Document:

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                                  EXHIBIT 10.32

                              EMPLOYMENT AGREEMENT
                              --------------------

         This AGREEMENT (the "Agreement") is made and entered into as of this
1st day of April, 2000, by and among PhoneTel Technologies, Inc. (the
"Corporation") and John D. Chichester (the "Executive").

                                R E C I T A L S :

         WHEREAS, the Executive is presently employed by the Corporation as its
President and Chief Executive Officer.

         WHEREAS, PhoneTel's Board of Directors (the "Board") recognizes that
Executive's contribution to the growth and success of PhoneTel has been
substantial. The Board desires to provide for the continued employment of
Executive having determined that the services of the Executive are of value to
the Corporation and further determined that the Executive's continued employment
is in the best interest of PhoneTel and its shareholders.

         WHEREAS, Executive is willing to commit himself to continue to serve
PhoneTel on the terms and conditions herein provided.

                              A G R E E M E N T S :

         NOW THEREFORE, in consideration of the foregoing recitals and of the
promises and respective covenants and agreements of the parties herein
contained, and intending to be legally bound hereby, the parties hereto agree as
follows:

         1. EMPLOYMENT AND SERVICES.

         During the term of this Agreement, the Executive shall be employed as
President and Chief Executive Officer of the Corporation. As President and Chief
Executive Officer the Executive shall render administrative and management
services to the Corporation such as are customarily performed by persons
situated in similar executive positions, and such other duties as the Board may
from time to time direct. As an employee of the Corporation, the Executive shall
report directly to the Board.

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         2. TERM OF AGREEMENT.

         The term of this Agreement shall continue for a period of two years (2)
commencing April 1, 2000 and ending on March 31, 2002 (the "Initial Term"). The
Agreement shall automatically be extended for an additional one-year period (the
"Extended Term"), unless the Executive is notified by the Board, at least thirty
(30) days prior to the expiration of the Initial Term, that the term of this
Agreement shall not be extended.

         3. OBLIGATIONS OF THE EXECUTIVE.

         Except as set forth herein, the Executive agrees to devote his best
efforts and such business time as may be reasonably necessary to the business
and affairs of the Corporation and to discharge his responsibilities herein in a
faithful and diligent manner. The Executive may serve on corporate, civic or
charitable boards or committees and may manage personal investments, so long as
such activities do not interfere in any material respect with the performance of
his responsibilities hereunder. While Executive is providing services pursuant
to the terms of this Agreement, Executive shall also be permitted to continue as
an officer and director of Urban Telecommunications, Inc. ("Urban"), provided
such involvement does not interfere in any material respect with his services to
the Corporation. Other than in connection with Executive's rendering of services
to Urban, Executive shall not, during the term of this Agreement, participate in
any business competitive to the Corporation.

         4. COMPENSATION.

                  a. SALARY. During the first year of the Initial Term of this
Agreement, the Corporation shall pay the Executive a salary of $350,000 per
annum (the "Salary") which shall be paid at regular intervals in accordance with
the Corporation's normal payroll practices. During the second year of the
Initial Term and during the Extended Term of this Agreement, the Salary shall be
increased by four percent (4%) per annum; provided, however, that said salary
obligation for the Extended Term shall be in effect only in the event that the
Extended Term hereof is in effect as provided herein. The Company's current
payroll practices mandate payment on a bi-weekly basis.

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                  b. INCENTIVE BONUS. During the Initial Term and Extended Term
of this Agreement, the Executive shall be entitled to earn an annual cash bonus
(the "Annual Bonus") based upon the annual financial performance of the
Corporation.

     The Annual Bonus will be determined by first calculating the percentage
of Executive's achievement (the "Achievement Percentage") which shall be
obtained by dividing the Corporation's actual annual EBIDTA performance (the
"Actual EBIDTA") by the Corporation's projected annual EBIDTA performance (the
"Projected EBIDTA") as set forth in the Corporation's budget dated February 4,
2000 (the "Plan"). The Achievement Percentage shall be utilized, in accordance
with the schedule set forth below (the "Annual Bonus Calculator Schedule"), to
determine the bonus opportunity percentage (the "Bonus Opportunity Percentage").
During the first year of the Initial Term the Annual Bonus shall equal the
product of the Bonus Opportunity Percentage and the sum of $90,000. During the
second year of the Initial Term the Annual Bonus shall equal the product of the
Bonus Opportunity Percentage and the sum of $100,000. During the Extended Term
the Annual Bonus shall equal the product of the Bonus Opportunity Percentage and
the sum of $110,000. The Annual Bonus shall be paid to Executive within
forty-five (45) days following the end of each calendar year and shall be
subject to withholding for any and all applicable federal, state and municipal
payroll taxes.

                        ANNUAL BONUS CALCULATOR SCHEDULE

         ACHIEVEMENT PERCENTAGE             BONUS OPPORTUNITY PERCENTAGE

         Less than 80%                                 0%
         80.1% to 90%                                 90%
         90.1% to 100%                               100%
         100.1% to 110%                              110%
         Greater than 110%                           120%

                  c. BENEFIT PLANS. The Executive shall be entitled to
participate in all plans of the Corporation relating to pension, deferred
compensation, profit-sharing, stock purchase, group life insurance, medical
insurance or other retirement or employee benefits that the Corporation may then
have in force for the benefit of its executive employees, and for which he is
otherwise eligible.

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                  d. EXPENSE REIMBURSEMENT. In addition to the compensation
provided to the Executive pursuant to subparagraphs a, b and c hereof, and upon
receipt of proper documentation, the Corporation agrees to promptly reimburse
the Executive for reasonable entertainment, travel, lodging, and other
miscellaneous expenses incurred on its behalf and related to the performance of
the Executive's duties hereunder.

                  e. STOCK INCENTIVE OPTIONS. The Executive is hereby granted
stock incentive options ("Stock Incentive Options") to purchase 50,000 shares of
the Common Stock of PhoneTel pursuant to the terms and conditions of the 1999
Management Incentive Plan. The Stock Incentive Options are in addition to those
vested options to purchase shares of the Common Stock previously granted to
Executive pursuant to Executive's 1999 Employment Agreement. The Stock Incentive
Options shall vest as follows: 16,667 of said amount on March 31, 2001; 16,667
of said amount on March 31, 2002; and, the remaining balance of said amount on
March 31, 2003; provided, however, that vesting of the Stock Incentive Options
on March 31, 2003 shall occur only in the event that the Extended Term is in
effect as provided pursuant to Section 2. In the event the Company should not
elect to continue the employment of the Executive into the Extended Term for any
reason other than Cause, the vesting of the Stock Incentive Options anticipated
to occur on March 31, 2003 shall be advanced to the earlier expiration date of
the Initial Term. The specific terms of the Stock Incentive Options shall be set
forth in an Award Agreement of even date herewith between Executive and
PhoneTel, and shall be further subject to the terms and conditions set forth in
the 1999 Management Incentive Plan.

                  f. COMPANY VEHICLE. Company shall provide Executive with a
vehicle for business and personal use and shall pay for all expenses incident to
the operation of said vehicle including gasoline, insurance and reasonable
repairs and maintenance.

                  g. RELOCATION EXPENSES. Company shall reimburse Executive
those actual reasonable and customary expenses incurred as a result of the
relocation of Executive's primary residence from New York to Ohio, up to a
maximum amount of $70,000. Such expenses shall include, but not be limited to
moving costs, bank closing costs, real estate fees and settlement costs
associated with the sale of Executive's primary residence in New York and the
purchase of Executive's primary residence in Ohio.

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5.     VACATIONS.

         The Executive shall be entitled to three weeks of paid vacation for
each calendar year during the Initial Term or Extended Term of this Agreement.
No more than two consecutive weeks of such vacation time may be taken at any one
time and all vacation time must be preceded with notification to the Board of
Directors. The Executive shall also be entitled to all paid holidays given by
PhoneTel to its executives. The Executive shall not be entitled to receive any
additional compensation for his unused vacation time.

         6. TERMINATION OF EMPLOYMENT.

         The Executive's employment hereunder may be terminated without any
breach of this Agreement only under the following circumstances:

                  a. DEATH. The Executive's employment hereunder shall terminate
upon his death. If the Executive's employment is terminated by his death,
PhoneTel shall pay to Executive's spouse, or if he leaves no spouse, to his
estate or such other beneficiaries as he shall designate on Exhibit A hereto,
any benefits which, pursuant to the terms of this Agreement or any other benefit
plan have been earned and have become payable but which have not yet been paid
to the Executive. In the event Executive's employment is terminated pursuant to
this subparagraph, all Stock Incentive Options granted to Executive which had
not vested at the time of any such termination shall immediately terminate.

                  b. DISABILITY. If the Executive's employment terminates by
reason of the Executive's Disability as defined in Paragraph 7 hereinbelow, the
Corporation shall pay the Executive any benefits which, pursuant to the terms of
this Agreement or any other benefit plan have been earned and have become
payable but which have not yet been paid to the Executive. In the event
Executive's employment is terminated pursuant to this subparagraph, all Stock
Incentive Options granted to Executive which had not vested at the time of any
such termination shall immediately terminate.

                  c. CAUSE. PhoneTel may terminate the Executive's employment
hereunder for Cause, as such term is hereinafter defined. For purposes of this
Agreement, termination for Cause shall include termination based on (i) the
Executive's material breach of this Agreement which is not cured fully within
ten (10) days after written notice to the

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Executive identifying such breach, provided that such ten (10) day period shall
be extended to thirty (30) days if such breach is not reasonably susceptible of
cure within ten (10) days and the Executive has commenced to cure and is then
proceeding with diligence to cure such breach; (ii) conviction of the Executive
for (A) any crime committed during the Initial Term or Extended Term of this
Agreement constituting a felony in the jurisdiction in which committed, (B) any
crime committed during the Initial Term or Extended Term of this Agreement
involving moral turpitude (whether or not a felony) or (C) any other criminal
act committed during the Initial Term or Extended Term of this Agreement against
the Corporation involving dishonesty or willful misconduct intended to injure
the Corporation (whether or not a felony); (iii) habitual and excessive use of
alcohol or controlled substances other than for therapeutic reasons; (iv)
indictment of the Executive by a grand jury for a felony violation of the
federal securities laws; or (v) Executive's gross negligence in the performance
of his duties. The Board shall have the authority to make the determinations
with respect to termination for Cause provided for under this subparagraph. If
the Executive's employment shall be terminated pursuant to this subparagraph,
the Corporation shall pay the Executive his full salary through the date of
termination at the rate in effect at the time notice of termination is given and
the Corporation shall have no further obligations to the Executive under the
terms of this Agreement.

                  d. TERMINATION BY EXECUTIVE. This Agreement may be voluntarily
terminated by the Executive at any time upon sixty (60) days' written notice to
the Corporation or upon such shorter period as may be agreed upon between the
Executive and the Board. In the event of such termination, the Corporation shall
be obligated only to continue to pay the Executive his salary up to the date of
termination and those retirement and/or employee benefits which have been earned
or become payable up to the date of termination and shall have no further
obligations to Executive under the terms of this Agreement.

                  e. TERMINATION WITHOUT CAUSE.The Corporation may terminate the
Executive's employment hereunder without cause, upon three (3) months prior
written notice; provided however, that in the event the Corporation terminates
the Executive without cause during the Initial Term, the Executive shall be
entitled, as the Executive's sole and

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exclusive remedy for such termination, a cash severance payment (the "Severance
Payment") from the Corporation and immediate vesting in all Stock Incentive
Options previously granted subject to vesting. The amount of the Severance
Payment shall be equal to (i) the Executive's salary for the remaining months in
the Initial Term and (ii) the sum of $7,500 for each calendar month then
remaining in the Initial Term for which the Executive has not yet qualified for
or been paid the Annual Bonus. The amount of the Severance Payment shall
additionally be increased by a factor of twenty five percent (25%) to account
for the Executive's loss of benefits.

         In the event the Corporation terminates the Executive without cause
during the Extended Term, the amount of the severance payment shall be equal to
(i) the Executive's salary for the remaining months in the Extended Term and
(ii) the sum of $7,500 for each calendar month remaining in the Extended Term
for which the Executive has not yet qualified for or been paid the Annual Bonus
(the "Extended Term Severance Payment"). The amount of the Extended Term
Severance Payment shall additionally be increased by a factor of twenty percent
(20%) to account for the Executive's loss of benefits.

         The amount of the Severance Payment or the Extended Term Severance
Payment shall be due and payable to the Executive immediately upon termination
and shall be subject to withholding for any and all applicable federal, state
and municipal payroll taxes.

                  f. TERMINATION BY EXECUTIVE UPON TRIGGER EVENT. Upon a trigger
event, as such term is defined hereinbelow (the "Trigger Event"), the Executive
may elect to terminate this Agreement upon thirty (30) days written notice. In
the event the Executive gives notice pursuant to this subparagraph, the
Executive shall be entitled to the Severance Payment or the Extended Term
Severance Payment set forth in subparagraph (e) unless the Executive has been
advised by the Corporation, or its successor, that subsequent to the Trigger
Event he is to be retained for the remainder of the Initial Term or Extended
Term of the Agreement, subject to the terms and conditions contained herein and
that he will perform substantially the same functions as those that he performed
prior to the Trigger Event; provided, however, that the Executive shall not be
required to relocate his primary residence to another location.

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         In the event that following a Trigger Event the Executive is offered
continued employment subject to the terms and conditions contained herein, to
the extent necessary, an extension of the then remaining Initial Term or
Extended Term shall be extended to ensure a remaining period of not less than
one (1) year following the Trigger Date and the provisions set forth in Section
2 hereinabove regarding an extension shall remain in full force and effect, if
the Trigger Event should occur during the Initial Term. In the event of a
Trigger Event, the vesting of all Stock Incentive Options held by the Executive
as of the date of such Trigger Event shall be accelerated such that all of the
Executive's Stock Incentive Options shall become exercisable and remain so until
the earlier of their expiration or the termination of this Agreement.

         For purposes of this subparagraph a Trigger Event shall be deemed to
occur if (a) the Corporation shall be merged or consolidated into another entity
that is not affiliated with the Corporation, or (b) all or substantially all of
the assets of the Corporation are sold to another entity that is not affiliated
with the Corporation or (b) any person, as such term is used in Section 13 (d)
and 14 (d) of the Securities and Exchange Act of 1934 (the "Exchange Act"), with
the exception of any affiliate existing as of the date hereof, becomes the
beneficial owner, as such term is defined in Rule 13d-3 under the Exchange Act,
of securities of the Corporation representing fifty percent (50%) or more of the
combined voting power of the Corporation's then outstanding securities entitled
to vote generally in the election of directors. Notwithstanding anything to the
contrary contained herein, a Trigger Event shall not include a public offering
of the Corporation's securities.

         7. DISABILITY.

         Executive shall be deemed to be disabled and the Corporation may
terminate this Agreement if Executive shall, as a result of such Disability,
fail to perform the duties hereunder for any two (2) months during a consecutive
three (3) month period. The Corporation may terminate the Executive's employment
after having established his Disability, which results in the Executive becoming
eligible for long-term disability benefits. For purposes of this Agreement,
"Disability" means a physical, or mental infirmity, which prevents the Executive
from performing the essential functions of his position under this Agreement.

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         8. NON-SOLICITATION AND NON-COMPETITION.

                  a. The Executive agrees that, other than in connection with
the businesses currently serviced by Urban, during the Initial Term or Extended
Term of this Agreement, and for a period of one (1) year after the termination
of this Agreement, he will not directly or indirectly:

                           i. Solicit, divert or take away any of the customers,
                  business or patronage of the Corporation or its subsidiaries
                  or affiliates; or

                           ii. Induce or attempt to influence any employee of
                  the Corporation or its subsidiaries or affiliates to terminate
                  his or her employment therewith.

                  b. Executive agrees that during the Initial Term or Extended
Term hereof and for one (1) year from the date of the termination of Executive's
employment hereunder, other than in connection with the business currently
conducted by Urban, Executive shall not compete with the Corporation, on behalf
of his himself or any other person, firm, business or corporation, and he shall
not directly or indirectly engage in the pay telephone business. The scope of
this provision shall include any and all customers of the Corporation and any
state served by the Corporation wherein it operates 250 or more pay telephones
at any time during the term hereof.

                  c. In the event of a breach or threatened breach of the
Executive of the provisions of this Paragraph 8, the Corporation, or any duly
authorized officer thereof, will be entitled to a temporary restraining order or
injunction from a court of appropriate jurisdiction.

         9. SUCCESSORS; BINDING AGREEMENT.

         This Agreement and all rights of the Executive hereunder shall inure to
the benefit of and be enforceable by his personal or legal representatives,
successors, heirs, distributees, devisees, legatees and permitted assigns. This
Agreement and all rights of the Corporation hereunder shall inure to the benefit
of and be enforceable by its successors and permitted assigns.

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         10. NO ASSIGNMENT.

         This Agreement is personal to the Executive and Executive shall not
assign or delegate any of its rights or obligations hereunder without first
obtaining the written consent of the Corporation.

         11. NOTICES. All notices, requests, demands and other communications
hereunder shall be in writing and shall be deemed to have been duly given if
delivered by hand or mailed certified or registered mail, return receipt
requested with postage repaid, to the following addresses or to such other
address as either party may designate by like notice.

                  a.       If to the Corporation, to:
                           PhoneTel Technologies, Inc.
                           1001 Lakeside Avenue, 7th Floor
                           Cleveland, Ohio 44114
                           Attention:  General Counsel

                  b.       If to the Executive, to:
                           1700 East 13th Street, Apartment 17VE
                           Cleveland, Ohio  44114

                           With a copy to:
                           Bresler, Goodman & Unterman, LLP
                           521 Fifth Avenue
                           New York, NY 10175
                           Attn. Lee D. Unterman, Esq.

and to such other or additional person or persons as either party shall have
designated to the other party in writing by like notice.

         12. AMENDMENTS.

         No amendments or additions to this Agreement shall be binding unless in
writing and signed by both parties except as herein otherwise provided.

         13. PARAGRAPH HEADINGS.

         The Paragraph headings used in this Agreement are included solely for
convenience and shall not affect, or be used in connection with, the
interpretation of this Agreement.

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         14. SEVERABILITY.

         The provisions of this Agreement shall be deemed severable and the
invalidity or unenforceability of any provisions shall not affect the validity
or enforceability of the other provisions hereof.

         15. GOVERNING LAW.

         This Agreement shall, except to the extent that Federal law shall be
deemed to preempt it, be governed by and construed and enforced in accordance
with the laws of the State of Ohio.

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

                                             PHONETEL TECHNOLOGIES, INC.

                                             By:   /s/ Thomas M. Barnhart II
                                                   -----------------------------
                                                   Thomas M. Barnhart II
                                                   Chairman of the Board

                                             EXECUTIVE

                                                   /s/ John D. Chichester
                                             -----------------------------------
                                             John D. Chichester

                                       10<PAGE>   1
                                                                    Exhibit 10.1

                                                              November 4, 1999

Mr. Gary Patton
16002 South 7th Drive
Phoenix, AZ  85045

Dear Gary:

         This letter will serve to confirm the agreement which we have reached
with respect to (i) your resignation from MCM Capital Group, Inc. (the
"Company"), and its subsidiaries on November 15, 1999 (the "Effective Date") and
(ii) your rendering consulting services to the Company and its subsidiaries
beginning on the Effective Date. The payments to be made to you under this
Letter Agreement shall be made in lieu of any other amount that would otherwise
be payable to you pursuant to any other agreement or understanding.

         1. Effective as of the Effective Date, you are resigning as a Senior
Vice President of the Company and of Midland Credit Management, Inc., a wholly
owned subsidiary ("Midland Credit") of the Company, and as an officer and
employee of any other direct and indirect subsidiaries or affiliates of the
Company (the Company and all such subsidiaries and affiliates being
collectively, the "MCM Group"), which you serve in any such capacity. You will
receive your normal base salary through the Effective Date and you will have no
employment relationship with any member of the MCM Group subsequent to the
Effective Date. You are entitled to reimbursement of all reasonable, actual,
ordinary and necessary travel and other reasonable business expenses that you
have incurred as the necessary part of discharging your duties as an employee of
the MCM Group prior to the
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Effective Date. Midland Credit will reimburse you for such expenses to the
extent heretofore unreimbursed, subject to your submission of reasonable and
appropriate documentation to Midland Credit.

         2. Commencing on the Effective Date, you will become a consultant to
the MCM Group until April 30, 2000 (such period is referred to herein as the
"Consulting Period"), and subject to Paragraphs 8-11 below, you will be paid
your former salary of $115,000 per year or $4,423.07 per pay period (payable in
bi-weekly installments), in consideration thereof through the Consulting Period.
During the Consulting Period you agree to make yourself available to the MCM
Group for: (i) up to twenty hours of consulting per month until such time as you
commence full-time employment with another employer and (ii) up to five hours of
consulting per month if you are employed full-time by another employer.

         3. No later than the Effective Date, you will return to the Company all
MCM Group owned or supplied property, such as credit cards, computers, fax
machines, pagers, cellular phones, printers, files, etc.

         4. Your eligibility to participate in Midland Credit's 401(k) Plan will
cease as of the Effective Date; however, you may, in your sole discretion, keep
your account in Midland Credit's 401(k) Plan, if permitted, or remove all or
part thereof at any time or times in accordance with the terms of such 401(k)
Plan.

         5. You and your family members will be entitled, at your election, for
a period of 18 months commencing on the Effective Date, to continue your
coverage under all health and medical insurance policies, at your own cost,
pursuant to Section 4980B of the Internal Revenue Code of 1986, as amended, or
under Part 6 of Title I of the Employee Retirement Income Security Act of

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1974, as amended, to the extent such coverage is available; provided, however,
that the Company shall pay the cost of such coverage until the earlier of (i)
your being a participant entitled to benefits in a medical plan with another
employer; (ii) the date you become covered or eligible for coverage under
Medicare or any other medical benefit plan; or (iii) the end of the Consulting
Period. All other benefits provided by the Company (including, without
limitation, long-term disability and life insurance) shall terminate on the
Effective Date.

         6. You acknowledge that as of the Effective Date you will have no
unused vacation time remaining for 1999.

         7. Your obligation to provide part-time consulting services to the MCM
Group shall not prevent you from accepting other part-time or full-time
employment. However, you agree promptly to notify MCM Capital if you accept
other full-time employment and the date such employment is to begin. All
reasonable, actual, ordinary and necessary travel expenses incurred by you in
providing the consulting services hereinunder will be borne by the Company,
subject to your submission of reasonable and appropriate documentation.

         8. You agree, in consideration of this Letter Agreement, that you will
(i) refrain from making any statement written or oral which is detrimental to
the best interests of the members of the MCM Group and/or their respective
shareholders, officers, employees and directors, and (ii) treat as confidential
and not disclose (a) the terms of this Letter Agreement (except in a proceeding
to enforce the terms of this Letter Agreement) or (b) the affairs of the members
of the MCM Group and their respective shareholders, officers, employees and
directors. You will not, for a period of eighteen (18) months after the
Effective Date, without prior written consent of the Company, divulge, furnish
or make known or accessible to, or use for the benefit of, anyone other than the

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MCM Group, any information of a confidential nature relating in any way to the
business of the MCM Group, or any of their respective direct business customers,
unless (i) you are required to disclose any such information by judicial or
administrative process, or, in the opinion of your counsel, by other
requirements of law, (ii) such information is in the public domain through no
fault of you or (iii) such information has been lawfully acquired by you from
other sources unless you know that such information was obtained in violation of
an agreement of confidentiality. You agree that in addition to any other remedy
provided at law or in equity or in this Letter Agreement, the Company shall be
entitled to a temporary restraining order and both preliminary and permanent
injunctions restraining you from violating any provision of this Paragraph 8.
Additionally, you agree that on or before the Effective Date you will return to
the MCM Group any and all confidential and proprietary information or any other
property of the MCM Group that is in your possession.

         9. In consideration of the value referred in Paragraph 2 above and 12
below, you hereby covenant not to sue or pursue any litigation (or file any
charge with any Federal, state or local administrative agency) against, and
waive, release and discharge each member of the MCM Group, their affiliates,
assigns, subsidiaries, parents, predecessors and successors, and the
shareholders, employees, officers, directors, representatives and agents or any
of them, from any and all charges or causes of action you may have against any
of them, including, but not limited to any claims, charges or causes of action
related to employment or termination of employment or any term or condition of
that employment under Federal, state and local statutory and common law,
including, but not limited to, any and all claims, charges or actions that arise
out of or relate in any way to the Age Discrimination in Employment Act of 1967,
as amended, the Older Workers Benefit Protection Act, Title VII of the Civil
Rights of 1964, as amended, all claims under Federal, state or local laws

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for express or implied breach of contracts, wrongful discharge, defamation,
intentional infliction of emotional distress, race, sex, age, national origin,
color, marital status, handicap, or other discrimination, and any related claims
for attorneys' fees and costs. This covenant, waiver, release and discharge of
claims expressly excludes any and all rights to indemnification which you may
have under the Certificate of Incorporation, by-laws, or similar charter
documents of any member of the MCM Group.

         10. You acknowledge and agree that you are or may be exclusively liable
for the payment of certain Federal, state, local and foreign taxes that may be
due as a result of the payments to be made to you under this Letter Agreement
(including, without limitation, the payments referred to in Paragraph 2 above);
provided, however, the Company shall be entitled to withhold from any amounts
payable under this Letter Agreement such amounts that it determines in its sole
discretion is required by law or regulation to withhold in respect of any such
payment or such greater amounts as you may request. If the MCM Group or any of
its affiliates are required at any time to pay any monies in payment of your tax
obligations, including interest, penalties and other additions, in respect of
the payments made under this Letter Agreement, you agree to indemnify and hold
harmless the MCM Group, its affiliates and agents or employees for payment of
any such taxes or other amounts. In addition to the foregoing, you agree that
the Company, in its sole discretion, may deduct from any amounts payable under
this Letter Agreement (a) any amount of garnished earnings which would have been
withheld from your pay, if the Company has been garnishing your earnings
pursuant to an order of garnishment, child support or tax lien and (b) to the
extent permitted by law, any amounts you owe to the Company.

         11. You acknowledge that you have been offered the opportunity and have
been advised

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in writing to consult with an attorney regarding the terms of this
Letter Agreement before signing this Letter Agreement. You further acknowledge
that you otherwise would have been provided a period of at least 21 days within
which to consider the terms of this Letter Agreement, but that you have decided,
in a knowing and voluntary manner, in consideration of the value referred to in
Paragraphs 2 above and 12 below, to sign this Letter Agreement before the
expiration of such 21 day period. This Letter Agreement shall become effective
only if you elect not to rescind this Letter Agreement. You will have seven days
following the execution of this Letter Agreement to rescind the Agreement by
notifying the Secretary of the Company in writing of your decision to rescind.
You further agree that if you decide to rescind this Letter Agreement, MCM Group
shall be relieved of all of its obligations hereunder, including without
limitation, MCM Group's obligation to make the payments and provide the benefits
specified in Paragraphs 2 and 5.

         12. The Company, on behalf of itself and each member of the MCM Group,
hereby waives, releases and discharges you from any and all claims any of them
may have against you based on facts known to any current executive officer of
the Company, including, but not limited to, any claims related to your
employment or any term or condition of that employment. This discharge and
release includes, among other things, all claims under Federal, state or local
laws for express or implied breach of contract, failure to perform employment
duties, defamation and any related claims for attorneys' fees and costs;
provided, however, that nothing contained in this discharge and release shall
release you from any obligations arising under this Letter Agreement.

         13. You agree that you will cooperate with the members of the MCM Group
in connection with all litigations relating to the activities of the Company and
its affiliates during the period of your employment with the Company including,
without limitation, being available to take

                                       6
<PAGE>   7
depositions and to be a witness at trial, help in preparation of any legal
documentation and providing affidavits and any advice or support that the
Company or any affiliate thereto may request of you in connection with such
claims.

         14. Effective as of the Effective Date, the Employment Letter dated as
of February 13, 1998 (the "Employment Agreement") by and between Midland Credit
and you shall be deemed to be terminated in all respects.

         15. This Letter Agreement represents the entire agreement between you
and the Company with respect to matters referred to herein and supersedes all
prior agreements, whether written or oral, with respect thereto. This Letter
Agreement and the rights and duties of the parties hereunder shall be construed
and interpreted in accordance with the laws of the State of Arizona applicable
to agreements made and to be performed entirely within such State. If any
section, paragraph, sentence, clause, or phrase contained in this Letter
Agreement shall become illegal, null, or void, or shall be found to be against
public policy, for any reason, or shall be held by any court of competent
jurisdiction to be illegal, null, or void, or found to be against public policy,
the remaining sections, paragraphs, sentences, clauses, or phrases contained in
this Letter Agreement shall not be affected thereby. One or more waivers of a
breach of any provision hereunder by any party to this Letter Agreement shall
not be deemed to be a waiver of any proceeding or subsequent breach hereunder.

         16. This Letter Agreement shall be binding upon and inure to the
benefit of the Company and its successors and assigns. This Letter Agreement and
your rights hereunder may not be assigned by you.

                                       7
<PAGE>   8
         17. Neither the negotiation nor the execution of this Letter Agreement
shall constitute or operate as an acknowledgment or admission of any kind by the
MCM Group that it violated or failed to comply with any provision of federal,
state, or local law.

         18. The parties agree that they will not seek to introduce this Letter
Agreement as evidence for any purpose in any proceeding of any kind, other than
a proceeding to enforce the terms of this Letter Agreement.

                                       8
<PAGE>   9
         If this Letter Agreement is in accordance with your understanding of
the entitlements and obligations pertaining to the foregoing, please sign two
copies of this Letter Agreement in the space provided and return one copy to us.

                             Very truly yours,
                             MCM CAPITAL GROUP, INC.

                             By:   /s/ Robert E. Koe
                                 _________________________________
                                   Name:  Robert E. Koe
                                   Title: President and Chief Executive Officer

                             MIDLAND CREDIT MANAGEMENT, INC.

                             By:    /s/ Robert E. Koe
                                  ___________________________________
                                    Name:  Robert E. Koe
                                    Title: President and Chief Executive Officer

ACCEPTED AND AGREED TO:

/s/ Gary Patton
___________________________
Gary Patton

Date:    November 4, 1999

                                       9

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