Exhibit 10.7
FOURTH FORBEARANCE AND
AMENDMENT
TO
LOAN AND SECURITY
AGREEMENT
This FOURTH FORBEARANCE AND
AMENDMENT to Loan and Security Agreement (this “
Amendment ”) is entered into as of the 31st day of
October, 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, the Second Forbearance Agreement and the Third
Forbearance Agreement, each 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 ”), that certain Second Forbearance, Consent
and Amendment to Loan and Security Agreement dated as of
July 22, 2005 (the “ Second Forbearance Agreement
”), and that certain Third Forbearance to Loan and Security
Agreement dated as of August 31, 2005 (the “ Third
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. in two
tranches, with the first in the amount of $8,040,000 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
completion of the second tranche, Dolphin loaned Borrowers
$7,000,000 (the second “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 this second Bridge Loan
to repay the remaining balances of the existing Subordinated Debt
and the proceeds of the second tranche will be used to repay this
Bridge Loan. Bank consented to the Transaction and the payments or
prepayments of Subordinated Debt and the borrowing of this Bridge
Loan on a secured, subordinated basis before the closing of the
second tranche pursuant to the terms of a Consent dated as of
October 28, 2005 by and among Bank and Borrowers.
D. Borrowers again acknowledge that events of
default occurred under the Loan Agreement including
Borrowers’ failure to maintain the required Minimum Cash
Income as of 08/31/05 and 09/30/05 (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
(1) forbear and continue to forbear from exercising its rights
and remedies against Borrowers through and including 02/12/06 to
allow Borrowers time to complete the Transaction or otherwise raise
additional equity, continue restructuring, and implement their
strategic plan. Although Bank is under no obligation to do so, Bank
is willing to forbear and continue to forbear from exercising its
rights and remedies against Borrowers through and including
02/12/06 on the terms and conditions set forth in this Amendment,
so long as Borrowers comply with the terms, covenants and
conditions set forth in this Amendment in a timely
manner.
F. In consideration of such continued forbearance,
Borrowers have agreed to amend the Loan Agreement as set forth in
this Amendment. Bank has agreed to so amend certain provision 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 below.
A GREEMENT
N OW ,
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 Amendment shall have the meanings given to them
in the Loan Agreement.
2. Continued
Forbearance.
2.1 Fourth 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 02/12/06 (the “
Fourth Forbearance Perio d”). Except as expressly
provided herein, this Amendment 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 Amendment. If Borrowers do not comply
with the terms of this Amendment, Bank shall have no further
obligations under this Amendment 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 Fourth Forbearance Period.
2.2 Forbearance Terms.
Repayment and performance of all obligations of Borrowers to Bank
under the Loan Agreement and this Amendment shall be and shall
continue to be secured by the Collateral. The terms of the First,
Second and Third Forbearance Agreements shall continue to apply
except as set forth herein.
3. Amendment to Loan Agreement. The Schedule
to the Loan Agreement is amended as follows:
3.1 Section 4 entitled
“MATURITY DATE (Section 6.1)” shall be amended entirely
to read as follows: “February 12, 2006.”
2
3.2 Section 5 entitled
“FINANCIAL COVENANTS (Section 5.1)” shall be further
amended entirely to read as follows:
Borrower shall comply
with
