Exhibit 99.1
TWELFTH WAIVER, AMENDMENT AND
FORBEARANCE AGREEMENT
This Twelfth Waiver, Amendment and
Forbearance Agreement (“Amendment”) is effective as of
March 4, 2005 and relates to the Note Agreement dated as of May 12,
2003 (the “Note Agreement”) among NewWest Mezzanine
Fund, LP (“NewWest”), KCEP Ventures II, L.P.
(“KCEP”), Convergent Capital Partners I, L.P.
(“Convergent”), James F. Seifert Management Trust dated
October 8, 1992 (the “Trust”) (collectively, the
“Purchaser”) and ACT Teleconferencing, Inc.
(“Holdings”) and certain subsidiaries of Holdings, as
amended, and the Warrant Agreement dated as of May 12, 2003 (the
Warrant Agreement”) among the Purchaser and Holdings, as
amended. Other capitalized terms used herein and not otherwise
defined shall have the meanings ascribed to them in the Note
Agreement.
Recitals
Holdings has requested that the
Purchaser extend its agreement to forbear in connection with
certain current Events of Default under the Note Agreement and to
agree to certain amendments and waivers under the Note Agreement,
subject to the terms and conditions set forth in this Amendment,
and the Purchaser has agreed to such forbearance, amendments and
waivers, on the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of
the foregoing premises and the mutual covenants hereinafter stated,
the parties hereby agree as follows:
1. Forbearance . So long as
Holdings and Services comply with all terms and conditions of the
Note Agreement, as amended by this Amendment (other than the
Enumerated Matters, as defined below), the Purchaser agrees to
forbear, until the Forbearance Date defined below, from (i)
accelerating or demanding immediate payment of the Obligations, and
(ii) exercising remedies against Borrower under the Note Agreement.
The Forbearance Date shall be June 30, 2005; provided
however , that such date shall be automatically extended
until August 31, 2005 unless and until the Purchaser notifies
Holdings that the Purchaser is not satisfied, in its reasonable
discretion, with Holdings’ financial condition and
Holdings’ progress in raising new financing. For purposes of
this Amendment, the “Enumerated Matters” shall mean the
matters attached as Exhibit A. Such agreement to forbear is
effective only for such Enumerated Matters and not for any other
defaults of covenants or obligations or for any other time
periods.
2. Amendments.
(a) Item 2 of the Financial
Covenants Schedule (Debt Service Coverage Ratio) is amended to add
the following sentence:
“Notwithstanding the
foregoing, Holdings shall not permit its Debt Service Coverage
Ratio, as determined on a rolling four (4) calendar quarter basis,
to be less than 0.80:1 (for the calendar quarter ended December 31,
2004), 0.35:1 (for the calendar quarter ended March 31, 2005) and
.70:1 (for the calendar quarter ended June 30, 2005), it being
agreed that the foregoing calculations may be made on the
assumption that Holdings’ Mandatory Debt Retirement and
Interest Payments for the period of 12 months after the date of
determination excludes the principal amount of balloon payments
scheduled to be made in 2006 to the Purchaser, David Holden,
Equitas, L.P., Robert Kaphan, and Richard
Parlato.”
(b) Item 3 of the Financial
Covenants Schedule (Minimum Net Worth) is amended to add the
following sentence:
“Notwithstanding the
foregoing, Holdings shall not permit its Minimum Net Worth to fall
below $19,000,000.00 during any period from December 31, 2004
through June 30, 2005, provided that, in calculating Minimum New
Worth, Holdings may add back any write-off of goodwill during the
calendar quarter ended December 31, 2004.”
(c) Section 6.10(a) of the Note
Agreement, relating to Capital Expenditures, is amended to add the
following:
“Holdings and Borrower shall
not, and shall not permit any Subsidiary to, make any Capital
Expenditures if, after giving effect thereto, the aggregate amount
of all Capital Expenditures by Holdings, Borrower and their
Subsidiaries during the period from January 1, 2005 to June 30,
2005 will exceed $750,000 or the aggregate amount of all Capital
Expenditures by Holdings, Borrower and their Subsidiaries during
the period from July 1, 2005 to September 30, 2005 will exceed
$375,000; provided, however, that prior to the Forbearance Date,
Holdings and Borrower may exceed such limits if Holdings has (i)
set forth such proposed Capital Expenditures in a business plan
provided to Purchaser and Holdings’ Board of Directors in
advance of any such Capital Expenditures, and (ii) received the
written consent of Holdings’ Board of Directors and the
Majority Purchaser in advance of any such Capital
Expenditures.”
(d) In connection with this
Agreement, Holdings has agreed to reduce the exercise price on
300,000 warrants held by the Purchaser (on a pro rata basis).
Accordingly, the existing warrant certificates held by the
Purchaser shall be cancelled and Holdings shall reissue such
warrants in the form attached to this Agreement.
3. Covenants of Holdings and
Services.
(a) Holdings agrees that its Chief
Financial Officer shall hold a weekly conference call with the
Purchaser to provide an update on Holdings’ financial
condition and Holdings’ progress in raising new financing
(except during the week of a regular board meeting). Except as
otherwise agreed by Holdings and the Purchaser, such call shall be
held at 9:00 a.m. Mountain Time each Thursday beginning on March
17, 2005.
(b) Holdings agrees to use the
proceeds of any debt or equity financings (other than debt payable
to the Bank) as follows:
(i) One hundred percent (100%) of
any aggregate proceeds of such financings that are less than or
equal to $1,000,000 shall be used by Holdings for general corporate
purposes, provided that such proceeds may not be used to repay any
principal amount of indebtedness of Holdings ranking junior to the
Obligations (“Junior Debt”);
(ii) One hundred percent (100%) of
any aggregate proceeds of such financings that are greater than
$1,000,000 and less than or equal to $1,500,000 shall be applied to
prepay obligations to the Purchaser on a pro rata basis. Such
prepayment shall be applied first to any accrued and unpaid
interest, second to outstanding principal amounts, and finally to
any other amounts owed to the Purchaser, in each case on a pro rata
basis;
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(iii) Fifty percent (50%) of any
aggregate proceeds of such financings that are greater than
$1,500,000 and less than or equal to $2,500,000 shall be applied to
prepay obligations to the Purchaser on a pro rata basis in the
manner set forth in clause (iv) below. The remaining 50% of such
proceeds may be used by Holdings for general corporate purposes,
other than to repay Junior Debt;
(iv) Twenty percent (20%) of any
aggregate proceeds of such financings that are greater than
$2,500,000 and less than or equal to $5,000,000 shall be applied
first to satisfy all royalties owed, second to any accrued and
unpaid interest, third to outstanding principal amounts, and
finally to any other amounts owed to the Purchaser, in each case on
a pro rata basis. The remaining 80% of such proceeds may be used by
Holdings for general corporate purposes, other than to repay Junior
Debt; and
(v) Any aggregate proceeds of such
financings that are greater than $5,000,000 shall be used by
Holdings to fully repay amounts owed to the Purchaser on a pro rata
basis in the manner set forth in clause (iv) above.
Notwithstanding the foregoing, a portion of any
proceeds of such financings in excess of $2,500,000 that would
otherwise go for general corporate purposes may, with the written
consent of the Purchaser (which may be withheld in the
Purchaser’s sole discretion) be used to repay Junior
Debt.
(c) Holdings and Services agree that
Borrower will reimburse the Purchaser for all reasonable expenses
in connection with this Amendment within 10 days of receiving
notice from the Purchaser of such expenses.
(d) Holdings acknowledges and agrees
that its continuing obligations under the existing subordination
and intercreditor agreements between and among Holdings, the
Purchaser, Silicon Valley Bank, David Holden, Equitas. L.P., Robert
Kaphan, and Richard Parlato remain in full force and effect and
shall remain unaffected and unchanged.
(e) Any failure by Holdings and
Services to comply with the provisions of this Amendment shall
constitute an Event of Default under the Note Agreement.
4. Conditions to
Effectiveness . The effectiveness of this Amendment is
expressly conditioned upon Holdings and Borrower delivering to the
Purchaser this Amendment duly executed by Holdings, Borrower, the
Co-Borrowers (ACT VideoConferencing, Inc., ACT Proximity, Inc., and
ACT Research, Inc.), and the Principal.
5. Reaffirmation of Financing
Documents . All terms, conditions and provisions of the Note
Agreement and the other Financing Documents are hereby reaffirmed
and continued in full force and effect and shall remain unaffected
and unchanged, except as specifically amended by this Amendment.
All covenants, representations and warranties of Holdings and
Borrower in this Amendment shall survive the closing and delivery
of this Amendment. The Events of Default specified in the Note
Agreement shall continue to be the events of default under the
Note. The Purchaser’s remedies with respect to the occurrence
of an Event of Default shall continue to be as set forth in the
Note Agreement and in the Financing Documents.
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6. Representations and
Warranties . Holdings and Borrower represent and warrant to the
Purchaser that (i) they have full power and authority to consummate
this Amendment and the execution and delivery by Holdings of this
Amendment have been duly and properly made and authorized, (ii)
this Amendment and the Financing Documents to which Holdings and
Borrower are a party each constitutes a valid and binding
obligation of Holdings and Borrower, enforceable against Holdings
and Borrower in accordance with its respective terms, (iii) the
execution and delivery of this Amendment will not violate any
provisions of any law or any order of any court or governmental
authority or agency and will not conflict with or result in any
breach of any of the terms, conditions or provisions of, or
constitute a default under Holdings and Borrower’s articles
of incorporation or bylaws or any indenture or other agreement or
instrument to which Holdings or Borrower is a party or by which
they may be bound or result in the imposition of any Liens or
encumbrances on any of its property (other than as contemplated in
the other Financing Documents and as contemplated hereby), (iv) no
approval, consent or withholding of objection on the part of any
regulatory body, federal, state or local, is necessary in
connection with the execution and delivery by Holdings of this
Amendment, (v) Holdings and Borrower have no defense, offset or
counterclaim with respect to the payment of any sum owed to the
Purchaser, or with respect to the performance or observance of any
warranty or covenant contained in the Financing Documents, and the
Purchaser has performed all obligations and duties owed to Holdings
and Borrower through the date of this Amendment, and (vi) other
than the Enumerated Matters, there is no Default or Event of
Default.
7. General Release . In
consideration of, among other things, the Amendment provided for
herein, each of Holdings, Borrower and the Principals, on behalf of
itself and its stockholders and other Affiliates and their
successors and assigns (collectively, the “Releasors”),
hereby forever waives, releases and discharges to the fullest
extent permitted by law any and all claims (including, without
limitation, cross claims, counterclaims, rights of set-off and
recoupment), causes of action, demands, suits, costs, expenses and
damages (collectively, the “Claims”), that any Releasor
now has or hereafter may have, of whatsoever nature and kind,
whether known or unknown, whether now existing or hereafter
arising, whether arising at law or in equity, against the Purchaser
and any of their affiliates, partners, shareholders and
“controlling persons” (within the meaning of the
federal securities laws), and their respective successors and
assigns and each and all of the officers, directors, employees,
agents, attorneys and other representatives of each of the
foregoing (collectively, the “Releasees”), based in
whole or in part on facts, whether or not now known, existing on or
before the execution of this Amendment. In entering into this
Amendment, Holdings, Borrower and the Principals have consulted
with and been represented by counsel and expressly disclaim any
reliance on any representations, acts or omissions by any of the
Releasees and hereby agree and acknowledge that the validity and
effectiveness of the release set forth above does not depend in any
way on any such representations, acts and/or omissions or the
accuracy, completeness or validity thereof. The provisions of this
Section shall survive the termination of the Note Agreement
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