<PAGE>   1

                                                                    Exhibit 10.1

                             RELEASE AND TERMINATION
                             -----------------------


                  This RELEASE AND TERMINATION ("Release") is made and entered
into as of August 8, 1997 by and among Comerica Bank-Texas (the "Escrow Agent"),
PhoneTel Technologies, Inc., an Ohio corporation ("PhoneTel"), and Bill H.
Bailey, Jr. and J. Bruce Duty, as duly authorized agents (collectively, the
"Sellers' Representatives") on behalf of Bill H. Bailey, Jr., Edward L.
Marshall, Jerry T. Beddow, C. Nelson Trimble, Berthel Fisher & Company
Investments, Inc., Capital Southwest Corporation, Capital Southwest Venture
Corporation, Bank One Capital Partners, L.P. (collectively, the "Sellers").

                  WHEREAS, the parties hereto are parties to an Escrow Agreement
dated as of November 21, 1996, as amended by the Amendment to Escrow Agreement
dated as of December 31, 1996 (the "Escrow Agreement");

                  WHEREAS, the parties hereto desire to direct the Escrow Agent
to release the remainder of the Escrow Amounts; and

                  WHEREAS, the parties hereto further desire to terminate the
Escrow Agreement and to release the Escrow Agent from any further obligations or
responsibilities thereunder.

                  NOW, THEREFORE, in consideration of the premises and intending
to be legally bound hereby, the parties hereto agree as follows:

                  Section 1. DEFINED TERMS. Capitalized terms used but not
otherwise defined herein shall have the meanings ascribed to such terms in the
Escrow Agreement.

                  Section 2. DISBURSEMENT OF FUNDS. The Sellers' Representatives
and PhoneTel hereby authorize and direct the Escrow Agent to release the
remainder of the Escrow Amounts and the earnings and interest thereon as
follows:

                  (a) to the Sellers' Representatives, after deduction of 50% of
         the Escrow Agent's fee (as contemplated by Section 7 of the Escrow
         Agreement):



<PAGE>   2



         (i) the remainder of the Merger Escrow Amount, (ii) the earnings and
         interest (adjusted for any increase or decrease in the principal value
         of any investment or any capital gain or loss, as the case may be) on
         the Merger Escrow Amount, and (iii) $1.8 million of the Rate Cap Escrow
         Amount; and

                  (b) to PhoneTel, after deduction of 50% of the Escrow Agent's
         fee (as contemplated by Section 7 of the Escrow Agreement): (i) $4.2
         million of the Rate Cap Escrow Amount and (ii) the earnings and
         interest (adjusted for any increase or decrease in the principal value
         of any investment or any capital gain or loss, as the case may be) on
         the Rate Cap Escrow Amount.

                  Section 3. RELEASE OF ESCROW AGENT. Effective immediately upon
the disbursement of funds as contemplated by Section 2 hereof, the Sellers'
Representatives and PhoneTel hereby (i) discharge the Escrow Agent from its
duties under the Escrow Agreement, and (ii) subject to such disbursement,
release the Escrow Agent from any loss or claim whatsoever (including attorneys'
fees) in conjunction with the performance of its duties under the Escrow
Agreement.

                  Section 4. TERMINATION. Upon the final distribution of funds
contemplated by Section 2 hereof, but subject to Section 3 hereof, the Escrow
Agreement shall be terminated, except for the provisions therein which, by their
express terms, are to survive the termination of the Escrow Agreement.

                  Section 5. COUNTERPARTS. This Release may be executed in two
or more counterparts, each of which shall be deemed an original, but all of
which shall together constitute one and the same instrument.

                  Section 6. GOVERNING LAW. This Release shall be construed in
accordance with and governed by the internal laws of the State of Texas without
giving effect to the principles of conflicts of law thereof.

                  Section 7. BENEFIT. This Release shall be binding upon and
inure to the benefit of the parties hereto and the successors and assigns of
each of them.



                                        2

<PAGE>   3


                  IN WITNESS WHEREOF, the parties hereto have affixed their
signatures to this Release upon the date first set forth above.

                                        COMERICA BANK-TEXAS




                                        By:  /s/ Charles D. Holmes
                                           ----------------------------------
                                           Name: Charles D. Holmes
                                           Title: Vice President and Trust 
                                                            Officer
                                                                             
                                                                             
                                        PHONETEL TECHNOLOGIES, INC.          
                                                                             
                                                                             
                                                                             
                                        By: /s/ Peter G. Graf
                                           ----------------------------------
                                           Name:  Peter G. Graf              
                                           Title: Chairman and Chief         
                                                            Executive Officer
                                                                             
                                                                             
                                        SELLERS' REPRESENTATIVES, ON         
                                        BEHALF OF THE SELLERS:               
                                          BILL H. BAILEY, JR., individually  
                                          EDWARD L. MARSHALL, individually   
                                          JERRY T. BEDDOW, individually      
                                          C. NELSON TRIMBLE, individually    
                                          BERTHEL FISHER & COMPANY           
                                            INVESTMENTS, INC.                
                                          CAPITAL SOUTHWEST CORPORATION      
                                          CAPITAL SOUTHWEST VENTURE          
                                            CORPORATION                      
                                          BANC ONE CAPITAL PARTNERS, L.P.    
                                                                             
                                                                             
                                                                             
                                        By: /s/ BILL H. BAILEY, JR.
                                           ----------------------------------
                                           BILL H. BAILEY, JR.,              
                                           as Sellers' Representative        
                                                                             
                                                                             
                                                                             
                                        By: /s/ J. BRUCE DUTY,
                                           ----------------------------------
                                           J. BRUCE DUTY,                    
                                           as Sellers' Representative        


                                        3

<PAGE>   4

                                    AGREEMENT
                                    ---------


                  This AGREEMENT ("Agreement") is made and entered into as of
August 8, 1997 by and among PhoneTel Technologies, Inc., an Ohio corporation
("Buyer"), Cherokee Communications, Inc., formerly known as PhoneTel CCI,
Inc., a Texas corporation and wholly owned subsidiary of the Buyer ("CCI"), and
Bill H. Bailey, Jr. and J. Bruce Duty, as duly authorized agents (collectively,
the "Sellers' Representatives") on behalf of Bill H. Bailey, Jr., Edward L.
Marshall, Jerry T. Beddow, C. Nelson Trimble, Berthel Fisher & Company
Investments, Inc., Capital Southwest Corporation, Capital Southwest Venture
Corporation, Bank One Capital Partners, L.P. (collectively, the "Sellers").

                  WHEREAS, the Buyer, CCI and the Sellers entered into that
certain Agreement and Plan of Merger, dated as of November 21, 1996, as amended
by the Amendment to Agreement and Plan of Merger, dated as of December 31, 1996
(the "Merger Agreement");

                  WHEREAS, the Buyer, the Sellers' Representatives and Comerica
Bank-Texas (the "Escrow Agent") entered into that certain Escrow Agreement dated
as of November 21, 1996, as amended by the Amendment to Escrow Agreement, dated
as of December 31, 1996 (the "Escrow Agreement");

                  WHEREAS, pursuant to and in accordance with Section 1.5(a) of
the Merger Agreement, the Buyer submitted to the Sellers' Representatives, by
letter dated May 23, 1997 (the "Adjustment Schedule Letter"), an Adjustment
Schedule which included the calculation of the Consideration as adjusted
pursuant to Section 1.4 of the Merger Agreement;

                  WHEREAS, pursuant to and in accordance with Section 1.5(b) of
the Merger Agreement, the Sellers' Representatives submitted to the Buyer, by
letter dated June 19, 1997 (the "Sellers' Response Letter"), their response,
good faith objections and dollar amount of each objection to the Adjustment
Schedule received by the Sellers' Representatives from the Buyer;




<PAGE>   5



                  WHEREAS, pursuant to and in accordance with Section 1.5(c) of
the Merger Agreement, the Buyer submitted to the Sellers' Representatives, by
letter dated July 17, 1997 (the "Buyer's Response Letter"), the Buyer's good
faith response to the Sellers' Response
Letter;

                  WHEREAS, in accordance with Section 1.5(d) of the Merger
Agreement, the Buyer and the Sellers' Representatives desire to resolve all
objections to the Adjustment Schedule and agree on the amount of the adjustment
to the Consideration; and

                  WHEREAS, the Buyer and the Sellers' Representatives have
agreed to amend the Escrow Agreement to provide for the distribution of the
funds reflecting the agreed upon adjustment to the Consideration.

                  NOW, THEREFORE, in consideration of the premises and intending
to be legally bound hereby, the parties hereto agree as follows:

                  Section 1. DEFINED TERMS. Capitalized terms used but not
otherwise defined herein shall have the meanings ascribed to such terms in the
Merger Agreement.

                  Section 2. ESCROW AMENDMENT. Simultaneously with the execution
and delivery of this Agreement, the Buyer, the Sellers' Representatives and the
Escrow Agent are entering into a Release and Termination of the Escrow
Agreement, in the form attached to this Agreement as Exhibit A (the "Release"),
pursuant to which the remaining Escrow Amount, and the earnings and interest
thereon, are to be released to the Sellers' Representatives and PhoneTel.

                  Section 3. PAYMENT OF THE ADJUSTMENT TO THE CONSIDERATION.
Notwithstanding anything to the contrary contained in the Merger Agreement, the
parties hereto agree that the distributions to be made by the Escrow Agent in
accordance with the terms and conditions of the Release reflect the parties'
agreement with respect to the adjustment to the Consideration (including,
without limitation, with respect to the tax matters set forth in the Adjustment
Schedule Letter and the Buyer's Response Letter), pursuant to the terms and
provisions of the Merger Agreement (including, without limitation, Sections


                                        2

<PAGE>   6



1.4 and 1.5 therein). Buyer hereby acknowledges that it waives, solely with
respect to the tax matters set forth in the Adjustment Schedule Letter and the
Buyer's Response Letter, any right to make any other claims against the Sellers
for indemnification pursuant to Section 7.7 of the Merger Agreement. Buyer also
acknowledges that the Seller Representatives are entitled to receive any tax
refunds relating to the exercise by certain Sellers of stock options prior to
the Effective Time.

                  Section 4. CLAIMS AGAINST THE SELLERS. As of the date hereof,
Buyer has no additional claims against the Sellers, jointly or severally, with
respect to the transactions contemplated under the Merger Agreement.

                  Section 5. PARTIES IN INTEREST; NO THIRD PARTY BENEFICIARIES.
(a) This Agreement shall be binding upon, inure to the benefit of, and be
enforceable by, the parties hereto and their respective successors and permitted
assigns. This Agreement and the rights and obligations of the parties hereunder
may not be assigned by any of the parties hereto without the prior written
consent of the other parties.

                  (b) This Agreement is not intended, nor shall it be construed,
to confer upon any Person except the parties hereto and their heirs, successors
and permitted assigns any rights or remedies under or by reason of this
Agreement.

                  Section 6. COUNTERPARTS. This Agreement may be executed in any
number of counterparts, each of which shall be deemed an original but all of
which together shall constitute one and the same instrument.

                  Section 7. GOVERNING LAW. This Agreement shall be governed by
and construed in accordance with the laws of the State of Texas without giving
effect to the conflicts of law principles of such jurisdiction.



                                        3

<PAGE>   7


                  IN WITNESS WHEREOF, the parties hereto have executed this
Agreement, on the day and year first above written.

                                            PHONETEL TECHNOLOGIES, INC.  
                                                                         
                                                                         
                                            By:  /s/ Peter G. Graf
                                               ---------------------------------
                                               Peter G. Graf             
                                               Chairman and              
                                               Chief Executive Officer   
                                                                         
                                                                         
                                            CHEROKEE COMMUNICATIONS, INC.
                                                                         
                                                                         
                                            By: /s/ Peter G. Graf
                                               ---------------------------------
                                               Peter G. Graf             
                                               Chairman and              
                                               Chief Executive Officer   
                                                                         
                                                                         
                                            SELLERS' REPRESENTATIVES, ON 
                                            BEHALF OF THE SELLERS:       
                                              BILL H. BAILEY, JR., individually
                                              EDWARD L. MARSHALL, individually
                                              JERRY T. BEDDOW, individually
                                              C. NELSON TRIMBLE, individually
                                              BERTHEL FISHER & COMPANY
                                                INVESTMENTS, INC.
                                              CAPITAL SOUTHWEST CORPORATION
                                              CAPITAL SOUTHWEST VENTURE
                                                CORPORATION
                                              BANC ONE CAPITAL PARTNERS, L.P.


                                            By: /s/ BILL H. BAILEY, JR.
                                               ---------------------------------
                                               BILL H. BAILEY, JR.,
                                               as Sellers' Representative


                                            By: /s/ J. BRUCE DUTY
                                               ---------------------------------
                                               J. BRUCE DUTY,
                                               as Sellers' Representative


                                        4





<PAGE>   8
                                    AGREEMENT


             This AGREEMENT ("Agreement") is made and entered into as of
August 8, 1997 by and among PhoneTel Technologies, Inc., an Ohio corporation
("Buyer"), Cherokee Communications, Inc., formerly known as PhoneTel CCI,
Inc., a Texas corporation and wholly owned subsidiary of the Buyer ("CCI"), and
Bill H. Bailey, Jr. and J. Bruce Duty, as duly authorized agents (collectively,
the "Sellers' Representatives") on behalf of Bill H. Bailey, Jr., Edward L.
Marshall, Jerry T. Beddow, C. Nelson Trimble, Berthel Fisher & Company
Investments, Inc., Capital Southwest Corporation, Capital Southwest Venture
Corporation, Bank One Capital Partners, L.P. (collectively, the "Sellers").

             WHEREAS, the Buyer, CCI and the Sellers entered into that certain
Agreement and Plan of Merger, dated as of November 21, 1996, as amended by the
Amendment to Agreement and Plan of Merger, dated as of December 31, 1996 (the
"Merger Agreement");

             WHEREAS, the Buyer, the Sellers' Representatives and Comerica
Bank-Texas (the "Escrow Agent") entered into that certain Escrow Agreement dated
as of November 21, 1996, as amended by the Amendment to Escrow Agreement, dated
as of December 31, 1996 (the "Escrow Agreement");

             WHEREAS, pursuant to and in accordance with Section 1.5(a) of the
Merger Agreement, the Buyer submitted to the Sellers' Representatives, by letter
dated May 23, 1997 (the "Adjustment Schedule Letter"), an Adjustment Schedule
which included the calculation of the Consideration as adjusted pursuant to
Section 1.4 of the Merger Agreement;

             WHEREAS, pursuant to and in accordance with Section 1.5(b) of the
Merger Agreement, the Sellers' Representatives submitted to the Buyer, by letter
dated June 19, 1997 (the "Sellers' Response Letter"), their response, good faith
objections and dollar amount of each objection to the Adjustment Schedule
received by the Sellers' Representatives from the Buyer;




<PAGE>   9



                  WHEREAS, pursuant to and in accordance with Section 1.5(c) of
the Merger Agreement, the Buyer submitted to the Sellers' Representatives, by
letter dated July 17, 1997 (the "Buyer's Response Letter"), the Buyer's good
faith response to the Sellers' Response
Letter;

                  WHEREAS, in accordance with Section 1.5(d) of the Merger
Agreement, the Buyer and the Sellers' Representatives desire to resolve all
objections to the Adjustment Schedule and agree on the amount of the adjustment
to the Consideration; and

                  WHEREAS, the Buyer and the Sellers' Representatives have
agreed to amend the Escrow Agreement to provide for the distribution of the
funds reflecting the agreed upon adjustment to the Consideration.

                  NOW, THEREFORE, in consideration of the premises and intending
to be legally bound hereby, the parties hereto agree as follows:

                  Section 1. DEFINED TERMS. Capitalized terms used but not
otherwise defined herein shall have the meanings ascribed to such terms in the
Merger Agreement.

                  Section 2. ESCROW AMENDMENT. Simultaneously with the execution
and delivery of this Agreement, the Buyer, the Sellers' Representatives and the
Escrow Agent are entering into a Release and Termination of the Escrow
Agreement, in the form attached to this Agreement as Exhibit A (the "Release"),
pursuant to which the remaining Escrow Amount, and the earnings and interest
thereon, are to be released to the Sellers' Representatives and PhoneTel.

                  Section 3. PAYMENT OF THE ADJUSTMENT TO THE CONSIDERATION.
Notwithstanding anything to the contrary contained in the Merger Agreement, the
parties hereto agree that the distributions to be made by the Escrow Agent in
accordance with the terms and conditions of the Release reflect the parties'
agreement with respect to the adjustment to the Consideration (including,
without limitation, with respect to the tax matters set forth in the Adjustment
Schedule Letter and the Buyer's Response Letter), pursuant to the terms and
provisions of the Merger Agreement (including, without limitation, Sections


                                        2

<PAGE>   10



1.4 and 1.5 therein). Buyer hereby acknowledges that it waives, solely with
respect to the tax matters set forth in the Adjustment Schedule Letter and the
Buyer's Response Letter, any right to make any other claims against the Sellers
for indemnification pursuant to Section 7.7 of the Merger Agreement. Buyer also
acknowledges that the Seller Representatives are entitled to receive any tax
refunds relating to the exercise by certain Sellers of stock options prior to
the Effective Time.

                  Section 4. CLAIMS AGAINST THE SELLERS. As of the date hereof,
Buyer has no additional claims against the Sellers, jointly or severally, with
respect to the transactions contemplated under the Merger Agreement.

                  Section 5. PARTIES IN INTEREST; NO THIRD PARTY BENEFICIARIES.
(a) This Agreement shall be binding upon, inure to the benefit of, and be
enforceable by, the parties hereto and their respective successors and permitted
assigns. This Agreement and the rights and obligations of the parties hereunder
may not be assigned by any of the parties hereto without the prior written
consent of the other parties.

                  (b) This Agreement is not intended, nor shall it be construed,
to confer upon any Person except the parties hereto and their heirs, successors
and permitted assigns any rights or remedies under or by reason of this
Agreement.

                  Section 6. COUNTERPARTS. This Agreement may be executed in any
number of counterparts, each of which shall be deemed an original but all of
which together shall constitute one and the same instrument.

                  Section 7. GOVERNING LAW. This Agreement shall be governed by
and construed in accordance with the laws of the State of Texas without giving
effect to the conflicts of law principles of such jurisdiction.



                                        3

<PAGE>   11


                  IN WITNESS WHEREOF, the parties hereto have executed this
Agreement, on the day and year first above written.

                                            PHONETEL TECHNOLOGIES, INC.


                                            By: /s/ Peter G. Graf
                                              ---------------------------------
                                               Peter G. Graf
                                               Chairman and
                                               Chief Executive Officer


                                             CHEROKEE COMMUNICATIONS, INC.


                                            By: /s/ Peter G. Graf
                                              ---------------------------------
                                                Peter G. Graf
                                                Chairman and
                                                Chief Executive Officer


                                              SELLERS' REPRESENTATIVES, ON
                                              BEHALF OF THE SELLERS:
                                              BILL H. BAILEY, JR., individually
                                              EDWARD L. MARSHALL, individually
                                              JERRY T. BEDDOW, individually
                                              C. NELSON TRIMBLE, individually
                                              BERTHEL FISHER & COMPANY
                                                INVESTMENTS, INC.
                                              CAPITAL SOUTHWEST CORPORATION
                                              CAPITAL SOUTHWEST VENTURE
                                                CORPORATION
                                              BANC ONE CAPITAL PARTNERS, L.P.


                                            By: /s/ Bill H Bailey, Jr.
                                               --------------------------------
                                               BILL H. BAILEY, JR.,
                                               as Sellers' Representative


                                            By: J. Bruce Duty
                                               --------------------------------
                                               J. BRUCE DUTY,
                                               as Sellers' Representative


                                        4