Forbearance Agreement Regarding Events of Default under Amended Credit Agreement between Davel Communications, Inc. and Lender Group

Summary

This agreement is between Davel Communications, Inc. and its subsidiaries, and a group of lenders led by Wells Fargo Foothill, Inc. The lenders agree to temporarily refrain from exercising their rights and remedies for certain defaults under an existing credit agreement, provided Davel makes specified payments and submits a new business plan by set deadlines. The forbearance period lasts until January 30, 2004, unless conditions are not met. The agreement does not waive any lender rights beyond what is specifically stated.

EX-10.1 3 l03445aexv10w1.txt EXHIBIT 10.1 EXHIBIT 10.1 November 11, 2003 Davel Communications, Inc. and its subsidiaries North Point Tower - 7th Floor 1001 Lakeside Avenue Cleveland, Ohio 44114 Re: Forbearance from Exercise of Remedies due to Events of Default under the Amended, Restated and Consolidated Credit Agreement, dated as of July 24, 2002 (as amended, restated or otherwise modified from time to time, the "Credit Agreement"), by and among Davel Financing Company, L.L.C., a Delaware limited liability company ("Davel"), PhoneTel Technologies, Inc., an Ohio corporation ("PhoneTel"), Cherokee Communications, Inc., a Texas corporation ("Cherokee", and together with Davel and PhoneTel, individually, a "Borrower" and, collectively, the "Borrowers"), Davel Communications, Inc., a Delaware corporation ("Parent"), each of the Domestic Subsidiaries (as defined therein) of Parent or any Borrower, each of the lenders that is signatory thereto (together with its successors and permitted assigns, individually, a "Lender", and, collectively, the "Lenders"), Wells Fargo Foothill, Inc. (formerly known as Foothill Capital Corporation), a California corporation, as agent for the Lenders (in such capacity, together with its successors, if any, in such capacity, the "Agent"; and together with each of the Lenders, individually and collectively the "Lender Group"); Capitalized terms used herein and not otherwise defined shall have the meaning ascribed thereto in the Credit Agreement. Ladies and Gentlemen: As you know, certain Events of Default have occurred under the Credit Agreement as set forth on Schedule 1 attached hereto. The Lender Group is willing upon the terms and conditions set forth herein to forbear, through and including January 30, 2004, from exercising its remedies under the Loan Documents, but only with respect to those certain Events of Default set forth on Schedule 1. This forbearance is conditioned upon each of the following: 1. The Borrowers shall make a payment of $600,000 to the Lender Group in respect of Term Loan A concurrently with the execution and delivery of this forbearance agreement; Davel Communications, Inc. and its subsidiaries November 11, 2003 Page 2 2. In lieu of the scheduled payments of $1,041,666.67 under Section 2.03(e) of the Credit Agreement that are due and payable on December 1, 2003 and January 1, 2004, the Borrowers shall make payments of $100,000 to the Lender Group in respect of Term Loan A on each of December 1, 2003 and January 1, 2004; 3. The Borrowers shall submit a new business plan to the Agent, the form and substance of which shall be reasonably satisfactory to the Agent, on or before January 20, 2004; By their signatures below, the Credit Parties acknowledge and agree (i) each Event of Default specified on Schedule 1 has occurred and is continuing and (ii) upon the earliest of (a) the Borrowers' non-compliance with any of the requirements set forth herein, (b) the existence of an Event of Default under the Credit Agreement other than an Event of Default set forth on Schedule 1 or (c) January 30, 2004, the forbearance provided herein shall terminate and the Lender Group shall have the right to exercise any and all remedies. You are hereby advised that the Lender Group specifically reserves all of its rights and remedies against the Credit Parties under the Loan Documents and applicable law with respect to the Events of Default set forth on Schedule 1, including without limitation, the right to charge the default rate of interest under Section 2.03(a) of the Credit Agreement retroactively to the date of the occurrence of the first Event of Default set forth on Schedule 1. Neither the Agent nor any Lender shall be deemed to have waived any term or condition of the Credit Agreement or any other Loan Document or, except as specifically set forth herein, to have agreed to a forbearance with respect to any right or remedy which the Lender Group may now have or in the future may have under the Credit Agreement or any other Loan Document, at law, in equity or otherwise on account of the Events of Default set forth on Schedule 1 or any other Default or Event of Default. Neither Agent nor any Lender shall by virtue of any action or omission be deemed to have altered or prejudiced any rights or remedies under or in connection with the Credit Agreement or under or in connection with any Event of Default. All of the terms and conditions of the Credit Agreement and the other Loan Documents are and shall remain in full force and effect. This forbearance agreement shall be deemed a Loan Document for all purposes. This forbearance agreement reflects the entire understanding of the parties with respect to the matters contemplated hereby and shall not be contradicted or qualified by any other agreement, oral or written, before the date hereof. This forbearance agreement may be executed in any number of counterparts and by different parties on separate counterparts, each of which, when executed and delivered, shall be deemed to be an original, and all of which, when taken together, shall constitute but one and the same agreement. Delivery of an executed counterpart of this forbearance agreement by telefacsimile shall be equally as effective as delivery of an original executed counterpart of this forbearance agreement. Any party delivering an executed counterpart of this forbearance agreement by telefacsimile also shall deliver an original executed counterpart of this forbearance agreement, Davel Communications, Inc. and its subsidiaries November 11, 2003 Page 3 but the failure to deliver an original executed counterpart shall not affect the validity, enforceability, and binding effect of this forbearance agreement. This forbearance agreement shall be construed under and governed by the laws of the State of California. Sincerely, WELLS FARGO FOOTHILL, INC., as Agent and as a Lender By: /s/ Amy Lam --------------------------------------- Name: Amy Lam Title: Vice President FOOTHILL PARTNERS III, L.P., as a Lender By: /s/ Dennis R. Ascher --------------------------------------- Name: Dennis R. Ascher Title: Managing General Partner ABLECO FINANCE LLC, as a Lender, on behalf of itself and its affiliate assigns By: /s/ Mark Neporent --------------------------------------- Name: Mark Neporent Title: Chief Operating Officer CERBERUS PARTNERS, L.P., as a Lender BY: CERBERUS ASSOCIATES, LLC, AS GENERAL PARTNER By: /s/ Mark Neporent -------------------------------------------------- Name: Mark Neporent Title: Managing Director Davel Communications, Inc. and its subsidiaries November 11, 2003 Page 4 ARK CLO 2000-1, LIMITED, as a Lender BY: PATRIARCH PARTNERS, LLC ITS COLLATERAL MANAGER By: /s/ Lynn Tilton -------------------------------------------------- Name: Lynn Tilton Title: Manager PNC BANK, NATIONAL ASSOCIATION, as a Lender By: /s/ Micheal A. Valerio ----------------------------------------- Name: Micheal A. Valerio Title: Vice President U.S. BANK NATIONAL ASSOCIATION, as a Lender By:/s/ James Cecil -------------------------------------------------- Name: James Cecil Title: Assistant Vice President Davel Communications, Inc. and its subsidiaries November 11, 2003 Page 5 BNP PARIBAS, as a Lender By: /s/ Brock Harris -------------------------------------------------- Name: Brock Harris Title: Director By: /s/ Albert A. Young, Jr. ----------------------------------------- Name: Albert A. Young, Jr. Title: Managing Director MORGAN STANLEY PRIME INCOME TRUST, as a Lender By: /s/ Shiela Finnerty ------------------------------------------------------- Name: Shiela Finnerty Title: Executive Director AVENUE SPECIAL SITUATIONS FUND II, LP, as a Lender By: /s/ Sonia E.Gardner -------------------------------------------------------- Name: Sonia E.Gardner Title: Managing Member By: Avenue Capital Partners II, LLC, General Partner By: GL Partners II, LLC, Managing Member of the General Partner Davel Communications, Inc. and its subsidiaries November 11, 2003 Page 6 Acknowledged and Agreed as of the date first above written: BORROWERS: DAVEL FINANCING COMPANY, L.L.C., a Delaware limited liability company By: DAVEL COMMUNICATIONS, INC., its sole managing member By: /s/ Woody McGee ----------------------------- Name: Woody McGee Title: Chief Executive Officer PHONETEL TECHNOLOGIES, INC., an Ohio corporation By: /s/ Woody McGee ----------------------------- Name: Woody McGee Title: Chief Executive Officer CHEROKEE COMMUNICATIONS, INC., a Texas corporation By: /s/ Woody McGee ----------------------------- Name: Woody McGee Title: Chief Executive Officer PARENT GUARANTOR: DAVEL COMMUNICATIONS, INC., a Delaware corporation By: /s/ Woody McGee ----------------------------- Name: Woody McGee Title: Chief Executive Officer Davel Communications, Inc. and its subsidiaries November 11, 2003 Page 7 SUBSIDIARY GUARANTORS: - ---------------------- DAVEL COMMUNICATIONS GROUP, INC., an Illinois corporation ADTEC COMMUNICATIONS, INC., a Florida corporation CENTRAL PAYPHONE SERVICES, INC., a Georgia corporation COMMUNICATIONS CENTRAL INC., a Georgia corporation COMMUNICATIONS CENTRAL OF GEORGIA, INC., a Georgia corporation DAVEL MEDIA, INC., a Delaware corporation DAVEL MEXICO, LTD., an Illinois corporation DAVELTEL, INC., An Illinois corporation INTERSTATE COMMUNICATIONS, INC., a Georgia corporation INVISION TELECOM, INC., a Georgia corporation PEOPLES ACQUISITION CORPORATION, a Pennsylvania corporation PEOPLES COLLECTORS, INC., a Delaware corporation PEOPLES TELEPHONE COMPANY, INC., a New York corporation PEOPLES TELEPHONE COMPANY, INC., a New Hampshire corporation Davel Communications, Inc. and its subsidiaries November 11, 2003 Page 8 PTC CELLULAR, INC., a Delaware corporation PTC SECURITY SYSTEMS, INC., a Florida corporation SILVERADO COMMUNICATIONS CORP., a Colorado corporation TELALEASING ENTERPRISES, INC., an Illinois corporation T.R.C.A., INC. an Illinois corporation By: /s/ Woody McGee ----------------------------- Name: Woody McGee Title: Chief Executive Officer SCHEDULE 1 EVENTS OF DEFAULT The following Events of Default have occurred under the Credit Agreement: Under Section 2.03(e) of the Credit Agreement for failure to make the payment of $1,041,666.67 under Term Loan A due on July 1, 2003. Under Section 2.03(e) of the Credit Agreement for failure to make the payment of $1,041,666.67 under Term Loan A due on August 1, 2003. Under Section 2.03(e) of the Credit Agreement for failure to make the payment of $1,041,666.67 under Term Loan A due on September 1, 2003. Under Section 2.03(e) of the Credit Agreement for failure to make the payment of $1,041,666.67 under Term Loan A due on October 1, 2003. Under Section 2.03(e) of the Credit Agreement for failure to make the payment of $1,041,666.67 under Term Loan A due on November 1, 2003. Under Section 6.01(b)(iii) of the Credit Agreement for failure to achieve minimum Adjusted EBITDA of at least $1,500,000 for the period 7/1/02-6/30/03. Under Section 6.01(b)(iii) of the Credit Agreement for failure to achieve minimum Adjusted EBITDA of at least $5,100,000 for the period 10/1/02-9/30/03.