Exhibit 10.20.3
THIRD FORBEARANCE
TO
LOAN AND SECURITY
AGREEMENT
This Third Forbearance to Loan
and Security Agreement (this “Agreement” )
is entered into this 31st day of August, 2005, by and among Silicon
Valley Bank ( “Bank” or
“Silicon” ) and each of the following named
corporations: ACT Teleconferencing Inc., ACT Teleconferencing
Services, Inc., ACT Videoconferencing, Inc., ACT Proximity, Inc.,
and ACT Research, Inc. (collectively and jointly and severally, the
“Borrowers” and separately, a
“Borrower” ), with ACT Teleconferencing, Inc.,
whose chief executive office is located at 1526 Cole Boulevard,
Suite 300, Golden, CO 80401, acting as the Borrowers’
agent.
R ECITALS
A. Bank and Borrowers have entered into that
certain Loan and Security Agreement dated as of November 12,
2004 (as the same has been amended by the First Forbearance
Agreement referred to below and as the same may from time to time
be further amended, modified, supplemented or restated, the
“Loan Agreement” ). Bank has extended credit to
Borrowers for the purposes permitted in the Loan
Agreement.
B. Bank and Borrowers entered into that certain
Forbearance and Amendment to Loan and Security Agreement dated as
of May 31, 2005 (the “First Forbearance
Agreement” ) and that certain Second Forbearance, Consent
and Amendment to Loan and Security Agreement dated as of
July 31, 2005 (the “Second Forbearance
Agreement” ), pursuant to which Bank agreed to forbear
from exercising its rights and remedies against Borrowers, relating
to certain events of default that had occurred under the Loan
Agreement, through and including 08/31/05 on the terms and
conditions set forth therein, and Bank agreed to amend certain
provisions of the Loan Agreement, but only to the extent, in
accordance with the terms, subject to the conditions and in
reliance upon the representations and warranties set forth
therein.
C. Borrowers entered into certain agreements with
Dolphin Direct Equity Partners, LP, a Delaware limited partnership
(“Dolphin”), providing for the sales of up to
$16,000,000 of preferred stock of ACT Teleconferencing, Inc. (which
will result in a change of control of Borrowers in excess of 20%)
in two tranches, with the first in the amount of $8,000,000 which
has been completed and the second in the remaining amount to be
completed through a public rights offering to existing shareholders
of ACT Teleconferencing, Inc., with Dolphin funding any shortfall.
Pending shareholder approval of the first tranche. Dolphin loaned
Borrowers up to $1,500,000 (the “Bridge Loan”) secured
by a junior lien on Borrowers’ assets and subordinated to
Bank (collectively, the “Transaction”). In connection
with the Transaction, Borrowers used proceeds of the first tranche
to repay the Bridge Loan and $5,000,000 to repay a portion of the
then existing Subordinated Debt and the proceeds of the second
tranche will be used to repay the remaining existing Subordinated
Debt.
D. Borrowers again acknowledge that events of
default occurred under the Loan Agreement (collectively, the
“Existing Defaults” ) and that Borrowers
continue to be in default of the Loan Agreement as a result of
Borrowers’ previous failure to comply with Section 5.3
(Schedule Section 6, subsections 5, 6 and 8) and
Section 5.1 (Schedule Section 5) of the Loan
Agreement.
E. Borrowers have requested that Bank continue to
forbear from exercising its rights and remedies against Borrowers
through and including 10/31/05 to allow Borrowers time to complete
the second tranche of the Transaction or otherwise raise additional
equity, refinance existing subordinated debt, continue
restructuring, and implement their strategic plan. Although Bank is
under no obligation to do so, Bank is willing to continue to
forbear from exercising its rights and remedies against Borrowers
through and including 10/31/05 on the terms and
conditions set forth in this Agreement, so long
as Borrowers comply with the terms, covenants and conditions set
forth in this Agreement in a timely manner.
A GREEMENT
Now, T HEREFORE , in
consideration of the foregoing recitals and other good and valuable
consideration, the receipt and adequacy of which is hereby
acknowledged, and intending to be legally bound, the parties hereto
agree as follows:
1. Definitions.
Capitalized terms used but not
defined in this Agreement shall have the meanings given to them in
the Loan Agreement.
2. Continued
Forbearance.
2.1 Third Forbearance Period.
So long as no Event of Default, other than the Existing Defaults,
occurs, subject to the terms and conditions set forth herein, Bank
shall continue to forbear from filing any legal action or
instituting or enforcing any rights and remedies it may have
against Borrowers through and including 10/31/05 (the
“Third Forbearance Period” ). Except as
expressly provided herein, this Agreement does not constitute a
waiver or release by Bank of any Existing Defaults or of any
Obligations or of any Event of Default which may arise in the
future after the date of execution of this Agreement. If Borrowers
do not comply with the terms of this Agreement, Bank shall have no
further obligations under this Agreement and shall be permitted to
exercise at such time any rights and remedies against Borrowers as
it deems appropriate in its sole and absolute discretion. Borrowers
understand that Bank has made no commitment and is under no
obligation whatsoever to grant any waiver or additional extensions
of time at the end of the Third Forbearance Period.
2.2 Forbearance Terms.
Repayment and performance of all obligations of Borrowers to Bank
under the Loan Agreement and this Agreement shall be and shall
continue to be secured by the Collateral. The terms of the First
Forbearance Agreement and the Second Forbearance Agreement shall
continue to apply except as set forth herein.
3. Limitation of
Agreement.
3.1 The Agreement is effective for
the purposes set forth herein and shall be limited precisely as
written and shall not be deemed to (a) be a consent to any
amendment, waiver or modification of any other term or condition of
any Loan Document, or (b) otherwise prejudice any right or
remedy which Bank may now have or may have in the future under or
in connection with any Loan Document.
3.2 This Agreement sha
