Exhibit 10.20.2
SECOND FORBEARANCE, CONSENT AND
AMENDMENT
TO
LOAN AND SECURITY
AGREEMENT
This SECOND FORBEARANCE, CONSENT
AND AMENDMENT to Loan and Security Agreement (this
“Amendment” ) is entered into this 22nd day of
July, 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” ), 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 06/30/05 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 have notified Bank that Borrowers have
accepted a term sheet dated 06/08/05 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 to be
completed upon approval of the shareholders of ACT
Teleconferencing, Inc. 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 is
prepared to lend 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 plan to use of the proceeds of the first tranche to repay
the Bridge Loan and a minimum of $5,000,000 to repay a portion of
the existing Subordinated Debt and the proceeds of the second
tranche to repay the remaining existing Subordinated Debt.
Borrowers have requested that Bank consent to the Transaction and
the payments or prepayments of Subordinated Debt and the borrowing
of the Bridge Loan on a secured, subordinated basis before the
closing of the first tranche.
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
(1) continue to forbear from exercising its rights and
remedies against Borrowers through and including 08/31/05 to allow
Borrowers time to complete 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 06/31/05 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 sat 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
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 Amendment shall have the meanings given to them in
the Loan Agreement.
2. Consent.
This Amendment will serve as
Bank’s consent to the Transaction and the payments or
prepayments of Subordinated Debt and the borrowing of the Bridge
Loan on a secured, subordinated basis before the closing of the
first tranche in the Transaction solely for purposes of those
Sections of the Loan Agreement which would otherwise conflict with
or be violated by the actions contemplated by the Transaction.
Bank’s consent shall not limit or impair Bank’s right
to demand strict performance of (1) such covenants as set
forth in the Loan Agreement after completion of the Transaction;
and (2) all other covenants and provisions set forth in the
Loan Agreement at all times. Bank’s consent shall be
conditioned upon the Bridge Loan being subordinated to Bank on
terms satisfactory to Bank in its sole discretion, and the other
holders of existing Subordinated Debt also forbearing from acting
upon any defaults by Borrowers on such Subordinated Debt and
subordinating their collateral to Dolphin in connection with the
Bridge Loan.
3. Continued
Forbearance.
3.1 Second 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 08/31/05 (the
“Second Forbearance Period” ). 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 Second Forbearance Period.
3.2 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
Forbearance Agreement shall continue to apply except as set forth
herein.
2
4. Amendment to Loan
Agreement. The Schedule
to the Loan Agreement is amended as follows:
4.1 Section 5 entitled
“FI
