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Exhibit 10.3  

 
 

ETS CREDITORS' LITIGATION TRUST AGREEMENT    
    

        AGREEMENT AND DECLARATION OF TRUST (the "Litigation Trust Agreement"), dated as of December 4, 2002 (the
"Effective Date") by and among PSA Inc., ETS Payphones, Inc., ETS Vending, Inc., et. al., debtors and
debtors-in-possession (collectively, the "Debtors"), the Official Committee of Unsecured Creditors in the Debtors' cases (the "Creditors' Committee") and Darryl S. Laddin, as
trustee (the "Trustee") and Kevin Gross, as potential conflicts trustee (the "Conflicts Trustee"). 

        WHEREAS, on September 11 and 21, 2000, the Debtors filed petitions for relief under chapter 11 of title 11 of the United States
Code, 11 U.S.C. §§ 101 - 1330 (the "Bankruptcy Code"); 

        WHEREAS, on July 25, 2001, the Debtors and the Committee filed the First Amended Joint Reorganization Plan (the "Plan"), pursuant
to section 1121 of the Bankruptcy Code, which contemplates the eventual distribution to creditors of the Debtors' Estate of certain estate assets after such assets are collected; 

        WHEREAS, on November 14, 2001 the Bankruptcy Court entered an order confirming the Plan (the "Confirmation Order"); and 

        WHEREAS, the Plan provides for the creation of a trust to coordinate the initiation, prosecution, resolution, defense and settlement of
certain claims and causes of action of the estate (the "Litigation") and the distribution of certain assets subject to collection (the "Proceeds"). 

        NOW, THEREFORE, in consideration of the mutual premises and other valuable consideration, and subject to the terms and provisions set out
in this Litigation Trust Agreement, (i) the Debtors and the Creditors' Committee hereby grant, assign, transfer, convey and deliver to the Trustee of the ETS Creditors' Litigation Trust, all of
the Debtors' right, title and interest in and to each and every claim and cause of action (and the property and proceeds arising therefrom) of the Debtors and the Creditors' Committee existing as of
the Petition Date against (a) Charles Edwards, (b) any insider of the Debtors, (c) any Person, provided that such claim or cause of action arises under or relates to sections 544,
547, 548, 549 and 550 of the Bankruptcy Code or theories of conversion, breach of fiduciary duty or fraud, (d) any Person, provided that such claim or cause of action arises under or relates to
Debtors' alleged violations of Federal and State Securities laws or allegations set forth in the SEC Action, (e) any Person, provided that such claim or cause of action arises in connection
with or relates to Debtors' sale of payphones, (f) any officer, director, agent, affiliate, spouse, insider, initial transferee or subsequent transferee of any of the Persons described in
clauses (a) through (e) of this sentence, and any person acting in concert with or under the direction or control of any of the Persons described in clauses (a) through
(e) of this sentence (collectively, such claims and causes of action as referred to in this clause (i), the "Claims"); and (ii) the Trustee hereby accepts the foregoing rights and
properties so assigned and transferred to it and the trust so imposed upon it and agrees to initiate, prosecute, defend, retain, enforce, compromise and settle the Claims on behalf of and for the
benefit of (x) the Holders of Allowed Class 3 General Unsecured Claims and (y) the Holders of Allowed Class 4 Payphone Investor Claims, as the beneficiaries of this Trust
(collectively, the "Beneficiaries"), and further agrees to be appointed for such purpose under section 1123(b)(3)(B) of the Bankruptcy Code and to hold all amounts that may be delivered to it
from time to time in trust for the Beneficiaries; provided, however, that in the event that the Trustee determines in its sole and absolute discretion
that a Claim of the Estate should not be pursued, the Trustee need not pursue any such Claim. Notwithstanding anything to the contrary contained in this Litigation Trust Agreement, any proceeds
realized from potential claims and causes of action of the Debtors arising after the Petition Date or related to prepetition breaches of contract, the Debtors' interest in New York Local Telephone
Company, the Debtors' investment in Mexico, and Debtors' interest in the EUCL litigation and similar litigation, shall not be part of the Trust but shall remain assets of the Debtors and Reorganized
ETS. 

 

ARTICLE I

NAME AND DEFINITIONS  

       1.01  Name. This trust shall be known as the ETS Creditors' Litigation Trust (the "Trust"). 

       1.02  Certain Terms Defined. Terms defined in the Plan, and not otherwise defined herein, shall, when used herein (including
in the recitals hereto), have the meanings ascribed to such terms in the Plan. 

       1.03  Meanings of Other Terms. Except where the context otherwise requires, words importing the masculine gender include the
feminine and the neuter, if appropriate, words importing the singular number shall include the plural number and vice versa and words importing persons shall include firms, associations, corporations
and other entities. All references herein to Articles, Sections and other subdivisions, unless referring specifically to the Plan, refer to the corresponding Articles, Sections and other subdivisions
of this Litigation Trust Agreement, and the words herein and words of similar import refer to this Litigation Trust Agreement as a whole and not to any particular Article, Section or subdivision of
this Litigation Trust Agreement. 

ARTICLE II

NATURE OF TRANSFER  

       2.01  Purpose of Trust. The primary purpose of this Litigation Trust Agreement is to implement portions of the Plan by
providing for the vesting in the Trustee of the ownership of and the responsibility for the protection and conservation of the Trust Estate on behalf of and for the benefit of the Beneficiaries. Such
responsibility shall be limited to the initiation, prosecution, retention, settlement, compromise and enforcement by the Trustee on behalf of and for the benefit of the Beneficiaries and the
preservation of, all Claims and causes of action that have been or may in the future be asserted by the Trustee, the collection of the Proceeds, the payment of the costs and expenses of litigation,
the making of any other payments provided to be made from the Trust Estate and the distribution of the Proceeds from the Trust Estate to the Beneficiaries in accordance with the provisions of the Plan
and this Litigation Trust Agreement. Except as otherwise provided in the Plan, the assets placed into this Trust shall automatically vest in the Trust on the Effective Date without any further action
required on the part of the Debtors, Reorganized ETS, the Creditors' Committee or the Trustee, and any assignment, execution, delivery, filing or recording as necessary of documents evidencing such
transfer, conveyance and physical delivery of such interests and property shall occur as soon thereafter as practical. All Claims, causes of action and any other assets transferred to this Trust shall
vest in the Trust free and clear of all liens, claims and encumbrances, except as otherwise specifically provided in the Plan. 

       2.02  Instruments of Further Assurance. The Debtors and the Creditors' Committee shall, upon the reasonable request of the
Trustee, execute, acknowledge and deliver such further instruments and do such further acts as may be necessary or proper to carry out effectively the purpose of this Litigation Trust Agreement. 

       2.03  Incidents of Ownership. The Beneficiaries shall be the beneficiaries of the trust created by this Litigation Trust
Agreement and the Trustee shall retain only such incidents of ownership as are necessary to undertake the actions and transactions authorized herein. No certificates or other instruments shall be
issued evidencing the Beneficiaries' interests in proceeds from the Trust. 

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ARTICLE III

BENEFICIARIES  

       3.01  Beneficial Interests. (a) The beneficial interest of each Beneficiary shall be that portion of the Proceeds to
which such Beneficiary is entitled under Section 5.02 hereof (each, a "Beneficial Interest"). 

        (b)   If
any conflicting claims or demands are made or asserted with respect to the Beneficial Interest of any Beneficiary, or if there is any disagreement between the
transferees, assignees, heirs, representatives or legatees succeeding to all or any part of the interest of any Beneficiary resulting in adverse claims or demands being made in connection with such
interest, then, in any of such event, the Trustee shall be entitled, at its sole election, to refuse to comply with any such conflicting claims or demands. In so refusing, the Trustee may elect to
make no payment or distribution with respect to the Beneficial Interest represented by the claim involved, or any part thereof and to refer such conflicting claims or demands to the Bankruptcy Court,
which shall have exclusive jurisdiction over resolution of such conflicting claims or demands. In so doing the Trustee shall not be or become liable to any of such parties for its refusal to comply
with any of such conflicting claims or demands, nor shall the Trustee be liable for interest on any funds which it may so withhold. The Trustee shall be entitled to refuse to act until either
(i) the rights of the adverse claimants have been adjudicated by a final judgment of the Bankruptcy Court or (ii) all differences have been resolved by a valid written agreement among
all of such parties and the Trustee, which agreement shall include a complete release of the Trustee. 

       3.02  Rights of Beneficiaries. Each Beneficiary shall be entitled to participation in the rights and benefits due to a
Beneficiary hereunder according to its Beneficial Interest. Each Beneficiary shall take and hold the same subject to all the terms and provisions of this Litigation Trust Agreement. The interest of a
Beneficiary is hereby declared and shall be in all respects personal property. Upon the death of an individual who is a Beneficiary, his interest shall pass as personal property to his legal
representative and such death shall in no way terminate or affect the validity of this Litigation Trust Agreement. Upon the merger, consolidation or other similar transaction involving a Beneficiary
that is not an individual, such Beneficiary's interest shall be transferred by operation of law and such transaction shall in no way terminate or affect the validity of this Litigation Trust
Agreement. Except as expressly provided hereunder, a Beneficiary shall have no title to, right to, possession of, management of or control of the Trust Estate. No widower, widow, heir or devisee of
any individual who may be a Beneficiary and no bankruptcy trustee, receiver or similar person of any Beneficiary shall have any right, statutory or otherwise, (including any right of dower, homestead
or inheritance, or of partition, as applicable), in any property whatever forming a part of the Trust Estate, but the whole title to all the Trust Estate shall be vested in the Trustee and the sole
interest of the Beneficiaries shall be the rights and benefits given to such persons under this Litigation Trust Agreement. 

       3.03  No Transfer of Interests of Beneficiaries. The Beneficial Interest of a Beneficiary shall not be assignable or
transferable, except by will, intestate succession or operation of law, either by the Beneficiary in person, by a duly authorized agent or attorney or by the properly appointed legal representative of
the Beneficiary, nor shall a Beneficiary have authority or power to sell, assign, transfer, encumber or in any other manner anticipate or dispose of its Beneficial Interest, and any such transfer
shall be null and void ab inito; provided, however, that the Beneficial Interest of a Beneficiary may be assignable or transferable if (i) the
Trustee, in its sole discretion, has consented in writing to such assignment or transfer and (ii) such Beneficiary has furnished to the Trustee an opinion of counsel, reasonably satisfactory to
the Trustee, to the effect that the transfer or assignment of such Beneficial Interest may be effected without registration under the Securities Act of 1933, as amended. 

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ARTICLE IV

DURATION AND TERMINATION OF TRUST  

       4.01  Duration. The existence of the Trust shall terminate upon the later of (i) the date that is three
(3) years after the Effective Date and (ii) the conclusion of the prosecution of the Litigation; provided, however, that the Trustee may,
subject to Bankruptcy Court approval, extend the existence of this Trust to such later date as it may designate if the Trustee determines that such an extension is reasonable because the Litigation
has not then been finally settled or final judgment no longer subject to appeal, review or certiorari proceeding with respect thereto has not then been entered. Notwithstanding anything to the
contrary in this Litigation Trust Agreement, in no event shall the Trustee unduly prolong the duration of the Trust, and the Trustee shall at all times endeavor to prosecute, direct, settle or
compromise expeditiously the Litigation, so as to distribute the Proceeds to the Beneficiaries and terminate the Trust as soon as practicable in accordance with this Litigation Trust Agreement. 

       4.02  Termination by Beneficiaries. The Trust may not be terminated at any time by the Beneficiaries. 

       4.03  Continuance of Trust for Winding Up. After the termination of the Trust and solely for the purpose of liquidating and
winding up the affairs of the Trust, the Trustee shall continue to act as such until its duties have been fully performed. Upon distribution of the entire Trust Estate, the Trustee shall retain the
books, records and files which shall have been delivered to or created by the Trustee. At the Trustee's discretion, all of such records and documents may be destroyed at any time after six
(6) years from the distribution of the entire Trust Estate. Except as otherwise specifically provided herein, upon the distribution of the entire Trust Estate, the Trustee shall have no further
duties or obligations hereunder except to account to the Beneficiaries as provided in Section 5.04 hereof. 

ARTICLE V

ADMINISTRATION OF TRUST ESTATE  

       5.01  Payment of Claims, Expenses and Liabilities. The Trustee shall, in its sole discretion, as and when funds are available,
pay from the Trust Estate all claims, expenses, charges, liabilities and obligations of the Trust Estate, including professional fees and expenses as contemplated by this Litigation Trust Agreement
and as required by law, without prior approval of the Bankruptcy Court. 

       5.02  Distributions. The Trustee shall, after making all of the payments required to be made from the Trust Estate under this
Litigation Trust Agreement, and in the Trustee's sole discretion, distribute or cause to be distributed the Proceeds to the Disbursing Agent, to be distributed thereafter to the Beneficiaries in
accordance with the Plan. The Trustee shall not distribute Proceeds hereunder unless (a) all advances made by Reorganized ETS pursuant to Section 13.09 hereof have been repaid by the
Trust or (b) after making any such distribution of Proceeds, the Trust continues to hold more than $600,000 in cash. 

       5.03  Final Distribution. If the Trustee determines that the Proceeds have been collected and all claims, expenses, charges,
liabilities and obligations of the Trust have been discharged or paid from the Trust Estate to the extent funds are available therefrom, or if the existence of the Trust shall terminate pursuant to
Section 4.01 hereof, the Trustee shall, as expeditiously as is consistent with the conservation and protection of the Trust Estate, distribute the Trust Estate to the Beneficiaries in
accordance with Section 5.02, above. 

       5.04  Reports to Beneficiaries. As soon as practicable after the end of each fiscal year of the Trust, the Trustee shall
submit a written report and account to the Bankruptcy Court (and make available to any Holder of a Claim or any party in interest in the Chapter 11 Cases) showing (i) the assets and
liabilities, if any, of the Trust at the end of such fiscal year and the receipts and disbursements of the 

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Trust
for such fiscal year and (ii) if, in the Trustee's sole discretion such would be useful, a brief status report on the Litigation. The Trustee may submit similar reports for such interim
periods during any fiscal year as the Trustee deems advisable in its sole discretion or as may be reasonably requested by Reorganized ETS. The approval of the Beneficiaries of any report or account
shall not be required, and, subject to Article VI hereof, the Trustee's determinations as to all matters and transactions disclosed in such reports shall be final and binding upon all persons,
whether in being or not, who may then be, or thereafter become, interested in the Trust Estate. In addition, within thirty (30) days after the end of each fiscal year, the Trustee shall cause
to be prepared and mailed to each Beneficiary any information with respect to the Trust which is necessary for such Beneficiary to complete and file its federal, state and local income and other tax
returns. 

       5.05  Fiscal Year. The fiscal year of the Trust shall be the calendar year. 

ARTICLE VI

POWERS OF AND LIMITATIONS ON THE TRUSTEE  

       6.01  Limitations on Trustee. The Trustee shall not at any time, on behalf of the Trust or the Beneficiaries, enter into or
engage in any trade or business, and no part of the Trust Estate shall be used or disposed of by the Trustee in furtherance of any trade or business. The Trustee shall be restricted to the initiation,
prosecution, enforcement, compromise and settlement on behalf of and for the benefit of the Beneficiaries of the Claims and the Litigation, the payment and distribution of the Proceeds for the purpose
set forth in this Litigation Trust Agreement and the conservation and protection of the Trust Estate and the administration thereof in accordance with the provisions of this Litigation Trust
Agreement. The Trustee shall be entitled to invest the moneys received by the Trust or otherwise held in the Trust Estate in a manner consistent with the investment and deposit guidelines of
section 345 of the Bankruptcy Code or such other guidelines as may be set forth on Exhibit "A" annexed hereto. 

       6.02  Specific Powers of Trustee. Subject to the limitations set out in this Litigation Trust Agreement and the provisions of
the Plan and the Confirmation Order, the Trustee shall have in addition to any powers conferred upon him by any other Section or provision of this Litigation Trust Agreement, the power to take any and
all actions as, in the sole and absolute discretion of the Trustee, are necessary or advisable to effectuate the purpose of the Trust, including the following specific powers: 

        (a)   To
retain all or any assets constituting part of the Trust Estate, to hold legal title to property of the Trust in the name of the Trust, to invest or reinvest funds of
the Trust only as provided in Section 6.01 of this Litigation Trust Agreement and to cause such investments of any part to be registered and held in its name, as Trustee, or in the names of
nominees. 

        (b)   if
any Proceeds are recovered in a form other than cash and not reasonably susceptible to distribution, or if valuation of Proceeds is otherwise necessary or appropriate
in order for the Trustee to carry out its duties hereunder, to take such action as may, in its sole and absolute discretion, be necessary or appropriate to value and reduce such Proceeds to a form
susceptible to distribution, including, but not limited to, retaining professionals for such purpose, which professionals may be reasonably compensated therefor from the Trust Estate. 

        (c)   To
make or cause to be made payments out of the Trust Estate as and when funds or Proceeds are available. 

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        (d)   To
investigate, initiate, prosecute, defend, monitor, supervise, direct, compromise or settle all Claims assigned to the Trust including, without limitation, avoidance
actions; making continuing efforts to liquidate the assets of the Trust; making timely distributions, filing tax returns, establishing and maintaining the various reserve accounts contemplated by the
Plan, if any; maintaining appropriate records and accountings; paying reasonable expenses of the Trust; resolving, with the aid of the Bankruptcy Court, if necessary, any tax issue or liability
relating to the Trust; and in connection therewith, at the Trustee's sole discretion, to retain and employ such agents and professionals and to confer upon them such authority as the Trustee may deem
expedient to carry out its duties hereunder and to pay reasonable compensation therefor from the Trust Estate. 

        (e)   To
perform any act authorized, permitted or required by the Plan or by this Litigation Trust Agreement, consistent with the purpose of this Litigation Trust Agreement,
whether in the nature of an approval, consent, demand, notice or otherwise. 

        (f)    To
act as a "party in interest" pursuant to section 1109(b) of the Bankruptcy Code for all matters arising in, arising under or related to the Chapter 11 Cases
and Reorganized ETS, including without limitation, the right and ability to request examinations pursuant to Rule 2004 of the Federal Rules of Bankruptcy Procedure, and otherwise to appear and
be heard on matters brought before the Bankruptcy Court or other courts of competent jurisdiction, be entitled to notice and opportunity for hearing, and participate, at the Trustee's discretion, in
all matters brought before the Bankruptcy Court. 

        (g)   To
waive or assert the attorney-client privilege or other applicable privileges and immunities on behalf of the Debtors and/or the Creditors' Committee. If it shall
appear to the Trustee that the Trustee's waiver or assertion of any privilege or immunity would prejudice claims or causes of action that are property of Reorganized ETS rather than the Trust, the
Trustee shall consult with Reorganized ETS with respect to such waiver or assertion; provided, however, that nothing herein shall prevent the Trustee
from waiving or asserting any such privilege or immunity following such consultation if, in the exercise of the Trustee's sole discretion, the Trustee deems it necessary or appropriate to do so. 

ARTICLE VII

CONCERNING THE TRUSTEE, BENEFICIARIES AND AGENTS  

       7.01  Generally. The Trustee accepts and undertakes to discharge the Trust created by this Litigation Trust Agreement upon the
terms and conditions hereof. The Trustee shall exercise such of the rights and powers vested in it by this Litigation Trust Agreement, and use the same degree of care and skill in its exercise as a
prudent man would exercise or use under the circumstances in the conduct of his own affairs. No provisions of this Litigation Trust Agreement shall be construed to relieve the Trustee from liability
for its own recklessness or its own intentional or willful and wanton misconduct resulting in personal gain, except that: 

        (a)   The
Trustee shall not be liable for any action taken in good faith in reliance upon the advice of professionals. 

        (b)   The
Trustee shall not be liable except for the performance of such duties and obligations as are specifically set forth in this Litigation Trust Agreement, and no
implied covenants or obligations shall be read into this Litigation Trust Agreement against the Trustee. 

        (c)   The
Trustee shall not be liable for any error of judgment made in good faith. 

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       7.02  Reliance by Trustee. Except as otherwise provided in Section 7.01 above: 

        (a)   The
Trustee may rely and shall be protected in acting upon any resolution, certificate, statement, instrument, opinion, report, notice, request, consent, order or other
paper or document reasonably believed by the Trustee to be genuine and to have been signed or presented by the proper party or parties. 

        (b)   The
Trustee may consult with legal counsel and other professionals to be selected by it, and pay the cost of such consultation from the Trust Estate, and the advice or
opinion of such counsel shall be full and complete personal protection to the Trustee and agents of the Trust in respect of any action taken or suffered by it in good faith and in reliance on, or in
accordance with, such advice or opinion. 

        (c)   Persons
dealing with the Trustee shall look only to the Trust Estate to satisfy any liability incurred by the Trustee to such person in carrying out the terms of this
Litigation Trust Agreement, and the Trustee shall have no personal or individual obligation to satisfy any such liability. 

       7.03  Liability to Third Persons. No Beneficiary shall be subject to any personal liability whatsoever, in tort, contract or
otherwise, to any person in connection with the Trust Estate or the affairs of the Trust, and no Trustee or agent of the Trust shall be subject to any personal liability whatsoever, in tort, contract
or otherwise, to any person in connection with the Trust Estate or the affairs of this Trust, except for its own recklessness or its own intentional or willful and wanton misconduct resulting in
personal gain; and all such persons shall look solely to the Trust Estate for satisfaction of claims of any nature arising in connection with affairs of the Trust. Notwithstanding the foregoing,
nothing contained herein shall in any way be deemed to limit or prejudice the Trustee's right to pursue any Claim against any Beneficiary. 

       7.04  Indemnification of Trustee. (a) The Trustee shall be indemnified by and receive reimbursement from the Trust
Estate against and from any and all loss, liability, damage or expense that the Trustee may incur or sustain, in good faith and without recklessness or its own intentional or willful and wanton
misconduct resulting in personal gain, in the exercise and performance of any of the powers and duties of the Trustee under this Litigation Trust Agreement, including costs and expenses (including the
reasonable compensation, and the expenses and disbursements, of its attorneys) of defending the Trustee against any claim arising in connection with this Litigation Trust Agreement. The Trustee may
receive advance payments in connection with indemnification under this Section, provided that prior to receiving any such advance, the Trustee shall first have given a written undertaking to repay any
amount advanced to it and to reimburse the Trust in the event it is subsequently determined that it was not entitled to such indemnification. The rights accruing to the Trustee by reason of the
foregoing shall not be deemed to exclude any other right to which it may legally be entitled, nor shall anything else contained herein restrict the right of the Trustee to contribution under
applicable law. Neither the Trustee nor any successor shall be obligated to give any bond or surety for the performance of its duties, unless otherwise ordered by the Bankruptcy Court, and if so
ordered, all costs and expenses of providing such bond or surety, shall be paid or reimbursed from the Trust Estate. 

       7.05  Nonliability of Trustee for Acts of Others. Nothing contained in this Trust Agreement shall be deemed to be an
assumption by the Trustee of any of the liabilities, obligations or duties of the Debtors and shall not be deemed to be or contain a covenant or agreement by the Trustee to assume or accept any such
liability, obligation or duty. Any successor Trustee may accept and rely upon any accounting made by or on behalf of any predecessor Trustee hereunder, and any statement or representation made as to
the assets comprising the Trust Estate or as to any other fact bearing upon the prior administration of the Trust. A Trustee shall not be liable for having accepted and relied upon such accounting,
statement or representation if it is later proved to be incomplete, inaccurate or untrue. A Trustee or successor Trustee shall not be liable for any act or omission of any predecessor 

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Trustee,
nor have a duty to enforce any claims against any predecessor Trustee on account of any such act or omission. 

ARTICLE VIII

COMPENSATION OF TRUSTEE  

       8.01  Amount of Compensation. The Trustee shall be entitled to receive from the Trust from time to time compensation equal to
the following: (a) with respect to disbursements from the Trust up to and including the aggregate amount of $10 million, the sum that is the greater of (i) three percent
(3%) of such aggregate amount and (ii) the number of hours expended by the Trustee in fulfillment of his duties hereunder multiplied by the Trustee's customary and reasonable hourly rate
then in effect; and (b) with respect to disbursements from the Trust in excess of the aggregate amount of $10 million, the difference, if any, between (i) the number of hours
expended by the Trustee in fulfillment of his duties hereunder multiplied by the Trustee's customary and reasonable hourly rate then in effect, and (ii) $300,000. Any amounts disbursed from the
Trust to the Trustee or any professionals retained by the Trustee as commissions, compensation for services rendered or reimbursement for expenses incurred, shall not be included in the amount of the
Trust's disbursements for the purposes of calculating the Trustee's commissions pursuant to the preceding sentence. 

       8.02  Expenses. The Trustee shall be reimbursed by the Trust for all fees and expenses actually incurred by it in the
performance of its duties in accordance with this Litigation Trust Agreement. 

ARTICLE IX

APPOINTMENT OF TRUSTEE  

       9.01  No Inappropriate Conflicts. The Trustee hereby certifies that, to the best of his knowledge, information and belief, he
does not represent any other entity having an adverse interest in connection with the Trustee's duties as contemplated herein. If the Trustee has or develops a conflict of interest with respect to any
particular Claim, the Trustee shall so notify the Notice Parties (defined below), and (a) the Conflicts Trustee shall have all of the rights, powers and duties of the Trustee (pursuant to
section 9.04 hereof and as if the Trustee had no conflict of interest) in respect of such Claim, and (b) the Trustee shall be relieved of his rights, powers and duties in respect of such
Claim pursuant to section 9.04 hereof. In the event that both the Trustee and the Conflicts Trustee have or develop a conflict of interest with respect to any particular claim, the Trustee
shall so notify the Notice Parties, and (a) Reorganized ETS and the United States Trustee shall appoint a substitute trustee solely with respect to such Claim (b) such substitute trustee
shall have all of the rights, powers and duties of the Trustee (pursuant to section 9.04 hereof and as if the Trustee had no conflict of interest) in respect of such claim, and (c) the
Trustee shall be relieved of his rights, powers and duties in respect of such claim pursuant to section 9.04 hereof. 

       9.02  Resignation. The Trustee may resign and be discharged from the Trust hereby created by giving at least thirty
(30) days prior written notice thereof to the Bankruptcy Court, Reorganized ETS, the Office of the United States Trustee for the District of Delaware and the Atlanta District Office of the
Securities and Exchange Commission, (collectively, the "Notice Parties"). Such resignation shall become effective on the day specified in such written notice or upon the appointment of such Trustee's
successor and such successor's acceptance of such appointment, whichever is later. 

       9.03  Appointment of Successor. In the event of the death, resignation, incompetence (as reasonably determined by the
Bankruptcy Court), bankruptcy or insolvency of the Trustee, the Conflicts Trustee shall be deemed to be the successor Trustee for all purposes hereunder upon the filing of a written notice thereof in
the Bankruptcy Court and service of such 

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written
notice upon the Notice Parties. In the event of the death, resignation, incompetence (as reasonably determined by the Bankruptcy Court), bankruptcy or insolvency of both the Trustee and the
Conflicts Trustee, a vacancy shall be deemed to exist and a successor shall be appointed by Reorganized ETS and the Office of the United States Trustee, upon notice to the remaining Notice Parties. 

       9.04  Acceptance of Appointment by Successor Trustee. The death, resignation, incompetence, bankruptcy or insolvency of the
Trustee shall not operate to terminate the Trust created by this Agreement or to revoke any existing agency created pursuant to the terms of this Litigation Trust Agreement or invalidate any action
theretofore taken by the Trustee. Any successor Trustee appointed hereunder, including the Conflicts Trustee, shall execute an instrument accepting its appointment and shall deliver one counterpart
thereof to the Notice Parties, and, in case of the Trustee's resignation or conflict of interest, to the retiring Trustee. Thereupon such successor shall, without any further act, become vested with
all the liabilities, duties, powers, rights, title, discretion and privileges of its predecessor in the Trust with like effect as if originally named Trustee and shall be deemed appointed pursuant to
section 1123(b)(3)(B) of the Bankruptcy Code. The retiring Trustee shall duly assign, transfer and deliver to such successor all property and money held by such retiring Trustee hereunder and
shall, as directed by the Bankruptcy Court or reasonably requested by such successor, execute and deliver an instrument or instruments conveying and transferring to such successor upon the trust
herein expressed, all the liabilities, duties, powers, rights, title, discretion and privileges of such retiring Trustee. 

ARTICLE X

CONCERNING THE BENEFICIARIES  

     10.01  No Suits by Beneficiaries. No Beneficiary shall have any right by virtue of any provision of this Litigation Trust
Agreement to institute any action or proceeding at law or in equity against any party other than the Trustee upon or under or with respect to the Trust Estate. 

     10.02  Requirement of Undertaking. The Trustee may request the Bankruptcy Court to require, in any suit for the enforcement of
any right or remedy under this Litigation Trust Agreement, or in any suit against the Trustee for any action taken or omitted by it as Trustee, the filing by any party litigant in such suit of an
undertaking to pay the costs of such suit, including reasonable attorneys' fees, against any party litigant in such suit; provided, however, that the
provisions of this Section 10.02 shall not apply to any suit by the Trustee. 

ARTICLE XI

RETENTION OF JURISDICTION  

     11.01  The
parties agree that the Bankruptcy Court shall have exclusive jurisdiction over the Trust, the Trustee and the Trust Estate, including, without limitation,
jurisdiction to determine all controversies and disputes arising under or in connection with this Litigation Trust Agreement. 

ARTICLE XII

AMENDMENTS  

     12.01  Subject
to Article IV of this Litigation Trust Agreement, whenever necessary to carry out the purpose of the Trust, this Litigation Trust Agreement may be
amended by the Trustee; provided, however, that any such amendment must be consistent with the Plan and must not materially and adversely affect the
rights of any Beneficiary; and, provided, further, that any such amendment shall 

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become
effective only with the written approval of each of the Notice Parties after written notice to such Notice Parties. 

ARTICLE XIII

MISCELLANEOUS PROVISIONS  

     13.01  Intention of Parties to Establish Trust. This Litigation Trust Agreement is intended to create a trust without
transferable beneficial interests (except as permitted by will, intestate succession or operation of law) and the Trust created hereunder shall be governed and construed in all respects as a trust. 

     13.02  Laws as to Construction. This Litigation Trust Agreement shall be governed by and construed in accordance with the laws
of the State of Delaware. 

     13.03  Severability. In the event any provision of this Litigation Trust Agreement or the application thereof to any person or
circumstances shall be finally determined by a court of proper jurisdiction to be invalid or unenforceable to any extent, the remainder of this Litigation Trust Agreement, or the application of such
provision to persons or circumstances or in jurisdictions other than those as to or in which it is held invalid or unenforceable, shall not be affected thereby, and each provision of this Litigation
Trust Agreement shall be valid and enforced to the fullest extent permitted by law. 

     13.04  Notices. Any notice or other communication required or permitted to be made in accordance with this Litigation Trust
Agreement shall be in writing and shall be deemed to have been sufficiently given, for all purposes, (i) upon the date of personal delivery (if notice is delivered by personal delivery),
(ii) on the date of delivery, as confirmed by electronic answerback (if notice is delivered by facsimile transmission), (iii) on the day that is one (1) Business Day after deposit
with a nationally recognized overnight courier service (if notice is delivered by nationally recognized overnight courier service), or (iv) on the third (3rd) Business Day following mailing
from within the United States by first class United States mail, postage prepaid, certified mail return receipt requested (if notice is given in such manner), and in any case addressed to the parties
at the addresses set forth below (or to such other addresses as the parties may specify by due notice to the other): 

          (i)  if
to the Trustee: 

Darryl
S. Laddin, Esq.

Arnall Golden Gregory LLP

2800 One Atlantic Center

1201 West Peachtree Street

Atlanta, GA 30309-3450 

         (ii)  if
to the Conflicts Trustee: 

Kevin
Gross, Esq.

Rosenthal, Monhait, Gross & Goddess, P.A.

919 Market Street, Suite 1401, P.O. Box 1070

Wilmington, Delaware 19899-1070 

        (iii)  if
to any Beneficiary, to the last known business or residential address of such Beneficiary, as the case may be, reflected in the Trustee's records. 

     13.05  Counterparts. This Litigation Trust Agreement may be executed in any number of counterparts, each of which shall be an
original, but such counterparts shall together constitute but one and the same instrument. 

10

 

     13.06  Irrevocable Nature of Trust. The Trust shall be irrevocable, except as otherwise provided herein. The Debtors and
Reorganized ETS shall have no right or power, whether alone or in conjunction with others (in whatever capacity) to amend this Trust, in whole or in part, or to designate the persons who shall
possess, manage, distribute or otherwise enjoy the assets of the Trust. 

     13.07  Ratification of Trust Agreement. On the Effective Date, each Holder of a Claim will be deemed to have ratified, and
shall become bound by, the terms of this Trust as set forth in the Plan. 

     13.08  Payment of Taxes. The Trustee is authorized to pay taxes and excises lawfully owing by or chargeable against the Trust
or Trust assets in the possession or under the control of the Trustee and to take any action necessary or advisable to obtain prompt determination of any such tax liability. The Trustee, in his sole
discretion, is authorized to make all tax elections permitted to be made by the Trust under federal and state laws. 

     13.09  Retention and Compensation of Professionals. The Trustee may engage the services of lawyers, accountants, investigators
and/or such other professionals or advisors to assist the Trustee in carrying out his authorized powers and responsibilities hereunder, as the Trustee deems necessary and proper, and upon such terms
and conditions as the Trustee deems appropriate. The Trust shall be primarily responsible for satisfying the fees and expenses (the "Professional Fees") charged by professionals retained by the
Trustee, including professionals retained pursuant to the Trust's obligation to indemnify the Trustee pursuant to Section 7.04 hereof. Upon the Effective Date of the Joint Plan, Reorganized ETS
shall pay to the Trust the sum of $100,000, and the Trust shall have no obligation to repay or reimburse Reorganized ETS for any portion of such amount. In the event that the Trust has insufficient
funds with which to satisfy the Professional Fees or out-of-pocket expenses incurred by the Trustee, Reorganized ETS shall advance to the Trust sufficient funds to satisfy such
Professional Fees and expenses subject to the following terms and conditions: (a) Reorganized ETS shall be permitted thirty (30) days from the receipt of a written request by the Trustee
accompanied by an invoice and appropriate back-up or supporting documentation (i.e., a computerized report of time expended by the respective professional, which may be redacted as
necessary to preserve privileges and immunities) to advance the amount of any Professional Fees or expenses; (b) in the event Reorganized ETS disputes in writing the reasonableness of any
Professional Fees or expenses, the Trustee shall be required to apply to the Bankruptcy Court for an order determining the reasonableness of the disputed portion of such Professional Fees and
Reorganized ETS shall advance sufficient funds to satisfy the undisputed portion of such Professional Fees; (c) Reorganized ETS shall not be required to advance more than $75,000 per month in
respect of its obligations under this paragraph, (d) the aggregate amount of unreimbursed advances by Reorganized ETS hereunder shall not exceed $450,000 (which amount excludes the $100,000
payment described in the preceding sentence), (e) in the event that the solvency or viability of Reorganized ETS would be jeopardized by the advancement of funds as contemplated hereunder, or
for other cause shown, Reorganized ETS may apply to the Bankruptcy Court for an order modifying the provisions of clauses (c) and (d) of this sentence, and (f) promptly upon the
Trust's receipt of funds, the Trust shall either (i) reimburse Reorganized ETS for all amounts advanced pursuant to this paragraph or (ii) effectuate a setoff of amounts owed to
reimburse Reorganized ETS for prior advances against any then-pending requests for an advance; provided, however, that the Trust's
reimbursement or setoff shall be accomplished before any other Professional Fees or expenses are satisfied by the Trust and before any distributions are made to or for the benefit of the
Beneficiaries. 

11

 

        IN WITNESS WHEREOF, the parties have executed this Litigation Trust Agreement or caused this Litigation Trust Agreement to be duly
executed by their respective officers and the Trustee herein has executed this Litigation Trust Agreement, as Trustee, effective as of the day and year first above written. 

	 	 	ETS PAYPHONES, INC., et. al.
 Debtor and debtor-in-possession
	

 	
 	

By:	
 	

 
	 	 	 	 	

	

 	
 	
THE OFFICIAL COMMITTEE OF UNSECURED CREDITORS OF ETS PAYPHONES, INC., et al.
	

 	
 	

By:	
 	

 
	 	 	 	 	

	

 	
 	
DARRYL S. LADDIN, AS TRUSTEE
	

 	
 	

By:	
 	

 
	 	 	 	 	

	

 	
 	
KEVIN GROSS, AS CONFLICTS TRUSTEE
	

 	
 	

By:	
 	

 
	 	 	 	 	

12

 
 
 

EXHIBIT A
  
  INVESTMENT AND DEPOSIT GUIDELINES    
    

Objective:
To maximize interest earned on investments of cash consistent with a high degree of safety of principal and liquidity. 

Approved
Investment Instruments: 

	a)
	U.S.
Government Treasury obligations with current maturities of one year or less.

	b)
	Federal
agency obligations (including obligations guaranteed thereby), except obligations of Federal Farm Loan Banks, with an active secondary market and having current maturities of
one year or less.

	c)
	Commercial
bank certificates of deposit, time deposits, bankers' acceptances, or other debt obligations of, or fully guaranteed by, the united States branch of any bank with capital,
surplus and individual profits aggregating at least $100 million.

	d)
	Repurchase
agreements for underlying securities of the types described in clauses (a), (b) and (c) above entered into with a United States branch of any bank.

	e)
	Any
directly issued or dealer issued commercial paper rated at least A-2 or the equivalent thereof by Standard & Poor's or P-2 or the equivalent thereof
by Moody's Investors Service. 

13

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Exhibit 10.4  

 
 

EMPLOYMENT AGREEMENT    
    

        THIS AGREEMENT is made effective as of the 5th day of December, 2002 (the "Commencement Date"), between ETS Payphones, Inc., a Georgia
corporation (the "Company"), and Guy A. Longobardo (the "Executive"). 

INTRODUCTION 

        The
Company and the Executive desire to enter into an employment agreement embodying the terms and conditions of Executive's employment. 

        NOW,
THEREFORE, the parties agree as follows: 

1.     Definitions  

        (a)   "Affiliate" means any person, firm, corporation, partnership, association or entity that, directly or indirectly or
through one or more intermediaries, controls, is controlled by or is under common control with the Company. 

        (b)   "Applicable Period" means the period of the Executive's employment hereunder and for six (6) months after
termination of his employment with the Company. 

        (c)   "Area" means the United States of America. 

        (d)   "Business of the Company" means the business of the management and operation of payphones, as such business existed on
the date of Executive's termination of employment. 

        (e)   "Cause" any of the following events which is reasonably determined by the Board of Directors of the Company to have
occurred: (i) willful and continued failure (other than such failure resulting from his incapacity during physical or mental illness) by the Executive to substantially perform his duties with
the Company or an Affiliate; (ii) conduct by the Executive that amounts to willful misconduct or gross negligence which causes material harm to the Company; (iii) any act by the
Executive of fraud, misappropriation, dishonesty, embezzlement or similar conduct against the Company or an Affiliate; (iv) conviction of the Executive for a felony or any other crime involving
moral turpitude; or (v) illegal drug use by the Executive. 

        (f)    "Change in Control". For purposes of this Agreement, a Change in Control of the Company shall have occurred if (i) any
"Person" (as defined in Section 3(a)(9) of the Securities Exchange Act of 1934 (the "Exchange Act") as modified and used in Sections 13(d) and 14(d) of the Exchange Act) other than
(1) the Company or any of its subsidiaries, (2) any trustee or other fiduciary holding securities under an employee benefit plan of the Company or any of its subsidiaries, (3) an
underwriter temporarily holding securities pursuant to an offering of such securities, or (4) any corporation owned, directly or indirectly, by the stockholders of the Company in substantially
the same proportions as their ownership of the Company's common stock), is or becomes the "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act), directly or
indirectly, of securities of the Company representing more than 10% of the combined voting power of the Company's then outstanding voting securities; 

        (f)    "Company Information" means Confidential Information and Trade Secrets. 

        (g)   "Competing Business" means any person, firm, corporation, joint venture or other business entity which is engaged in the
Business of the Company (or any aspect thereof) within the Area. 

        (h)   "Confidential Information" means data and information relating to the Business of the Company (which does not rise to the
status of a Trade Secret) which is or has been disclosed to the Executive or of which the Executive became aware as a consequence of or through its relationship to the Company and which has value to
the Company and is not generally known to its competitors. Confidential Information shall not include any data or information that has been voluntarily disclosed 

 

to
the public by the Company (except where such public disclosure has been made by the Executive without authorization) or that has been independently developed and disclosed by others, or that
otherwise enters the public domain through lawful means. The provisions in this Agreement restricting the use of Confidential Information shall survive for a period of one (1) year following
termination of this Agreement. 

        (i)    "Disability" means a physical or mental condition which prevents Executive from performing the regular duties of his
employment for any period in excess of the period of short-term disability or salary continuation under the Company's short-term disability plan or policy, or if none, a
continuous period of three months or an aggregate of three months in any twelve month period. 

        (j)    "Good Reason" means the occurrence of any of the following events which is not corrected by the Company within thirty
(30) days after the Executive's written notice to the Company of the same: (i) the nature of Executive's duties or the scope of his responsibilities are materially modified without the
Executive's written consent; (ii) the Executive is required to report to a different position without the Executive's written consent; (iii) the Executive is no longer on the Board of
Directors, unless the Executive consents to his ceasing to serve on the Board of Directors; or (iv) a material breach of the Agreement by the Company. 

Additionally,
for purposes of Section 4(c), if Executive terminates his employment within 30 days of a Change in Control, it shall be considered a termination for Good Reason. 

        (k)   "Invention" means any discovery, whether or not patentable, including, but not limited to, any useful process, method,
formula, technique, machine, manufacture, composition of matter, algorithm or computer program, as well as improvements thereto, which is new or which Executive has a reasonable basis to believe may
be new. The definition of "Invention" under this Agreement is not limited to the definition of that term under the United States patent laws. 

        (k)   "Subject Invention" means any Invention which is conceived by or first practiced by Executive, whether alone or in a
joint effort with others, during Executive's employment by the Company, whether prior to or following execution of this Agreement, which (i) may be reasonably expected to be used in a product
of the Company or a product similar to a Company product; (ii) results from work that Executive has been assigned as part of Executive's duties as an employee of the Company; (iii) is in
an area of technology which is the same as or substantially related to the areas of technology with which Executive is involved in the performance of Executive's duties as an employee of the Company;
or (iv) is useful, or which Executive reasonably expects may be useful, in any manufacturing or product design process of the Company. 

        (l)    "Trade Secrets" means information including, but not limited to, technical or nontechnical data, formulas, patterns,
compilations, programs, devices, methods, techniques, drawings, processes, financial data, financial plans, product plans or lists of actual or potential customers or suppliers which
(i) derives economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means by, other persons who can obtain economic value from its
disclosure or use, and (ii) is the subject of efforts that are reasonable under the circumstances to maintain its secrecy. 

        (m)  "Work" means a copyrightable work of authorship, including without limitation, any technical descriptions for products,
user's guides, illustrations, advertising materials, computer programs (including the contents of read only memories) and any contribution to such materials. 

2.     Terms and Conditions of Employment.  

        (a)   Employment. The Company hereby employs the Executive as its President and Chief Executive Officer and the Executive
accepts employment with the Company subject to the terms and conditions 

2

 

hereof.
The Executive shall have such authority and responsibilities and perform such duties as shall be assigned to the Executive from time to time by the Board of Directors of the Company. 

        (b)   Exclusivity. Throughout the Executive's employment hereunder, the Executive shall devote substantially all the
Executive's time, energy and skill during regular business hours to the performance of the duties of the Executive's employment (vacations and reasonable absences due to illness excepted), shall
faithfully and industriously perform such duties, and shall diligently follow and implement all management policies and decisions of the Company. 

3.     Compensation.  

        (a)   Base Salary. In consideration for the Executive's services hereunder, the Company shall pay to the Executive an initial
annual base salary in the amount of $360,000 Executive's annual base salary shall be reviewed at least annually by the Company, and the Company may increase the Executive's annual base salary in its
discretion. The Company shall pay annual base salary in accordance with the normal payroll payment practices of the Company and subject to such deductions and withholdings as law or policies of the
Company, from time to time in effect, require. 

        (b)   Annual Bonus. In addition to the annual base salary payable under Section 3(a) hereof, the Executive shall be
entitled to an annual bonus for each fiscal year of the Company beginning on or after January 1, 2003 in an amount determined by the Board of Directors of the Company. Notwithstanding the
foregoing, Executive shall be entitled, upon the confirmation of the Company's plan of reorganization, to any success bonus established by Executive's compensation agreement with the Company's
creditors. 

        (c)   Benefits. In addition to the annual base salary, bonus, and other benefits payable to the Executive hereunder, the
Executive shall be entitled to such benefits as currently exist for executives of the Company. 

        (d)   Expenses. The Executive shall be entitled to be reimbursed in accordance with the policies of the Company, as adopted and
amended from time to time, for reasonable and necessary expenses incurred by the Executive in connection with the performance of the Executive's duties of employment hereunder; provided, however, the
Executive shall, as a condition of such reimbursement, submit verification of the nature and amount of such expenses in accordance with the reimbursement policies from time to time adopted by the
Company. 

        (e)   In
addition to those benefits described in Section 3(c) above, Executive shall be entitled to the following: 

          (i)  A
housing allowance in substantially the same amount as Executive is receiving on the Commencement Date. 

         (ii)  A
monthly car allowance or a car provided by the Company for the Executive's exclusive use and reimbursement of expenses related thereto, on substantially the same
terms as Executive is being provided on the Commencement Date. 

4.     Term, Termination and Termination Payments.  

        (a)   Term. The term of this Agreement (the "Term") shall commence as of the Commencement Date of this Agreement and shall end
on the first anniversary of the Commencement Date; provided, however, that the Term may be renewed if the Executive and Company agree. 

        (b)   Termination. This Agreement and the Executive's employment by the Company hereunder may only be terminated (i) by
mutual agreement of the Executive and the Company; (ii) by the Executive upon not less than one month's prior notice to the Company; (iii) by the Company without Cause; (iv) by
the Company for Cause; or (v) upon expiration of the Term. This Agreement shall also 

3

 

terminate
immediately upon the death or the Disability of the Executive. Notice of termination by either the Company or the Executive shall be given in writing and shall specify the basis for
termination and the effective date of termination. 

        (c)   Effect of Termination. Upon termination of this Agreement and the Executive's employment hereunder, the Company shall
have no further obligation to the Executive or the Executive's estate with respect to this Agreement, except for payment of salary and bonus amounts, if any, accrued pursuant to Section 3(a) or
3(b) hereof and unpaid at the date of termination; provided, however, that if the Company terminates the Executive's employment without Cause during the Term or if the Executive terminates his
employment for Good Reason during the Term, the Company shall pay the Executive a lump sum equal to his base salary for six (6) months based on the Executive's base salary as of the date of
termination and shall continue medical insurance for the Executive and his dependents on the same terms as exist on the date of termination for six (6) months following the date of termination
after that six (6) month period, Executive shall be entitled to elect eighteen months of continuation coverage under COBRA. Nothing contained herein shall limit or impinge any other rights or
remedies of the Company or the Executive under any other agreement or plan to which the Executive is a party or of which the Executive is a beneficiary. 

        (d)   Survival. The covenants of the Executive in Sections 5, 6, 7, and 8 hereof shall survive the termination of this
Agreement and the Executive's employment hereunder and shall not be extinguished thereby. 

5.     Agreement Not to Compete and Not to Solicit Customers.  

        The Executive agrees that commencing on the Commencement Date and continuing through the Applicable Period, he will not, either directly or indirectly, on the
Executive's own behalf or in the service of or on behalf of others, solicit or divert, or attempt to solicit or divert, to a Competing
Business, any individual or entity which was an actual or actively sought prospective client, customer of the Company, or distributor of the Company's products or services and with whom the Executive
had material contact during the Executive's last 2 year(s) of employment with the Company. 

6.     Agreement Not to Solicit Employees.  

        The Executive agrees that commencing on the Commencement Date and continuing through the Applicable Period, he will not, either directly or indirectly, on the
Executive's own behalf or in the service of or on behalf of others, solicit, divert or attempt to solicit, divert, to any Competing Business in the Area any person employed by the Company or an
Affiliate, whether or not such employee is a full-time employee or a temporary employee of the Company or an Affiliate and whether or not such employment is pursuant to written agreement
and whether or not such employment is for a determined period or is at will. 

7.     Ownership and Protection of Proprietary Information.  

        (a)   Confidentiality. All Confidential Information and Trade Secrets and all physical embodiments thereof received or
developed by the Executive while employed by the Company are confidential to and are and will remain the sole and exclusive property of the Company. Except to the extent necessary to perform the
duties assigned to him by the Company, the Executive will hold such Confidential Information and Trade Secrets in trust and strictest confidence, and will not use, reproduce, distribute, disclose or
otherwise disseminate the Confidential Information and Trade Secrets or any physical embodiments thereof and may in no event take any action causing or fail to take the action necessary in order to
prevent, any Confidential Information and Trade Secrets disclosed to or developed by the Executive to lose its character or cease to qualify as Confidential Information or Trade Secrets. 

4

 

        (b)   Return of Company Property. Upon request by the Company, and in any event upon termination of the employment of the
Executive with the Company for any reason, the Executive will promptly deliver to the Company all property belonging to the Company, including, without limitation, all Confidential Information and
Trade Secrets (and all embodiments thereof) then in the Executive's custody, control or possession. 

        (c)   Survival. The covenants of confidentiality set forth herein will apply on and after the date hereof to any Confidential
Information and Trade Secrets disclosed by the Company or developed by the Executive prior to or after the date hereof. The covenants restricting the use of Confidential Information will continue and
be maintained by the Executive for a period of one (1) year following the termination of this Agreement. The covenants restricting the use of Trade Secrets will continue and be maintained by
the Executive following termination of this Agreement for so long as permitted by the Georgia Trade Secrets Act of 1990, O.C.G.A. § 10-1-760, et seq. 

8.     Inventions.  

        (a)   Executive
agrees that all Subject Inventions and all patent and other intellectual property and trade secret rights in and to Subject Inventions will become the property
of the Company, and Executive hereby irrevocably assigns to the Company all of Executive's rights to all Subject Inventions. 

        (b)   Executive
agrees that if Executive has conceived or reduced to practice or if Executive conceives or reduces to practice an Invention during the term of Executive's
employment with the Company, Executive will promptly provide a written description of the Invention and all other requested information to the Company adequate to allow evaluation for a determination
as to whether the Invention is a Subject Invention. 

        (c)   If,
upon commencement of Executive's employment with the Company, Executive has previously conceived any Invention or acquired any ownership interest in any Invention,
which: (i) is Executive's property, or of which Executive is a joint owner with another person or company; (ii) is not described in any issued patent as of the commencement of
Executive's employment with the Company; and (iii) would be a Subject Invention if such Invention was made while a Company employee; then Executive must provide the Company with a written
description of the Invention on Exhibit A, in which case the written description (but no rights to the Invention) shall become the property of
the Company; or (ii) provide the Company with the license described in Section 8(d) of this Agreement. 

        (d)   If
Executive has previously conceived or acquired any ownership interest in an Invention described above in Section 8(c) and Executive elects not to disclose the
same to the Company as provided above, then Executive hereby grants to the Company a nonexclusive, paid up, royalty-free license to use and practice the Invention, including a license
under all patents to issue in any country which pertain to the Invention. 

        (e)   Executive
owns no patents, either individually or jointly with others, except those described on Exhibit A. 

9.     Patent Applications.  

        (a)   Executive
agrees that should the Company elect to file an application for patent protection, whether in the United States or in any foreign country, on a Subject
Invention of which Executive was an inventor, Executive will execute all necessary documentation relating to the patent applications, including formal assignments to the Company. 

        (b)   Executive
further agrees that Executive will cooperate with attorneys or other persons designated by the Company by explaining the nature of any Subject Invention for
which the Company elects to file an application for patent protection, reviewing applications and other papers and providing any other cooperation required for prosecution of the patent applications.
The Company will 

5

 

be
responsible for all expenses incurred for the preparation and prosecution of all patent applications on Subject Inventions assigned to the Company. 

10.   Copyrights.  

        (a)   Executive
agrees that any Works created by Executive in the course of Executive's duties as an employee of the Company are subject to the "Work for Hire" provisions
contained in Sections 101 and 201 of the United States Copyright Law, Title 17 of the United States Code. All right, title and interest to copyrights in all Works that have been or will be prepared by
Executive within the scope of Executive's employment with the Company will be the property of the Company. Executive acknowledges and agrees that, to the extent the provisions of Title 17 of the
United States Code do not vest in the Company the copyrights to any Works, Executive hereby assigns to the Company all right, title and interest to copyrights which Executive may have in the Works. 

        (b)   Executive
must disclose to the Company all Works referred to in Section 10(a) and will execute and deliver all applications, registrations, and documents relating
to the copyrights to the Works and will provide assistance to secure the Company's title to the copyrights in the Works. The Company will be responsible for all expenses incurred in connection with
the registration of all such copyrights that it decides to register. 

        (c)   Executive
has no ownership rights in any Works except those described on Exhibit A. 

11.   Contracts or Other Agreements with Former Employer or Business.  

        The Executive hereby represents and warrants that he is not subject to any employment agreement or similar document, except as previously disclosed and delivered
to the Company, with a former employer or any business with which the Executive has been associated, which on its face prohibits the Executive during a period of time which extends through the
Commencement Date from any of the following: (i) competing with, or in any way participating in a business which competes with the Executive's former employer or business;
(ii) soliciting personnel of such former employer or business to leave such former employer's employment or to leave such business; or (iii) soliciting customers of such former employer
or business on behalf of another business. 

12.   Remedies.  

        The Executive agrees that the covenants and agreements contained in Sections 5, 6, 7 and 8 hereof are of the essence of this Agreement; that each of such
covenants is reasonable and necessary to protect and preserve the interests and properties of the Company and the Business of the Company; that the Company is engaged in and throughout the Area in the
Business of the Company; that irreparable loss and damage will be suffered by the Company should the Executive breach any of such covenants and agreements; that each of such covenants and agreements
is separate, distinct and severable not only from the other of such covenants and agreements but also from the other and remaining provisions of this Agreement; that the unenforceability of any such
covenant or agreement shall not affect the validity or enforceability of any other such covenant or agreements or any other provision or provisions of this Agreement; and that, in addition to other
remedies available to it, the Company shall be entitled to specific performance of this Agreement and to both temporary and permanent injunctions to prevent a breach or contemplated breach by the
Executive of any of such covenants or agreements. 

13.   No Set-Off.  

        The existence of any claim, demand, action or cause of action by the Executive against the Company, or any Affiliate of the Company, whether predicated upon this
Agreement or otherwise, shall not constitute a defense to the enforcement by the Company of any of its rights hereunder. 

6

 

14.   Notice.  

        All notices, requests, demands and other communications required hereunder shall be in writing and shall be deemed to have been duly given if delivered or if
mailed, by United States certified or registered mail, prepaid to the party to which the same is directed at the following addresses (or at such other addresses as shall be given in writing by the
parties to one another): 

	If to the Company:	 	ETS Payphones, Inc.

Suite G

1490 Westfork Drive

Lithia Springs, Georgia 30122
	

With a copy to:	
 	

Shannon Lowry Nagle, Esq.

Powell, Goldstein, Frazer & Murphy LLP

191 Peachtree Street, N.E.

Sixteenth Floor

Atlanta, Georgia 30303-1740
	

If to the Executive:	
 	

Guy A. Longobardo

Notices
delivered in person shall be effective on the date of delivery. Notices delivered by mail as aforesaid shall be effective upon the third calendar day subsequent to the postmark date thereof. 

15.   Miscellaneous.  

        (a)   Assignment. This Agreement will be binding on the assignees of the Company and may be assigned by the Company to any
Affiliate, legal successor to the Company or an Affiliate, or to an entity which purchases all or substantially all of the assets of the Company or an Affiliate. Otherwise, neither this Agreement nor
any right of the parties hereunder may be assigned or delegated by any party hereto without the prior written consent of the other party. In the event the Company assigns this Agreement as permitted
by this Agreement, the "Company" as defined herein will refer to the assignee and the Executive will not be deemed to have terminated employment hereunder until the Executive terminates employment
from the assignee. 

        (b)   Waiver. The waiver by the Company of any breach of this Agreement by the Executive shall not be effective unless in
writing, and no such waiver shall constitute the waiver of the same or another breach on a subsequent occasion. 

        (c)   Governing Law. This Agreement shall be governed by and construed in accordance with the internal laws of the State of
Georgia. The parties agree that any appropriate state or federal court located in Fulton County, Georgia shall have jurisdiction of any case or controversy arising under or in connection with this
Agreement and shall be a proper forum in which to adjudicate such case or controversy. The parties consent to the jurisdiction of such courts. 

        (d)   Entire Agreement. This Agreement embodies the entire agreement of the parties hereto relating to the subject matter
hereof and supersedes all oral agreements, and to the extent inconsistent with the terms hereof, all other written agreements. 

        (e)   Amendment. This Agreement may not be modified, amended, supplemented or terminated except by a written instrument
executed by the parties hereto. 

        (f)    Severability. Each of the covenants and agreements hereinabove contained shall be deemed separate, severable and
independent covenants, and in the event that any covenant shall be declared invalid by any court of competent jurisdiction, such invalidity shall not in any manner affect or impair the validity or
enforceability of any other part or provision of such covenant or of any other covenant contained herein. 

7

 

        (g)   Captions and Section Headings. Except as set forth in Section 1 hereof, captions and section headings used herein
are for convenience only and are not a part of this Agreement and shall not be used in construing it. 

        IN
WITNESS WHEREOF, the Company and the Executive have each executed and delivered this Agreement as of the date first shown above. 

	 	 	COMPANY:
	

 	
 	

By:	
 	

 
	 	 	 	 	

	

 	
 	

Title:	
 	

 
	 	 	 	 	
 [CORPORATE SEAL]
	

 	
 	

EMPLOYEE:
	

 	
 	

 Guy A. Longobardo

8

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EMPLOYMENT AGREEMENT

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