EXHIBIT 10.4
AMENDMENT NUMBER EIGHT
TO LOAN AND SECURITY AGREEMENT
THIS AMENDMENT NUMBER EIGHT TO LOAN AND SECURITY AGREEMENT
(this "Amendment") dated as of February 19, 2002, is entered into among PHONETEL
TECHNOLOGIES, INC., an Ohio corporation ("Phonetel"), CHEROKEE COMMUNICATIONS,
INC., a Texas corporation ("Cherokee," and together with Phonetel, collectively,
jointly and severally, "Borrower"), on the one hand, and, on the other hand,
Agent (as hereinafter defined) and the financial institutions (collectively, the
"Lenders" and individually, a "Lender") that are signatories to that certain
Loan and Security Agreement, dated as of November 17, 1999 (as amended,
restated, supplemented, or otherwise modified from time to time, the "Loan
Agreement"), entered into among Borrower, Lenders, and FOOTHILL CAPITAL
CORPORATION, a California corporation, as agent for the Lenders (herein, in such
capacity, referred to as "Agent"), in light of the following:
RECITALS
WHEREAS, Borrower has requested that the Lenders amend the
Loan Agreement; and
WHEREAS, Lenders are willing to amend the Loan Agreement under
the terms and conditions set forth in this Amendment.
NOW, THEREFORE, in consideration of the foregoing and the
mutual covenants herein contained, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereby agree as follows:
AGREEMENT
I. DEFINITIONS. Capitalized terms not otherwise defined herein shall have
the meaning ascribed thereto in the Loan Agreement.
II. AMENDMENTS TO THE LOAN AGREEMENT. Upon the Eighth Amendment Effective
Date, the parties agree to amend the Loan Agreement as follows:
2.1 Section 1.1 of the Loan Agreement hereby is amended by
inserting the following new defined terms in the proper
alphanumerical order:
"Eighth Amendment" means that certain Amendment Number Eight
to Loan and Security Agreement, dated as of February 19, 2002,
among Borrower, Lenders and Agent.
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"Eighth Amendment Effective Date" means the date that all
conditions set forth in Section 4 of the Eighth Amendment have
been satisfied.
"Madeleine Lenders" means Madeleine L.L.C. and ARK CLO 2000-1,
Limited.
"Madeleine Indebtedness" means Indebtedness of Borrower owed
to the Madeleine Lenders evidenced by that certain Credit
Agreement, dated as of the Eighth Amendment Effective Date, by
and among Borrower and the Madeleine Lenders.
"Madeleine Intercreditor Agreement" means that certain
Intercreditor Agreement, dated as of the Eighth Amendment
Effective Date, by and among Agent and the Madeleine Lenders,
the form and substance of which shall be satisfactory to
Agent.
2.2 The definition of Permitted Liens hereby is amended by adding
the following new subsection (l) immediately after subsection
(k) appearing in such definition:
(l) subject to the Madeleine Intercreditor Agreement, Liens
securing the Madeleine Indebtedness.
2.3 Section 2.6 of the Loan Agreement hereby is amended by
inserting the following new subsection (m) thereof:
(m) PAYMENT IN KIND OF CERTAIN INTEREST OWING. Notwithstanding
the provisions of subsections (c), (h), (i), (j), (k) and (l)
above, (A) interest accrued during the month of August, 2001,
otherwise due and payable on September 1, 2001, shall instead
be added to principal as of September 1, 2001, and shall
thereafter accrue interest at the rate then applicable to
Advances hereunder, (B) interest accrued during the month of
September, 2001, otherwise due and payable on October 1, 2001,
shall instead be added to principal as of October 1, 2001, and
shall thereafter accrue interest at the rate then applicable
to Advances hereunder, (C) interest accrued during the month
of October, 2001, otherwise due and payable on November 1,
2001, shall instead be added to principal as of November 1,
2001, and shall thereafter accrue interest at the rate then
applicable to Advances hereunder, (D) interest accrued during
the month of November, 2001, otherwise due and payable on
December 1, 2001, shall instead be added to principal as of
December 1, 2001, and shall thereafter accrue interest at the
rate then applicable to Advances hereunder, (E) interest
accrued during the month of December, 2001, otherwise due and
payable on January 1, 2002, shall instead be added to
principal as of January 1, 2002, and shall thereafter accrue
interest at the rate then applicable to Advances hereunder,
(F) interest accrued during the month of January, 2002,
otherwise due and payable on February 1, 2002, shall instead
be added to principal as of
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February 1, 2002, and shall thereafter accrue interest at the
rate then applicable to Advances hereunder, (G) interest
accrued during the month of February, 2002, otherwise due and
payable on March 1, 2002, shall instead be added to principle
as of March 1, 2002, and shall thereafter accrue interest at
the rate then applicable to Advances hereunder, (H) interest
accrued during the month of March, 2002, otherwise due and
payable on April 1, 2002, shall instead be added to principle
as of April 1, 2002, and shall thereafter accrue interest at
the rate then applicable to Advances hereunder; (I) interest
accrued during the month of April, 2002, otherwise due and
payable on May 1, 2002, shall instead be added to principle as
of May 1, 2002, and shall thereafter accrue interest at the
rate then applicable to Advances hereunder; (J) interest
accrued during the month of May, 2002, otherwise due and
payable on June 1, 2002, shall instead be added to principle
as of June 1, 2002, and shall thereafter accrue interest at
the rate then applicable to Advances hereunder; (K) interest
accrued during the month of June, 2002, otherwise due and
payable on July 1, 2002, shall instead be added to principle
as of July 1, 2002, and shall thereafter accrue interest at
the rate then applicable to Advances hereunder; and (L)
interest accrued during the month of July, 2002, otherwise due
and payable on August 1, 2002, shall instead be added to
principle as of August 1, 2002, and shall thereafter accrue
interest at the rate then applicable to Advances hereunder.
2.4 Section 3.4 of the Loan Agreement hereby is amended and
restated in its entirety to read as follows:
3.4 TERM. This Agreement shall continue in full force and
effect until August 31, 2002 (the "Maturity Date"). The
foregoing notwithstanding, the Required Lenders shall have the
right to terminate the obligations of the Lenders under this
Agreement immediately and without notice upon the occurrence
and during the continuation of an Event of Default.
2.5 Section 7.1 of the Loan Agreement hereby is amended by adding
the following new subsection (g) immediately after subsection
(f) appearing in such Section:
(g) subject to the Madeleine Intercreditor Agreement, the
Madeleine Indebtedness in an aggregate principal amount
outstanding at any one time not to exceed $11,000,000.
2.6 Section 7.20 of the Loan Agreement hereby is amended and
restated in its entirety to read as follows:
(a) Minimum EBITDA. Borrower will not permit its EBITDA for
each period shown on the chart below, measured at the end of
each such period, to be less than the amount set forth
opposite each such period:
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<Table>
<Caption>
PERIOD CUMULATIVE EBITDA
------ ----------------
January 1, 2002 through
March 31, 2002 $ (450,000)
----------------
January 1, 2002 through
June 30, 2002 $ 275,000
----------------
January 1, 2002 through
August 31, 2002 $ 725,000
================
</Table>
III. WAIVERS IN CONNECTION WITH THE LOAN AGREEMENT. Upon the Eighth
Amendment Effective Date, the parties agree to certain waivers as
follows:
3.1 Waiver of Certain Financial Covenants for the Quarters Ended
September 30, 2001 and December 31, 2001. Agent hereby waives
any Default or Event of Default solely with respect to
Borrower's failure to comply with Sections 7.20(a), 7.20(b),
7.20(c), 7.20(d), 7.20(e), 7.20(f), and 7.20(g), only for the
periods ending September 30, 2001 and December 31, 2001.
3.2 Waiver of Restrictions Upon Overadvances. Agent hereby waives
any Default or Event of Default that has or would have
occurred solely with respect to Borrower's failure to comply
with Section 2.5 for the time period prior to and including
the Eighth Amendment Effective Date.
IV. CONDITIONS PRECEDENT TO AMENDMENT. The satisfaction of each of the
following unless waived or deferred by Lenders, in their sole
discretion, shall constitute conditions precedent to the effectiveness
of this Amendment and each and every provisions hereof:
4.1 Agent shall have received this Amendment, in form and
substance satisfactory to Agent, duly executed by each party
hereto, and in full force and effect;
4.2 The representations and warranties in this Amendment, the Loan
Agreement as amended by this Amendment, and the other Loan
Documents shall be true and correct in all respects on and as
of the date hereof, as though made on such date (except to the
extent that such representations and warranties relate solely
to an earlier date);
4.3 No Default or Event of Default (except for the Events of
Default specified in Sections 3.1 and 3.2) shall have occurred
and be continuing on the date hereof, nor shall result from
the consummation of the transactions contemplated herein;
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4.4 No injunction, writ, restraining order, or other order of any
nature prohibiting, directly or indirectly, the consummation
of the transactions contemplated herein shall have been issued
and remain in force by any Governmental Authority against
Borrower, Agent or any of the Lenders;
4.5 Agent shall have received executed copies of all agreements,
instruments, and other documents entered into or executed in
connection with the Madeleine Indebtedness, including without
limitation the Madeleine Intercreditor Agreement, each of
which shall be in form and substance satisfactory to Agent;
and
4.6 Agent shall have received evidence satisfactory to Agent that
the transactions to be consummated on the effectiveness of
each of the agreements, instruments, and other documents
entered into or executed in connection with the Madeleine
Indebtedness have been consummated.
V. REPRESENTATIONS AND WARRANTIES. Each Borrower hereby represents and
warrants to the Lenders that (a) the execution, delivery, and
performance of this Amendment and of the Loan Agreement, as amended by
this Amendment, are within such Borrower's corporate powers, have been
duly authorized by all necessary corporate action, and are not in
contravention of any law, rule, or regulation, or any order, judgment,
decree, writ, injunction, or award of any arbitrator, court, or
Governmental Authority, or of the terms of its Governing Documents, or
of any contract or undertaking to which it is a party or by which any
of its properties may be bound or affected, (b) this Amendment and the
Loan Agreement, as amended by this Amendment, constitute such
Borrower's legal, valid, and binding obligation, enforceable against
such Borrower in accordance with its terms, and (c) this Amendment has
been duly executed and delivered by such Borrower.
VI. CHOICE OF LAW. THE VALIDITY OF THIS AMENDMENT, ITS CONSTRUCTION,
INTERPRETATION AND ENFORCEMENT, THE RIGHTS OF THE PARTIES HEREUNDER,
SHALL BE DETERMINED UNDER, GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK.
VII. COUNTERPARTS; TELEFACSIMILE EXECUTION. This Amendment may be executed
in any number of counterparts and by different parties and separate
counterparts, each of which when so executed and delivered, shall be
deemed an original, and all of which, when taken together, shall
constitute one and the same instrument. Delivery of an executed
counterpart of a signature page to this Amendment by telefacsimile
shall be effective as delivery of a manually executed counterpart of
this Amendment. Any party delivering an executed counterpart of this
Amendment by telefacsimile also shall deliver a manually executed
counterpart of this Amendment but the failure to deliver a manually
executed counterpart shall not affect the validity, enforceability, and
binding effect of this Amendment.
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VIII. EFFECT ON LOAN AGREEMENT. The Loan Agreement, as amended hereby, shall
be and remain in full force and effect in accordance with its
respective terms and hereby is ratified and confirmed in all respects.
The execution, delivery, and performance of this Amendment shall not
operate as a waiver of or, except as expressly set forth herein, as an
amendment of, any right, power, or remedy of Agent or any Lender under
the Loan Agreement, as in effect prior to the date hereof.
IX. FURTHER ASSURANCES. Each Borrower shall execute and deliver all
agreements, documents, and instruments, in form and substance
satisfactory to Agent, and take all actions as Agent may reasonably
request from time to time, to perfect and maintain the perfection and
priority of Liens in the Collateral held by Agent for the benefit of
the Lenders and to fully consummate the transactions contemplated under
this Amendment and the Loan Agreement, as amended by this Amendment.
X. MISCELLANEOUS.
10.1 Upon and after the effectiveness of this Amendment, each
reference in the Loan Agreement to "this Agreement",
"hereunder", "herein", "hereof" or words of like import
referring to the Loan Agreement, and each reference in the
other Loan Documents to "the Loan Agreement", "thereunder",
"therein", "thereof" or words of like import referring to the
Loan Agreement, shall mean and be a reference to the Loan
Agreement as modified and amended hereby.
10.2 The Loan Agreement and all other Loan Documents, are and shall
continue to be in full force and effect and are hereby in all
respects ratified and confirmed and shall constitute the
legal, valid, binding and enforceable obligations of each
Borrower to Agent and Lenders.
[signature page follows]
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IN WITNESS WHEREOF, the parties have entered into this
Amendment as of the date first above written.
PHONETEL TECHNOLOGIES, INC.,
an Ohio corporation
By /s/ John D. Chichester
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Name: John D. Chichester
Title: President and Chief Executive Officer
CHEROKEE COMMUNICATIONS, INC.,
a Texas corporation
By /s/ John D. Chichester
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Name: John D. Chichester
Title: President and Chief Executive Officer
FOOTHILL CAPITAL CORPORATION, a
California corporation, as Agent and a Lender
By /s/ Amy Lam
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Name: Amy Lam
Title: Vice President
FOOTHILL PARTNERS III, L.P.,
a Delaware limited partnership, as a Lender
By /s/ Dennis R. Ascher
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Name: Dennis R. Ascher
Title: Managing Member
ABLECO FINANCE LLC,
a Delaware limited liability company,
as a Lender and as agent for its affiliate assigns
By /s/ Kevin Genda
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Name: Kevin Genda
Title: Senior Vice President and Chief Credit
Officer