PHONETEL TECHNOLOGIES INC
EXHIBIT 10.4
<DOCUMENT>
<TYPE>EX-10.4
<SEQUENCE>8
<FILENAME>l92775aex10-4.txt
<DESCRIPTION>EXHIBIT 10.4
<TEXT>
<PAGE>

                                                                    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.





                                      -1-
<PAGE>

                  "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






                                      -2-
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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:




                                      -3-
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<Table>
<Caption>
               PERIOD                                          CUMULATIVE EBITDA
               ------                                          ----------------

<S>                                                            <C>
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;




                                      -4-
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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.




                                      -5-
<PAGE>

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]





                                      -6-
<PAGE>


                  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
                      ---------------------------------------------------
                    Name:  John D. Chichester
                    Title: President and Chief Executive Officer


                    CHEROKEE COMMUNICATIONS, INC.,
                    a Texas corporation

                    By /s/ John D. Chichester
                      ---------------------------------------------------
                    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
                      ---------------------------------------------------
                    Name:  Amy Lam
                    Title: Vice President


                    FOOTHILL PARTNERS III, L.P.,
                    a Delaware limited partnership, as a Lender

                    By /s/ Dennis R. Ascher
                      ---------------------------------------------------
                    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
                      ---------------------------------------------------
                    Name:  Kevin Genda
                    Title: Senior Vice President and Chief Credit
                           Officer


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