Document:

Exhibit 10.1

Prepared By and Return to:
Troy M. Lovell, Esq.
Foley & Lardner
P.O. Box 3391
Tampa, Florida  33601

                  SECOND FORBEARANCE AND MODIFICATION AGREEMENT

      THIS SECOND FORBEARANCE AND MODIFICATION AGREEMENT (the "Forbearance
Agreement") is made effective the 31st day of July, 2000, (the "Effective Date")
by and between Bank of America, N.A., d/b/a NationsBank, N.A., successor to
NationsBank, N.A., f/k/a NationsBank, N.A. (South), as successor in interest to
NationsBank of Florida, N.A. (the "Bank"); and Elcotel, Inc., a Delaware
corporation ("Elcotel"); Elcotel Direct, Inc., a Delaware corporation;
Technology Service Group, Inc., successor by merger with Elcotel Hospitality
Services, Inc., a Delaware corporation; and all subsidiaries of any of them
(collectively, the "Borrower"), jointly and severally.

                                    RECITALS

      WHEREAS, pursuant to a Restated Loan Agreement, the Borrower is indebted
to the Bank pursuant to a Consolidation Promissory Note (the "Consolidated
Note"), dated November 25, 1997, in the original principal amount of
$15,000,000.00, which Consolidated Note consolidated and renewed prior
indebtedness from the Borrower to the Bank;

      WHEREAS, the Consolidated Note was secured by certain personal property
more particularly described in that certain Restated Security Agreement of even
date therewith;

      WHEREAS, the Restated Loan Agreement was modified by that certain First
Amendment to Loan Agreement and Security Agreement dated March 29, 1999 (as
modified, the "Loan Agreement");

      WHEREAS, Borrower is indebted to the Bank pursuant to a First Replacement
Promissory Note ("Note 1") in the original principal amount of $10,000,000.00,
dated March 29, 1999, which renewed and replaced a portion of the Consolidated
Note;

      WHEREAS, Borrower is indebted to the Bank pursuant to a Promissory Note
("Note 2") in the original principal amount of $1,500,000.00, dated March 29,
1999;

      WHEREAS, Borrower is indebted to the Bank pursuant to a Second Replacement
Promissory Note ("Note 3") in the original principal amount of $4,000,000.00,
dated March 29, 1999, which renewed and replaced a portion of the Consolidated
Note;

                                      -1-
<PAGE>

      WHEREAS, Elcotel is indebted to the Bank pursuant to a Consolidated
Promissory Note ("Note 4") in the original principal amount of $1,920,000.00,
dated November 25, 1997;

      WHEREAS, Note 4 is secured by that certain Mortgage (as modified, the
"Mortgage") by Elcotel in favor of Carl G. Santangelo, as Trustee encumbering
certain real property located in Manatee County, Florida, as more particularly
described on Exhibit A (the "Mortgaged Property") recorded in Official Records
Book 1416, beginning at Page 5745, which was assigned to the Bank by an
assignment recorded in Official Records Book 1435, beginning at Page 4451, and
which was modified by instruments recorded in Official Records Book 1425,
beginning at Page 6814, Official Records Book 1435, beginning at Page 4456,
Official Records Book 1468, beginning at Page 2483, Official Records Book 1537,
beginning at Page 2935, all of the public records of Manatee County, Florida;

      WHEREAS, the Notes went into default by virtue of a breach of the
covenants contained in the Loan Agreement, more specifically, breach of the debt
service coverage ratio required by the Loan Agreement (the "Existing Default");

      WHEREAS,  as a  result  of the  Existing  Default,  Borrower  requested  a
forbearance and modification of the terms and conditions of the Notes, which the
Bank agreed to in a Forbearance and Modification  Agreement dated April 12, 2000
(the "First Modification");

      WHEREAS, pursuant to the First Modification, the Bank's forbearance
expired and all sums due under the Notes became due and payable in full on July
31, 2000; and,

      WHEREAS, Borrower again desires to modify the terms of the Notes and other
Loan Documents (the Notes, the Mortgage, the Consolidated Note, the Loan
Agreement, First Modification, and all other documents executed in connection
with the Notes and the loans evidenced thereby are collectively referred to as
the "Loan Documents") and to have the Bank forbear enforcement of the Loan
Documents and, notwithstanding the existing default, the Bank is willing to
forbear enforcement and modify the Loan Documents, but only under the terms and
conditions set forth herein.

                                    AGREEMENT

      NOW, THEREFORE, in consideration of the mutual covenants contained herein
and other good and valuable consideration, the receipt and sufficiency of which
is hereby acknowledged, the parties agree as follows:

      1.    Recitals. The foregoing recitals are true and correct and
            incorporated herein by reference.

                                      -2-
<PAGE>

      2.    Maturity Date. The Maturity Date of this Forbearance Agreement, Note
            1, Note 2, Note 3, and Note 4, is September 30, 2000,
            notwithstanding anything to the contrary contained in the Loan
            Documents.

      3.    Forbearance. Provided that no event of default occurs under this
            Forbearance Agreement, the Bank shall forbear from enforcing its
            rights and remedies under the Loan Documents up to and including the
            Maturity Date. In the event of a default under this Forbearance
            Agreement, the Bank shall charge and Borrower shall pay interest at
            a default rate from the date of such default, but not prior to that
            date. The Existing Default shall not be considered a default under
            this Forbearance Agreement for the purposes of this paragraph.

      4.    Overadvance. The Bank will not require a cure of any overadvance up
            to a limit of $2,800,000 beyond the amount permitted by the
            Borrowing Base formula set forth in the Loan Documents, from the
            Effective Date of this Forbearance Agreement through the Maturity
            Date. Borrower shall not be entitled to future advances while
            exceeding the Borrowing Base formula limit.

      5.    Financial Conditions. For purposes of calculating the consolidated
            ratio of Current Assets to Current Liabilities (as defined in the
            Loan Documents), the balance of Note 3 and Note 4 shall not be
            included as Current Liabilities.

      6.    Interest Rate.

            a.    Note 1 and Note 2 shall accrue, and Borrower shall pay,
                  interest at a fluctuating rate equal to the "Prime Rate" of
                  the Bank plus 3.0% per annum from the Effective Date up to and
                  including payment in full or the occurrence of an event of
                  default other then the Existing Default. The "Prime Rate" is
                  the fluctuating rate of interest established by Bank from time
                  to time, at its discretion, whether or not such rate shall be
                  otherwise published. The Prime Rate is established by Bank as
                  an index and may or may not at any time be the best or lowest
                  rate charged by Bank on any loan.

            b.    Note 3 and Note 4 shall accrue, and Borrower shall pay,
                  interest at a fixed rate equal to the "Prime Rate" of the Bank
                  as of the Effective Date plus 3.0% per annum from the
                  Effective Date up to and including payment in full or the
                  occurrence of an event of default other than the Existing
                  Default.

            c     If an event of default occurs under this Forbearance
                  Agreement, the Notes shall accrue, and Borrower and Guarantors
                  shall pay, interest at the maximum rate permitted by Florida
                  law.

      7.    Extension Fee. Concurrent with the execution of this Forbearance
            Agreement, Borrower shall pay to the Bank a commitment fee equal to
            one-fourth of one percent (0.25%) of the combined outstanding
            balance of the Notes. On the

                                      -3-
<PAGE>

            Maturity Date, Borrower shall pay an additional commitment fee equal
            to one-quarter of one percent (0.25%) of the combined outstanding
            balance of the Notes as of the Maturity Date.

      8.    Expenses. Borrower shall pay all costs and expenses incurred by the
            Bank in connection with the Existing Default, negotiating, drafting
            and closing this Forbearance Agreement and related documents,
            including, but not limited to, documentary stamp taxes, intangibles
            taxes, any other transactional taxes, recording fees, the Bank's
            attorneys fees, and title insurance premiums and search costs. All
            such expenses shall be due and payable at the time of the closing of
            this Forbearance Agreement, and shall be secured by the collateral
            of the Notes.

      9.    Waiver and Release. To induce the Bank to enter into this
            Forbearance Agreement, Borrower, for themselves, and their agents,
            attorneys, successors and assigns, do hereby release the Bank and
            its predecessors, successors, assigns, officers, managers,
            directors, shareholders, employees, agents, attorneys,
            representatives, parent corporations, subsidiaries, and affiliates
            (collectively referred to as "Affiliates"), jointly and severally
            from any and all claims, counterclaims, demands, damages, debts,
            agreements, covenants, suits, contracts, obligations, liabilities,
            accounts, offsets, rights, actions and causes of action for
            contribution and indemnity, whether arising at law or in equity
            (including without limitation, claims of fraud, duress, mistake,
            tortious interference, usury, or control), whether presently
            possessed or possessed in the future, whether known or unknown,
            whether liability be direct or indirect, liquidated or unliquidated,
            whether presently accrued or to accrue hereafter, whether absolute
            or contingent, foreseen or unforeseen, and whether or not heretofore
            asserted, for or because of or as a result of any act, omission,
            communication, transaction, occurrence, representation, promise,
            damage, breach of contract, fraud, violation of any statute or law,
            commission or of any tort, or any other matter whatsoever or thing
            done, omitted or suffered to be done by Lender or any of its
            Affiliates, insofar as the same arise out of or relate to the Loans,
            the Loan Documents, the collateral securing the Loans, the
            debtor-creditor relationship between the parties, and all
            communications or contacts between the parties related to any of the
            foregoing, including this Forbearance Agreement, which has occurred
            in whole or in part, or was initiated at any time from the beginning
            of time up to and immediately preceding the moment of the execution
            of this Agreement. The rights and defenses being waived and released
            hereunder include without limitation any claim or defense based on
            the Bank having charged or collected interest at a rate greater than
            that allowed to be contracted for by applicable law as changed from
            time to time; provided, however, in no event shall such waiver and
            release be deemed to change or modify the terms of the Loan
            Documents or the Loans which provide that sums paid or received in
            excess of the maximum rate of

                                      -4-
<PAGE>

            interest allowed to be contracted for by applicable law, as changed
            from time to time, reduce the principal sum due, said provision to
            be in full force and effect.

      12.   Acknowledgement of Default. Borrower acknowledges that the Notes are
            currently in default because of the Existing Default. Nothing
            contained herein or in any document executed concurrently herewith
            shall constitute or be construed as a waiver of such default. Except
            to the extent specifically set forth herein, the Bank retains all of
            its rights and remedies with respect to the Notes and the Loan
            Documents.

      11.   WAIVER OF JURY TRIAL. THE PARTIES HERETO KNOWINGLY, IRREVOCABLY,
            VOLUNTARILY, AND INTENTIONALLY WAIVE ANY RIGHT THEY MAY HAVE TO A
            TRIAL BY JURY IN RESPECT OF ANY CLAIM, DEFENSE, DISPUTE OR
            LITIGATION BETWEEN OR AMONG ANY OF THE PARTIES HERETO. THIS
            PROVISION IS A MATERIAL INDUCEMENT FOR THE PARTIES ENTERING INTO
            THIS DOCUMENT.

      12.   Modification of Loan Documents. The terms of the Loan Documents are
            hereby modified to incorporate and reflect the terms and conditions
            of this Forbearance Agreement. In the event of any conflict between
            this Forbearance Agreement and the Loan Documents, the terms of this
            Forbearance Agreement shall prevail.

      13.   Ratification of Loan Documents. Borrower hereby ratifies and
            confirms all of the terms, warranties, representations, covenants
            and conditions set forth in the Loan Documents and this Forbearance
            Agreement and hereby acknowledges the Loan Documents as modified
            constitute valid and binding obligations of Borrower. Without
            limiting the foregoing, Borrower hereby ratifies and confirms the
            grant and conveyance to the Bank of the collateral set forth in the
            Loan Documents as security for the repayment of the Notes and all
            mortgages, security agreements, and financing statements, wherever
            filed, or unfiled. Borrower further acknowledges and agrees the Loan
            Documents as modified are enforceable in accordance with their terms
            and free from claims of defense, setoff or recoupment against the
            Bank or any other party. Without in any way limiting the
            applicability of the foregoing, Borrower hereby agrees, confirms and
            ratifies that all collateral securing any of the Notes shall serve
            as collateral for each of the Notes, and to the extent necessary to
            do so, hereby re-assigns all collateral to the Bank as security for
            each of the Notes.

      14.   Events of Default and Remedies. The failure to pay any sum required
            hereunder when due, the breach of any representation or warranty
            contained herein or in any of the Loan Documents, and the breach of
            any of the Loan Documents, other than the Existing Default, shall
            constitute an event of default under this Forbearance Agreement, and
            the Bank shall be immediately entitled,

                                      -5-
<PAGE>

            without notice or demand, to enforce its rights and remedies under
            the Loan Documents, this Forbearance Agreement, and law. An event of
            default under this Forbearance Agreement shall constitute an event
            of default under each of the Notes; an event of default under any of
            the Notes shall constitute an event of default under the other Notes
            and under this Forbearance Agreement.

      15.   Indemnity. Borrower hereby agrees to indemnify and hold harmless
            (including payment of attorneys fees and costs) the Bank from and
            against any loss, cost or expense resulting from any claim by
            Florida taxing authorities regarding the Loans or this Forbearance
            Agreement. This obligation to indemnify the Bank shall survive
            payment of the Notes, and the satisfaction of any Loan Document,
            this Forbearance Agreement or other instrument securing the Loans.

      16.   Anti-Novation. It is the intent of the parties that this instrument
            shall not constitute a novation and shall in no way adversely affect
            the lien priority of the Loan Documents referred to above.

      17.   Future Cooperation. Borrower agrees to cooperate with the Bank in
            giving effect to the purposes and terms of this Forbearance
            Agreement, including, but not limited to, the execution of
            additional documents deemed necessary or desirable by the Bank to
            document or perfect the Bank's rights under the Loan Documents and
            this Forbearance Agreement.

      18.   Representations. Borrower acknowledges, represents, warrants, and
            confirms the following:

            a.    Review of Agreement. Borrower has carefully read and
                  understands the effect of this Forbearance Agreement. Borrower
                  has had the assistance or the opportunity to seek the
                  assistance of separate legal counsel in carefully reviewing,
                  discussing and considering all terms of this Forbearance
                  Agreement;

            b.    Reliance Only on Representations Herein. The execution of this
                  Forbearance Agreement by Borrower is not based upon reliance
                  upon any representation, understanding or agreement not
                  expressly set forth herein. The Bank has not made any
                  representations to Borrower not expressly set forth herein;

            c.    Residency. Borrower is subject to the personal jurisdiction of
                  courts of the State of Florida;

            d.    Authority and Compliance. Borrower has full power and
                  authority to execute and deliver the Loan Documents and to
                  incur and perform the obligations provided for therein, all of
                  which have been duly authorized by all proper and necessary
                  action of the appropriate governing body of each. Each of
                  Borrower are corporations in good standing in the State

                                      -6-
<PAGE>

                  of Delaware and authorized to do business in Florida. Each of
                  Borrower shall provide a current incumbency certificate and
                  corporate resolution authorizing the entry into this
                  Forbearance Agreement. No additional consent or approval of
                  any court, public authority or other third party is required
                  as a condition to the validity of any Loan Document, and
                  Borrower is in compliance with all laws and regulatory
                  requirements to which each is subject;

            e.    Litigation. There is no proceeding against Borrower pending
                  or, to the knowledge of each, threatened before any court or
                  governmental authority, agency or arbitration authority,
                  except as disclosed to the Bank in writing and acknowledged by
                  the Bank prior to the date of this Forbearance Agreement;

            f.    Ownership of Assets. Borrower has good title to their
                  respective assets, and such assets are free and clear of
                  liens, except those granted to the Bank, except for purchase
                  money security interests in chattels, including leases, and as
                  disclosed to the Bank in writing prior to the date of this
                  Forbearance Agreement;

            g.    Taxes. All taxes and assessments due and payable by Borrower
                  have been paid or are being contested in good faith by
                  appropriate proceedings, and each has filed all tax returns
                  which it is required to file;

            h.    Voluntary Act. Borrower executes this Forbearance Agreement as
                  a free and voluntary act, without any duress, coercion or
                  undue influence exerted by or on behalf of the Bank or any
                  other party;

            i.    Representations True and Correct. All of the warranties and
                  representations made in this Forbearance Agreement and all
                  other Loan Documents, are materially true and correct as of
                  the date hereof and that Borrower is not in default of any of
                  the foregoing nor aware of any default with respect thereto;

            j.    Ownership of Claims. Borrower is the sole owner of the claims
                  or causes of action being released herein and has not conveyed
                  or assigned any interest in any such claims or causes of
                  action to any person or entity not a party hereto; and

            k.    Binding Agreement. This Forbearance Agreement does not violate
                  any law, rule, regulation, contract or agreement otherwise
                  enforceable by or against Borrower.

                                      -7-
<PAGE>

      19.   Miscellaneous.

            a.    Paragraph headings used herein are for convenience only and
                  shall not be construed as controlling the scope of any
                  provision hereof.

            b.    This Forbearance Agreement shall be governed by and construed
                  in accordance with the laws of the State of Florida and of the
                  United States of America and the rules and regulations
                  promulgated under the authority thereof. The parties hereto
                  acknowledge that this Forbearance Agreement affects interstate
                  commerce.

            c.    Time is of the essence of this Forbearance Agreement.

            d.    As used herein, the neuter gender shall include the masculine
                  and feminine genders, and vice versa, and the singular the
                  plural, and vice versa, as the context demands.

            e.    All costs incurred by the Bank in enforcing this Forbearance
                  Agreement and in collection of sums due the Bank from
                  Borrower, to include, without limitation, reasonable
                  attorney's fees through all mediation and arbitration
                  proceedings, trials, appeals and proceedings, to include,
                  without limitation, any proceedings pursuant to the bankruptcy
                  laws of the United States, shall be paid by Borrower.

            f.    This Forbearance Agreement shall inure to the benefit of and
                  be binding upon the parties hereto as well as their successors
                  and assigns, heirs and personal representatives.

      20.   Counterparts. This Forbearance Agreement may be executed in a number
            of multiple identical counterparts which, when taken together, shall
            constitute collectively one (1) agreement, but in making proof of
            this agreement it shall not be necessary to produce or account for
            more than one such counterpart executed by the party to be charged.
            Facsimile signatures may be deemed originals for all purposes.

      21.   Final Agreement. THIS FORBEARANCE AGREEMENT REPRESENTS THE ENTIRE
            AND FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED
            BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT WRITTEN OR ORAL
            AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS
            BETWEEN THE PARTIES. THIS FORBEARANCE AGREEMENT CONSTITUTES THE
            FINAL AND COMPLETE RELEASE OF THE BANK AND ITS AFFILIATES OF THOSE
            MATTERS SET FORTH HEREIN.

                                      -8-
<PAGE>

      IN WITNESS WHEREOF, the parties hereto have caused this Forbearance
Agreement to be executed the date first above written, effective as of the
Effective Date.

WITNESSES
                                          ELCOTEL, INC., a Delaware corporation

________________________
Print Name:_____________
                                          By:  /s/ William H. Thompson
                                               --------------------------------
                                          Print Name:  William H. Thompson
________________________                              -------------------------
Print Name:_____________                  Title:  Senior Vice President
                                                  -----------------------------

                                          ELCOTEL DIRECT, INC., a Delaware
_________________________                 corporation
Print Name:______________

                                          By:  /s/ William H. Thompson
                                               --------------------------------
_________________________                 Print Name:  William H. Thompson
                                                     --------------------------
Print Name:______________                 Title:  Vice President
                                                 ------------------------------

                                          TECHNOLOGY SERVICE GROUP, INC.
                                          successor by merger with Elcotel
                                          Hospitality Services, Inc., a Delaware
_________________________                 corporation
Print Name:______________

                                          By:  /s/ William H. Thompson
                                               --------------------------------
_________________________                 Print Name:  William H. Thompson
                                                     --------------------------
Print Name:______________                 Title:  Vice President
                                                 ------------------------------

                                          BANK OF AMERICA, N.A., d/b/a
                                          NationsBank, N.A.
_________________________
Print Name:______________

                                          By:______________________________
_________________________                 Print Name:_______________________

                                      -9-
<PAGE>

Print Name:______________________          Title:_____________________________

STATE OF _____________________
COUNTY OF ___________________

      The foregoing Forbearance Agreement was acknowledged before me, the
undersigned authority, this ___ day of ___________, 2000, by
_______________________________ as ______________________________ of Elcotel,
Inc., a Delaware corporation, ___ who is personally known to me or ___ who
produced ____________________ as identification.

                                         _______________________________________
                                         Notary Public, State of _______________

                                         Print Name:____________________________
                                         My Commission Expires:_________________

                                         [SEAL]

STATE OF _____________________
COUNTY OF ____________________

      The foregoing Forbearance Agreement was acknowledged before me, the
undersigned authority, this ___ day of ___________, 2000, by
_______________________________ as ______________________________ of Elcotel
Direct, Inc., a Delaware corporation, ___ who is personally known to me or ___
who produced ____________________ as identification.

                                         _______________________________________
                                         Notary Public, State of _______________

                                         Print Name:____________________________
                                         My Commission Expires:_________________

                                         [SEAL]

                                      -10-
<PAGE>

STATE OF _____________________
COUNTY OF ___________________

      The foregoing Forbearance Agreement was acknowledged before me, the
undersigned authority, this ___ day of _______, 2000, by
_______________________________ as ______________________________ of Technology
Service Group, Inc., successor by merger with Elcotel Hospitality Services,
Inc., a Delaware corporation, ___ who is personally known to me or ___ who
produced ____________________ as identification.

                                         _______________________________________
                                         Notary Public, State of _______________

                                         Print Name:____________________________
                                         My Commission Expires:_________________

                                         [SEAL]

STATE OF _____________________
COUNTY OF ___________________

      The foregoing Forbearance Agreement was acknowledged before me, the
undersigned authority, this ___ day of __________, 2000, by ____________________
as ______________ of Bank of America, N.A. d/b/a NationsBank, N.A., ___ who is
personally known to me or ___ who produced ____________________ as
identification.

                                         _______________________________________
                                         Notary Public, State of _______________

                                         Print Name:____________________________
                                         My Commission Expires:_________________

                                         [SEAL]

                                      -11-Exhibit 10.2

THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933 (THE "ACT"), OR THE SECURITIES LAWS OF ANY STATE. THE SECURITIES
HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TOWARD DISTRIBUTION OR
RESALE AND MAY NOT BE SOLD OR OTHERWISE TRANSFERRED WITHOUT AN EFFECTIVE
REGISTRATION STATEMENT COVERING SUCH SECURITIES UNDER THE ACT OR ANY APPLICABLE
STATE SECURITIES LAWS, OR AN OPINION OF COUNSEL, REASONABLY SATISFACTORY TO THE
ISSUER, THAT REGISTRATION IS NOT REQUIRED UNDER THE ACT OR APPLICABLE STATE LAW.

                                  ELCOTEL, INC.

                               WARRANT TO PURCHASE
                             SHARES OF COMMON STOCK

Warrant No. W-1                                           No. of Shares - 53,827

      This certifies that, for valued received, id8 Group Holdings, Inc.
("Holder"), or its registered assigns, is entitled, subject to the terms and
conditions hereinafter set forth, at or prior to 5:00 p.m., Sarasota, Florida
time, on May 1, 2002, but not thereafter, to purchase 53,827 shares of Common
Stock ("Common Stock"), par value $.01 per share, of Elcotel, Inc., a Delaware
corporation (hereinafter called the "Company"). The purchase price payable upon
the exercise of this Warrant (the "Warrant Price") shall be $2.40625 per share.

      Upon delivery of this Warrant with the subscription notice duly executed,
together with payment of the Warrant Price, by certified or cashier's check
payable to the Company, for the shares of Common Stock thereby purchased, at the
principal office of the Company, 6428 Parkland Drive, Sarasota, Florida 34243,
or at such other address as the Company may designate by notice in writing to
the Holder, the Holder of this Warrant shall be entitled to receive a
certificate or certificates for the shares of Common Stock so purchased. All
shares of Common Stock which may be issued upon the exercise of this Warrant
will, upon issuance, be fully paid and non-assessable and free from all taxes,
liens and charges with respect thereto.

      This Warrant is subject to the following terms and conditions:

      1. Exercise of Warrant. Except as otherwise provided in this paragraph 1,
this Warrant may be exercised in whole at any time, or in part from time to
time, at or prior to 5:00 p.m., Sarasota, Florida time, on May 1, 2002, but not
thereafter, as to all or any part of the number of whole shares of Common Stock
then subject hereto so long as for any partial exercise the number of shares of
Common Stock purchased is at least 100 shares. In case of any partial exercise
of this Warrant, the Company shall execute and deliver a new Warrant of like
tenor and date for the balance of the shares of Common Stock purchasable
hereunder or appropriate notation may be made on this Warrant which shall then
be returned to the Holder.

      2. Adjustment of Warrant Price and Number of Shares Purchasable Hereunder.
The Warrant Price and the number of shares purchasable hereunder shall be
subject to adjustment from time to time in accordance with the following
provisions:

                                       1
<PAGE>

      (a) In the event of any payment of any cash dividend or distribution of
property by the Company otherwise than out of earned surplus, either tangible or
intangible (other than distributions of the Common Stock), to the holders of the
Common Stock, the Warrant Price for the shares of Common Stock then subject to
this Warrant shall be reduced by the per share amount of such dividend or
distribution unless and until the Warrant Price is equal to the then par value
of the Common Stock. If and when the Warrant Price is equal to the then par
value of the Common Stock, the registered holder of this Warrant shall be
entitled to receive, concurrently with the holders of the Common Stock then
outstanding, the per share amount of any such dividend or distribution with
respect to the number of shares of Common Stock then purchasable upon exercise
of this Warrant in the same manner and to the same extent as if the registered
holder of this Warrant were then the registered owner of the shares of Common
Stock then subject hereto. For purposes of this subparagraph (a), the per share
amount of any distribution of property shall be the fair market value thereof as
determined by the Board of Directors in good faith in the resolutions
authorizing any such distribution.

      (b) In case the Company shall at any time subdivide the outstanding shares
of its Common Stock, the Warrant Price in effect immediately prior to such
subdivision shall be proportionately decreased, and in case the Company shall at
any time combine the outstanding shares of its Common Stock, the Warrant Price
in effect immediately prior to such combination shall be proportionately
increased, effective from and after the record date of such subdivision or
combination, as the case may be.

      Upon any adjustment in the Warrant Price per share pursuant to this
subparagraph (b), the Holder of this Warrant shall thereafter be entitled to
purchase, at the adjusted Warrant Price, the number of shares of Common Stock,
calculated to the nearest full share obtained by (X) multiplying the number of
shares of Common Stock purchasable hereunder immediately prior to such
adjustment by the Warrant Price in effect immediately prior to such adjustment,
and (Y) by dividing the product thereof by the Warrant Price resulting from such
adjustment. No such adjustment in the number of shares that may be purchased
upon exercise of this Warrant shall be required in the event of an adjustment in
the Warrant Price per share pursuant to subparagraph (a).

      (c) In the event of the issuance of additional shares of Common Stock of
the Company as a dividend on the Common Stock, from and after the day that is
the record date for the determination of stockholders entitled to such dividend
the Holder of this Warrant shall (until another adjustment) be entitled to
purchase the number of shares of Common Stock, calculated to the nearest full
share, obtained by multiplying the number of shares of Common Stock purchasable
hereunder immediately prior to said record date by the percentage which the
number of additional shares constituting any such dividend is of the total
number of shares of Common Stock outstanding immediately prior to said record
date plus the number of shares of Common Stock issuable upon conversion of the
outstanding convertible securities or upon exercise of any outstanding warrants,
options or rights (including those with respect to convertible securities) and
adding the result so obtained to the number of shares of Common Stock
purchasable hereunder immediately prior to said record date.

                                       2
<PAGE>

      Upon each adjustment pursuant to this subparagraph (c), the Warrant Price
in effect immediately prior to such adjustment shall be reduced to an amount
determined by dividing (X) the product obtained by multiplying such Warrant
Price by the number of shares of Common Stock purchasable hereunder immediately
prior to such adjustment by (Y) the number of shares of Common Stock purchasable
hereunder immediately following such adjustment.

      3. Reorganization, Reclassification, Consolidation or Merger. If at any
time while this Warrant is outstanding there shall be any reorganization or
reclassification of the Common Stock of the Company (other than a subdivision or
combination of shares provided for in paragraph 2 above), any consolidation or
merger of the Company with another corporation or any sale of all or
substantially all of its assets to another corporation effected in such a way
that holders of Common Stock shall be entitled to receive stock, securities or
property with respect to or in exchange for Common Stock, the Holder of this
Warrant shall thereafter be entitled to receive, during the term hereof and upon
payment of the Warrant Price, the number of shares of stock or other securities
or property of the Company or of the successor corporation resulting from such
consolidation, merger or sale of assets, as the case may be, to which a holder
of the Common Stock of the Company, deliverable upon the exercise of this
Warrant, would have been entitled upon such reorganization, reclassification,
consolidation, merger or sale of assets if this Warrant had been exercised
immediately prior to such reorganization, reclassification, consolidation,
merger or sale of assets; and in any such case, appropriate adjustment (as
determined in good faith by the Board of Directors of the Company) shall be made
in the application of the provisions herein set forth with respect to the rights
and interest thereafter of the Holder of this Warrant to the end that the
provisions set forth herein (including the adjustment of the Warrant Price and
the number of shares issuable upon the exercise of this Warrant) shall
thereafter be applicable, as near as reasonably may be, in relation to any
shares or other property thereafter deliverable upon the exercise hereof.

      4. Notice of Adjustments. Upon any adjustment of the Warrant Price and any
increase or decrease in the number of shares of Common Stock purchasable upon
the exercise of this Warrant, then, and in each such case, the Company, within
thirty days after a Holder's request, shall give written notice thereof to the
Holder of this Warrant at the address of such Holder as shown on the books of
the Company, which notice shall state the Warrant Price as adjusted and the
increased or decreased number of shares purchasable upon the exercise of this
Warrant, setting forth in reasonable detail the method of calculation of each.

      5. Charges, Taxes and Expenses. The issuance of certificates for shares of
Common Stock upon any exercise of this Warrant shall be made without charge to
the Holder hereof for any tax or other expense in respect to the issuance of
such certificates, all of which taxes and expenses shall be paid by the Company,
and such certificates shall be issued in the name of, or in such name or names
as may be directed by, the Holder of this Warrant; provided, however, that in
the event that certificates for shares of Common Stock are to be issued in a
name other than the name of the Holder of this Warrant, this Warrant when
surrendered for exercise shall be accompanied by an instrument of transfer in
form satisfactory to the Company, duly executed by the Holder hereof in person
or by an attorney duly authorized in writing and the Holder shall pay all stock
transfer taxes payable upon issuance of such stock certificate.

                                       3
<PAGE>

      6. Certain Obligations of the Company. The Company agrees that it will not
establish or increase the par value of the shares of any Common Stock which are
at the time issuable upon exercise of this Warrant above the then prevailing
Warrant Price hereunder and that, before taking any action which would cause an
adjustment reducing the Warrant Price hereunder below the then par value, if
any, of the shares of any Common Stock issuable upon exercise hereof, the
Company will take any corporate action which may, in the opinion of its counsel,
be necessary in order that the Company may validly and legally issue fully paid
and non-assessable shares of Common Stock at the Warrant Price as so adjusted.

      7. Restrictions on Exercise and Transfer. Notwithstanding any provisions
contained in this Warrant to the contrary, this Warrant shall not be exercisable
or transferable and the related shares of Common Stock shall not be transferable
except upon the conditions specified in this paragraph 7, which conditions are
intended, among other things, to insure compliance with the provisions of the
Act in respect of the exercise or transfer of the Warrant or transfer of the
related shares of Common Stock. The Holder represents and warrants that the
language contained in the legend on the first page hereof is true and correct.
The Holder of this Warrant, by acceptance hereof, agrees that it will not (a)
exercise this Warrant except in compliance with the applicable securities laws
or (b) transfer this Warrant or the related shares of Common Stock except (i)
pursuant to an effective registration statement covering such securities under
the Act and any applicable state securities laws, (ii) in a transaction
permitted by Rule 144 promulgated under the Act and as to which the Company has
received reasonably satisfactory evidence of compliance with the provisions of
Rule 144, or (iii) upon receipt of a legal opinion rendered by counsel
reasonably satisfactory to the Company to the effect that the transaction does
not require registration under the Act and any applicable state securities laws.

      8. Miscellaneous. (a) The Company covenants that it will at all times
reserve and keep available, solely for the purpose of issue upon the exercise
hereof, a sufficient number of shares of Common Stock to permit the exercise
hereof in full.

            (b) The terms of this Warrant shall be binding upon and shall inure
to the benefit of any successors or assigns of the Company and of the Holder or
Holders hereof.

            (c) No Holder of this Warrant, as such, shall be entitled to vote,
receive dividends (except as provided in paragraph 2(a) hereof), receive notice
in respect of meetings of stockholders or any other matter whatsoever as a
stockholder of the Company or be deemed to be a stockholder of the Company for
any purpose.

            (d) This Warrant may be divided into separate Warrants covering at
least one hundred shares of the Common Stock for the total number of shares of
Common Stock then subject to this Warrant at any time, or from time to time,
upon the request of the Holder of this Warrant and the surrender of the same to
the Company for such purpose. Such subdivided Warrants shall be issued promptly
by the Company following any such request and shall be of the same form and
tenor as this Warrant, except for any requested change in the name of the Holder
stated herein.

                                       4
<PAGE>

            (e) Except as otherwise provided herein, this Warrant and all rights
hereunder are transferable by the Holder hereof in person or by duly authorized
attorney on the books of the Company upon surrender of this Warrant, with the
attached assignment properly endorsed, to the Company. The Company may deem and
treat the registered Holder of this Warrant at any time as the absolute owner
hereof for all purposes and shall not be affected by any notice to the contrary.

            (f) Notwithstanding any provision herein to the contrary, the Holder
hereof may not exercise, sell, transfer or otherwise assign this Warrant unless
the Company is provided with an opinion of counsel satisfactory in form and
substance to the Company, to the effect that such exercise, sale, transfer or
assignment does not violate the Securities Act of 1933 or applicable state
securities laws.

            (g) This Warrant contains the entire agreement between the Holder
hereof and the Company with respect to the purchase of shares of Common Stock of
the Company and supersedes all prior arrangements or understandings with respect
thereto.

            (h) This Warrant shall be governed by and construed in accordance
with the laws of the State of Delaware.

            (i) Any term or provision of this Warrant may be waived at any time
by the party which is entitled to the benefits thereof and any term or provision
of this Warrant may be amended or supplemented at any time by agreement of the
Holder of this Warrant and the Company, except that any waiver of any term or
condition, or any amendment or supplementation, of this Warrant must be in
writing. A waiver of any breach or failure to enforce any of the terms or
conditions of this Warrant shall not in any way affect, limit or waive a party's
rights hereunder at any time to enforce strict compliance thereafter with any
term or condition of this Warrant.

            (j) Any notice or other document required or permitted to be given
or delivered to the Holder of this Warrant shall be delivered personally, or
sent by certified or registered mail, to each such Holder at the last address
shown on the books of the Company for the registration of, and the registration
of transfer of, the Warrant or at any more recent address of which the Holder of
this Warrant shall have notified the Company in writing. Any notice or other
document required or permitted to be given or delivered to the Company, shall be
delivered at, or sent by certified or registered mail to, the office of the
Company at 6428 Parkland Drive, Sarasota, Florida 34243, Attention: Chief
Executive Officer, or such other address within the United States of America as
shall have been furnished by the Company to the Holder of the Warrant.

                                       5
<PAGE>

      IN WITNESS WHEREOF, the Company and the Holder have caused this Warrant to
be signed by their duly authorized officers.

Dated: May 1, 2000

                                 ELCOTEL, INC.

                                 By:  /s/ Michael J. Boyle
                                      ------------------------------------------
                                      Michael J. Boyle, Chief Executive Officer

                                 ID8 GROUP HOLDINGS, INC.

                                 By:  /s/ Blake Krikorian
                                      ------------------------------------------
                                      Blake Krikorian, Chief Executive Officer

                                       6
<PAGE>

                               SUBSCRIPTION NOTICE

Elcotel, Inc.

      The undersigned, the holder of the foregoing Warrant, hereby elects to
exercise purchase rights represented by said Warrant for, and to purchase
thereunder, ________ shares of the Common Stock covered by said Warrant and
herewith makes payment in full therefor of $_______ by certified or cashier's
check payable to the order of the Company, and requests (a) that certificates
for such shares (and any securities or other property issuable upon such
exercise) be issued in the name of and delivered to ______________ whose address
is _________________________________ and (b) if such shares shall not include
all of the shares issuable as provided in said Warrant, that a new Warrant of
like tenor and date for the balance of the shares issuable thereunder be
delivered to the undersigned or that appropriate notation be made on the Warrant
which shall be returned to the undersigned.

                                                 _______________________________
                                                 Signature Guaranteed:

Dated:

                                       7
<PAGE>

                                   ASSIGNMENT

                   (To be Executed by the Registered Holder to
                   effect a transfer of the foregoing Warrant)

      FOR VALUE RECEIVED, the undersigned hereby sells, and assigns and
transfers unto ______________________________________________ the foregoing
Warrant and the rights represented thereby to purchase shares of Common Stock of
the Company in accordance with the terms and conditions thereof, and does hereby
irrevocably constitute and appoint _________________________ Attorney to
transfer the said Warrant on the books of the Company, with full power of
substitution.

                                                   Holder:

                                                   _____________________________

                                                   _____________________________
                                                             Address

Dated:   _____________________, 20__

In the presence of:

____________________________________

                                       8

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