Document:

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                                                                    EXHIBIT 10.4

                                STOCK RESTRICTION
                          AND SPECIAL PAYMENT AGREEMENT
                               FREDJOSEPH GOLDNER

         This Stock Restriction and Special Payment Agreement (this
"Agreement"), dated as of March 17, 1999, is by and between BlueStar Properties,
Inc., a Tennessee corporation (the "Company"), with its principal executive
offices at 131 Second Avenue North, Nashville, Tennessee 37201, and Fredjoseph
Goldner (the "Stockholder"), an individual residing at 912 Gale Lane, Nashville,
Tennessee 37204.

         The Company proposes to enter into a Series A Preferred Stock Purchase
Agreement with certain investors, of even date herewith (the "Series A Purchase
Agreement"), pursuant to which such investors will purchase certain securities
from the Company. The execution and delivery of this Agreement by the Company
and the Stockholder is a condition precedent to the transactions contemplated by
the Series A Purchase Agreement, which the Company and the Stockholder believe
will benefit the Company and will also benefit the Stockholder, in his capacity
as a stockholder of the Company.

         Accordingly, to induce the Company and the proposed investors to enter
into and consummate the transactions contemplated by the Series A Purchase
Agreement, the Company and the Stockholder agree as follows:

         1. REPURCHASE RIGHTS OF THE COMPANY. The Stockholder currently holds an
aggregate of 1,642,500 shares (including any shares issued in respect thereof by
reason of any stock dividend, stock split, recapitalization, or other similar
event affecting such shares occurring after the date hereof) (the "Total
Shares") of the Company's Common Stock, $0.01 par value per share ("Common
Stock"). The Stockholder hereby grants to the Company certain repurchase rights
with respect to 65% of the Total Shares (i.e., 1,067,625 shares of Common Stock)
(the "Restricted Shares"), as set forth in this Section 1.

         (A) ESCROW. To ensure the availability for delivery of the
Stockholder's Repurchasable Shares (as defined below in Section 1(c) hereof)
upon repurchase by the Company pursuant to the Repurchase Option (as defined
below in Section 1(b) hereof), the Stockholder shall, upon execution of this
Agreement, deliver and deposit with the corporate secretary of the Company as
escrow agent (the "Escrow Holder") the share certificate(s) representing the
Repurchasable Shares, together with a stock assignment duly endorsed in blank,
in the form attached hereto as Exhibit A-1. The Repurchasable Shares and stock
assignment shall be held by the Escrow Holder, pursuant to the Joint Escrow
Instructions of the Company and Stockholder in the form attached hereto as
Exhibit A-2, until such time as the number of Repurchasable Shares is zero. [As
a further condition to the Company's obligations under this Agreement, the
Company may require the spouse of Stockholder, if any, to execute and deliver to
the Company a Consent of Spouse in the form attached hereto as Exhibit A-3.]

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             Subject to the terms hereof, the Stockholder shall have all the
rights of a shareholder with respect to the Restricted Shares while they are
held in escrow, including without limitation, the right to vote the Restricted
Shares and to receive any cash dividends declared thereon. If, from time to time
during the period of time in which there are Repurchasable Shares, there is (i)
any stock dividend, stock split, combination of shares or other similar event
affecting the Restricted Shares, or (ii) any merger or sale of all or
substantially all of the assets or other acquisition of the Company, any and all
new, substituted or additional securities to which the Stockholder is entitled
by reason of the Stockholder's ownership of the Restricted Shares shall be
immediately subject to this escrow, deposited with the Escrow Holder and
included thereafter as "Restricted Shares," "Repurchasable Shares" and
"Non-Repurchasable Shares," as the case may be and as applicable, for purposes
of this Agreement and the Repurchase Option.

         (B) RIGHT TO REPURCHASE RESTRICTED SHARES. Following termination of the
Stockholder's employment with the Company, the Company will have the right and
option (the "Repurchase Option"), but not the obligation, to repurchase all or
any portion of the Repurchasable Shares (as defined in Section 1(c) hereof), at
a purchase price per Share equal to $0.147. The Stockholder will not sell,
pledge, or otherwise transfer any Repurchasable Shares or any interest therein,
and all certificates representing Repurchasable Shares will bear appropriate
restrictive legends referring to the restrictions on transfer and repurchase
rights of the Company under this Agreement.

          (C) NON-REPURCHASABLE SHARES. For purposes of this Agreement, and
subject to the following provisions, 2.0833% of the Restricted Shares will
become "Non-Repurchasable Shares" on the last day of each calendar month
beginning with April 1999, provided, in each case, that as of the relevant date
the Stockholder remains employed by the Company. All Restricted Shares that are
not Non-Repurchasable Shares as of any particular time of reference are referred
to in this Agreement as "Repurchasable Shares."

In addition to the foregoing: (1) in the event of a Business Combination, as
defined below, the greater of (a) 50% of the then remaining Repurchasable
Shares or (b) 25% of the Restricted Shares, will automatically and without
further action become Non-Repurchasable Shares; and (2) in addition to the
provision of the foregoing clause (1), in the event of an involuntary
termination of the Stockholder's employment with the Company for any reason or
no reason other than for Cause (as defined below), then 266,907 Shares of the
Restricted Shares will automatically and without further action become
Non-Repurchasable Shares.

         For purposes of this Section 1, "Business Combination" shall mean (i)
the sale, lease or exchange (for cash, shares of stock, securities or other
consideration) of all or substantially all the property and assets of the
Company or (ii) the merger or consolidation of the Company into or with any
other corporation or entity or the merger or consolidation of any other
corporation into or with the Company (except for a merger or consolidation in
which the holders of the voting capital stock of

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the Company hold more than 50% of the voting rights of the surviving entity).
For purposes of this Section 1 and Section 2 below, an involuntary termination
of employment shall include a reduction in the authorities, duties or
responsibilities of the Stockholder to a level significantly below his then
existing authorities, duties or responsibilities. A termination shall be for
"Cause" if the Board of Directors of the Company shall determine in good faith
that any one or more of the following has occurred: (i) the Stockholder shall
have committed a material act of theft, dishonesty, gross dereliction of duty,
fraud, embezzlement, misappropriation, or material breach of fiduciary duty
against the Company, or has committed any other act of grave misconduct against
the Company, or (ii) the Stockholder shall have been convicted by a court of
competent jurisdiction of, or pleaded guilty or nolo contendere to, any felony
or any crime involving moral turpitude or dishonesty.

         (D) EXERCISE OF REPURCHASE RIGHTS. The Company may exercise its
repurchase rights under this Section 1 by giving written notice (a "Repurchase
Notice") to the Stockholder and the Escrow Holder, specifying the number of
Repurchasable Shares that the Company desires to repurchase and setting a date
(not later than 30 days after the date of such Repurchase Notice) for the
closing of such repurchase. A Repurchase Notice may be given at any time within
90 days following the date of termination of the Stockholder's employment
hereunder, whereupon, if such time period for giving such Repurchase Notice
shall lapse without the Company having given such Repurchase Notice, the
Repurchase Option shall automatically expire.

         Upon the giving of a Repurchase Notice, the Stockholder will be
obligated to sell to the Company, and the Company will be obligated to purchase,
the number of Repurchasable Shares specified in the Repurchase Notice, with the
closing of the purchase and sale to take place at the principal office of the
Company or its counsel on the date specified in the Repurchase Notice. At the
closing, the Escrow Holder will deliver to the Company the certificates
representing the Repurchasable Shares to be repurchased, together with duly
executed stock powers sufficient effectively to transfer ownership of such
Repurchasable Shares to the Company, free and clear of all liens, security
interests, and other encumbrances, and the Company will pay for such
Repurchasable Shares by check or wire transfer (and will issue to the
Stockholder a new stock certificate representing any Restricted Shares
represented by the certificate delivered to the Company that are not repurchased
by the Company). In the event that the Company fails to give a Repurchase Notice
or if the Repurchase Option expires unexercised, all of the then Repurchasable
Shares shall automatically and without further action become Non-Repurchasable
Shares.

         2. SPECIAL PAYMENT/EFFECT OF TERMINATION. In the event that at any time
the Stockholder's employment with the Company is terminated for any reason or no
reason other than for Cause, the Company shall pay to the Stockholder (a) within
fourteen (14) days after the effective date of such termination, a cash payment
equal to six months' of such Stockholder's then base salary, plus (b) such
Stockholder's pro rata portion (based upon the number of days actually worked by
such Stockholder) of any bonus pursuant to any such then existing bonus plan or
arrangements.

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         3. "LOCK-UP" AGREEMENT. The Stockholder agrees that if the Company at
any time or from time to time deems it necessary or desirable to make any
registered public offering(s) of shares of Common Stock, then upon the Company's
request, the Stockholder will not sell, make any short sale of, loan, grant any
option for the purchase of, pledge, or otherwise encumber or otherwise dispose
of any of the Restricted Shares during such period (not to exceed 180 days)
commencing on the effective date of the registration statement relating to any
such offering as the Company may request, except with the prior written consent
of the Company. The Stockholder agrees that he will enter into an agreement with
the Company's underwriters for a registered public offering if requested by such
underwriter, with respect to the foregoing agreements in this Section 3 and on
customary terms and conditions.

         4. NO ASSIGNMENTS; BENEFITS OF AGREEMENT. Neither party will assign any
rights or delegate any obligations hereunder without the consent of the other
party (except that the Company may assign its rights and delegate its
obligations hereunder to any successor to its business, whether by merger or
consolidation, sale of stock or of all or substantially all of assets, or
otherwise), and any attempt to do so will be void. This Agreement will bind and
inure to the benefit of the parties hereto and their respective heirs,
successors, and permitted assigns.

         5. NO THIRD-PARTY BENEFICIARIES. Nothing in this Agreement is intended
to or will confer any rights or remedies on any Person other than the parties
hereto, their respective heirs, successors, and permitted assigns.

         6. NOTICES. All notices, requests, payments, instructions, or other
documents to be given hereunder will be in writing or by written
telecommunication, and will be deemed to have been duly given if (i) delivered
personally (effective upon delivery), (ii) mailed by registered or certified
mail, return receipt requested, postage prepaid (effective three business days
after dispatch), (iii) sent by a reputable, established courier service that
guarantees next business day delivery (effective the next business day), or (iv)
sent by telecopier followed within 24 hours by confirmation by one of the
foregoing methods (effective upon receipt of the telecopy in complete, readable
form), addressed to the recipient party at his or its address set forth in the
first paragraph hereof (or to such other address as the recipient party may have
furnished to the sending party for the purpose pursuant to this section).

         7. COUNTERPARTS. This Agreement may be executed by the parties in
separate counterparts, each of which when so executed and delivered will be an
original, but all of which together will constitute one and the same agreement.
In pleading or proving this Agreement, it will not be necessary to produce or
account for more than one such counterpart.

         8. CAPTIONS. The captions of sections or subsections of this Agreement
are for reference only and will not affect the interpretation or construction of
this Agreement.

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         9. CONSTRUCTION. The language used in this Agreement is the language
chosen by the parties to express their mutual intent, and no rule of strict
construction will be applied against either party.

         10. WAIVERS; AMENDMENTS. No waiver of any breach or default hereunder
will be valid unless in a writing signed by the waiving party. No failure or
other delay by any party exercising any right, power, or privilege hereunder
will be or operate as a waiver thereof, nor will any single or partial exercise
thereof preclude any other or further exercise thereof or the exercise of any
other right, power, or privilege. This Agreement may be amended only with the
prior written consent of the parties hereto.

         11. ENTIRE AGREEMENT. This Agreement contains the entire understanding
and agreement between the parties, and supersedes any and all prior and/or
contemporaneous understandings or agreements between them, with respect to the
subject matter hereof.

         12. EQUITABLE RELIEF. The Stockholder acknowledges that any breach by
him of his obligations under this Agreement would cause substantial and
irreparable damage to the Company, and that money damages would be an inadequate
remedy therefor. Accordingly, the Stockholder agrees that the Company will be
entitled to an injunction, specific performance, and/or other equitable relief
to prevent the breach of such obligations.

         13. GOVERNING LAW. This Agreement will be governed by and interpreted
and construed in accordance with the internal laws of the State of Tennessee
(without reference to principles of conflicts or choice of law).

         14. LEGENDS. The share certificate evidencing the Restricted Shares, if
any, shall be endorsed with the following legend (in addition to any legend
required under applicable state securities laws):

         THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN
RESTRICTIONS UPON TRANSFER AND RIGHTS OF REPURCHASE AS SET FORTH IN A STOCK
RESTRICTION AND SPECIAL PAYMENT AGREEMENT BETWEEN THE COMPANY AND THE
SHAREHOLDER, DATED AS OF MARCH 17, 1999, A COPY OF WHICH IS ON FILE WITH THE
SECRETARY OF THE COMPANY AND WILL BE PROVIDED UPON WRITTEN REQUEST.

              [The rest of this page is intentionally left blank.]

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         IN WITNESS WHEREOF, each of the Company and the Stockholder has
executed and delivered this Stock Restriction and Special Payment Agreement as
of the date first above written.

COMPANY:                              BLUESTAR PROPERTIES, INC.

                                      By /s/ Fredjoseph Goldner
                                      Name: Fredjoseph Goldner
                                      Title: President/CEO

STOCKHOLDER:                          /s/ Fredjoseph Goldner
                                      Name: Fredjoseph Goldner

<PAGE>   7

                                   EXHIBIT A-1

                      ASSIGNMENT SEPARATE FROM CERTIFICATE

         FOR VALUE RECEIVED I, _____________________, hereby sell, assign and
transfer unto __________ (__________) shares of the Common Stock of BlueStar
Properties, Inc. (the "Company") standing in my name of the books of said
corporation represented by Certificate No. _____ herewith and do hereby
irrevocably constitute and appoint _________________ to transfer the said stock
on the books of the within named corporation with full power of substitution in
the premises.

         This Stock Assignment may be used only in accordance with the Stock
Restriction and Special Payment Agreement (the "Agreement") between the Company
and the undersigned dated March _____, 1999.

Dated: _______________, 1999

                                       Signature:
                                                 ----------------------------

INSTRUCTIONS: Please do not fill in any blanks other than the signature line.
The purpose of this assignment is to enable the Company to exercise the
Repurchase Option, as set forth in the Agreement, without requiring additional
signatures on the part of the Stockholder.

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                                   EXHIBIT A-2

                            JOINT ESCROW INSTRUCTIONS

                                                              March _____, 1999

Corporate Secretary
BlueStar Properties, Inc.
131 Second Avenue North
Nashville, TN 37201

Dear Sir/Madam:

         As Escrow Agent for both BlueStar Properties, Inc., a Tennessee
corporation (the "Company"), and the undersigned stockholder of the Company (the
"Stockholder"), you are hereby authorized and directed to hold the documents
delivered to you pursuant to Section 1(a) of that certain Stock Restriction and
Special Payment Agreement ("Agreement") between the Company and the undersigned,
dated as of March ____, 1999, in accordance with the following instructions:

         1. In the event the Company exercises the Company's Repurchase Option
set forth in the Agreement, the Company and the Stockholder shall give to you a
written notice from both of them specifying the number of Repurchasable Shares
to be purchased, the purchase price, and the time for a closing hereunder at the
principal office of the Company (the "Joint Written Instructions"). Stockholder
and the Company hereby irrevocably authorize and direct you to close the
transaction contemplated by such notice in accordance with the terms of said
notice.

         2. At the closing, you are directed (a) to date the stock assignments
necessary for the transfer in question, (b) to fill in the number of shares
being transferred, and (c) to deliver same, together with the certificate
evidencing the shares of stock to be transferred, to the Company, against the
simultaneous delivery to you of the purchase price (by cash, a check, or some
combination thereof) for the number of shares of stock being purchased, each of
the foregoing pursuant to the Joint Written Instructions.

         3. Stockholder irrevocably authorizes the Company to deposit with you
any certificates evidencing Repurchasable Shares to be held by you hereunder
and any additions, substitutions and/or subtractions to said Repurchasable
Shares as defined in the Agreement. Stockholder does hereby irrevocably
constitute and appoint you as Stockholder's attorney-in-fact and agent for the
term of this escrow to execute with respect to such securities all documents
necessary or appropriate to make such securities negotiable and to complete any
transaction herein contemplated, including but

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not limited to the filing with any applicable state blue sky authority of any
required applications for consent to, or notice of transfer of, the securities.
Subject to the provisions of this paragraph 3, Stockholder shall exercise all
rights and privileges of a shareholder of the Company while the stock is held by
you.

         4. Upon written request of the Stockholder, but no more than twice per
calendar year, unless the Company's Repurchase Option has been exercised, you
shall deliver to Stockholder a certificate or certificates representing so many
of the Restricted Shares as are not then subject to the Company's Repurchase
Option. Simultaneously with the closing of a Business Combination, or within
ninety (90) days after Stockholder ceases to be an employee of the Company (and
consistent with the provisions pertaining to the termination of employment of
the Stockholder as more fully set forth in the Agreement), you shall deliver to
Stockholder a certificate or certificates representing the aggregate number of
Non-Repurchasable Shares held by you and all Repurchasable Shares not
purchased by the Company under its Repurchase Option.

         5. If at the time of termination of this escrow you should have in your
possession any documents, securities, or other property belonging to
Stockholder, you shall deliver all of the same to Stockholder and shall be
discharged of all further obligations hereunder.

         6. Your duties hereunder may be altered, amended, modified or revoked
only by a writing signed by all of the parties hereto.

         7. You shall be obligated only for the performance of such duties as
are specifically set forth herein and may rely and shall be protected in relying
or refraining from acting on any instrument reasonably believed by you to be
genuine and to have been signed or presented by the proper party or parties. You
shall not be personally liable for any act you may do or omit to do hereunder as
Escrow Agent or as attorney-in-fact for Stockholder while acting in good faith,
and any act done or omitted by you pursuant to the advice of your own attorneys
shall be conclusive evidence of such good faith.

         8. You are hereby expressly authorized to disregard any and all
warnings given by any of the parties hereto or by any other person or
corporation, excepting only orders or process of courts of law, and are hereby
expressly authorized to comply with and obey orders, judgments or decrees of any
court. In case you obey or comply with any such order, judgment or decree, you
shall not be liable to any of the parties hereto or to any other person, firm or
corporation by reason of such compliance, notwithstanding any such order,
judgment or decree being subsequently reversed, modified, annulled, set aside,
vacated or found to have been entered without jurisdiction.

         9. You shall not be liable in any respect on account of the identity,
authorities or rights of the parties executing or delivering or purporting to
execute or deliver the Agreement or any documents or papers deposited or called
for hereunder.

<PAGE>   10

         10. You shall not be liable for the outlawing of any rights under the
statute of limitations with respect to these Joint Escrow Instructions or any
documents deposited with you.

         11. You shall be entitled to employ such legal counsel and other
experts as you may deem necessary properly to advise you in connection with your
obligations hereunder, may rely upon the advice of such counsel, and may pay
such counsel reasonable compensation therefor to be reimbursed by the Company.

         12. Your responsibilities as Escrow Agent hereunder shall terminate if
you shall cease to be an officer or agent of the Company or if you shall resign
by written notice to each party. In the event of any such termination, the
Company shall appoint a successor Escrow Agent.

         13. If you reasonably require other or further instruments in
connection with these Joint Escrow Instructions or obligations in respect
hereto, the necessary parties hereto shall join in furnishing such instruments.

         14. It is understood and agreed that should any dispute arise with
respect to the delivery and/or ownership or right of possession of the
securities held by you hereunder, you are authorized and directed to retain in
your possession without liability to anyone all or any part of said securities
until such disputes shall have been settled either by mutual written agreement
of the parties concerned or by a final order, decree or judgment of a court of
competent jurisdiction after the time for appeal has expired and no appeal has
been perfected, but you shall be under no duty whatsoever to institute or defend
any such proceedings.

         15. Any notice required or permitted hereunder shall be given in
writing and shall be deemed effectively given upon personal delivery or upon
deposit in the United States Post Office, by registered or certified mail with
postage and fees prepaid, addressed to each of the other parties thereunto
entitled at the following addresses or at such other addresses as a party may
designate by ten days' advance written notice to each of the other parties
hereto.

<PAGE>   11

                  COMPANY:          BlueStar Properties, Inc.
                                    131 Second Avenue North
                                    Nashville, TN 37201
                                    Attention: Corporate Secretary

                  STOCKHOLDER:

                  ESCROW AGENT:     BlueStar Properties, Inc.
                                    131 Second Avenue North
                                    Nashville, TN 37201
                                    Attention: Corporate Secretary

         16. By signing these Joint Escrow Instructions, you become a party
hereto only for the purpose of said Joint Escrow Instructions; you do not become
a party to the Agreement.

         17. This instrument shall be binding upon and inure to the benefit of
the parties hereto, and their respective successors and permitted assigns.

         18. These Joint Escrow Instructions shall be governed by, and construed
and enforced in accordance with, the internal substantive laws, but not the
choice of law rules, of Tennessee.

         19. Capitalized terms used herein without definition shall have the
respective meanings for such terms set forth in the Agreement.

         20. This letter agreement shall automatically terminate upon the
earlier to occur of: (a) the date on which the number of Repurchasable Shares,
pursuant to the Agreement, equals zero; and (b) ninety days after the date on
which the Stockholder ceases to be an employee of the Company or simultaneously
with the closing of a Business Combination, as the case may be (in which case
the securities held by you shall be delivered to the Stockholder as set forth in
Section 4).

<PAGE>   12

                                  Very truly yours,

                                  BLUESTAR PROPERTIES, INC.

                                  ---------------------------------------
                                  By

                                  ---------------------------------------
                                  Title

                                  ----------------------------------------------

                                  STOCKHOLDER:

                                  ----------------------------------------------

                                  ---------------------------------------
                                  Signature

                                  ----------------------------------------------

                                  ---------------------------------------
                                  Print Name

ESCROW AGENT:

--------------------------------
Corporate Secretary

<PAGE>   13

                                   EXHIBIT A-3

                                CONSENT OF SPOUSE

         I, ____________________, spouse of ___________________, have read and
approve the foregoing Stock Restriction and Special Payment Agreement (the
"Agreement"). In consideration of the Company's grant to my spouse of the right
to purchase/receive shares of BlueStar Properties, Inc., I hereby appoint my
spouse as my attorney-in-fact in respect to the exercise of any rights under the
Agreement and agree to be bound by the provisions of the Agreement insofar as I
may have any rights in said Agreement or any shares issued pursuant thereto
under the community property laws or similar laws relating to marital property
in effect in the state of our residence as of the date of the signing of the
foregoing Agreement.

Dated: _______________, 19

                                           ------------------------------------
                                           Signature of Spouse<PAGE>   1
                                                                    EXHIBIT 10.5

                             MASTER LEASE AGREEMENT

                                                                         NO.  2
                                                                            ----

         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. INDEMNIFICATION. 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

<PAGE>   2

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/   Mark E. Alman                BY:      /S/   Richard L. Burtner
       -----------------------------               -----------------------------

NAME:  Mark E. Alman                      NAME:    Richard L. Burtner
       -----------------------------               -----------------------------

                                                                           Print
TITLE: Director of Corporate Finance      TITLE:   CFO
       -----------------------------               -----------------------------

DATE:  7/5/99                             DATE:    5/28/99
       -----------------------------               -----------------------------

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