
TERMINATION DATE:   September 30, 2001 (One year after Closing Date).

CAPITALIZED
INTEREST PERIOD:    September 29, 2000, through September 30, 2001.

INTEREST
ONLY PERIOD:        October 1, 2001, through September 30, 2002.

CONVERSION  DATE:   September  30,  2002.

PAYMENT  SCHEDULE:  After  the  Conversion  Date,  the  Borrower  shall  pay all
                    outstanding principal amounts, together with all accrued but
                    unpaid interest, in arrears in 20 quarterly  installments of
                    principal  and interest.  If the Borrower  elects to convert
                    all or a portion of the Advances to a fixed interest rate on
                    the Conversion  Date as set forth below,  the Borrower shall
                    pay  the  outstanding  principal  amount  of  the  Loans  so
                    converted  in equal  quarterly  payments  of  principal  and
                    interest on the last Business Day of each  Calendar  Quarter
                    in an amount  sufficient to fully  amortize the Loans by the
                    Maturity Date. If the Borrower does not make the election to
                    convert all Advances to a fixed interest rate on or prior to
                    the Conversion  Date as set forth below,  the Borrower shall
                    pay the  outstanding  principal  amount  of the Loans not so
                    converted in quarterly  payments on the last Business Day of
                    each Calendar Quarter as follows:

                          Quarter  Ending          Amount
                          ---------------          ------

                          December  31,  2002       3.75%
                          March  31,  2003          3.75%
                          June  30,  2003           3.75%
                          September  30,  2003      3.75%
                          December  31,  2003       4.25%
                          March  31,  2004          4.25%
                          June  30,  2004           4.25%
                          September  30,  2004      4.25%
                          December  31,  2004       5.00%
                          March  31,  2005          5.00%
                          June  30,  2005           5.00%

<PAGE>
                                                                SCHEDULE 2.02 TO
                                                                ----------------
                                                     LOAN AND SECURITY AGREEMENT
                                                     ---------------------------
                                                                          PAGE 3

                          Quarter  Ending          Amount
                          ---------------          ------

                          September  30,  2005      5.00%
                          December  31,  2005       5.75%
                          March  31,  2006          5.75%
                          June  30,  2006           5.75%
                          September  30,  2006      5.75%
                          December  31,  2006       6.25%
                          March  31,  2007          6.25%
                          June  30,  2007           6.25%
                          September  30,  2007      6.25%

INITIAL
PAYMENT  DATE:      The last  Business Day of the first  Calendar  Quarter after
                    the Conversion Date.

INTEREST
PAYMENT  DATE:      The last  Business Day of the first  Calendar  Quarter after
                    the Capitalized Interest Period and the last Business Day of
                    each Calendar Quarter thereafter until the Maturity Date.

PAYMENT  DATE:      The Initial  Payment Date and the last  Business Day of each
                    Calendar Quarter thereafter until the Maturity Date.

<PAGE>
                                                                SCHEDULE 2.02 TO
                                                                ----------------
                                                     LOAN AND SECURITY AGREEMENT
                                                     ---------------------------
                                                                          PAGE 4

MATURITY  DATE:     September  30,  2007  (Last  Business  Day of 20th  Calendar
                    Quarter after the Conversion Date).

GOVERNING  LAW:     New  York.

<PAGE>
                                                                SCHEDULE 2.09 TO
                                                                ----------------
                                                     LOAN AND SECURITY AGREEMENT
                                                     ---------------------------

                                      FEES
                                      ----

The  Borrower  shall pay a  non-refundable  origination  fee of  $320,000 on the
Closing Date,  provided that Borrower  shall receive a credit for any portion of
the Origination Fee paid prior to the Closing Date. The Borrower may finance (or
refinance) with Advances hereunder up to $320,000 of the Origination Fee.

Upon invoicing, the Borrower shall pay all reasonable fees, charges and expenses
of the Lender (including,  without limitation, the fees, charges and expenses of
the  Lender's  counsel)  arising  in  connection  with  the  structuring  of the
transactions  contemplated  in this Loan  Agreement and in  connection  with the
negotiation,  drafting, preparation,  execution and/or delivery of the documents
evidencing  the terms and  conditions  of the credit  facility  and all  related
documents  regardless of a successful  closing.  The Borrower also shall pay all
closing costs,  including legal fees and charges,  as well as all stamp or other
recording costs,  charges,  filing fees, costs and expenses of the Lender in the
enforcement or protection of its rights.  The Borrower may finance up to $50,000
of the foregoing fees,  charges and expenses under the Loan,  which the Borrower
first shall use to reimburse the Lender for its legal fees, charges and expenses
and, then, to reimburse the Borrower for its legal expenses.

<PAGE>
                                  SCHEDULE 4.04
                         TO LOAN AND SECURITY AGREEMENT

                                REQUIRED CONSENTS
                                -----------------

Certain  state  filings  requesting consent to incur indebtedness over a certain
threshold  are  required  in connection with the undertaking of the Subsidiaries
named  below  to  guarantee the obligations of the Borrower, as set forth below.
Regulatory  counsel  is  currently  preparing  the  filings and such filings are
expected  to  be  made by the Closing Date, and if not made by the Closing Date,
will  be made as soon as reasonably possible thereafter.  Each entity requesting
the aforementioned consents must receive approval from the relevant state office
within  60  days  of  the  Closing  Date.

Georgia:
-------
Overlook  Communications  International  Corporation
PointeCom,  Incorporated
Telscape  USA,  Inc.

Pennsylvania:
------------
MSN  Communications,  Inc.
Telscape  USA,  Inc.
Overlook  Communications  International  Corporation

New  York:
---------
Overlook  Communications  International  Corporation
Telscape  USA,  Inc.
PointeCom,  Incorporated

<PAGE>
                                                                SCHEDULE 4.05 TO
                                                                ----------------
                                                     LOAN AND SECURITY AGREEMENT
                                                     ---------------------------
                                                                          PAGE 2

                            REGULATORY AUTHORIZATIONS
                            -------------------------

                                  FEDERAL (FCC)

POINTE  COMMUNICATIONS  CORPORATION

     214 License               ITC-95-160                  5/1/95
     Earth Station E960410     SES-LIC-19960624-00939     9/20/96
     Earth Station E960094     SES-LIC-19951121-00140     4/26/96

TELSCAPE  INTERNATIONAL,  INC.

     Signaling Point Code      SPC-NEW-19990916-00073     9/22/99

TELSCAPE  USA,  INC.

     214 License (Global F/B)     ITC-214-19971222-0809   2/13/98
     214 License (Global Resale)  ITC-214-19960925-00465  11/8/96

MSN  COMMUNICATIONS,  INC.

     214 License              ITC-214-19960522-00207      7/19/96

OVERLOOK  COMMUNICATIONS  INTERNATIONAL  CORPORATION

     214 License              ITC-95-334                  7/10/95

WORLDLINK  COMMUNICATIONS,  INC.

     214 License              ITC-95-460                  9/22/95
     214 License              ITC-214-1999-0505-00284     6/18/99

POINTECOM,  INCORPORATED

     214 License              ITC-214-19990716-000468     8/18/99

INTERLINK  COMMUNICATIONS,  INC.

     214 License              ITC-214-19981014-00699     11/27/98
     Earth Station E960024    SES-MOD-19991018-01758     12/29/99
     Earth Station E921000    Various                     Various
     Earth Station E890130    SES-LIC-19990920-01853      2/18/00

<PAGE>
                                                                SCHEDULE 4.05 TO
                                                                ----------------
                                                     LOAN AND SECURITY AGREEMENT
                                                     ---------------------------
                                                                          PAGE 3

TSCP  INTERNATIONAL,  INC.

     214 License    ITC-98-588-AL  8/6/98

STATE

TELSCAPE  USA,  INC.

     Arizona           Application T-03268A-960520          10/3/96
     Arkansas          Docket No. 96-294-U                  10/7/96
     California        Decision No. 97-04-040                4/9/97
     Florida           Cert. No. 4768                       1/27/97
     Georgia           Cert. No. R-395                      10/7/97
     Idaho             Tariff Accepted                     10/12/96
     Illinois          Docket No. 96-0450                   12/4/96
     Iowa              Registered                            8/9/99
     Kansas            Docket No. 97-TUSC-147-COC           11/7/96
     Kentucky          Tariff Accepted                     10/11/96
     Louisiana         TSP00038                             11/1/96
     Maine             Docket No. 96-528                   11/15/96
     Massachusetts     Registered
     Michigan          Registered                            9/6/96
     Minnesota         Docket No. P-5399/NA-96-1057         12/6/96
     Mississippi       Docket No. 96-UA-0430               10/25/96
     Missouri          Case No. TA-97126                   11/12/96
     Montana           Authorized
     Nebraska          Case No. C-1413                     11/12/96
     Nevada            CPC 2616                            11/15/96
     New Mexico        96-345-TC / Utility Case No. 2954    4/20/99
     New York          Case No. 96-C-0823                  12/11/96
     North Carolina    Docket No. P-589                    11/14/96
     North Dakota      Certificate No. 365                 10/10/96
     Ohio              Case No. 96-978-CT-RRJ              10/13/96
     Oregon            Order No. 96-267                     10/9/96
     Pennsylvania      Docket No. A-310444                 12/16/96
     South Dakota      Docket TC 96-162                    10/17/96
     Tennessee         Case No. 96-01396                    10/2/96
     Texas             Registration Letter Amended          7/14/97
     Utah              Letter of Registration submitted      8/4/99
     Washington        Case No. UT-961137 (IXC Resell)      10/9/96
                       Case No. UT-971780 (Comp. Class.)    3/24/98
     Wisconsin         Utility No. 7093-TI-100             12/23/96
     Wyoming           Docket No. 74209-TX-96-1             9/10/96

<PAGE>
                                                                SCHEDULE 4.05 TO
                                                                ----------------
                                                     LOAN AND SECURITY AGREEMENT
                                                     ---------------------------
                                                                          PAGE 4

MSN  COMMUNICATIONS,  INC.

     California        Decision No. 97-03-010  App. No. 96-12-004    3/7/97
     Illinois          Docket No. 96-0601                           3/12/97
     Nevada            CPC 2207,  Docket No. 96-12009               3/20/97
     New York          Case No. 96-C-1172                            4/7/97
     Texas             Registered (IXC)                             7/20/96
                       SPCOA No. 60073

OVERLOOK  COMMUNICATIONS  INTERNATIONAL  CORPORATION

     Alabama           Docket No. 25636                           12/2/96
     Arizona           Docket No. U-3129-96-165                   9/24/97
     Connecticut       Docket No. 96-0813                        12/18/96
     Florida           Cert. No. 4088, Docket No. 95-0871-TI     12/29/95
                       Order No. PSC-95-1020-FOF-TI
     Georgia           Cert. No.R-286, Docket No. 5841-U         11/22/96
     Idaho             Tariff Accepted                            8/10/95
     Indiana           Cause No. 40344                           11/30/95
     Kansas            Docket No. 194,710 U, 96-OLCC-617-COC      8/12/96
     Kentucky          Case No. 95-366                            10/4/95
     Louisiana         Registration Accepted                      10/6/95
     Massachusetts     Registered                                 7/21/95
     Minnesota         Docket No. P-5258/NA-95-976                1/12/95
     Missouri          Case No. TA-96-101                        11/28/95
     Nevada            Docket No. 96-5030  Cert. No. 2119         7/31/96
     New Hamp.         Docket DE-96-009, Order No. 22,269          8/6/96

     New Jersey        Registered                                  7/6/95
     New York          Case No. 95-C-0902                         12/8/95
     North Dakota      Case PU-151996-197  Registration No. 325   6/11/96
     Ohio              Case No. 96-17-CT RRJ                       2/9/96
     Oklahoma          Cause PUD 95-0000199,  Order No. 408533    1/15/97
     Pennsylvania      Docket No. A-310359                        4/11/96
     Tennessee         Registered                                  8/4/95
     Texas             Registered                                 7/13/95
     Vermont           CPG No. 238                                6/26/97
     Washington        Docket No. UT-961222                      11/13/96
                       Docket No. UT-991073                       9/22/99
     West Virginia     Case No. 96-0981-T-CN                     11/26/96

<PAGE>
                                                                SCHEDULE 4.05 TO
                                                                ----------------
                                                     LOAN AND SECURITY AGREEMENT
                                                     ---------------------------
                                                                          PAGE 5

WORLDLINK  COMMUNICATIONS,  INC.

     Connecticut    Docket No. 96-09-01                         4/30/97
     Georgia        Docket No. 5073-U Cert.  No. R-194           6/8/95
     Idaho          Tariff Accepted                            10/16/95
     Indiana        Cause No. 40660                              1/8/97
     Louisiana      Tariff Accepted                             4/11/96
     Massachusetts  Tariff Approved                              9/4/96
     Missouri       Case No. TA-97-107                         11/22/96
     Nevada         Docket No. 96-9010  Cert. No. 2164         11/15/96
     North Dakota   Registration No. 370, Case PU-1583-96-480  11/29/96
     Texas          Registered                                  8/31/95
     West Virginia  Case No 96-1158-T-CN                       12/16/96

POINTE  LOCAL  EXCHANGE  COMPANY  (FORMERLY  HTC  COMMUNICATIONS,  LLC)

     California     U-6185-C, Decision 99-06-083 (LEC license)  6/24/99
                    U-6185-C, Decision 99-06-083 (IXC license)  6/24/99

PointeCom,  Incorporated

    Florida         Docket No. 990215-TX                         6/2/99
                    Order No. PSC-99-1056-CO-TX (LEC license)
                    Docket No. 991008-TI                       11/12/99
                    Order No. PSC-99-2050-PAA-TI (IXC license)
     Georgia        IXC application filed                       8/24/99
     New York       Case No. 99-C-0902                         11/19/99
     Texas          COA-50027, Docket No. 22049 (SPCOA)         4/12/00

Rent-A-Line  Telephone  Company,  LLC

     Georgia        Amended Cert. No. L-035                     5/20/99
                    Docket Nos. 7130-U and 6170-U

Galatel,  Inc.

     Georgia  Pre-paid Reseller

<PAGE>
                                                                SCHEDULE 4.05 TO
                                                                ----------------
                                                     LOAN AND SECURITY AGREEMENT
                                                     ---------------------------
                                                                          PAGE 6

                 REGULATORY AUTHORIZATIONS NOT IN GOOD STANDING
                 ----------------------------------------------

                               TELSCAPE USA, INC.
                           CERTIFICATION STATUS REPORT
                           ---------------------------

                                   IN GOOD STANDING
             STATE      WITH PUBLIC SERVICE/PUBLIC UTILITY COMMISSION
             ---------  --------------------------------------------

             KENTUCKY     NO
             ---------  --------------------------------------------

             LOUISIANA     NO
             ---------  --------------------------------------------

                            MSN COMMUNICATIONS, INC.
                           CERTIFICATION STATUS REPORT
                           ---------------------------

                                   IN GOOD STANDING
             STATE      WITH PUBLIC SERVICE/PUBLIC UTILITY COMMISSION
             ---------  --------------------------------------------

             FLORIDA     NO
             ---------  --------------------------------------------

Certificates  of  the  above  entities  are  in effect but not in good standing;
efforts  are  being  undertaken  presently  to  bring these certificates to good
standing  status.

<PAGE>
                                  SCHEDULE 4.06
                         TO LOAN AND SECURITY AGREEMENT

                      PERMITTED CONFLICTS AND RESTRICTIONS
                      ------------------------------------

                                      NONE

<PAGE>
                                                                SCHEDULE 4.07 TO
                                                                ----------------
                                                     LOAN AND SECURITY AGREEMENT
                                                     ---------------------------

                              RESTRICTIONS ON LOANS
                              ---------------------

                                      NONE

<PAGE>
                                                                SCHEDULE 4.08 TO
                                                                ----------------
                                                     LOAN AND SECURITY AGREEMENT
                                                     ---------------------------

                              FINANCIAL STATEMENTS
                              --------------------

Quarterly  Report  of  Telscape on Form 10-Q for the period ended June 30, 2000.
Annual  Report  of Telscape on Form 10-K for the period ended December 31, 1999.
Annual  Report  of Pointe Communications Corporation on Form 10-K for the period
ended  December  31,  1999.

<PAGE>
                                  SCHEDULE 4.11

                         TO LOAN AND SECURITY AGREEMENT
                       DEFAULTS UNDER MATERIAL AGREEMENTS
                       ----------------------------------

                                      NONE

<PAGE>
                                                                SCHEDULE 4.12 TO
                                                                ----------------
                                                     LOAN AND SECURITY AGREEMENT
                                                     ---------------------------
                                                                          PAGE 2

                                  SCHEDULE 4.12
                         TO LOAN AND SECURITY AGREEMENT

                               PENDING LITIGATION
                               ------------------

Telscape  International,  Inc.,  Telereunion,  S.A.  de  C.V.,  Telereunion
-----------------------------------------------------------------------------
International,  S.A.  de C.V., vs. Mastec, et. al. and Acietel Mexicana, S.A. de
--------------------------------------------------------------------------------
C.V. in the  United  States  District Court, Southern District of Texas, Houston
---
Division,  Case  No.  H-99-1468,  regarding  breach of contract, fraud, tortious
interference  with  contract  and  negligent  misrepresentations  resulting  in
construction  delays  and  alternate  financing  incurring  additional costs and
expenses,  as  well  as  reputation and credibility damages.  This suit has been
filed  in  the  above  district  court  and  is  currently set to go to trial on
September  29,  2000.  The  defendants  have  filed  a  counterclaim  seeking an
unspecified  amount  of  damages  against  the  Company  which  the Company will
vigorously  contest  and  refute.   All  activity has been temporarily stayed in
this  case, as the parties are negotiating and will likely conclude a settlement
agreement.  Even  though we have been advised that we have a strong case against
MasTec,  there  can  be  no  assurance  as  to the successful conclusion to this
matter.

<PAGE>
                                                                SCHEDULE 4.15 TO
                                                                ----------------
                                                     LOAN AND SECURITY AGREEMENT
                                                     ---------------------------

<TABLE>
<CAPTION>
                                              TAXES
                                              -----

<S>   <C>                                                                            <C>
ITEM  DESCRIPTION                                                                    Amount
----  -----------------------------------------------------------------------------  -----------

1     Federal Excise Taxes:  The Company has reached a settlement with the
      IRS regarding  unpaid Federal Excise Taxes.  The liability is as follows:
      Federal Excise Taxes (November 1998 through June 2000 - accrued on             $1,587 ,000
      books)
      Interest at 10% (not accrued on books)                                         $   238,000
      The Company has negotiated a 24 month payment plan, which will begin
      in October 2000.

2     Section 280G payments:
      None

3     Overlook Communications International Corporation has not filed federal
      excise and various state sales and use, gross receipts, universal service
      fund and franchise tax returns related to its conduct of the prepaid calling
      card business during 1997 through August 2000.  The Company has
      received an assessment for Universal Service Fund Fees for
      approximately $2.0 million, which it believes is incorrect and has retained
      Telecom Compliance Services, Inc. ("TCS") to assist in determining the
      correct obligation and negotiating a settlement with the USAC.
      Additionally, the Company has engaged Arthur Andersen to assist the
      Company in determining its liability for the various state and federal taxes
      and facilitating the filing of any required returns.  Arthur Andersen began
      the voluntary disclosure process with the Company's three largest states
      California, Illinois and Florida as well as the IRS for Federal Excise tax.
      Thus far they have been successful in arguing no NEXUS related to the
      prepaid calling card business in California and Illinois and the Company
      has received notification of no liability past or prospective (assuming fact
      patterns remain constant) for the prepaid card business in these states.  A
      voluntary disclosure was filed with the IRS in May 2000 but a response
      has not been received to date.  The Federal Excise tax has been repealed
      and will phase out over a three year period.  As of August 31, 2000, the
      Company had accrued approximately $3.3 million in its Financial
      Statements for these various obligations.

4     As a result of a Georgia State Use tax audit during 1998, Pointe
      Communications Corporation was assessed approximately $85,000 in use
      tax, which has been accrued in the Company's Financial Statement but
      has not yet been paid.

<PAGE>
5     Pointe Communications Corporation has not filed the Texas Franchise
      Tax Return for 1998 for its subsidiary TOPS.  The return will be filed
      pending resolution of a valuation of Telcommute Solutions G.P., Inc.,
      which TOPS dividended to its parent Pointe Communications Corporation.
</TABLE>

<PAGE>
                                                                SCHEDULE 4.16 TO
                                                                ----------------
                                                     LOAN AND SECURITY AGREEMENT
                                                     ---------------------------

The  financial  projections and the financial condition of the Company have been
negatively  affected  by  the  following  events  since  June  30,  2000:

     (i) The Mexican network was expected to be complete and operational  during
     the second  quarter of 2000.  However,  due to delays in  construction  and
     interconnection with Telmex, the network became only partially  operational
     during the third  quarter  and is not  expected  to be  complete  until the
     fourth  quarter  of 2000.  This delay has had a  significant  impact on the
     gross  margins  earned  in the  prepaid  calling  card  and  the  wholesale
     businesses.

     (ii) The completion of the Competitive  Local Exchange  Carrier network and
     marketing of such services was delayed by approximately  one quarter due to
     delay in the completion of the build out and delay in the implementation of
     the Operating Support System necessary to provision customers.

     (iii) The non-CLEC one plus  business in the United  States was closed as a
     result of negative operating results.

     (iv) The Coast Partners litigation was settled for $875,000.

Borrower  acknowledges  that  nothing  in  the disclosures in this Schedule 4.16
shall  be  deemed  to  alter  its  obligations under the Agreement, or limit the
Lender's  rights  and  remedies  under  the  Agreement.

<PAGE>
                                  SCHEDULE 4.25
                         TO LOAN AND SECURITY AGREEMENT

                               UCC FILING OFFICES
                               ------------------

CALIFORNIA

     Secretary  of  State
     Uniform  Commercial  Code  Division
     P.  O.  Box  942835
     Sacramento,  California  94235-0001

FLORIDA

     Bureau  of  Uniform  Commercial  Code
     Department  of  State
     P.  O.  Box  5588
     Tallahassee,  Florida  32314

GEORGIA

     Clerk  of  the  Superior  Court  of  Cobb  County
     P.  O.  Box  3370
     Marietta,  Cobb  County,  Georgia  30061

TEXAS

     Texas  Secretary  of  State
     UCC  Filing/Recording  Office
     P.O.  Box  13697
     Austin,  Texas  78711

NEVADA

     Nevada  Secretary  of  State
     UCC  Filing/Recording  Office
     200  North  Carson  Street
     Carson  City,  Nevada  89701-4201

<PAGE>
                                SCHEDULE  4.26
                         TO LOAN AND SECURITY AGREEMENT

                  PRINCIPAL OFFICES AND LOCATION OF COLLATERAL
                  --------------------------------------------

BORROWER'S  CHIEF  EXECUTIVE  OFFICE:

     Pointe  Communications  Corporation  c/o
     Telscape  International,  Inc.
     1325  Northmeadow  Parkway,  Suite  110
     Roswell,  Georgia  30076

LOCATIONS  OF  COLLATERAL:

     3949  Ruffin  Road,  Suite  E-2
     San  Diego,  California  92123

     11021  Valley  Blvd.
     El  Monte,  California  91731

     444  Brickell  Avenue,  Suite  100
     Miami,  Florida  33131

     1301  Fanning  Street,  Suite  1275
     Houston,  Texas  77002

<PAGE>
                                  SCHEDULE 4.29
                         TO LOAN AND SECURITY AGREEMENT

                                  ASSUMED NAMES
                                  -------------

Pointecom
Telscape  Communications
Telscape  Communications  International

<PAGE>
                                                               SECTION  4.30  TO
                                                                ----------------
                                                     LOAN AND SECURITY AGREEMENT
                                                     ---------------------------

                          TRANSACTIONS WITH AFFILIATES
                          ----------------------------

     On  May  7,  1999,  the  Company  issued  $1,000,000  in senior notes to E.
Scott  Crist,  bearing  interest  at 8% until November 6, 1999.  Thereafter, the
interest  rate  increased  by  1%  for  each  month after November 6, 1999.  The
Company  repaid  $150,000  to  Mr.  Crist  on  August  27,  1999  and 200,000 on
August  2000.  The outstanding balance of the Note due to Mr. Crist at September
29,  2000  is  $650,000.

     On  August 16, 1999, E. Scott Crist issued a Promissory Note to the Company
in  the amount of $95,000, bearing simple interest at an annual rate of 8%.  The
outstanding  balance  of  the  Note  due to the Company at December 31, 1999 was
$97,873,  including  principal  and  accrued  interest.

     On  December  10,  1998,  Manual  Landa  issued  a  Promissory  Note to the
Company  in the amount of $270,000, bearing simple interest at an annual rate of
9%.  The outstanding balance of the Note due to the Company at December 31, 1999
was  $220,336,  including  principal  and  accrued  interest.

     During  1997, the Company entered into a five year operating lease of earth
station  equipment located in Panama, Costa Rica and Nicaragua. Steve Raville is
affiliated  with  one  of the lessors. The lease obligations total approximately
$70,000  per  annum.

<PAGE>
                                                                SCHEDULE 4.31 TO
                                                                ----------------
                                                     LOAN AND SECURITY AGREEMENT
                                                     ---------------------------

                            NORTEL PURCHASE AGREEMENT
                            -------------------------

     Master  Purchase  Agreement  dated  as  of November 2, 1999, between Pointe
Communications  Corporation  and  Nortel  Networks,  Inc.

<PAGE>
                                                                SCHEDULE 6.02 TO
                                                                ----------------
                                                     LOAN AND SECURITY AGREEMENT
                                                     ---------------------------

                               POST-CLOSING ITEMS
                               ------------------

1.   Filing of UCC-1  Financing  Statements  in offices  listed on Schedule 4.25
     within 10 days of the Closing Date.

2.   Filing of UCC-1  Financing  Statements as fixture filings for the locations
     of Collateral listed on Schedule 4.26 within 10 days of the Closing Date.

3.   Delivery to Lender of Certificate of Insurance  satisfying the requirements
     of Section 7.01 within 15 days of Closing.

4.   Delivery to Lender of all post-filing lien searches  reflecting no liens as
     to  Collateral  (other than a  subordinate  lien securing the Lucent Credit
     Agreement) within 45 days of the Closing Date.

5.   Delivery to Lender of all Consents within 60 days of the Closing Date.

6.   Delivery  to  Lender  of an  opinion  of  Regulatory  Counsel  in form  and
     substance satisfactory to Lender within 15 days of the Closing Date.

7.   Receipt of all Required Consents within 60 days of the Closing Date.

The  failure  of  the  Borrower  to  satisfy, or cause the satisfaction of, each
post-closing item listed above within the specified time period shall constitute
an  Event  of  Default.

<PAGE>
                                                                SCHEDULE 7.07 TO
                                                                ----------------
                                                     LOAN AND SECURITY AGREEMENT
                                                     ---------------------------

                                    INSURANCE
                                    ---------

                          [SEE ATTACHED CERTIFICATE(S)]

<PAGE>
                                                                SCHEDULE 8.01 TO
                                                                ----------------
                                                     LOAN AND SECURITY AGREEMENT
                                                     ---------------------------

                         PERMITTED SPECIFIC ENCUMBRANCES
                         -------------------------------

1.   Liens securing  Indebtedness  under the Lucent Credit  Agreement,  provided
     that  any lien on the  Collateral  must be  subordinate  to the Lien on the
     Collateral in favor of Lender.

2.   Liens securing  Indebtedness under the Loan and Security Agreement dated as
     of January 11, 1999 between and among Telscape International, Inc., a Texas
     corporation ("Telscape"),  Domestic and/or Foreign Subsidiaries of Telscape
     which are  signatories to the Schedule of Borrowing  Subsidiaries  attached
     thereto  and  such  additional  Domestic  and/or  Foreign  Subsidiaries  of
     Telscape  which may thereafter  become a party thereto  pursuant to Section
     1(b)  thereof,  and NTFC  Capital  Corporation,  provided  that no lien may
     encumber the Collateral.

3.   Liens securing  Indebtedness under the Loan and Security Agreement dated as
     of December 7, 1998 between and among Telscape International, Inc., a Texas
     corporation ("Telscape"),  Domestic and/or Foreign Subsidiaries of Telscape
     which are  signatories to the Schedule of Borrowing  Subsidiaries  attached
     thereto  and  such  additional  Domestic  and/or  Foreign  Subsidiaries  of
     Telscape  which may thereafter  become a party thereto  pursuant to Section
     1(b)  thereof,  and  Newbridge  Financial  Services,  a unit of GE  Capital
     Corporation, provided that no lien may encumber the Collateral.

4.   Liens securing Indebtedness permitted under Section 8.01(a),  provided that
     no lien may encumber the Collateral.

<PAGE>
                                                                SCHEDULE 8.13 TO
                                                                ----------------
                                                     LOAN AND SECURITY AGREEMENT
                                                     ---------------------------

               RESTRICTIONS ON DIVIDENDS AND RELATED TRANSACTIONS
               --------------------------------------------------

1.   Lucent Credit Agreement.

2.   Loan and Security  Agreement dated as of January 11, 1999 between and among
     Telscape International,  Inc., a Texas corporation  ("Telscape"),  Domestic
     and/or  Foreign  Subsidiaries  of  Telscape  which are  signatories  to the
     Schedule of Borrowing  Subsidiaries  attached  thereto and such  additional
     Domestic  and/or  Foreign  Subsidiaries  of Telscape  which may  thereafter
     become a party thereto  pursuant to Section 1(b) thereof,  and NTFC Capital
     Corporation.

3.   Loan and Security  Agreement dated as of December 7, 1998 between and among
     Telscape International,  Inc., a Texas corporation  ("Telscape"),  Domestic
     and/or  Foreign  Subsidiaries  of  Telscape  which are  signatories  to the
     Schedule of Borrowing  Subsidiaries  attached  thereto and such  additional
     Domestic  and/or  Foreign  Subsidiaries  of Telscape  which may  thereafter
     become a party  thereto  pursuant to Section 1(b)  thereof,  and  Newbridge
     Financial Services, a unit of GE Capital Corporation.

<PAGE>
                                                                       EXHIBIT A
                                                                       ---------
                                                     LOAN AND SECURITY AGREEMENT
                                                     ---------------------------

                                  FORM OF NOTE
                                  ------------

<PAGE>
                                                                       EXHIBIT B
                                                                       ---------
                                                     LOAN AND SECURITY AGREEMENT
                                                     ---------------------------

                          FORM OF BORROWING CERTIFICATE
                          -----------------------------

<PAGE>
                                                                       EXHIBIT C
                                                                       ---------
                                                     LOAN AND SECURITY AGREEMENT
                                                     ---------------------------

                     FORM OF OPINION OF COUNSEL FOR BORROWER
                     ---------------------------------------

<PAGE>
                                                                       EXHIBIT D
                                                                       ---------
                                                     LOAN AND SECURITY AGREEMENT
                                                     ---------------------------

               FORM OF OPINION OF REGULATORY COUNSEL FOR BORROWER
               --------------------------------------------------

<PAGE>
                                                                       EXHIBIT E
                                                                       ---------
                                                     LOAN AND SECURITY AGREEMENT
                                                     ---------------------------

                           FORM OF LANDLORD'S CONSENT
                           --------------------------

<PAGE>
                                                                       EXHIBIT F
                                                                       ---------
                                                     LOAN AND SECURITY AGREEMENT
                                                     ---------------------------

                   FORM OF CERTIFICATE OF FINANCIAL CONDITION
                   ------------------------------------------

<PAGE>
                                                                       EXHIBIT G
                                                                       ---------
                                                     LOAN AND SECURITY AGREEMENT
                                                     ---------------------------

                       FORM OF TELSCAPE GUARANTY AGREEMENT
                       -----------------------------------

<PAGE>
                                                                       EXHIBIT H
                                                                       ---------
                                                     LOAN AND SECURITY AGREEMENT
                                                     ---------------------------

                FORM OF SIGNIFICANT SUBSIDIARY GUARANTY AGREEMENT
                -------------------------------------------------

<PAGE>
                                    EXHIBIT I
                                    ---------
                                                     LOAN AND SECURITY AGREEMENT
                                                     ---------------------------

               FORM OF COLLATERAL ASSIGNMENT OF PURCHASE AGREEMENT
               ---------------------------------------------------

<PAGE>

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