Document:

SENT PAID SERVICES AGREEMENT FROM SBC PAY PHONES
                   BETWEEN SBC SERVICES, INC. AND PHONE1, INC.

     THIS SERVICES AGREEMENT ("Agreement") is entered into as of December 10,
2002 between Phone1, Inc., with offices at 100 N. Biscayne Blvd., 25th Floor,
Miami, Florida, 33132 ("Phone1") and SBC Services, Inc., as agent for one or
more of the following depending upon the state(s) in which SBC provides pay
telephone services pursuant to this Agreement: SBC Pacific Bell Telephone
Company, a California corporation; SBC Nevada Bell Telephone Company, a Nevada
corporation; Southwestern Bell Telephone, L.P., a limited partnership under the
laws of the state of Texas providing pay phone service in the states of Texas,
Missouri, Kansas, Arkansas, and Oklahoma; SBC Ameritech Illinois, an Illinois
corporation; SBC Ameritech Indiana, an Indiana corporation; SBC Ameritech
Michigan, a Michigan corporation; SBC Ameritech Ohio, an Ohio corporation;
Wisconsin Bell, Inc., d/b/a SBC Ameritech Wisconsin, a Wisconsin corporation;
and SNET America, Inc., a Connecticut corporation (referred to collectively or
individually as "SBC"), with offices at 105 Auditorium Circle, Room 12-A-60, San
Antonio, Texas 78205. The signatories to this Agreement shall hereafter be
referred to individually as "Party" or jointly as the "Parties".

     WHEREAS, SBC is in the business of providing public pay telephone service
within the meaning of Section 276 of the Telecommunications Act of 1996 from
payphones owned and operated by SBC; and

     WHEREAS, Phone1 is in the business of providing coin calling services
(excluding local exchange) from public pay telephones; and

     WHEREAS, Phone1 and SBC have entered into a Services Trial Agreement dated
June 26, 2002 ("Trial") in order to trial Phone1's services; and

     WHEREAS, as a result of the aforementioned Trial, SBC and Phone1 have
agreed to deploy Phone1's services operationally across SBC's operating
territory at selected sites.

     NOW THEREFORE, in consideration of the mutual obligations set forth herein,
Phone1 and SBC agree as follows:

1. SCOPE OF SERVICES

     A.   This Agreement sets forth the terms and conditions whereby Phone1's
          coin pay phone services, including interLATA domestic long distance,
          and (interLATA) international long distance coin service shall be
          deployed on SBC owned and operated pay telephones located at specific
          sites designated by SBC ("Services"). Such locations shall be those
          pursuant to separate service agreements between SBC and third parties
          who own or control the premises where said SBC pay telephones are
          placed ("Locations"). The pay telephone numbers and physical addresses
          of the SBC pay telephones where Phone1 Services are to be provided
          shall be determined by SBC in its sole discretion, transmitted to
          Phone1 via an electronic data feed provided, and the initial numbers
          and addresses are identified in Exhibit A, which is attached hereto
          and incorporated by reference herein. Exhibit A may be updated by SBC
          on an on-going basis, via additional data feeds on a periodic basis as
          determined by SBC.

     B.   Phone1 Services deployed on SBC pay telephones shall allow consumers
          to make domestic interLATA long distance calls and international long
          distance calls anywhere in the world at the rates set forth in Section
          5, CALLING RATES. . In exchange for the opportunity to solicit
          Phone1's Services on SBC's public pay telephones, Phone1 shall
          compensate SBC by paying SBC a commission equal to a percentage of the
          revenues derived from the Services at the rates set forth in Section
          6, COMPENSATION. For the SBC pay telephones covered by this Agreement,
          local exchange pay telephone service shall be provided by SBC, and
          shall not be included in the Services described herein, nor shall such
          local exchange service be a part of the financial terms of this
          Agreement. Phone1 shall also be responsible for all aspects of its
          Services, including but not limited to, to the extent set forth in
          greater detail herein, marketing and promoting the Services, providing
          call capability at specific "Dumb Set" (as defined below) pay
          telephones, providing the identifiable Phone1 handsets, and compliance
          with all laws and regulations applicable to the Services provided by
          Phone1.
<PAGE>

     C.   To the extent SBC becomes authorized use the Phone1 service for their
          intraLATA domestic service then intraLATA service shall be with in the
          meaning of the term Services under this Agreement.

     D.   [CONFIDENTIAL INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH
          THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2]

2. TERM OF AGREEMENT

     The initial term of this Agreement shall commence on the date last signed
below ("Effective Date") and, subject to the terms and conditions of this
Agreement, shall expire three (3) years (i) from the date of SBC's acceptance of
the Dumb Set Upgrade (as hereinafter defined), as contemplated by Section 7,
provided such acceptance occurs within [CONFIDENTIAL INFORMATION HAS BEEN
OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION
PURSUANT TO RULE 24b-2] of the Effective Date, or (ii) from the Effective Date
if no such acceptance has occurred within [CONFIDENTIAL INFORMATION HAS BEEN
OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION
PURSUANT TO RULE 24b-2] of the Effective Date ("Initial Term"). Unless either
Party provides written notice of termination to the other via certified mail,
return receipt requested, no less than thirty (30) days prior to the expiration
of the Initial Term of this Agreement, or any subsequent Renewal Term(s) of this
Agreement, this Agreement will automatically renew for up to three (3)
consecutive one (1) year renewal terms (individually, "Renewal Term").

3. OBLIGATIONS OF PHONE1

     A.   [CONFIDENTIAL INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH
          THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2]

                                       2
<PAGE>

     B.   Without regard to legal and/or regulatory issues or other technical
          issues, in order for the Phone1 Service to operate from SBC public pay
          telephones, the SBC public pay telephones must be electronically
          linked to the Phone1 platform for call routing and processing. For the
          SBC pay telephones listed in Exhibit A which are identified as
          standard SBC Western Electric type public pay telephones ("Dumb
          Sets"), it is contemplated that Phone1 shall provide an "upgrade
          solution" for all such public pay telephones to enable the public pay
          telephones to interface with the Phone1 platform for accurate call
          processing ("Upgrade" or "Dumb Set Upgrade"), and such Upgrade shall
          be available for the Upgrade Acceptance Trial pursuant to Section 7
          within [CONFIDENTIAL INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY
          WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2].
          The Parties shall mutually agree upon the logistics for Phone1's
          providing Upgrades to SBC for the Acceptance Trial and, following
          acceptance, if accepted by SBC, for installation in the remaining SBC
          public pay telephones. Phone1's Upgrade solution shall be subject to
          the Upgrade Acceptance Trial terms set forth in Section 7 herein
          including the capability to count completed local calls and coin
          detail information of all intraLATA and interLATA (domestic and
          international) calls. Except as otherwise set forth in this Agreement,
          any parts, materials or labor required for such Upgrade shall be
          provided to SBC at Phone1's expense. [CONFIDENTIAL INFORMATION HAS
          BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
          COMMISSION PURSUANT TO RULE 24b-2]

     C.   Call Detail Reports. As set forth herein, Phone1 shall collect and
          record, on a per call basis, the call detail information pertaining to
          calls that are covered by this Agreement and made from SBC's pay
          telephones ("Call Detail Records"). Phone1 shall collect and store the
          Call Detail Records in redundant media until the Call Detail Records
          are transmitted to SBC, and successful transmission and receipt has
          been confirmed, as set forth in Section 6 herein. Phone1 shall forward
          to SBC on a weekly basis, or on a daily basis if requested by SBC, all
          Call Detail Records for the prior week or day, as applicable, as well
          as all those Call Detail Records not previously forwarded successfully
          to SBC. Phone1 shall transmit the Call Detail Records in a mutually
          agreeable electronic format. The specifications for the electronic
          format at the Effective Date are attached hereto as Exhibit D. These
          specifications may be modified by written agreement of the Parties
          from time to time. Phone1 shall be solely responsible for the accuracy
          and completeness of the Call Detail Records provided to SBC as set
          forth herein. SBC shall have the right to audit Phone1's Call Detail
          Records according to the terms and conditions as set forth in the
          RECORDS and AUDITS clause of this Agreement.

     D.   Promotion and Marketing. Phone1 shall provide SBC in sufficient
          mutually agreeable quantities with multi-lingual adhesive placards
          ("Placards"), instruction cards ("Instruction Cards"), and lower
          housing door plates ("Door Plates") advertising the Phone1 Services.
          Placards, Instruction Cards and Door Plates to be placed on the public
          pay telephone set shall be designed by Phone1 to be complimentary with
          the Handsets and SBC pay telephones. Metal placards shall be
          approximately 13/4" width by 31/2" in height, of aluminum
          construction, and use Scotch 468MP high performance adhesive,

                                       3
<PAGE>

          Instruction Cards shall be manufactured based on SBC standard
          instruction card specifications, and Doorplates shall be replacement
          units that meet SBC's standard door plate specifications and that are
          field-ready to install. In addition, Phone1 shall provide and larger
          advertising ("Panels") to be placed on certain SBC peripheral
          equipment (such as enclosures), the size and content of which shall be
          mutually agreed to by both parties promptly following execution of
          this Agreement. Placards, Instruction Cards, and Door Plates shall set
          forth dialing instructions, required legal or regulatory information,
          and other necessary information required by the consumer to use the
          Services. Phone1 shall design and format the content of the Phone1
          Placards; provided, however, SBC shall have a right to consent to the
          design and content prior to the Placard being placed on SBC's pay
          telephones, such consent not to be unreasonably withheld or delayed.
          Phone1 shall use its commercially reasonable best efforts to promote
          the Phone1 Services through other mass media such as television,
          outdoor, print, and radio advertisements. (Phone1's Handsets,
          Upgrades, Placards, Instruction Cards, Door Plates, and Panels shall
          be referred to jointly in this Agreement as "Equipment".)

4. OBLIGATIONS OF SBC

     A.   Subject to i) the ability of SBC to secure agreements to install the
          Phone1 Services at the Locations, and ii) the success of Phone1's
          Upgrade Solution as set forth herein, SBC shall use its best efforts
          to target use of the Services on approximately two-hundred thousand
          (200,000) public pay telephone stations.

     B.   SBC shall have the sole right and responsibility to negotiate
          placement agreements with its premise customers for the operation of
          public telephones at the Locations. All such agreements shall be by
          and between SBC and the Locations. Any payments due to Locations as a
          result of SBC's agreements with Locations for calls made from the SBC
          public pay telephones shall be the sole responsibility of SBC.

     C.   SBC shall be responsible for the accurate and timely payment to Phone1
          of Phone1's revenues for the calls covered by this Agreement, as set
          forth Section 6 herein.

     D.   SBC shall install and maintain its public pay telephone equipment in
          accordance with its service agreements with its premise customers at
          the Locations.

     E.   SBC shall be responsible, at its expense, for the installation,
          cleaning, and removal of the Phone1 Equipment. SBC shall, in
          accordance with a commercially reasonable standard, (i) install and
          provide general maintenance to the Equipment and public pay telephone
          equipment throughout the term of this Agreement, and (ii) remove and
          return any worn or faulty Equipment to Phone1 that require
          replacement.

     F.   SBC shall be responsible, at its expense, for installing the Upgrade
          solution to SBC's public pay telephones for the Acceptance Trial (as
          described below) and, if accepted by SBC, for installation in the
          remaining SBC public pay telephones. SBC shall use reasonable efforts
          to keep Phone1 apprised of its progress with installing Upgrades. In
          the event that the Parties mutually agree that an accelerated
          installation schedule would be necessary or beneficial and would
          contribute to the success of the rollout of the Services, the Parties
          shall share equally in any reasonable excess expenses, i.e., overtime,
          priority shipment, etc.

     G.   Customer service for coin refund requests shall be handled by SBC
          according to its standard process. Requests for refunds related to
          Phone1 Services shall be investigated in the same manner and with the
          same resources as SBC investigates requests for refunds related to
          other services (such as local calls) offered from its pay telephones,
          and SBC shall maintain reasonable documentation to support its
          resolution of any refund request related to Phone1 Services. Any
          refund paid by SBC as a result of an attempted Phone1 call shall be
          subsequently settled by an offset to the amounts paid to Phone1
          pursuant to Section 6, COMPENSATION. Any reasonably requested
          documentation for such offset shall be provided to Phone1 upon
          request.

                                       4
<PAGE>

5. CALLING RATES

     SBC agrees to utilize the Phone1 Services for intraLATA if applicable (see
     1.C.), domestic long distance (both intrastate and interstate), and
     international interLATA long distance calls, so long as such Services are
     advertised as and offered under this Agreement at a suggested retail price
     of [CONFIDENTIAL INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE
     SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2] per call for a
     set number of domestic initial minutes and [CONFIDENTIAL INFORMATION HAS
     BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
     COMMISSION PURSUANT TO RULE 24b-2] for international minutes, which number
     of initial minutes shall vary depending on the origin and destination of
     the call and which initial number of minutes shall be determined by Phone1.
     Phone1 shall also offer additional minutes at commercially reasonable
     prices not to exceed [CONFIDENTIAL INFORMATION HAS BEEN OMITTED AND FILED
     SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE
     24b-2] per minute domestic, but which shall be determined by Phone1. For
     the public pay telephones covered by this Agreement, Phone1 agrees to give
     SBC prior notification of any changes in the prices charged for Services,
     including but not limited to the price charged for an initial set of
     minutes and any additional minute(s).

6. COMPENSATION

A. Commissions

     At the beginning of each calendar week (each Monday), or on a more frequent
basis as determined solely by SBC (but not more frequently than daily), Phone1
shall forward to SBC an electronic data feed containing the Call Detail Records
of all completed Phone1 calls made during the prior calendar week (Monday
through Sunday), or if received on a daily basis, during the previous day, and
any other calls not previously forwarded, broken down between call types. SBC
shall acknowledge receipt of the Call Detail Records and confirm the total
numbers for each call type, which Phone1 shall use to determine if the success
of the data transmission. Unless agreed to otherwise by the Parties, if the
beginning of a calendar week falls on a holiday (defined as a day the federal
government is closed), Phone1 shall forward to SBC the Call Detail Records on
the next business day (Tuesday) of all Phone1 calls made during the prior
calendar week or day, as applicable.

     On the first Monday of each calendar month, Phone1 shall, along with
transmitting the Call Detail Records for the previous week, invoice SBC for the
Phone1 calls made during the entire previous calendar month. SBC shall pay to
Phone1 the revenues generated from the Phone1 calls ("Gross Receipts"), less
commissions owed by Phone1 to SBC calculated as a percentage of the revenues
according to the following schedule ("Net Receipts"):

                                                     SBC COMMISSIONS
                                                     ---------------
         DOMESTIC LONG DISTANCE                       Attachment A

         INTERNATIONAL LONG DISTANCE                  Attachment B

     [CONFIDENTIAL INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH
     THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2]

     B. Dial-Around Waiver. SBC understands that Phone1's provision of the
Services may utilize a toll-free 1-800 subscriber or access number or numbers.
In further consideration of the Services, SBC hereby agrees to waive its
entitlement, if any, to federally mandated dial-around compensation for calls to
such toll-free subscriber or access 1-800 number(s) for the term of this
Agreement. The Parties understand that SBC does not waive its entitlement to any
dial-around compensation not directly related to Phone1's provisioning of the
Services as described in this paragraph. For purposes of this paragraph,
Phone1's provisioning of Services shall encompass the completing of what appear
to the consumer to be direct-dialed or 1+ long distance calls (that is, if a
phone user physically dials a 1-800 number, other than to Phone1 Customer
Service, then the waiver contained in this paragraph shall not apply).

                                       5
<PAGE>

7. UPGRADE ACCEPTANCE TEST

          A.   Phone1's Dumb Set Upgrade solution shall be approved and accepted
               by [CONFIDENTIAL INFORMATION HAS BEEN OMITTED AND FILED
               SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT
               TO RULE 24b-2] (or other mutually agreed to engineering firm)
               prior to installation on SBC's public pay telephones. Upon
               installation of the Upgrades on all of the SBC public pay
               telephones identified as Test Phones in Exhibit A (which shall be
               limited to one thousand (1,000) Test Phones), SBC shall commence
               an acceptance trial ("Acceptance Trial"). The Acceptance Trial
               shall be for a period of thirty (30) business days, unless a
               different duration is agreed to by both Parties, and shall be
               conducted under the same terms and conditions as this Agreement.
               During the Acceptance Trial, SBC shall operate the Services to
               test the Upgrade as it deems appropriate to determine whether the
               Upgrade performs in conformance with SBC's specifications, as set
               forth in Exhibit E, which is attached hereto and incorporated by
               reference herein. In addition to the tests included in Exhibit E,
               SBC will complete testing of the coin counting and validation
               application of the Dumb Set Upgrade during both the [CONFIDENTIAL
               INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE
               SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2]testing
               review and the Acceptance Trial. SBC's use of the Services for
               commercial purposes during the Acceptance Trial shall not
               constitute acceptance of the Upgrade. If the Upgrade passes the
               Acceptance Trial, SBC shall "accept" the Upgrade by providing
               Phone1 with written notice of such acceptance no later then
               thirty (30) business days after the conclusion of the acceptance
               trial. Upon acceptance, the Parties shall mutually agree upon a
               schedule for installing the Upgrade in SBC's public pay
               telephones not identified as Test Phones in Exhibit A (except for
               those identified as "Smart Sets" for which the Upgrade is not
               necessary). SBC's determination as to whether or not to accept
               the Upgrade shall be made in SBC's sole discretion, but shall not
               be unreasonably withheld or delayed.

     B.   If the Upgrade fails to pass the Acceptance Trial, SBC may:

          i.   agree with Phone1 to extend the Acceptance Trial for a specific
               time frame to enable Phone1 to correct the deficiencies; or

          ii.  permit Phone1 to replace the Upgrade, at no additional charge to
               SBC, with a substitute solution ("Alternative Upgrade") that, in
               SBC's judgment, is functionally equivalent or superior to the
               original Upgrade; or

          iii. terminate this Agreement without liability to SBC or Phone 1,
               whereupon SBC shall de-install the Upgrades or Alternative
               Upgrades on all Test Phones and from any and all SBC network
               facilities.

          If SBC elects the option set forth in subparagraph (i) above, at the
          conclusion of the agreed-upon extension, SBC shall again have the same
          three options as listed above. If SBC elects the option in
          subparagraph (ii), the Alternative Upgrade shall be subject to the
          same Acceptance Trial as the replaced Upgrade, with the trial
          commencing upon proper installation of the Alternative Upgrade. If SBC
          elects the option in subparagraph (iii), it shall cancel without
          liability, any undelivered orders for Equipment, remove and return any
          installed Equipment, and return any unused promotional material.

8. SERVICE PERFORMANCE

          A.   The quality of the Services shall be comparable to the quality
               obtainable through the services provided by the major providers
               of long distance calling from public pay telephones using smart
               set technology, and shall not generate a volume or severity of
               complaints or inquiries to SBC, or to regulatory bodies or other
               authoritative bodies, that exceed the level of complaints
               generated by consumers utilizing SBC's installed pay telephone
               base prior to the implementation of the Phone1 Services.

          B.   The Phone1 Service shall adhere to a Service Availability of
               [CONFIDENTIAL INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY
               WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE
               24b-2] as measured by a service performance report provided
               monthly to SBC by Phone1. For the purposes of this Section 8,
               Service Availability shall be defined as the ability of the
               Service to accept and complete 1+ calls from the applicable SBC
               public pay telephones.

                                       6
<PAGE>

          C.   Time to Answer for calls carried by Phone1 under this Agreement
               shall be [CONFIDENTIAL INFORMATION HAS BEEN OMITTED AND FILED
               SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT
               TO RULE 24b-2] or less. Time to Answer shall be defined as the
               average time after the consumer has dialed the final digit of the
               telephone number being called to the time the terminating number
               first rings. Phone1 shall notify SBC no less than one (1) hour
               after Phone1 Service experiences a major (Priority 1) service
               failure as set forth in Exhibit F. Phone1 shall adhere to the
               Escalation procedure set forth in Exhibit F for all service
               outages not corrected in the time frames set forth therein.

          D.   Phone1 shall provide SBC with a toll free service call to which
               service problems can be reported twenty-four (24) hours per day,
               seven (7) days per week, three-hundred and sixty-five (365) days
               per year.

          E.   In the event the Phone1 Services fail to operate solely because
               of major outage with the Phone1 platform, and Phone1 calls are
               unable to be made from SBC public pay telephones for a period of
               time exceeding twenty-four (24) hours pursuant to procedures in
               Exhibit F, Phone 1 shall pay to SBC any lost SBC commissions for
               each day of the outage. Lost commissions will be based on the
               average Phone1 call revenues associated with the same or
               similarly-situated SBC public pay telephones during the previous
               thirty (30) day period.

          F.   In the event Phone1's Call Detail Record collector fail to record
               and capture Call Detail Records that should have been generated
               as a result of consumers' use of the Service ("Lost CDRs"),
               Phone1 shall notify SBC and, at no cost to SBC, Phone1 shall
               reconstruct the Lost CDRs through Phone1's IXC carrier billing
               information for such calls. Phone1's failure to record and
               capture Call Detail Records shall not be deemed a material breach
               of this Agreement so long as Phone1 notifies SBC of Lost CDRs and
               is able promptly to reconstruct Lost CDRs.

9. RISK OF LOSS

     Phone1 shall bear the risk of loss of or damage to all Equipment supplied
and shipped by Phone1 and any other parts and materials that may be required for
Upgrades, except that SBC shall be responsible for loss or damage to such
Equipment and/or parts and materials caused by SBC's acts or omissions, theft
and/or vandalism.

10. TRADENAMES AND TRADEMARKS; ADVERTISING REVIEW; OWNERSHIP OF TECHNOLOGY:

     A.   Neither Party may use the other Party's marks, tradenames, or logo
          designs without the other Party's prior written approval.

     B.   Neither Party, under any circumstances, will advertise the other
          Party's products or services without the other Party's prior written
          approval.

     C.   Either Party may use the other Party's marks, tradename, and logo
          design only in marketing materials, advertising, and promotional
          literature (collectively, "Materials") in conjunction with its
          solicitation of the Services only with the prior written approval of
          the other Party. Such prior written approval shall be obtained for
          each instance of any usage of any Party's mark or tradename in such
          Materials.

     D.   Each Party acknowledges and agrees that: (i) such Party's marks are
          owned by it; (ii) it will do nothing inconsistent with such ownership;
          (iii) all use of the marks by it will inure to the benefit of and be
          on behalf of the owner of the mark; (iv) that nothing in this grant
          will give it any right, title or interest in the other Party's marks
          other than the right to use the marks in accordance herewith; (v) it
          will not attack the other Party's title to the marks or the validity
          of this grant; and (vi) further agrees to use the other Party's marks
          only in the form and manner prescribed from time to time by such
          Party, and not to use any other trademark or service mark in
          combination with any of the other Party's marks without the prior
          written approval of such Party.

     E.   Neither Party may assign this grant of a limited, nonexclusive
          authorization to any other entity or Party without the prior written
          approval of the other Party.

                                       7
<PAGE>

     F.   Each Party agrees, at its own expense, to defend, indemnify and hold
          the other Party ("Indemnified Party") harmless from and against any
          and all claims, suits, actions, proceedings, judgments, damages,
          liabilities, costs and expenses (including attorney's fees) arising
          either from use of the Indemnified Party's marks by the other Party or
          any third party authorized by the other Party or advertising claims
          made in connection therewith, other than a claim based on an assertion
          by a third party either that the Indemnified Party does not own the
          marks, does not have the right to grant the authorization provided
          herein, or that the substance of an advertising claim approved by the
          Indemnified Party is materially false or misleading.

     G.   Upon termination of this Agreement, any permission or right to use
          marks granted hereunder will cease to exist and each Party will
          immediately cease any use of such marks and immediately cease
          referring to itself as an authorized user or provider.

     H.   Each Party will submit to the other Party at the following address an
          identical copy of any material in which such Party seeks to use the
          other Party's marks, tradename or logo design for written approval
          prior to use:

<TABLE>
<CAPTION>
                  To Phone1:                                  To SBC:
                  ----------                                  -------

                  <S>                                         <C>
                  Phone1 Inc.                                 SBC Public Communications
                  100 North Biscayne Blvd.                    225 W. Randolph Street
                  25th Floor                                  Floor 15C
                  Miami, Florida 33132                        Chicago, Illinois 60606
                  Attn: Dario Echeverry, CEO                  Attn:  Kirk J. Moser, Director of Contracts
</TABLE>

     I.   The Parties acknowledge and agree that the intellectual property and
          other technology included in the Equipment is proprietary to Phone1,
          and nothing in this Agreement, including transfer of title to the
          Handset and or Dumb Set Upgrade (DSU), is intended to transfer
          ownership of any such intellectual property or technology to SBC.
          Nothing in this Agreement shall permit SBC to use any of the Equipment
          except under this Agreement. Upon termination of this Agreement in
          whole or part, for any reason whatsoever, and unless agreed to
          otherwise in writing, SBC shall cease using any such intellectual
          property and technology; provided, however that SBC shall be granted a
          limited license for up to one (1) year to remove Equipment that is not
          under title to SBC and to disable or remove (at SBC's sole option)
          Equipment that is under title to SBC.

11. RECORDS AND AUDITS

     A.   Phone1 and SBC shall, during the term of this Agreement and for a
          period of one (1) year thereafter, maintain complete and accurate
          records relating to its performance of this Agreement.

     B.   SBC and Phone1 shall have the right, during the term of this Agreement
          and for a period of one (1) year thereafter, during normal business
          hours and upon reasonable prior notice to the other Party, to enter
          the other Party's premises to review the other Party's records,
          including but not limited to Call Detail Records, as necessary solely
          to validate the other Party's compliance with the provisions of this
          Agreement, provided that an audit can be conducted no more than twice
          in any twelve (12) month period. All information contained in the
          records shall be deemed Confidential Information under this Agreement.
          If either Party's audit is conducted by a third party auditor, the
          Party requesting the audit shall require such auditor to sign an
          appropriate nondisclosure agreement with the other Party prior to
          obtaining access to the other Party's records. The Party requesting
          the audit shall bear all costs and expenses related to such audit. If
          any independent audit shows that either party has failed to remit to
          the other the amounts required under this Agreement, then promptly
          after the audit, the party responsible for the failure shall pay to
          the other the difference between the amount paid and the amount that
          should have been paid based on the results of the audit.

                                       8
<PAGE>

12. WARRANTIES

     A.   Phone1 warrants that Phone1's Equipment will be in good working order
          when delivered and complies with all applicable laws and regulations,
          including without limitation consumer safety and FCC laws and
          regulations. During the Agreement, Phone1 shall, at no charge to SBC,
          make all necessary adjustments and and/or upgrades and corrections to
          the Services, and provide repair parts and/or replacement parts for
          all repairs and/or corrections to the Phone1 Equipment.

     B.   Phone1 warrants that it is the legal owner of the Handsets, and that
          it has the full right, title and interest in said Handset and
          Services. Phone1 further warrants to SBC that Phone1 has any and all
          necessary authority and permits to enter into this Agreement, offer
          the Services and to grant any rights between the Parties that may
          result therefrom.

     C.   SBC warrants it has full legal right to enter into this agreement and
          perform its obligations of the agreement and to place Phone1 Services
          at the Locations.

     D.   SBC warrants all phones at Locations are in good working order and
          will be maintained in good working order.

13. TERMINATION.

     A.   This Agreement may be terminated by the non-breaching party upon
          thirty (30) days' written notice to the breaching party that any of
          the following breach circumstances has occurred:

          (i)  the breaching party has neglected or failed to perform any of the
               material covenants, terms or obligations required to be performed
               by it under this Agreement (provided that termination shall not
               occur if such failure is cured within the twenty (20) day period
               after receipt of the written notice of termination);

          (ii) any representation or warranty made by a party in this Agreement
               shall prove to have been false or misleading in any material
               respect when the same was made;

          (iii) a party ceases permanently to carry on its present business,
               except as a result of a bona fide reorganization in the course of
               which the Agreement is transferred to a successor company of
               equal or greater financial resources carrying on substantially
               the same business;

          (iv) a party makes an assignment for the benefit of creditors; or
               admits in writing its inability to pay debts as they mature; or a
               trustee or receiver of a party, or of any substantial part of
               such party's assets, is appointed by any court; or a proceeding
               is instituted against a party under any provision of the United
               States Bankruptcy Code or any other law affecting the rights of
               creditors and such proceeding is acquiesced in or is not
               dismissed within sixty (60) days; or

          (v)  continued performance would cause a party to be in violation of
               (i) any order of any court or regulatory agency having
               jurisdiction over such party, or (ii) any law, statute, ordinance
               or regulation to which such party is subject.

     B.   Notwithstanding the foregoing, if the same breach of a material
          covenant, term, obligation, or warranty occurs repeatedly (at least
          three (3) times within six (6) months) and the breaching party has not
          implemented an effective cure following such repeated breaches, the
          non-breaching party may terminate this Agreement by providing thirty
          (30) days prior written notice to the other party.

14. CHOICE OF LAW

     The construction and interpretation of this Agreement and any claims
arising hereunder or related hereto, whether in contract or tort, shall be
governed by the laws (except those provisions relating to conflict of laws) of
the State of Texas.

                                       9
<PAGE>

15. COMPLIANCE WITH LAWS

     Phone1 and all persons furnished by Phone1 shall comply with the provisions
of the Fair Labor Standards Act, the 1996 Telecommunications Act, the Federal
Occupational Safety and Health Act, environmental laws and all other applicable
federal, state and local laws, ordinances and regulations in the performance of
this Agreement, including the procurement of required permits and certificates.
Phone1 shall pay wages that are not less than the minimum wages required by law
to persons employed in its operations hereunder. Furthermore, Phone1 shall keep
current throughout the term of this Agreement all federal, state, and local
licenses, permits, and certificates necessary to perform this Agreement, which
shall be promptly furnished to SBC upon request.

16. CONFIDENTIAL INFORMATION

     A.   Any information, including but not limited to specifications,
          drawings, computer programs, technical or business information or
          other data in whatever form (hereinafter "Information") disclosed by
          SBC or Phone1 under or in contemplation of this Agreement, shall
          remain the property of the disclosing Party. Information shall be
          deemed "Confidential Information" if the disclosing Party designates
          and clearly marks the information as proprietary, confidential or
          private prior to disclosure or, if oral or visual, the information is
          identified as proprietary, confidential or private on disclosure and
          is summarized in writing so marked and delivered within ten (10) days
          following such disclosure. Notwithstanding the foregoing, SBC's
          Confidential Information includes, whether marked or not, any
          additional information of SBC to which Phone1 has access through it
          performance hereunder. Confidential Information shall be subject to
          the following:

          (1)  recipient shall restrict disclosure of the Confidential
               Information to employees of the recipient with a "need to know"
               (i.e., employees that require the Confidential Information to
               perform their responsibilities in connection with this Agreement)
               and not disclose it to any other person or entity without the
               prior written consent of the disclosing Party, except SBC may
               disclose such Confidential Information to employees of its
               corporate affiliates with a need to know;

          (2)  recipient shall use the Confidential Information only for
               purposes of performing under this Agreement:

          (3)  recipient shall advise those employees who access the
               Confidential Information of their obligations with respect
               thereto; and

          (4)  recipient shall copy the Confidential Information only as
               necessary for those employees who are entitled to receive it and
               ensure that all confidentiality notices are reproduced in full on
               such copies.

     B.   The recipient recognizes and agrees that the unauthorized use or
          disclosure of the Confidential Information should cause irreparable
          injury to the disclosing Party for which they would have no adequate
          remedy at law, and that an actual or contemplated breach of this
          Section shall entitle the disclosing Party to obtain immediate
          injunctive relief prohibiting such breach, in addition to any other
          rights and remedies available to it. The obligations herein contained
          shall expressly survive the termination or expiration of this
          Agreement and for a period of five (5) years from the date hereof.

     C.   The obligations in the first paragraph shall not apply to any
          Confidential Information if the recipient can demonstrate that the
          Confidential Information:

          (1)  is or becomes available to the public through no breach of this
               Agreement;

                                       10
<PAGE>

          (2)  was previously known by the recipient without any obligation to
               hold it in confidence;

          (3)  is received from a third Party free to disclose such information
               without restriction;

          (4)  is independently developed by the recipient without the use of
               the Confidential Information of the disclosing Party;

          (5)  is approved for release by written authorization of the
               disclosing Party, but only to the extent of such authorization;

          (6)  is required by law or regulation to be disclosed, but only to the
               extent and for the purposes of such required disclosure; or

          (7)  is disclosed in response to a valid order of a court or lawful
               request of a governmental agency, but only to the extent of and
               for the purposes of such order or request, provided that the
               recipient first notifies the disclosing Party of the order or
               request ten (10) days prior to disclosure and permits the
               disclosing Party to seek an appropriate protective order.

     D.   At the written request of the disclosing Party, the recipient shall
          return such Confidential Information, including all copies, to the
          disclosing Party or destroy such Confidential Information and certify
          in writing that it has satisfied its obligations under this Agreement.

     E.   Without limiting any of its obligations under this Agreement, at law,
          or under regulations, to the extent that Phone1 acquires Carrier or
          Customer Proprietary Network Information, Phone1 certifies that it
          shall adhere to and abide by Section 222 of the Federal
          Telecommunications Act of 1996 pertaining to the privacy of public
          information.

17.      FORCE MAJEURE

     Neither Party shall be liable to the other for any delay or failure in
performance hereunder due to fires, strikes, threatened strikes, stoppage of
work, embargoes, requirements imposed by governmental regulations, civil or
military authorities, acts of God, the public enemy or other causes which are
beyond the control of the Party unable to perform (hereinafter "force majeure"),
provided that causes or impacts related to the arrival of the next millennium
shall not be considered a force majeure. If a force majeure occurs, the Party
delayed or unable to perform shall give immediate notice to the other Party.

18. INDEMNITY

     A.   Phone1 shall defend, indemnify, and hold harmless SBC, its corporate
          affiliates, their officers, employees and agents from and against all
          losses, damages, expenses (including attorney's fees auld costs),
          claims, suits and liabilities, whether based in contract or tort
          (including strict liability), to the extent arising out of or
          resulting from (a) Phone1's negligent or intentional acts or
          omissions, or those of persons furnished by it; (b) defective
          materials and/or Services provided hereunder, or (c) assertions under
          Worker's Compensation or similar laws made by persons furnished by
          Phone1, including but not limited to all applicable laws or
          regulations implicated by Phone1's Services. SBC shall promptly notify
          Phone1 of any written claim or demand for which Phone1 is responsible
          under this Section.

     B.   SBC shall defend, indemnify, and hold harmless Phone1, its corporate
          affiliates, their officers, employees and agents from and against all
          losses, damages, expenses (including attorney's fees auld costs),
          claims, suits and liabilities, whether based in contract or tort
          (including strict liability), to the extent arising out of or
          resulting from (a) SBC's negligent or intentional acts or omissions,
          or those of persons furnished by it, or (b) assertions under Worker's
          Compensation or similar laws made by persons furnished by SBC. Phone1
          shall promptly notify SBC of any written claim or demand for which SBC
          is responsible under this Section.

                                       11
<PAGE>

19. INFRINGEMENT

     Phone1 shall defend, indemnify and hold harmless SBC and its corporate
affiliates from and against any suits, claims, actions, losses, damages,
expenses (including attorneys' fees and costs) or liabilities that may result by
reason of any alleged violation, infringement or misappropriation of a United
States patent, trade secret, copyright or other proprietary right, regulation or
rule based on use of the Equipment and/or Services or the performance and
receipt of any Services provided under this Agreement. SBC shall promptly notify
Phone1 of any claim of infringement violation or misappropriation for which
Phone1 is responsible and shall cooperate with Phone1 to facilitate the defense
or settlement of such claim. Phone1 or Phone1's attorney(s) shall keep SBC
reasonably apprised of the continuing status of the claim, including any lawsuit
resulting there from, and shall permit SBC, upon SBC's written request, to
participate in the defense or settlement of such claim.

20. LIABILITY

     Except as otherwise set forth in this Agreement, SBC shall not be
responsible for loss of or damage to Equipment during this Agreement not arising
solely from SBC's negligence or intentional conduct. Neither Party shall be
liable for loss of profits, except as otherwise provided for herein. In
addition, neither party shall be liable for direct, indirect, incidental,
special, consequential or other damages under this Agreement. SBC shall not be
liable for Phone1's failure to abide by any state or federal law, rule or
regulation related to the Services provided by Phone1 under this Agreement.

21. TECHNOLOGY ESCROW AGREEMENT

     Phone1 and SBC agree that within thirty (30) days of the Acceptance Trial
and, if accepted by SBC, Phone1 shall deposit Phone1's call platform
specifications, including hardware specifications, operating system requirement,
etc, along with the source code and related documentation for the Upgrade (or
Alternate Upgrade) into an escrow account, pursuant to a reasonable and
appropriate Technology Escrow Agreement entered into by and between Phone1, SBC,
and the escrow agent similar in form and content as that shown as Exhibit G. Any
disputes relating to the Escrow Agreement, including whether a triggering event
has occurred or Phone1's consent to release the source code, shall be resolved
pursuant to the Dispute Resolution provisions of this Agreement. At a minimum,
the escrow agreements shall provide that:

     A.   The copy of the source code placed in escrow shall be reproduced and
          maintained on magnetic medium compatible with the equipment on which
          the Services are provided to SBC;

     B.   The source code shall be accompanied by full documentation and other
          information and technical materials that will enable a reasonably
          skilled technician, programmer or analyst to maintain or enhance the
          subject software without references to any other materials. This
          information and materials shall include maintenance tools (test
          programs and program specifications), proprietary or third party
          system utilities (compiler and assembler descriptions), a description
          of the system/program generation, and descriptions and locations of
          programs not owned by Phone1 that are required for use and/or support
          of the Services;

     C.   When a change is made to the source code during the term of this
          Agreement, the revised source code shall be deposited into escrow no
          later than seven (7) days after the source code has been revised, and
          the immediately preceding version of the source code shall remain in
          escrow with the revised version. All deposits of revisions to the
          source code shall include the documentation and other information and
          materials described in paragraph B above;

     D.   The escrow agreement shall authorize the escrow agent to release the
          versions of the source code held in escrow to SBC immediately upon
          SBC's notification and the consent of Phone1, such consent not to be
          unreasonably withheld or delayed, to the escrow agent that one of the
          triggering events has occurred, and Phone1 has failed to immediately
          provide the source code to SBC. Such triggering events are outlined in
          Exhibit G, Section 3

                                       12
<PAGE>

22. NOTICES

     A.   Any notice which under the terms of this Agreement must or may be
          given or made by either Party hereunder shall be in writing and shall
          be delivered personally or sent by U.S. Mail, express delivery service
          or by certified mail, return receipt requested, addressed to the
          respective Parties at the addresses set forth below:
<TABLE>
<CAPTION>
                  To Phone1:                                  To SBC:
                  ----------                                  -------
<S>                    <C>
                  Phone1 Inc.                                 SBC Public Communications
                  100 North Biscayne Blvd.-25th Fl.           225 W. Randolph Street      - Floor 15C
                  Miami, Florida 33132                        Chicago, Illinois 60606
                  Attn: Dario Echeverry, CEO                  Attn:  Kirk J. Moser, Director of Contracts
</TABLE>

     B.   Notices will be deemed to have been received as of the earlier of the
          date of actual receipt or, in case of notices sent via U.S. mail,
          three (3) days after mailing. A signed receipt shall be obtained where
          a notice is delivered in person.

23. [CONFIDENTIAL INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH
    THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2]

24. INSURANCE

     A.   Prior to the execution of this Agreement, Phone1 shall have obtained
          and shall maintain during the term of this Agreement: (a) Workers'
          Compensation insurance as prescribed by the law of the state in which
          Phone1's obligations under this Agreement are performed, (b)
          Employer's Liability insurance with limits of at least $1,000,000 for
          each occurrence, (c) Commercial General Liability insurance
          (including, but not limited to, contractual and products liability
          coverage) with combined single limits for each occurrence of at least
          $2,000,000, (d) if the use of motor vehicles is required, Commercial
          Automobile Liability insurance (including hired and non-owned
          coverage) with combined single limits for each occurrence of at least
          $2,000,000 for bodily injury and property damage, (e) Comprehensive
          Crime Insurance (including employee dishonesty (fidelity bond)
          coverage and theft, disappearance, and destruction coverage) with
          limits of at least $100,000 per occurrence and with "Loss Payable in
          Favor of SBC".

     B.   Neither Phone1 nor Phone1's insurer(s) shall have a claim, right of
          action or right of subrogation against SBC based on any occurrence
          insured against, in whole or in part, under the foregoing insurance.
          Phone1's policy shall be endorsed to name "SBC Services, Inc., its
          subsidiaries and corporate affiliates" as additional insureds and
          state: "SBC is to be notified in writing at least thirty (30) days
          prior to cancellation of or any material change in this policy."
          Phone1 shall furnish a copy of the endorsement and certificate(s)
          evidencing the foregoing insurance coverage prior to commencement of
          Services hereunder and, if applicable, annually thereafter during the
          term of this Agreement. Phone1's purchase of insurance shall not in
          any way limit Phone1's liability under this Agreement.

                                       13
<PAGE>

25.      ASSIGNMENT

     Neither Party may assign this Agreement in whole or in part without the
written consent of the other Party, which consent may be withheld for any
reason.

26. INDEPENDENT CONTRACTOR

     Phone1 shall perform the Services hereunder as an Independent Contractor,
and nothing herein shall be construed as creating the relationship of
partnership, agency or joint venture between the parties hereto. Neither Phone1
nor Phone1's subcontractors nor their employees shall be deemed for any purpose
to be employees of SBC. Accordingly, neither Phone1 nor its employees shall be
entitled as a result of this Agreement to any of the benefits under any employee
benefit plan SBC presently has in effect or may put into effect. Phone1 shall be
solely responsible for the withholding or payment of all applicable federal,
state and local personal income taxes, social security taxes, and other payroll
taxes with respect to their employees, as well as any applicable state
unemployment or compensation act(s). Phone1 has sole authority and
responsibility to hire, fire and otherwise control is employees.

27. DISPUTE RESOLUTION

     A.   If any claim, controversy or dispute between the parties, their
          agents, employees, officers, directors or affiliated agents should
          arise, and the parties do not resolve it in the ordinary course of
          their dealings (the "Dispute"), then it shall be resolved in
          accordance with the dispute resolution process set forth in these
          sections A through C. Each notice of default, unless cured within the
          applicable cure period, shall be resolved in accordance herewith.

     B.   At the written request of either party, and prior to any other formal
          dispute resolution proceedings, each party shall designate an
          officer-level employee with authority to resolve the dispute, to
          review, meet, and negotiate, in good faith, to resolve the Dispute.
          The parties intend that these negotiations be confidential and not to
          prejudice to the legal position of either party, to be conducted by
          non-lawyer, business representatives, and the locations, format,
          frequency, duration, and early conclusion of these discussions shall
          be at the discretion of the representatives. By mutual agreement, the
          representatives may use other procedures, such as mediation, to assist
          in these negotiations. The discussions and correspondence among the
          representatives for the purposes of these negotiations shall be
          treated as Confidential Information developed for purposes of
          settlement, and shall be exempt from discovery and production, and
          shall not be admissible in any subsequent arbitration or other
          proceedings without the concurrence of both the parties.

     C.   If the officer-level representatives have not reached a resolution of
          the Dispute within thirty (30) calendar days after the matter is
          referred to them, then either party may avail themselves to any other
          legal rights they may have.

28. SURVIVAL OF OBLIGATIONS

     The parties' obligations under this Agreement which by their nature are
intended to continue beyond the termination or expiration of this Agreement
shall survive the termination or expiration of this Agreement.

29. NO WAIVER OF RIGHTS

     Failure of either party to insist on performance of any term or condition
of this Agreement or to exercise any right or privilege hereunder shall not be
construed as a waiver of such term, condition, right, or privilege in the
future.

30. SEVERABILITY

     If any provision of this Agreement shall be held invalid or unenforceable,
such provision shall be deemed deleted from this Agreement and replaced by a
valid and enforceable provision which so far as possible achieves the same
economic and other benefits for the parties as the severed provisions was
intended to achieve, and the remaining provisions of this Agreement shall
continue in full force and effect.

                                       14
<PAGE>

31. TAXES

     Phone1 shall be responsible for all taxes related to the Services provided
under this Agreement and SBC shall be responsible for taxes related to the
public pay telephone service within the meaning of Section 276 of the
Telecommunications Act of 1996.

32. AUTHORITY

     Each Party represents to the other that it has full authority to enter into
and secure performance of this Agreement, and that the person signing this
Agreement on behalf of the Party has been properly authorized to enter into this
Agreement. Each Party further acknowledges that it has read this Agreement,
understands it, and agrees to be bound by all of its terms, conditions, and
provisions.

33. ENTIRE AGREEMENT

     The terms contained in this Agreement constitute the entire agreement
between the Parties with respect to the subject matter hereof, superseding all
prior written agreements, including the Services Trial Agreement dated June 26,
2002. This Agreement may not be modified except by a writing signed by the
Parties.

     IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed
by their duly authorized representatives as of the day and year first herein
above mentioned.

SBC SERVICES, INC.,
     FOR ITSELF AND ON BEHALF OF ITS AFFILIATES                 PHONE1, INC.
<TABLE>
<CAPTION>

<S>                                                             <C>
BY: /s/ Randall Feger                                          BY: /s/ Dario Echeverry
   ---------------------------------------------                   ---------------------------------------

NAME: Randall Feger                                            NAME: Dario Echeverry
   ---------------------------------------------                   ---------------------------------------

TITLE: President Public Communications                         TITLE: Chief Executive Officer
    --------------------------------------------                   ---------------------------------------

DATE: December 10, 2002                                        DATE:  December 10, 2002
   ---------------------------------------------                  ---------------------------------------
</TABLE>

<PAGE>
                                  ATTACHMENT A

[CONFIDENTIAL INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2]

<PAGE>
                                  ATTACHMENT B

[CONFIDENTIAL INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2]

<PAGE>
                                    EXHIBIT A
                                  DATA FEED FOR
                        SBC PUBLIC PAY PHONES & LOCATIONS
<TABLE>
<CAPTION>

============================== =========== =========== ========== ==================================================

------------------------------ ----------- ----------- ---------- --------------------------------------------------
1.1      SBC NOTIFICATION FILE LAYOUT

------------------------------ ----------- ----------- ---------- --------------------------------------------------
FIELD NAME                      POSITION     LENGTH    TYPE       FIELD DESCRIPTION / VALUE
------------------------------ ----------- ----------- ---------- --------------------------------------------------
<S>      <C>                      <C>          <C>                <C>
1.       Company                  1-4          4           X      AIT-Ameritech, PB-Pacific Bell, NB-Nevada Bell,
                                                                  SWBT-Southwestern Bell, SNET-Southern New England
------------------------------ ----------- ----------- ---------- --------------------------------------------------
2.       Action Code              5-8          4           X      INST-Install, DISC-Disconnect, CNR1-Customer
                                                                  transfer
------------------------------ ----------- ----------- ---------- --------------------------------------------------
3.       Premise Name             9-30         21          X      Name of Customer
------------------------------ ----------- ----------- ---------- --------------------------------------------------
4.       Address                 31-60         39          X      Street Address, Location
------------------------------ ----------- ----------- ---------- --------------------------------------------------
5.       City                    61-72         12          X      City
------------------------------ ----------- ----------- ---------- --------------------------------------------------
6.       State                   73-74         2           X      2 Char State Abreviation
------------------------------ ----------- ----------- ---------- --------------------------------------------------
7.       Zip                     75-83         9           9      5 or 9 Digit Zip Code
------------------------------ ----------- ----------- ---------- --------------------------------------------------
8.       Telephone Number        84-93         10          9      10 Digit Phone Number
------------------------------ ----------- ----------- ---------- --------------------------------------------------
9.       PIC                     94-97         4           X      0+ PIC
------------------------------ ----------- ----------- ---------- --------------------------------------------------
10.      Industry                98-113        15          X      Description of Industry
============================== =========== =========== ========== ==================================================
TOTAL                                         113
============================== =========== =========== ========== ==================================================
</TABLE>

<PAGE>
                                    EXHIBIT B
                             HANDSET SPECIFICATIONS

Phone1 shall supply handset with cords according to the following
specifications:

Handset Description                                        20"Dynamic  Pac Bell
Length                                                              22"
Wire Color                                                       R,B,W,W,
Wire Length                                                         35"
Inside                                                             Spade
Outside                                                           Female
J-Hook                                                            DM Tube
Length                                                              29"
Paint Color                                                    Phone1 Yellow

NOTE: Handset must meet or exceed Bellcore TR-NWT-000452, Issue 2 "Generic
Requirements for Public Telephone Handsets"

<PAGE>

                                    EXHIBIT C
                        PHONE1/SBC INSTALLATION SCHEDULE

Beginning 12/15/02, a 90-day rolling implementation schedule, that is mutually
agreeable to both SBC and Phone1, will be produced.

<PAGE>
                                    EXHIBIT D
                            CALL DETAIL RECORD FORMAT

1.       RECORD LAYOUT
1.1      HEADER RECORD LAYOUT
<TABLE>
<CAPTION>

------------------------------ ----------- ----------- ---------- --------------------------------------------------
FIELD NAME                      POSITION     LENGTH    TYPE       FIELD DESCRIPTION / VALUE
------------------------------ ----------- ----------- ---------- --------------------------------------------------
<S>      <C>                       <C>         <C>        <C>     <C>
1.       Record Type               1           4           X      Value: "0001"
------------------------------ ----------- ----------- ---------- --------------------------------------------------
2.       File Identifier           5           5           X      Reserved for Future Use
------------------------------ ----------- ----------- ---------- --------------------------------------------------
3.       Date                      10          8           9      Date File Was Created.
                                                                  Format: YYYYMMDD
------------------------------ ----------- ----------- ---------- --------------------------------------------------
4.       Time                      18          4           9      Time File was Created. Format: HHMM
                                                                  (Military time - 11:01PM = 2301)
------------------------------ ----------- ----------- ---------- --------------------------------------------------
5.       Sequence Number           22          4           9      Sequence number. Field Will Increment by 1 to
                                                                  9999. Right Justified, Zero Filled
                                                                  If the file is resent, it will have the same
                                                                  sequence number
------------------------------ ----------- ----------- ---------- --------------------------------------------------
6.       Filler                    26          49          X      Blanks.
------------------------------ ----------- ----------- ---------- --------------------------------------------------
7.       EOL                       75          1                  End of Line
============================== =========== =========== ========== ==================================================
TOTAL                                          75
============================== =========== =========== ========== ==================================================
<CAPTION>

1.2      TRAILER RECORD LAYOUT

------------------------------ ----------- ----------- ---------- --------------------------------------------------
FIELD NAME                      POSITION     LENGTH    TYPE       FIELD DESCRIPTION / VALUE
------------------------------ ----------- ----------- ---------- --------------------------------------------------
<S>      <C>                       <C>         <C>        <C>     <C>
1.       Record Type               1           4           X      Value: "0002"
------------------------------ ----------- ----------- ---------- --------------------------------------------------
2.       File Identifier           5           5           X      Reserved for Future Use
------------------------------ ----------- ----------- ---------- --------------------------------------------------
3.       Date                      10          8           9      Date File Was Created.
                                                                  Format: YYYYMMDD
------------------------------ ----------- ----------- ---------- --------------------------------------------------
4.       Time                      18          4           9      Time File was Created. Format: HHMM
                                                                  (Military time - 11:01PM = 2301)
------------------------------ ----------- ----------- ---------- --------------------------------------------------
5.       Record Count              22          4           9      A Count of All The Detail Rrecords. Header and
                                                                  Trailer records are Not Counted. Right
                                                                  Justified, Zero Filled.
------------------------------ ----------- ----------- ---------- --------------------------------------------------
6.       Filler                    26          49          X      Blanks.
------------------------------ ----------- ----------- ---------- --------------------------------------------------
7.       EOL                       75          1                  End of Line
============================== =========== =========== ========== ==================================================
TOTAL                                          75
------------------------------ ----------- ----------- ---------- --------------------------------------------------
<CAPTION>

1.3      DETAIL RECORD LAYOUT

------------------------------ ----------- ----------- ---------- --------------------------------------------------
FIELD NAME                      POSITION     LENGTH    TYPE       FIELD DESCRIPTION / VALUE
------------------------------ ----------- ----------- ---------- --------------------------------------------------
<S>      <C>                       <C>         <C>        <C>     <C>
1.       ORIGTN                   1-10         10          X      Ten digit number of the payphone (area code,
                                                                  prefix, and last 4 digits)
------------------------------ ----------- ----------- ---------- --------------------------------------------------
2.       CONN_DATE_TIME          11-18         8           X      Date and time the call was made - YYYYMMDDHHMMSS
------------------------------ ----------- ----------- ---------- --------------------------------------------------
3.       DURATION                19-27         9           9      Length of call in seconds (SSSSSSSSS)
------------------------------ ----------- ----------- ---------- --------------------------------------------------
4.       TERMTN                  28-43         16          X      16 digits terminating number
------------------------------ ----------- ----------- ---------- --------------------------------------------------
5.       JURISDICTION            44-47         4           X      ASAL(intrastate intraLata);
                                                                  ASEL(intrastate interLata);
                                                                  ESAL(interstate interLata);
                                                                  ESEL(interstate intraLata);
                                                                  USIL(USA to International)
------------------------------ ----------- ----------- ---------- --------------------------------------------------
6.       REV                     48-58        11.2       9V99     Revenue (usage charges and service charges
                                                                  combined)
------------------------------ ----------- ----------- ---------- --------------------------------------------------
7.       CALLCAT                 59-61         3           X      CC=calling card;
                                                                  COL=collect;
                                                                  3RD=third party;
                                                                  Billed out collect ="O";
                                                                  SP = Coin;
                                                                  otherwise=blank
------------------------------ ----------- ----------- ---------- --------------------------------------------------
8.       BLG_IND                   62          1           X
------------------------------ ----------- ----------- ---------- --------------------------------------------------
9.       FILLER                    63          12          X      Blanks
------------------------------ ----------- ----------- ---------- --------------------------------------------------
10.      EOL                       75          1                  END OF LINE
============================== =========== =========== ========== ==================================================
TOTAL                                          75
------------------------------ ----------- ----------- ---------- --------------------------------------------------
</TABLE>

<PAGE>
                             UPGRADE SPECIFICATIONS
                             ----------------------
                                    EXHIBIT E
                                    ---------

Call Testing   Complete call testing is critical to determine if the phone is
               functioning properly and rating calls accurately. At a minimum
               the following call testing must be completed on each station
               after programming:

[CONFIDENTIAL INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2]

<PAGE>

                                    EXHIBIT F

              PHONE1 PRIORITY DESCRIPTIONS AND ESCALATION PROCEDURE

[CONFIDENTIAL INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2]

<PAGE>

                                EXHIBIT F - CONT'

                              ESCALATION TIME LINES

[CONFIDENTIAL INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2]

<PAGE>

                                EXHIBIT F - CONT'

                              PRIORITY EXPLANATIONS

[CONFIDENTIAL INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2]

<PAGE>

           THE FOLLOWING ARE PROCEDURES AS TO HOW TICKET HANDLING AND
           ----------------------------------------------------------
                            ESCALATIONS WILL OCCUR:
                            -----------------------

[CONFIDENTIAL INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2]

<PAGE>

                                    EXHIBIT G

                           TECHNOLOGY ESCROW AGREEMENT

THIS ESCROW AGREEMENT, effective December __, 2002 (the "Escrow Agreement"), is
among SBC Services, Inc. ("SBC"), Phone1, Inc. ("Phone1") and
__________________________ ("Escrow Agent").

Pursuant to that certain "Sent Paid Services Agreement From SBC Pay Phones
Between SBC Services, Inc. and Phone1, Inc. ("the Primary Agreement"), the
parties agree as follows:

1.   Phone1 agrees to keep current copies of the source code and other materials
     for the Phone1 Services Software ("Deposit Materials") described in
     ATTACHMENT 1, attached hereto and made a part hereof, (herein referred to
     as the "Software") in escrow with Escrow Agent during the term of the
     Primary Agreement, in accordance with the provisions of the Primary
     Agreement and this Escrow Agreement.

2.   Phone1 shall bear all costs of providing and maintaining the Deposit
     Materials in escrow, including the fees of Escrow Agent. The copy of the
     Deposit Materials provided to SBC placed in escrow shall be reproduced and
     maintained on magnetic tape compatible with workstations and the Systems on
     which the Software will operate and shall be accompanied by full
     documentation therefor. When a new release or substantial change to the
     current release of the Software is issued by or on behalf of Phone1 during
     the term of the Escrow Agreement, the revised Deposit Materials, including
     the change, shall be delivered to the Escrow Agent as soon as practicable
     after the change is effected by or on behalf of Phone1. Copies of the
     revised Deposit Materials and the Deposit Materials prior to the then
     latest revision, shall be maintained in escrow as provided herein.

3.   Subject to the terms and conditions of this Escrow Agreement, Escrow Agent
     shall release the Deposit Materials to SBC under the following conditions
     (a "Release Condition"):

     (a)  Except as limited below, existence of any one or more of the following
          circumstances, uncorrected for more than thirty (30) days:

          (1)  all or any material part of such source code is made available by
               Phone1 to any other pay phone provider under an agreement
               substantially similar in scope to this Escrow Agreement;

                      RESTRICTED - CONFIDENTIAL INFORMATION

The information contained herein is for use by persons authorized by SBC
Services, Inc. and PHONE1, Inc. only and is not for general distribution within
or outside their respective companies. Disclosure is restricted in accordance
with Confidentiality Clause of the Agreement.

<PAGE>

          (2)  Phone1 ceases, for any reason, to do business, other than in
               connection with a corporate reorganization;

          (3)  Phone1 materially fails, for any reason, to satisfy its
               maintenance obligations under the Primary Agreement in connection
               with the Services;

          (4)  Phone1, after having reasonably been requested by SBC to provide
               adequate assurance of due performance of Phone1's maintenance and
               other obligations in connection with the subject Services, under
               the Primary Agreement, fails to provide such adequate assurance
               in writing within ten (10) business days of the request;

          (5)  Phone1 makes an assignment for the benefit of creditors, admits
               in writing its inability to pay debts as they mature, has a
               trustee or receiver appointed to manage all or a substantial part
               of its assets, or commences or has commenced against it a
               proceeding under the United States Bankruptcy Code and such
               proceeding is acquiesced in or is not dismissed within sixty (60)
               days;

          (6)  an order for relief under Title 11 of the Federal Bankruptcy Code
               is entered against Phone1;

          (7)  the making by Phone1 of a general assignment for the benefit of
               creditors;

          (8)  the appointment of a general receiver or trustee in bankruptcy of
               Phone1's business or property; or

          (9)  action by Phone1 under any state insolvency or similar law for
               the purpose of its bankruptcy, reorganization for the benefit of
               creditors, or liquidation.

          Notwithstanding the foregoing, the occurrence of the described events
          will not trigger release of the Deposit Materials if, within the
          specified thirty (30) day period, Phone1 provides to SBC adequate
          assurances, reasonably acceptable to SBC, of its continued ability and
          willingness to fulfill all of its maintenance and support obligations
          under the Primary Agreement.

                      RESTRICTED - CONFIDENTIAL INFORMATION

The information contained herein is for use by persons authorized by SBC
Services, Inc. and PHONE1, Inc. only and is not for general distribution within
or outside their respective companies. Disclosure is restricted in accordance
with Confidentiality Clause of the Agreement.

<PAGE>

     (b)  If SBC believes in good faith that a Release Condition has occurred,
          SBC may provide to Escrow Agent written notice of the occurrence of
          the Release Condition and a request for the release of the Deposit
          Materials ("REQUEST FOR RELEASE"). Such Request for Release shall be
          accompanied by an affidavit (the "AFFIDAVIT") signed by SBC attesting:

          (1)  To a full description of the Release Condition; and

          (2)  That the Deposit Materials shall continue to be the sole property
               of Phone1 and shall be subject to the confidentiality provisions
               of the Agreement; and

          (3)  That the Deposit Materials shall be used solely for SBC's support
               and maintenance, modification or correction of the Phone1
               Services Software utilized on SBC public pay telephones,
               including the creation of derivative works in order to provide
               SBC the benefits intended under the Primary Agreement (but not
               for purposes of sublicensing), but shall not extend or enlarge
               upon the rights of SBC under the Primary Agreement; and

          (4)  That, notwithstanding delivery of the Deposit Materials to SBC,
               the Primary Agreement will continue in full force and effect in
               accordance with its terms; and

          (5)  That upon expiration of the Primary Agreement, SBC will cease to
               use the Deposit Materials and will deliver all copies of the
               Deposit Materials to Phone1; and

          (6)  That, in the event SBC engages the services of any third party in
               connection with SBC's use of the Deposit Materials as
               contemplated hereby, it will enter into an appropriate
               confidentiality agreement with the third party so as to protect
               Phone1's ownership of and rights to the Deposit Materials; and

          (7)  That a copy of the Request for Release and said Affidavit have
               been provided to Phone1.

          Within three (3) business days of receipt of a Request for Release,
          Escrow Agent shall provide a copy of the Request for Release and the
          Affidavit to Phone1, by certified mail, return receipt requested, or
          by commercial express mail.

          From the date Escrow Agent mails the notice requesting release of the
          Deposit Materials, Phone1 shall have five (5) business days to deliver
          to Escrow Agent contrary instructions. "CONTRARY INSTRUCTIONS" shall
          mean the written representation by Phone1 that a Release Condition has
          not occurred or has been cured. Upon receipt of Contrary Instructions,
          Escrow Agent shall send a copy to SBC by certified mail, return
          receipt requested, or by commercial express mail. Additionally, Escrow
          Agent shall notify both SBC and Phone1 that there is a dispute to be
          resolved pursuant to the Dispute Resolution Section of the Primary
          Agreement (Section 27). Escrow Agent will continue to store the
          Deposit Materials without release pending the first to occur of: (i)
          joint instructions from Phone1 and SBC; (ii) resolution pursuant to
          the Dispute Resolution provisions; or (iii) order of a court.

                      RESTRICTED - CONFIDENTIAL INFORMATION

The information contained herein is for use by persons authorized by SBC
Services, Inc. and PHONE1, Inc. only and is not for general distribution within
or outside their respective companies. Disclosure is restricted in accordance
with Confidentiality Clause of the Agreement.

<PAGE>

          If Escrow Agent does not receive Contrary Instructions from Phone1,
          Escrow Agent is authorized to release the Deposit Materials to SBC.

4.   Escrow Agent shall be responsible to perform its obligations under this
     Escrow Agreement and to act in a reasonable and prudent manner with regard
     to this Escrow Agreement. Provided Escrow Agent has acted in the manner
     stated in the preceding sentence, the Party on whose behalf, or pursuant to
     whose direction Escrow Agent acts, shall indemnify, defend and hold
     harmless Escrow Agent from any and all claims, actions, damages,
     arbitration fees and expenses, costs, attorney's fees and other liabilities
     incurred by Escrow Agent relating in any way to this Escrow Agreement.
     Absent any such direction, Phone1 and SBC shall jointly and severally
     indemnify and hold harmless Escrow Agent from any and all claims, actions,
     damages, arbitration fees and expenses, costs, attorney's fees and other
     liabilities incurred by Escrow Agent relating in any way to this Escrow
     Agreement, except for any Liability, costs or expenses that may be
     sustained or incurred by the gross negligence or willful misconduct on the
     part of Escrow Agent, its employees or agents.

5.   Any dispute relating to or arising from this Escrow Agreement that cannot
     be resolve pursuant to the Primary Agreement shall be resolved by
     arbitration under the Commercial Rules of the American Arbitration
     Association. Any court having jurisdiction over the matter may enter
     judgment on the award of the arbitrator(s). Service of a petition to
     confirm the arbitration award may be made by First Class mail or by
     commercial express mail, to the attorney for the Party or, if
     unrepresented, to the Party at the last known business address.

6.   In the event of the nonpayment of fees owed to Escrow Agent, Escrow Agent
     shall provide written notice of delinquency to the parties to this Escrow
     Agreement affected by such delinquency. Any such Party shall have the right
     to make the payment to Escrow Agent to cure the default. If the past due
     payment is not received in full by Escrow Agent within one (1) month of the
     date of such notice, then at any time thereafter Escrow Agent shall have
     the right to terminate this Escrow Agreement to the extent it relates to
     the delinquent Party by sending written notice of termination to such
     affected parties. Escrow Agent shall have no obligation to take any action
     under this Escrow Agreement so long as any payment due to Escrow Agent
     remains delinquent.

7.   Upon termination of this Escrow Agreement by joint instruction of Phone1
     and SBC, Escrow Agent shall destroy, return, or otherwise deliver the
     Deposit Materials in accordance with such instructions. Upon termination
     for nonpayment, Escrow Agent may, at its sole discretion, destroy the
     Deposit Materials or return them to Phone1. Escrow Agent shall have no
     obligation to return or destroy the Deposit Materials if the Deposit
     Materials are subject to another escrow agreement with Escrow Agent.

                      RESTRICTED - CONFIDENTIAL INFORMATION

The information contained herein is for use by persons authorized by SBC
Services, Inc. and PHONE1, Inc. only and is not for general distribution within
or outside their respective companies. Disclosure is restricted in accordance
with Confidentiality Clause of the Agreement.

<PAGE>

8.   All notices, invoices, payments, deposits and other documents and
     communications ("Notices") shall be given to the parties at the address
     specified in Section 22 of the Primary Agreement, except that Notice to the
     Escrow Agent shall be provided to it at the address set forth on the
     signature page to this Escrow Agreement. It shall be the responsibility of
     the parties to notify each other as provided in this Section in the event
     of a change of address. The parties shall have the right to rely on the
     last known address of the other parties. Unless other wise provided in this
     Escrow Agreement, all Notices may be delivered by First Class mail.

IN WITNESS WHEREOF, this Escrow Agreement has been executed by authorized
representatives of the parties hereto, as of the date first set forth above.

<TABLE>
<CAPTION>

<S>                                                           <C>
         PHONE1, INC.                                         SBC SERVICES, INC.

         By:                                                  By:
            -------------------------------                      ----------------------------------

         Print Name:                                          Print Name:
            -------------------------------                      ----------------------------------

         Title:                                               Title:
            -------------------------------                      ----------------------------------

         Date Signed:                                         Date Signed:
            -------------------------------                      ----------------------------------

            -------------------------------
                  (Name of Escrow Agent)

         By:
            -------------------------------

         (Print Name)

         Title:
            -------------------------------

         Date:
            -------------------------------

         Signed:
            -------------------------------

         Address:
            -------------------------------

            -------------------------------
</TABLE>

                      RESTRICTED - CONFIDENTIAL INFORMATION

The information contained herein is for use by persons authorized by SBC
Services, Inc. and PHONE1, Inc. only and is not for general distribution within
or outside their respective companies. Disclosure is restricted in accordance
with Confidentiality Clause of the Agreement.<PAGE>

EXHIBIT 10.16

                AMENDMENT NO. 2 TO SECURITIES PURCHASE AGREEMENT

     This Amendment No. 2 to Securities Purchase Agreement, dated as of December
9, 2002, shall serve to amend the Securities Purchase Agreement (the
"Agreement"), dated as of May 15, 2002, as amended by Amendment No. 1 to
Securities Purchase Agreement dated as of August 21, 2002, by and among Torbay
Holdings, Inc., a Delaware corporation with its headquarters located at 4
Mulford Place, Suite 2G, Hempstead, New York 11550, and each of the Buyers set
forth in the Agreement.

1.     The undersigned parties hereby agree to amend Section 4(l) of the
Agreement to provide that the Buyers will fund the final $195,000 of the
subsequent investment on the date hereof, instead of within five (5) business
days following the Effective Date of the Registration Statement (as defined in
the Agreement).

2.     All other provisions of the Agreement shall remain in full force and
effect.

                            [Signature Page Follows]

<PAGE>

ACCEPTED AND AGREED:

TORBAY HOLDINGS, INC.

By:_____________________________________
     William Thomas Large
     President and Chief Executive Officer

AJW PARTNERS, LLC
By: SMS Group, LLC

By:_____________________________________
     Corey S. Ribotsky
     Manager

AJW OFFSHORE, LTD.
By:  First Street Manager II, LLC

By: ____________________________________
     Corey S. Ribotsky
Manager

AJW QUALIFIED PARTNERS, LLC
By:  AJW Manager, LLC

By: _____________________________________
     Corey S. Ribotsky
     Manager

<PAGE>

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