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                                                                    EXHIBIT 10.6

                             MASTER LEASE AGREEMENT

                                                                           NO. 1

         This Master Lease Agreement (the "MLA") is entered into by and between
Ascend Credit Corporation ("Lessor"), having its principal place of business at

1701 Harbor Bay Parkway, Alameda, CA 94502 and BLUESTAR COMMUNICATIONS, INC.
("Lessee"), having its principal place of business at L & C Tower,

24th Floor, 401 Church Street, Nashville, TN 37219

1. LEASE AGREEMENT. Lessor agrees to lease to Lessee, and Lessee agrees to lease
from Lessor, the equipment (the "Equipment") referenced in each of the Schedules
(the "Schedule" or "Schedules") which incorporate this MLA therein (the
"Lease"). So long as no Event of Default has occurred or is continuing, Lessor
agrees to lease to Lessee the groups of Equipment described on each Schedule,
subject the following conditions, which Lessor in its sole discretion may elect
to waive with respect to a Schedule: (i) that in no event shall Lessor be
obligated to lease Equipment to Lessee hereunder where the aggregate purchase of
all Equipment leased to Lessee hereunder would exceed ONE HUNDRED ONE MILLION
DOLLARS ($101,000,000); (ii) the Equipment leased hereunder shall only be
Equipment manufactured by Lessor until such time as Lessor has merged with
Lucent Technologies ("Lucent"), after which equipment leased may be manufactured
by either Lessor or Lucent; (iii) that once aggregate Equipment leased under
this Master Lease reaches TWENTY TWO MILLION DOLLARS ($22,000,000), additional
Equipment leases shall be subject to Lessee meeting one of the following
covenants: (a) Lessee maintains, on a rolling 3 month basis, a 0.5 to 1 ratio of
new equity to total Equipment Leased under this Master Lease AND the Master
Lease dated July 29, 1998 (together the "Combined Leases") or (b) Lessee has a
cash flow (EBITDA) coverage of 1.25 times the total potential Rent payable under
the Combined Leases; (iv) that once aggregate Equipment leased the Combined
Leases reaches FIFTY MILLION DOLLARS ($50,000,000) additional Equipment leases
shall be subject to the Lessee maintaining at least Ten Million Dollars
($10,000,000) in unencumbered cash or cash equivalents on hand at all times: (v)
no change in control (defined as an event or series of events as a result of
which any person on group is or becomes the beneficial owner of shares
representing more than fifty percent (50%) of the combined voting power of the
then outstanding securities entitled to vote generally in elections of Lessee's
directors); (vi) no new Equipment Leases shall be granted after November 30,
2000, and (vii) Advances under this Agreement may be made to subsidiaries of
affiliates under common control of Lessee, provided that Lessee has issued a
continuing guaranty in form and substance acceptable to Lessor, and as of the
date of such advances no Event of Default has occurred and is continuing
hereunder, and BlueStar Communications, Inc. remains in compliance with the
provisions of this paragraph.

2. TERM. Each Lease shall be effective upon the execution of the MLA and the
related Schedule by the Lessor and the Lessee. The lease term (the "Lease Term")
of the Equipment referenced in each of the Schedules shall commence on the rent
commencement date specified in each Schedule (the "Rent Commencement Date"). The
Rent Commencement Date shall be the date 30 days from the date that the
Equipment is shipped by the supplier (the "Ship Date") as evidenced by a
shipping document provided by the supplier related to the Equipment (the
"Shipping Document"). Lessor will provide Lessee with a copy of the Shipping
Document evidencing the Ship Date.

3. RENT. The rent (the "Rent") for the Equipment referenced in any Schedule
shall be as stated in such Schedule and shall be payable according to the
provisions of such Schedule. If any amount payable under a Schedule is not
received by Lessor within 10 days of the due date, Lessee agrees to pay an
Overdue Charge, as defined herein, with respect to such amount.

4. SELECTION AND ASSIGNMENT. Lessee will select the type, quantity and Supplier
(subject to restrictions noted above) of each item of Equipment designated in a
Schedule, and Lessee hereby assigns to Lessor all of its right, title and
interest in and to the related equipment purchase agreement, a copy of which has
been provided to Lessor by Lessee (the "Agreement"). The Agreement may be
amended with the consent of Lessor. Any such assignment with respect to
Equipment shall become binding upon Lessor when Lessor and Lessee have entered
into a Lease with respect to such Equipment and as of the Rent Commencement Date
referenced in such Lease. Upon such an assignment becoming effective, Lessor
shall be obligated to purchase the Equipment from the Supplier in accordance
with the provisions of the Agreement. It is expressly agreed that Lessee shall
at all times remain liable to Supplier under the Agreement to perform all duties
and obligations of Lessee thereunder, except for the obligation to purchase the
Equipment to the extent expressly assumed by the Lessor hereunder, and that the
Lessee shall be entitled to the same rights of the purchaser of the Equipment
under the Agreement, except such right, title and interest in the Equipment
retained exclusively by the Lessor as owner of the Equipment. Lessor shall have
no liability for a Supplier's failure to meet the terms and conditions of the
Agreement.

5. DELIVERY AND INSTALLATION. Lessee shall be responsible for payment of all
transportation, packing, installation, testing and other charges associated with
the delivery, installation or use of any Equipment which are not included in the
Agreement with respect to such Equipment.

6. WARRANTIES. LESSOR MAKES NO REPRESENTATION OR WARRANTY OF ANY KIND, EXPRESS
OR IMPLIED, WITH RESPECT TO ANY OF THE EQUIPMENT, ITS MERCHANTABILITY, OR ITS
FITNESS FOR A PARTICULAR PURPOSE. LESSOR SHALL NOT BE LIABLE TO LESSEE OR ANY
OTHER PERSON FOR DIRECT, INDIRECT, SPECIAL INCIDENTAL OR CONSEQUENTIAL DAMAGES
ARISING FROM LESSEE'S USE OF THE EQUIPMENT, OR FOR DAMAGES BASED ON STRICT OR
ABSOLUTE TORT LIABILITY OR LESSOR'S PASSIVE NEGLIGENCE. LESSEE HEREBY
ACKNOWLEDGES THAT ANY MANUFACTURER'S OR SUPPLIER'S WARRANTIES WITH RESPECT TO
THE EQUIPMENT ARE FOR THE BENEFIT OF BOTH LESSOR AND LESSEE. NOTWITHSTANDING THE
FOREGOING, LESSEE'S OBLIGATIONS TO PAY EACH RENT PAYMENT DUE, OR OTHERWISE
PERFORM ITS OBLIGATIONS, UNDER THIS LEASE ARE ABSOLUTE AND UNCONDITIONAL.

7. TITLE TO AND LOCATION OF EQUIPMENT. Lessor shall retain title to each item of
Equipment, Lessee, at its expense, shall protect Lessor's title and keep the
Equipment free from all claims, liens, encumbrances and legal processes. The
Equipment is personal property and is not to be regarded as part of the real
estate on which it may be situated. If requested by Lessor, Lessee will, at
Lessee's expense, furnish a landlord or mortgagee waiver with respect to the
Equipment. The Equipment shall not be removed from the location specified in the
Schedule without the written consent of Lessor. Lessee shall, upon Lessor's
request, affix and maintain plates, tags or other identifying labels, showing
Lessor's ownership of the Equipment in a prominent position on the Equipment.

8. USE OF EQUIPMENT, INSPECTION AND REPORTS. The use of the Equipment by Lessee
shall conform with all applicable laws, insurance policies, and warranties of
the manufacturer or Supplier of the Equipment. Lessor shall have the right to
inspect the Equipment at the premises where the Equipment is located. Lessee
shall notify Lessor promptly of any claim, liens, encumbrances or legal
processes with respect to the Equipment.

9. FURTHER ASSURANCES. Lessee shall execute and deliver to Lessor such
instruments as Lessor deems necessary for the confirmation of this Lease and
Lessor's rights hereunder. Lessor is authorized to file financing statements
signed only by the Lessor in accordance with the Uniform Commercial Code, or
financing statements signed by Lessor as Lessee's attorney-in-fact. Any such
filing with respect to the Equipment leased pursuant to a true lease shall not
be deemed evidence of any intent to create a security interest under The Uniform
Commercial Code.

10. MAINTENANCE AND REPAIRS. Lessee shall, at its expense, maintain each item of
Equipment in good condition, normal wear and tear excepted. Lessee shall not
make any addition, alteration, or attachment to the Equipment without Lessor's
prior written consent. Lessee shall make no repair, addition, alteration or
attachment to the Equipment which interferes with the normal operation or
maintenance thereof, creates a safety hazard, or might result in the creation of
a mechanic's or materialman's lien.

11. LESSOR'S PERFORMANCE OF LESSEE'S OBLIGATIONS. If Lessee fails to perform any
of its obligations under a Lease, Lessor may perform any act or make any payment
which Lessor deems necessary for the maintenance and preservation of the
Equipment subject thereto and Lessor's title thereto. All sums so paid by Lessor
(together with all related Overdue Charges), and reasonable attorneys' fees
incurred by Lessor in connection therewith, shall be additional rent payable to
Lessor on demand. The performance of any such act or the making of any such
payment by Lessor shall not be deemed a waiver or release of any obligation or
default on the part of Lessee.

12. INDEMNIFACTION. Lessee assumes liability for, and hereby agrees to
indemnify, protect and hold harmless, Lessor, and its agents, employees,
officers, directors, partners and successors and assigns, from and against, all
liabilities, obligations, losses, damages, injuries, claims, demands, penalties,
actions, costs and expenses, including, without limitation, reasonable
attorney's fees, of whatever kind and nature, in contract or in tort, arising
out of the use, condition, operation, ownership, selection, delivery, leasing or
return of any item of Equipment, regardless of when, how and by whom operated,
or any failure on the part of Lessee to perform or comply with any of its
obligations under a Lease, excluding, however, any of the foregoing which result
from the gross negligence or willful misconduct of Lessor. Such indemnities and
assumptions of liabilities and obligations shall continue in full force and
effect, notwithstanding the expiration or other termination of such Lease.
Nothing contained in any Lease shall authorize Lessee to operate the Equipment
subject thereto so as to incur or impose any liability on, or obligation for or
on behalf of, Lessor.

13. NO OFF-SET. All Rents shall be paid by Lessee irrespective of any off-set,
counterclaim, recoupment, defense or other right which Lessee may have against
Lessor, the manufacturer or Supplier of the Equipment or any other party.

14. ASSIGNMENT BY LESSEE. Lessee shall not, without Lessor's prior written
consent, (a) sell, assign, transfer, pledge, hypothecate, or otherwise dispose
of, encumber or suffer to exist a lien upon or against, any of the Equipment or
any lease, any interest therein, by operation of law or otherwise, or (b)
sublease or lend any of the Equipment or permit any of the Equipment to be used
by anyone other than Lessee.

15. ASSIGNMENT BY LESSOR. Lessor may assign, sell or encumber its interest in
any of the Equipment and any Lease. Upon Lessor's written consent, Lessee shall
pay directly to the assignee of any such interest all Rent and other sums due
under an assigned Lease. THE RIGHTS OF ANY SUCH ASSIGNEE SHALL NOT BE SUBJECT TO
ANY ABATEMENT, DEDUCTION, OFF-SET, COUNTERCLAIM, RECOUPMENT, DEFENSE OR OTHER
RIGHT WHICH LESSEE MAY HAVE AGAINST LESSOR OR ANY OTHER PERSON OR ENTITY.
Notwithstanding the foregoing, any such assignment (a) shall be subject to
Lessee's right to possess and use the Equipment subject to a Lease so long as
Lessee is not in default thereunder, and (b) shall not release any of Lessor's
obligations hereunder.

16. RETURN OF EQUIPMENT. Unless Lessee has exercised its option, if any, to
renew a lease or purchase the Equipment subject thereto, upon expiration of the
then current Lease Term of such Lease, Lessee shall, at its expense, cause such
Equipment to be removed, disassembled, and placed in the same condition as when
delivered to Lessee (reasonable wear and tear expected) and properly crate such
Equipment for shipment and deliver it to a common carrier designated by Lessor.
Lessee will ship such Equipment, F.O.B. destination, to any address specified in
writing by Lessor within the continental United States. All additions,
attachments, alterations and repairs made or placed upon any of the Equipment
shall become part of such Equipment and shall be the property of Lessor.

17. EVENTS OF DEFAULT. The occurrence of any of the following shall be deemed to
constitute an Event of Default hereunder: (a) Lessee fails to pay Rent, any
other amount it is obligated to pay under a Lease or any other amount it is
obligated to pay to Lessor and does not cure such failure within 10 days of such
amount becoming due; (b) Lessee fails to perform or observe any obligation or
covenant to be performed or observed by Lessee hereunder or under any Schedule,
including, without limitation, supplying all requested documentation, and does
not cure such failure within 10 days of

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receiving written notice thereof from Lessor; (c) the occurrence and continuance
of any default under any lease or agreement for borrowed money made between
Ascend Communications, Inc. or its affiliates or successors, and the Lessee; (d)
any warranty, representation or statement made or furnished to Lessor by or on
behalf of Lessee is proven to have been false in any material respect when made
or furnished; (e) the attempted sale or encumbrance by Lessee of the Equipment,
or the making of any levy, seizure or attachment thereof or thereon; or (f) the
dissolution, termination of existence, discontinuance of business, insolvency,
or appointment of a receiver of any part of the property of Lessee, assignment
by Lessee for the benefit of creditors, the commencement of proceedings under
any bankruptcy, reorganization or arrangement laws by or against Lessee, or any
other act of bankruptcy on the part of Lessee.

18. REMEDIES OF LESSOR. Any time after the occurrence of any Event of Default,
Lessor may exercise one or more of the following remedies: (a) Lessor may
terminate any or all of the Leases with respect to any or all items of Equipment
subject thereto; (b) Lessor may recover from Lessee all Rent and other amounts
then due and to become due under any or all of the Leases; (c) Lessor may take
possession of any or all items of Equipment, wherever the same may be located,
without demand or notice, without any court order or other process of law and
without liability to Lessee for any damages occasioned by such taking of
possession, and any such taking of possession shall not constitute a termination
of any Lease; (d) Lessor may demand that Lessee return any or all items of
Equipment to Lessor in accordance with Paragraph 16; and (e) Lessor may pursue
any other remedy available at law or in equity, including, without limitation,
seeking damages, specific performance or an injunction.

         Upon repossession or return of any item of the Equipment, Lessor shall
sell, lease or otherwise dispose of such item in a commercially reasonable
manner, with or without notice and on public or private bid, and apply the net
proceeds thereof (after deducting the estimated fair market value of such item
at the expiration of the term of the applicable Lease, in the case of a sale, or
the rents due for any period beyond the scheduled expiration of such Lease, in
the case of any subsequent lease of such item, and all expenses, including,
without limitation, reasonable attorney's fees, incurred in connection
therewith) towards the Rent and other amounts due under such Lease, with any
excess net proceeds to be retained by the Lessor.

         Each of the remedies under this Lease shall be cumulative, and not
exclusive, and in addition to any other remedy referred to herein or otherwise
available to Lessor in law or in equity. Any repossession or subsequent sale or
lease by Lessor of any item of Equipment shall not bar an action for a
deficiency as herein provided, and the bringing of an action or the entry of
judgment against Lessee shall not bar Lessor's right to repossess any or all
items of Equipment.

19. CREDIT AND FINANCIAL INFORMATION. Within 90 days of the close of Lessee's
fiscal years, Lessee shall deliver to Lessor a copy of Lessee's annual report,
if any, and an audited balance sheet and profit and loss statement with respect
to such year. Within 30 days of the close of Lessee's fiscal quarters, Lessee
shall deliver to Lessor a balance sheet and profit and loss statement certified
by an officer of Lessee. Lessee shall deliver any other additional information
regarding historic or projected operating performance that is reasonably
requested by Lessor.

20. INSURANCE. As of the date that risk of loss for the Equipment passes from
the Supplier to the Lessee under the terms of the Agreement, Lessee shall obtain
and maintain through the end of the Lease Term of each Lease (and any renewal or
extension thereof), at its own expense, property damage and personal liability
insurance and insurance against loss or damage to the Equipment, including,
without limitation, loss by fire (with extended coverage), theft and such other
risks of loss as are customarily insured against with respect to the types of
Equipment leased hereunder and by the types of businesses in which such
Equipment will be used by Lessee. Such insurance shall be in such amounts, with
such deductibles, in such form and with such insurers as shall be satisfactory
to Lessor; provided, however, that the amount of the insurance against loss or
damage to the Equipment shall not be less than the greater of the replacement
value of the Equipment, from time to time, or the original purchase price of the
Equipment. Each insurance policy shall name Lessee as an insured and Lessor as
an additional insured or loss payee, and shall contain a clause requiring the
insurer to give Lessor at least 30 days prior written notice of any alteration
in the terms of such policy or of the cancellation thereof. Lessee shall furnish
to Lessor a certificate of insurance or other evidence satisfactory to Lessor
that such insurance coverage is in effect; provided, however, that Lessor shall
be under no duty either to ascertain the existence of or to examine such
insurance policy or to advise Lessee in the event such insurance coverage shall
not comply with the requirements hereof. Lessee shall give Lessor prompt notice
of any damage to, or loss of, any of the Equipment, or any part thereof, or any
personal injury or property damage occasioned by the use of any of the
Equipment.

21. TAXES. Lessee hereby assumes liability for, and shall pay when due, and, on
a net after-tax-basis, shall indemnify, protect and hold harmless Lessor against
all fees, taxes and governmental charges (including, without limitation,
interest and penalties) of any nature imposed on or in any way relating to
Lessor, Lessee, any item of Equipment or any Lease, except state and local taxes
on or measured by Lessor's net income (other than any such tax which is in
substitution for or relieves Lessee from the payment of taxes it would otherwise
be obligated to pay or reimburse to Lessor as herein provided) and federal taxes
on Lessor's net income. Lessee shall, at its expense, file when due with the
appropriate authorities any and all tax and similar returns, and reports
required to be filed with respect thereto, for which it has indemnified Lessor
hereunder or, if requested by Lessor, notify Lessor of all such requirements and
furnish Lessor with all information required for Lessor to effect such filings.
Any fees, taxes or other charges paid by Lessor upon failure of Lessee to make
such payments shall, at Lessor's option, become immediately due from Lessee to
Lessor and shall be subject to the Overdue Charge from the date paid by Lessor
until the date reimbursed by Lessee.

22. SEVERABILITY. If any provision of any Lease is held to be invalid by a court
of a competent jurisdiction, such invalidity shall not affect the other
provisions of such Lease or any provision of any other Lease.

23. NOTICES. All notices hereunder shall be in writing and shall be deemed given
when sent by certified mail, postage prepaid, return receipt requested,
addressed to the party to which it is being sent at its address set forth herein
or to such other address as such party may designate in writing to the other
party.

24. AMENDMENTS, WAIVERS AND EXTENSIONS. This MLA and each Schedule constitute
the entire agreement between Lessor and Lessee with respect to the lease of the
Equipment subject to such Schedule, and supersede all previous communications,
understandings, and agreements, whether oral or written, between the parties
with respect to such subject matter. No provision of any Lease may be changed,
waived, amended or terminated except by a written agreement, specifying such
change, waiver, amendment or termination, signed by both Lessee and Lessor,
except that Lessor may insert, on the appropriate schedule, the serial number of
Equipment, after delivery of such Equipment, and the Rent Commencement Date for
the Equipment. No waiver by Lessor of any Event of Default shall be construed as
a waiver of any future Event of Default or any other Event of Default. At the
expiration of the Lease Term with respect to a Lease, upon notice given by
Lessee at least ninety (90) days prior thereto, (a) such lease shall be renewed
based upon the fair market value of the equipment as of the date of renewal or
the Equipment subject thereto shall be purchased under the terms and conditions
set forth herein for a term and rent amount or purchase price, as the case may
be, to be agreed upon, or (b) if no such agreement is reached prior to the
expiration of such Lease Term or such notice specifies that Lessee intends to
return the Equipment, then Lessee shall return the Equipment to Lessor in the
manner prescribed in Paragraph 16 of this MLA. In the absence of Lessor's timely
receipt of the notice contemplated by the preceding sentence, the Lease shall be
automatically extended, on a month-to-month basis, until terminated (upon notice
by either party given at least ninety (90) days prior to the end of the month on
which the termination is to be effective) or until renewed or the Equipment
subject thereto is purchased by agreement of the parties. Unless otherwise
agreed, Lessee shall continue to pay Rent for each month following such Lease
Term until the Equipment subject to such Lease is returned pursuant to Paragraph
16 of this MLA.

25. CONSTRUCTION. This MLA shall be governed by and construed in accordance with
the internal laws, but not the choice of laws provisions, of the State of
California. The titles of the sections of this MLA are for convenience only and
shall not define or limit any of the terms or provisions hereof. Time is of the
essence in each of the provisions hereof.

26. PARTIES. This MLA shall be binding upon, and inure to the benefit of, the
permitted assigns, representatives and successors of the Lessor and Lessee. If
there is more than one Lessee named in this MLA, the liability of each shall be
joint and several.

27. COUNTERPARTS. Each Lease may be executed in two or more counterparts, each
of which shall be deemed an original and all of which together shall constitute
but one and the same instrument.

28. OVERDUE CHARGE. Overdue Charge shall mean an amount equal to 2% per month of
any payment under a Lease which is past due, including, without limitation, any
amounts not included in any payment of Rent hereunder, or the highest charge
permitted by law, whichever is lower.

The person executing this MLA on behalf of Lessee hereby certifies that he or
she has read, and is duly authorized to execute, this MLA.

Accepted by:

ASCEND CREDIT CORPORATION                 LESSEE:  BLUESTAR COMMUNICATIONS, INC.

BY:    /S/  Michael F. Ashby              BY:    /S/    Fredjoseph Goldner
       ------------------------------            -------------------------------
NAME:  Michael F. Ashby                   NAME:  Fredjoseph Goldner
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                                                             Print

TITLE: CFO                                TITLE: CFO/President
       ------------------------------            -------------------------------
DATE:  8/5/98                             DATE:  7/29/98
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                                                                    EXHIBIT 10.7

                             SECURED PROMISSORY NOTE

$1,000,000

                                                                  August 8, 1998

         FOR VALUE RECEIVED, the undersigned, BLUESTAR COMMUNICATIONS, LLC
("Borrower"), hereby promises to pay to ASCEND COMMUNICATIONS, INC. ("Lender"),
or order, the principal sum or so much of the principal sum of One Million
Dollars ($1,000,000) as may from time to time have been advanced and be
outstanding, together with accrued interest as provided herein.

A.       Working Capital Facility.

         1. Advances. Borrower may at any time and from time to time request
advances from Lender for the purpose of funding Borrower's working capital needs
(individually an "Advance" and collectively the "Advances") by giving written
notice to Lender in accordance with the terms hereof, which notice shall
indicate (i) the amount of the Advance requested, and (ii) the proposed use of
the Advance proceeds. No more than two (2) Advances may be made hereunder.

         In the case of the first Advance requested (the "First Advance"),
Lender shall make such Advance within five (5) days of receipt of Borrower's
notice, provided that each of the following conditions are satisfied or waived
by Lender, in its sole discretion, (i) no Event of Default or Potential Default
is in existence and the First Advance would not cause an Event of Default or
Potential Default to occur, and (ii) Borrower has submitted, and Lender has
accepted, purchase orders for equipment of Lender ("Lender Equipment") with an
aggregate purchase price of not less than Two Million Dollars ($2,000,000), and
has agreed to take delivery of Lender Equipment with an aggregate purchase price
of not less than Four Hundred Thousand Dollars ($400,000) during each calendar
month during the five (5) month period commencing after the date of the First
Advance. The principal amount of the First Advance may not exceed Five Hundred
Thousand Dollars ($500,000).

         In the case of the second Advance requested (the "Second Advance"),
Lender shall make such Advance within five (5) days of receipt of Borrower's
notice, provided that each of the following conditions are satisfied or waived
by Lender, in its sole discretion, (i) no Event of Default or Potential Default
is in existence and the Second Advance would not cause an Event of Default or
Potential Default to occur, (ii) Borrower demonstrates, to Lender's reasonable
satisfaction, that Borrower obtained three (3) revenue generating customers in
the Nashville, Tennessee location by October 1, 1998, (iii) Borrower raised not
less than Five Hundred Thousand Dollars ($500,000) in equity financing from
third parties on terms and conditions that are acceptable to Lender in its good
faith judgment, (iv) Borrower has achieved, no later than March 31, 1999,
revenues of not less than seventy-five percent (75%) of the revenues that
Borrower projected in the Business Plan that it would achieve by December 31,
1998, (v) Borrower has accepted delivery of Lender Equipment in accordance with
clause (ii) of the conditions of the First Advance, and (vi) Borrower has agreed
to accept delivery of equipment sold by Lender

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(A) during the calendar quarter ending March 30, 1999, with an aggregate
purchase price of not less than Two Million Dollars ($2,000,000), (B) during the
calendar quarter ending June 30, 1999, with an aggregate purchase price of not
less than Two Million Dollars ($2,000,000) and (C) during the calendar quarter
ending September 30, 1999, with an aggregate purchase price of not less than
Three Million Dollars ($3,000,000). The Second Advance may not be made before
January 1, 1999, or after June 30, 1999, and the principal amount hereof may not
exceed Five Hundred Thousand Dollars ($500,000).

Borrower shall not have the right to re-borrow an Advance to the extent that it
has been repaid.

         2. Interest.

            (a) Interest Rate. Interest shall accrue with respect to the
principal amount of each Advance at the per annum rate equal to the Prime Rate.
However, if an Event of Default, as defined herein, occurs, then during the
continuance of such Event or Default interest shall accrue at the Default Rate.
Interest payable hereunder with respect to each Advance shall be calculated on
the basis of a three hundred sixty (360) day year for actual days elapsed. Each
change in the Prime Rate shall result in a change in the interest rate with
respect to each Advance as of the date of such Prime Rate change, without any
notice to Borrower.

            (b) Interest Payments. Interest shall be due and payable with
respect to each Advance in arrears on the first day of each calendar month,
commencing with the first (1st) month after the date thereof.

         3. Principal Payments.

            (a) Scheduled Payments.

                (1) First Advance. The principal indebtedness of the First
Advance shall be payable in thirty (30) monthly installments, based on a three
(3) year amortization schedule for a thirty (30) month term, with the first
installment due on the first day of the seventh (7th) calendar month commencing
after the date of the First Advance. All principal outstanding and interest
accrued but unpaid with respect to the First Advance shall be due and payable as
the thirtieth (30th) installment.

                (2) Second Advance. The principal indebtedness of the Second
Advance shall be payable in twenty-four (24) monthly installments, based on a
three (3) year amortization schedule for a twenty-four (24) month term, with the
first installment due on the first day of the seventh (7th) calendar month
commencing after the date of the Second Advance. All interest accrued but unpaid
with respect to the Second Advance shall be due and payable with the
twenty-fourth (24th) principal installment.

            (b) Mandatory Prepayment. The principal indebtedness and all accrued
but unpaid interest with respect to the Advances shall become immediately due

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and payable, without demand or any notice by Lender, on the date of the first to
occur of (i) the date on which Borrower receives the proceeds raised on the IPO
or (ii) the date of a Change of Control.

         4. General Payment Provisions.

            (a) Optional Prepayment. Borrower shall have the right at any time
and from time to time to prepay, in whole or in part, the principal of the
Advances, without payment of any premium or penalty. Any principal prepayment
shall be accompanied by a payment of all interest accrued on the amount prepaid
through the date of such prepayment.

            (b) Form of Payment. Principal and interest and all other amounts
due under with respect to the Advances are to be paid in lawful money of the
United States of America in federal or other immediately available funds.

B.       Covenants.

         1. Insurance. Borrower, at its expense and with such companies as are
reasonably acceptable to Lender, shall maintain liability insurance and fire,
theft and other hazard insurance which covers the Collateral, which insurance
shall be in such amounts as are ordinarily carried by other owners in similar
businesses conducted in the locations where Borrower's business is conducted on
the date hereof. All such liability insurance policies shall show Lender as an
additional insured or loss payee, as applicable, and shall specify that the
insurer must give at least thirty (30) days' notice to Lender before canceling
its policy for any reason, Borrower, upon Lender's request, shall deliver to
Lender certified copies of such policies of insurance and evidence of the
payments of all premiums therefor.

         2. Financial Information. Borrower shall deliver to Lender:

            (a) as soon as practicable after the end of each calendar month, and
in any event within thirty (30) days thereafter, an unaudited balance sheet of
Borrower as of the end of such month, cash flow statements and an unaudited
statement of operations of Borrower for the portion of the Fiscal Year ended
with such month prepared and certified by the chief financial officer of
Borrower, subject, however, to the exclusion of footnotes and to normal year-end
audit adjustments, and a comparison of such statements to Borrower's operating
plan or budget then in effect;

            (b) as soon as practicable after the end of each Fiscal Year, and in
any event within ninety (90) days thereafter, a copy of its audited financial
statements accompanied by a report thereon by a firm of independent certified
public accountants selected by Borrower, which report shall state that such
financial statements fairly present Borrower's financial position at the end of
such Fiscal Year;

                                       3

<PAGE>   4

            (c) as soon as available, and in any event prior to the commencement
of each Fiscal Year, a budget and business plan for Borrower for such Fiscal
Year;

            (d) promptly upon their becoming available, one copy of each report,
notice or proxy statement sent by Borrower to its shareholders generally and of
each regular or periodic report or registration statement, prospectus or written
communication (other than transmittal letters) filed by Borrower with the
Securities and Exchange Commission or any securities exchange on which
Borrower's securities are listed; and

            (e) with reasonable promptness, such other information as from time
to time may be reasonable requested by Lender.

         3. Board Observation Rights. During the term hereof, Borrower shall
permit one (1) representative of Lender to attend all meetings of the Board of
Directors of Borrower and of the committees thereof.

C.       Security Interest.

         1. Grant of Security Interest. Borrower grants to Lender a security
interest in the Collateral, as defined herein, to secure the payment of all of
the indebtedness hereunder (the "Secured Obligations").

         2. Representations and Warranties Regarding Collateral. Borrower
represents and warrants to Lender that Borrower is the true and lawful owner of
the Collateral, having good and marketable title thereto, free and clear of any
and all Liens other than the Lien and security interest granted to Lender
hereunder and Permitted Liens as described in Attachment"A" hereto. Borrower
shall not create or assume or permit to exist any such Lien on or against any of
the Collateral except as created or permitted by this Note and Permitted Liens,
and Borrower shall promptly notify Lender of any such other Lien against the
Collateral and shall defend the Collateral against, and take all such action as
may be necessary to remove or discharge, any such Lien.

         3. Perfection of Security Interest. Borrower agrees to take all actions
requested by Lender and reasonable necessary to perfect, to continue the
perfection of, and to otherwise give notice of, the Lien granted hereunder,
including, but not limited to, execution of financing statements.

D.       Events of Default.

         1. Definition of Event of Default. The occurrence of any one or more of
the following events shall constitute an "Event of Default" hereunder:

               (i) Borrower's breach of the obligation to pay any amount payable
hereunder on the date that it is due and payable;

                                       4
<PAGE>   5

               (ii) Borrower's breach of the covenant with respect to the use of
the Advance proceeds or of the covenant with respect to acquisition of equipment
exclusively from Lender;

               (iii) Borrower's commencement of an Insolvency Proceeding, or
Borrower's consent to the commencement of an Insolvency Proceeding or Borrower's
failure to have an Insolvency Proceeding commenced against it dismissed within
sixty (60) days;

               (iv) the loss, theft, damage or destruction of, or sale (other
than in the ordinary course of business), lease or furnishing under a contract
of service of, any of the Collateral to the extent that such Collateral is not
replaced by like Collateral as covered by insurance or otherwise;

               (v) the creation (whether voluntary or involuntary) of, or any
attempt to create, any Lien upon any of the Collateral, other than the Permitted
Liens, or the making or attempt to make any levy, seizure or attachment thereof
and such Lien, levy, seizure, or attachment has not been removed, discharged or
rescinded with ten (10) days;

               (vi) lease, including the Equipment Lease Agreement, or agreement
for borrowed money that gives the lessor or the creditor of such indebtedness,
as applicable, the right to accelerate the lease payments or the indebtedness,
as applicable, or the right to exercise any rights or remedies with respect to
any of the Collateral; or

               (vii) the entry of any judgment or order against Borrower which
remains unsatisfied or undischarged and in effect for thirty (30) days after
such entry without a stay of enforcement or execution.

         2. Rights and Remedies on Event of Default.

            (a) During the continuance of an Event of Default, Lender shall have
the right, itself or through any of its agents, with or without notice to
Borrower (as provided below), as to any or all of the Collateral, by any
available judicial procedure, or without judicial process (provided, however,
that it is in compliance with the UCC), to exercise any and all rights afforded
to a secured party under the UCC or other applicable law. Without limiting the
generality of the foregoing. Lender shall have the right to sell or otherwise
dispose of all or any part of the Collateral, either at public or private sale,
in lots or in bulk, for cash or for credit, with or without warranties or
representations, and upon such terms and conditions, all as Lender, in its sole
discretion, may deem advisable, and it shall have the right to purchase at any
such sale. Borrower agrees that a notice sent at least fifteen (15) days before
the time of any intended public sale or of the time after which any private sale
or other disposition of the Collateral is to be made shall be reasonable notice
of such sale or other disposition. The proceeds of any such sale, or

                                       5
<PAGE>   6

other Collateral disposition shall be applied, first to the expenses of
retaking, holding, storing, processing and preparing for sale, selling, and the
like, and to Lender's reasonable attorneys' fees and legal expenses, and then to
the Secured Obligations and to the payment of any other amounts required by
applicable law, after which Lender shall account to Borrower for any surplus
proceeds. If, upon the sale or other disposition of the Collateral, the proceeds
thereof are insufficient to pay all amounts to which Lender is legally entitled,
Borrower shall be liable for the deficiency, together with interest thereon at
the Default Rate, and the reasonable fees of any attorneys Lender's employs to
collect such deficiency; provided, however, that the foregoing shall not be
deemed to require Lender to resort to or initiate proceedings against Lender
arising out of the retention or sale or lease of the Collateral or other
exercise of Lender's rights and remedies with respect thereto.

            (b) To the extent permitted by law, Borrower covenants that it will
not at any time insist upon or plead, or in any manner whatever claim or take
any benefit or advantage of, any stay or extension law now or at any time
hereafter in force, nor claim, take or insist upon any benefit or advantage of
or from any law now or hereafter in force providing for the valuation or
appraisal of the Collateral or any part thereof, prior to any sale or sales
thereof to be made pursuant to any provision herein contained, or the decree,
judgment or order of any court of competent jurisdiction; or, after such sale or
sales, claim or exercise any right under any statute now or hereafter made or
enacted by any state or otherwise to redeem the property so sold or any part
thereof, and, to the full extent legally permitted, hereby expressly waives all
benefit and advantage of any such law or laws, and covenants that it will not
invoke or utilize any such law or laws or otherwise hinder, delay or impede the
execution of any power herein granted and delegated to Lender, but will suffer
and permit the execution of every such power as though no such power, law or
laws had been made or enacted.

            (c) Any sale, whether under any power of sale hereby given or by
virtue of judicial proceedings, shall operate to divest all Borrower's right,
title, interest, claim and demand whatsoever, either at law or in equity, in and
to the Collateral sold, and shall be a perpetual bar, both at law and in equity,
against Borrower, its successors and assigns, and against all persons and
entities claiming the Collateral sold or any part thereof under, by or through
Borrower, its successors or assigns.

            (d) Borrower appoints Lender, and any officer, employee or agent of
Lender, with full power of substitution, as Borrower's true and lawful
attorney-in-fact, effective as of the date hereof, with power, in its own name
or in the name of Borrower, during the continuance of an Event of Default, to
endorse any notes, checks, drafts, money orders, or other instruments of payment
in respect of the Collateral that may come into Lender's possession, to sign and
endorse any drafts against debtors, assignments, verifications and notices in
connection with accounts, and other documents relating to Collateral; to pay or
discharge taxes or Liens at any time levied or placed on or threatened against
the Collateral; to demand, collect, issue receipt for, compromise, settle and
sue for monies due in respect of the Collateral; to notify persons and entities

                                       6

<PAGE>   7

obligated with respect to the Collateral to make payments directly to Lender;
and, generally, to do, at Lender's option and at Borrower's expense, at any
time, or from time to time, all acts and things which Lender deems necessary to
protect, preserve and realize upon the Collateral and Lender's security interest
therein to effect the intent of this Note, all as fully and effectually as
Borrower might or could do; and Borrower hereby ratifies all that said attorney
shall lawfully do or cause to be done by virtue hereof. This power of attorney
shall be irrevocable as long as any of the Secured Obligations are outstanding.

            (e) All of Lender's rights and remedies with respect to the
Collateral, whether established hereby or by any other agreements, instruments
or documents or by law shall be cumulative and may be exercised singly or
concurrently.

E.       Other Provisions.

         1. Definitions. As used herein, the following terms shall have the
following meanings:

            "Change of Control" means an event or series of events as a result
of which (i) any person or group is or becomes the beneficial owner of shares
representing more than fifty percent (50%) of the combined voting power of the
then outstanding membership units or other securities entitled to vote generally
in elections of Borrower's directors (the "Voting Stock"), (ii) other than in
connection with its conversion to a corporation, Borrower consolidates with or
merges into any other entity, or conveys, transfers or leases all or
substantially all of its assets to any person, or any other entity merges into
Borrower, and, in the case of any such transaction, Borrower's outstanding
membership units or other securities are changed or exchanged as a result,
unless the Borrower's members or shareholders immediately before such
transaction own, directly or indirectly, immediately following such transaction,
at least fifty-one percent (51%) of the combined voting power of the outstanding
voting securities of the entity resulting from such transaction in substantially
the same proportion as their ownership of the Voting Stock immediately before
such transaction, or (iii) Continuing Directors do not constitute a majority of
the Board of Directors of Borrower (or, if applicable, Borrower's successor).

            "Collateral" means all of Borrower's right, title and interest in
each and all of the following, whether now existing or owned hereafter created
or acquired by Borrower:

                  a. All goods and equipment, including, without limitation, all
machinery, fixtures, vehicles (including motor vehicles and trailers), and any
interest in any of the foregoing, and all attachments, accessories, accessions,
replacements, substitutions, additions, and improvements to any of the
foregoing, wherever located, financed by Lender hereunder or under the Equipment
Lease Agreement; and

                  b. All claims, rights and interests in any of the above and,
all substitutions for, additions and accessions to and proceeds thereof.

                                       7
<PAGE>   8

            "Continuing Directors" means at any date a member of Borrower's
Board of Directors (i) who was a member of the Board as of the date hereof, or
(ii) who was nominated or elected by at least a majority of the directors who
were Continuing Directors at the time of such nomination or election or whose
election to the Board was recommended or endorsed by at least a majority of the
directors who were Continuing Directors at the time of such nomination or
election.

            "Equipment Lease Agreement" means the Master Lease Agreement, dated
as of the date hereof, between Borrower and Lender.

            "Fiscal Year" means the fiscal year of Borrower.

            "Insolvency Proceeding" means any proceeding commenced by or against
Borrower under any provision of the United States Bankruptcy Code, as amended,
or under any other bankruptcy or insolvency law, including assignments or the
benefit of creditors, formal or informal moratoria, compositions, extensions
generally with its creditors, or proceedings seeking reorganization, arrangement
or other relief.

            "IPO" means the first sale of Borrower's securities to the public
pursuant to a registration statement under the Securities Act of 1933, as
amended, in which the gross proceeds to Borrower, without reduction for selling
commissions or expenses of the sale equals of exceeds Ten Million Dollars
($10,000,000).

            "Lien" means any lien (statutory or other), mortgage, pledge,
hypothecation, assignment, deposit arrangement, security interest, charge, claim
or other encumbrance of any kind (including any conditional sale or other title
retention agreement, any lease in the nature thereof, and any agreement to give
any security interest) and any agreement to give or refrain from giving a lien,
mortgage, pledge, hypothecation, assignment, deposit arrangement, security
interest, charge, claim or other encumbrance of any kind.

            Permitted Liens" means: (i) Liens imposed by law, such as carrier's,
warehousemen's, materialmen's and mechanics' liens, or Liens arising out of
judgments or awards against Borrower with respect to which Borrower at the time
shall currently be prosecuting an appeal or proceedings for review; (ii) Liens
for taxes not yet subject to penalties for nonpayment and Liens for taxes the
payment of which is being contested in good faith and by appropriate proceedings
and for which, to the extent required by generally accepted accounting
principles then in effect, proper and adequate book reserves relating thereto
are established by Borrower; and (iii) Liens described in Attachment "A" hereto.

            "Potential Default" means any event or condition that with the
passage of time, the giving of notice or both would constitute an Event of
Default.

                                       8
<PAGE>   9

            "Prime Rate" means as of any date the per annum rate equal to the
"Prime Rate" as listed in The Wall Street Journal Money Rates report as of the
last day of the calendar month preceding such date.

            "UCC" means the Uniform Commercial Code in effect from time to
time in the relevant jurisdiction.

         2. Governing Law; Venue. This Note shall be governed by the laws of the
State of California, without giving effect to conflicts of law principles.
Borrower and Lender agree that all actions or proceedings arising in connection
with this Note shall be tried and litigated only in the state and federal courts
located in the County of Alameda, State of California or, at Lender's option,
any court in which Lender determines it is necessary or appropriate to initiate
legal or equitable proceedings in order to exercise, preserve, protect or defend
any of its rights and remedies under this Note or otherwise or to exercise,
preserve, protect or defend its Lien, and the priority thereof, against the
Collateral, and which has subject matter jurisdiction over the matter in
controversy. Borrower waives any right it may have to assert the doctrine of
forum non conviens or to object to such venue, and consents to any court ordered
relief. Borrower waives personal service of process and agrees that a summons
and complaint commencing an action or proceeding in any such court shall be
promptly served and shall confer personal jurisdiction if served by registered
or certified mail to Borrower. If Borrower fails to appear or answer any
summons, complaint, process or papers so served within thirty (30) days after
the mailing or other service thereof, it shall be deemed in default and an order
of judgment may be entered against it as demanded or prayed for in such summons,
complaint, process or papers. The choice of forum set forth herein shall not be
deemed to preclude the enforcement of any judgment obtained in such forum, or
the taking of any action under this Note to enforce the same, in any appropriate
jurisdiction.

         3. Notices. Any notice or communication required or desired to be
served, given or delivered hereunder shall be in the form and manner specified
below, and shall be addressed to the party to be notified as follows:

         If to Lender:      Ascend Communications, Inc.
                            1701 Harbor Bay Parkway
                            Alameda, California 94502
                            Attention: Fran Jewels, Esq.
                            Telecopier: (501) 747-2638

         If to Borrower     BlueStar Communications, LLC
                            131 Second Avenue North, Suite 500
                            Nashville, Tennessee 37201
                            Attention: Fredjoseph Goldner
                            Telecopier: (615-255-2102)

                                       9
<PAGE>   10

         With a Copy to:    Wyatt, Tarrant & Combs
                            511 Union Street, Suite 1500
                            Nashville, Tennessee 37219
                            Attention: Andrew M. Morin
                            Telecopier: (615) 256-1726

            or to such other address as each party designates to the other by
notice in the manner herein prescribed. Notice shall be deemed given hereunder
if (i) delivered personally or otherwise actually received, (ii) sent by
overnight delivery service, (iii) mailed by first-class United States mail,
postage prepaid, registered or certified, with return receipt requested, or (iv)
sent via telecopy machine with a duplicate signed copy sent on the same day as
provided in clause (ii) above. Notice mailed as provided in clause (iii) above
shall be effective upon the expiration of three (3) business days after its
deposit in the United States mail, and notice telecopied as provided in clause
(iv) above shall be effective upon receipt of such telecopy if the duplicate
signed copy is sent under clause (ii) above. Notice given in any other manner
described in this section shall be effective upon receipt by the addressee
thereof; provided, however, that if any notice is tendered to an addressee and
delivery thereof is refused by such addressee, such notice shall be effective
upon such tender unless expressly set forth in such notice

         4. Lender's Rights; Borrower Waivers. Lender's acceptance of partial or
delinquent payment from Borrower hereunder, or Lender's failure to exercise any
right hereunder, shall not constitute a waiver of any obligation of Borrower
hereunder, or any right of Lender hereunder, and shall not affect in any way the
right to require full performance at any time thereafter. Except as otherwise
specifically provided herein, Borrower waives presentment, diligence, demand of
payment, notice, protest and all other demands and notices in connection with
the delivery, acceptance, performance, default or enforcement of this Note. In
any action on this Note. Lender need not produce or file the original of this
Note, but need only file a photocopy of this Note certified by Lender be a true
and correct copy of this Note in all material respects.

         5. Enforcement Costs. Borrower shall pay all costs and expenses,
including, without limitation, reasonable attorneys' fees and expenses Lender
expends or incurs in connection with the enforcement of this Note, the
collection of any sums due hereunder, any actions for declaratory relief in any
way related to this Note, or the protection or preservation of any rights of the
holder hereunder.

         6. Severability. Whenever possible each provision of this Note shall be
interpreted in such manner as to be effective and valid under applicable law,
but if any provision is prohibited by or invalid under applicable law, it shall
be ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of the provision or the remaining provisions of this
Note.

                                       10
<PAGE>   11

         7. Amendment Provisions. This Note may not be amended or modified, nor
many of its terms be waived, except by written instruments signed by Borrower
and Lender.

         8. Binding Effect. This Note shall be binding upon, and shall inure to
the benefit of, Borrower and the holder hereof and their respective successors
and assigns; provided, however, that Borrower's rights and obligations shall not
be assigned or delegated without Lender's prior written consent, given in its
sole discretion, and any purported assignment or delegation without such consent
shall be void ab initio.

         9. Time of Essence. Time is of the essence of each and every provision
of this Note.

         10. Headings. Section headings used in this Note have been set forth
herein for convenience of reference only. Unless the contrary is compelled by
the context, everything contained in each section hereof applies equally to this
entire Note.

                                         BLUESTAR COMMUNICATIONS, LLC

                                         By: /s/ Fredjoseph Goldner
                                             ----------------------------------

REVIEWED AND AGREED TO:

ASCEND COMMUNICATIONS, INC.

By: /s/ Michael F. Ashby
   --------------------------

                                       11

<PAGE>   12

                                 ATTACHMENT "A"
                                       TO
                             SECURED PROMISSORY NOTE
                                       BY
                          BLUESTAR COMMUNICATIONS, LLC

                                 PERMITTED LIENS

None.

                                       12

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