Document:

Exhibit 10.1

 

Silicon Valley Bank

 

Loan and
Security Agreement

 

	
  Borrower:

  	
  ACT Teleconferencing, Inc.

  	
  Date:

  	
  November     , 2004

  	
   

  
	
  Address:

  	
  1526 Cole Boulevard, 

  	
   

  	
   

  	
   

  
	
   

  	
  Suite 300

  	
   

  	
   

  	
   

  
	
   

  	
  Golden , CO 80401

  	
   

  	
   

  	
   

  
	
  and

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  ACT Teleconferencing Services,
  Inc.

  	
   

  	
   

  
	
  and

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  ACT Videoconferencing, Inc.

  	
   

  	
   

  
	
  and

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  ACT Proximity, Inc.

  	
   

  	
   

  	
   

  
	
  and

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  ACT Research Inc.

  	
   

  	
   

  	
   

  

 

 

THIS LOAN AND SECURITY AGREEMENT is entered
into on the above date between SILICON VALLEY BANK (“Silicon”), whose address
is 3003 Tasman Drive, Santa Clara, California 95054 and the borrower(s) named
above (collectively and jointly and severally, the “Borrower”), with ACT
Teleconferencing, Inc. (herein sometimes called the “Parent”), whose chief
executive office is located at the above address (“Borrower’s Address”), acting
as the Borrower’s agent. The Schedule to this Agreement (the “Schedule”) shall
for all purposes be deemed to be a part of this Agreement, and the same is an
integral part of this Agreement. 
(Definitions of certain terms used in this Agreement are set forth in
Section 8 below.)

 

1.     LOANS.

 

1.1  Loans.
 Silicon will make
loans to Borrower (the “Loans”) up to the amounts (the “Credit Limit”) shown on
the Schedule, provided no Default or Event of Default has occurred and is
continuing, and subject to deduction of Reserves for accrued interest and such
other Reserves as Silicon deems proper from time to time in its good faith
business judgment.

 

1.2  Interest.  All Loans and all other monetary Obligations
shall bear interest at the rate shown on the Schedule, except where expressly
set forth to the contrary in this Agreement. 
Interest shall be payable monthly, on the last day of the month.  Interest may, in Silicon’s discretion, be
charged to Borrower’s loan account, and the same shall thereafter bear interest
at the same rate as the other Loans. 
Silicon may, in its discretion, charge interest to Borrower’s Deposit
Accounts maintained with Silicon. 
Regardless of the amount of Obligations that may be outstanding from
time to time, Borrower shall pay Silicon minimum monthly interest during the
term of this Agreement in the amount set forth on the Schedule (the “Minimum
Monthly Interest”).

 

1.3  Overadvances.
 If at any time or for
any reason the total of all outstanding Loans and all other monetary
Obligations exceeds the Credit Limit (an “Overadvance”), Borrower shall
immediately pay the amount of the excess to Silicon, without notice or
demand.  Without limiting Borrower’s
obligation to repay to Silicon the amount of any Overadvance, Borrower agrees
to pay Silicon interest on the outstanding amount of any Overadvance, on
demand, at the Default Rate.

 

1.4  Fees.  Borrower shall pay Silicon the fees shown on
the Schedule, which are in addition to all interest and other sums payable to
Silicon and are not refundable.

 

1

 

1.5 Loan Requests. To obtain a Loan, Borrower shall make a
request to Silicon by facsimile or telephone. Loan requests received after
12:00 Noon (pacific Standard Time)  will not be considered by Silicon until
the next Business Day. Silicon may rely on any telephone request for a Loan
given by a person whom Silicon believes is an authorized representative of
Borrower, and Borrower will indemnify Silicon for any loss Silicon suffers as a
result of that reliance.

 

1.6  Letters
of Credit.  At the request of Borrower, Silicon may, in its good faith business
judgment, issue or arrange for the issuance of letters of credit for the
account of Borrower, in each case in form and substance satisfactory to Silicon
in its sole discretion (collectively, “Letters of Credit”).  The aggregate face amount of all Letters of
Credit from time to time outstanding shall not exceed the amount shown on the
Schedule (the “Letter of Credit Sublimit”), and shall be reserved against Loans
which would otherwise be available hereunder, and in the event at any time
there are insufficient Loans available to Borrower for such reserve, Borrower
shall deposit and maintain with Silicon cash collateral in an amount at all times
equal to such deficiency, which shall be held as Collateral for all purposes of
this Agreement. Borrower shall pay all bank charges (including charges of
Silicon) for the issuance of Letters of Credit, together with such additional
fee as Silicon’s letter of credit department shall charge in connection with
the issuance of the Letters of Credit. 
Any payment by Silicon under or in connection with a Letter of Credit
shall constitute a Loan hereunder on the date such payment is made.  Each Letter of Credit shall have an expiry
date no later than thirty days prior to the Maturity Date.  Borrower hereby agrees to indemnify and hold
Silicon harmless from any loss, cost, expense, or liability, including payments
made by Silicon, expenses, and reasonable attorneys’ fees incurred by Silicon
arising out of or in connection with any Letters of Credit.  Borrower agrees to be bound by the
regulations and interpretations of the issuer of any Letters of Credit
guarantied by Silicon and opened for Borrower’s account or by Silicon’s
interpretations of any Letter of Credit issued by Silicon for Borrower’s
account, and Borrower understands and agrees that Silicon shall not be liable
for any error, negligence, or mistake, whether of omission or commission, in
following Borrower’s instructions or those contained in the Letters of Credit
or any modifications, amendments, or supplements thereto.  Borrower understands that Letters of Credit
may require Silicon to indemnify the issuing bank for certain costs or
liabilities arising out of claims by Borrower against such issuing bank.  Borrower hereby agrees to indemnify and hold
Silicon harmless with respect to any loss, cost, expense, or liability incurred
by Silicon under any Letter of Credit as a result of Silicon’s indemnification
of any such issuing bank.  The provisions
of this Loan Agreement, as it pertains to Letters of Credit, and any other Loan
Documents relating to Letters of Credit are cumulative.

 

2.  SECURITY INTEREST.
To secure the payment and performance of all of the Obligations when due,
Borrower hereby grants to Silicon a security interest in all of the following
(collectively, the “Collateral”):  all
right, title and interest of Borrower in and to all of the following, whether
now owned or hereafter arising or acquired and wherever located: all Accounts;
all Inventory; all Equipment; all Deposit Accounts; all General Intangibles
(including without limitation all Intellectual Property); all Investment
Property; all Other Property; and any and all claims, rights and interests in
any of the above, and all guaranties and security for any of the above, and all
substitutions and replacements for, additions, accessions, attachments,
accessories, and improvements to, and proceeds 
(including proceeds of any insurance policies, proceeds of proceeds and
claims against third parties) of, any and all of the above, and all Borrower’s
books relating to any and all of the above. 

 

3.  REPRESENTATIONS,
WARRANTIES AND COVENANTS OF BORROWER.

 

In
order to induce Silicon to enter into this Agreement and to make Loans,
Borrower represents and warrants to Silicon as follows, and Borrower covenants
that the following representations will continue to be true, and that Borrower
will at all times comply with all of the following covenants, throughout the
term of this Agreement and until all Obligations have been paid and performed
in full:

 

3.1  Corporate
Existence and Authority. 
Borrower is and will continue to be, duly organized, validly existing
and in good standing under the laws of the jurisdiction of its
incorporation.  Borrower is and will
continue to be qualified and licensed to do business in all jurisdictions in
which any failure to do so would result in a Material Adverse Change.  The execution, delivery and performance by
Borrower of this Agreement, and all other documents contemplated hereby (i)
have been duly and validly authorized, (ii) are enforceable against Borrower in
accordance with their terms (except as enforcement may be limited by equitable
principles and by bankruptcy, insolvency, reorganization, moratorium or similar
laws relating to creditors’ rights generally), and (iii) do not violate
Borrower’s articles or certificate of incorporation, or Borrower’s by-laws, or
any law or any material agreement or instrument which is binding upon Borrower
or its property, and (iv) do not constitute grounds for acceleration of any
material indebtedness or obligation under any agreement or instrument which is
binding upon Borrower or its property.

 

3.2  Name;
Trade Names and Styles. 
The name of Borrower set forth in the heading to this Agreement is its
correct name.  Listed in the
Representations are all prior names of Borrower and all of Borrower’s present
and prior trade names.  Borrower shall
give Silicon 30 days’ prior written notice before changing its name or doing
business under any other name.  Borrower
has complied, and will in the future comply, in all material respects, with all
laws relating to the conduct of business under a 

 

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fictitious business
name, except where the failure to so comply would not reasonably be expected to
result in a Material Adverse Change.

 

3.3  Place
of Business; Location of Collateral.  The address set forth in the heading to this
Agreement is Parent’s chief executive office. 
In addition, Borrower has places of business and Collateral is located
only at the locations set forth in the Representations.  Borrower will give Silicon at least 30 days
prior written notice before opening any additional place of business, changing
its chief executive office, or moving any of the Collateral to a location other
than Borrower’s Address or one of the locations set forth in the
Representations, except that Borrower may maintain sales offices in the
ordinary course of business at which not more than a total of $10,000 fair
market value of Equipment is located.

 

3.4  Title
to Collateral; Perfection; Permitted Liens.

 

(a) 
Borrower is now, and will at all times in the
future be, the sole owner of all the Collateral, except for items of Equipment
which are leased to Borrower.  The
Collateral now is and will remain free and clear of any and all liens, charges,
security interests, encumbrances and adverse claims, except for Permitted Liens.  Silicon now has, and will continue to have, a
first-priority perfected and enforceable security interest in all of the
Collateral, subject only to the Permitted Liens, and Borrower will at all times
defend Silicon and the Collateral against all claims of others.

 

(b)  Borrower
has set forth in the Representations all of Borrower’s Deposit Accounts, and
Borrower will give Silicon five Business Days advance written notice before
establishing any new Deposit Accounts and will cause the institution where any
such new Deposit Account is maintained to execute and deliver to Silicon a
control agreement in form sufficient to perfect Silicon’s security interest in
the Deposit Account and otherwise satisfactory to Silicon in its good faith
business judgment.  Nothing herein limits
any requirements which may be set forth in the Schedule as to where Deposit
Accounts will be maintained.

 

(c)  In
the event that Borrower shall at any time after the date hereof have any
commercial tort claims against others, which it is asserting or intends to
assert, and in which the potential recovery exceeds $100,000, Borrower shall
promptly notify Silicon thereof in writing and provide Silicon with such
information regarding the same as Silicon shall request (unless providing such
information would waive the Borrower’s attorney-client privilege).  Such notification to Silicon shall constitute
a grant of a security interest in the commercial tort claim and all proceeds
thereof to Silicon, and Borrower shall execute and deliver all such documents
and take all such actions as Silicon shall request in connection therewith.

 

(d)  None
of the Collateral now is or will be affixed to any real property in such a
manner, or with such intent, as to become a fixture.  Borrower is not and will not become a lessee
under any real property lease pursuant to which the lessor may obtain any
rights in any of the Collateral and no such lease now prohibits, restrains,
impairs or will prohibit, restrain or impair Borrower’s right to remove any
Collateral from the leased premises. 
Whenever any Collateral is located upon premises in which any third
party has an interest, Borrower shall, whenever requested by Silicon, use its
best efforts to cause such third party to execute and deliver to Silicon, in
form acceptable to Silicon, such waivers and subordinations as Silicon shall
specify in its good faith business judgment. 
Borrower will keep in full force and effect, and will comply with all
material terms of, any lease of real property where any of the Collateral now
or in the future may be located.

 

3.5  Maintenance
of Collateral.  Borrower will maintain the Collateral in good
working condition (ordinary wear and tear excepted), and Borrower will not use
the Collateral for any unlawful purpose. 
Borrower will immediately advise Silicon in writing of any material loss
or damage to the Collateral.

 

3.6  Books
and Records. 
Borrower has maintained and will maintain at Borrower’s Address complete
and accurate books and records, comprising an accounting system in accordance
with GAAP.

 

3.7  Financial
Condition, Statements and Reports.  All financial statements now or in the future
delivered to Silicon have been, and will be, prepared in conformity with GAAP
and now and in the future will fairly present the results of operations and
financial condition of Borrower, in accordance with GAAP, at the times and for
the periods therein stated.  Between the last date covered by any such statement provided to
Silicon and the date hereof, there has been no Material Adverse Change.

 

3.8  Tax
Returns and Payments; Pension Contributions.  Borrower has timely filed, and will timely
file, all required tax returns and reports, and Borrower has timely paid, and
will timely pay, all foreign, federal, state and local taxes, assessments,
deposits and contributions now or in the future owed by Borrower.  Borrower may, however, defer payment of any
contested taxes, provided that Borrower (i) in good faith contests Borrower’s
obligation to pay the taxes by appropriate proceedings promptly and diligently
instituted and conducted, (ii) notifies Silicon in writing of the commencement
of, and any material development in, the proceedings, and (iii) posts bonds or
takes any other steps required to keep the contested taxes from becoming a lien
upon any of the Collateral.  Borrower is
unaware of any claims or adjustments proposed for any of Borrower’s prior tax
years which could result in additional taxes becoming due and payable by
Borrower.  Borrower has paid, and shall
continue to pay all amounts necessary to fund all present and future pension,
profit sharing and deferred compensation plans in accordance with their terms,
and Borrower has not and will not withdraw from participation in, permit 

 

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partial or complete termination of, or permit the occurrence of any
other event with respect to, any such plan which could reasonably be expected
to result in any liability of Borrower, including any liability to the Pension
Benefit Guaranty Corporation or its successors or any other governmental agency.

 

3.9  Compliance
with Law. 
Borrower has, to the best of its knowledge, complied, and will comply,
in all material respects, with all provisions of all foreign, federal, state
and local laws and regulations applicable to Borrower, including, but not limited
to, those relating to Borrower’s ownership of real or personal property, the
conduct and licensing of Borrower’s business, and all environmental matters.

 

3.10  Litigation.  There is no claim, suit, litigation,
proceeding or investigation pending or (to best of Borrower’s knowledge)
threatened against or affecting Borrower in any court or before any
governmental agency (or any basis therefor known to Borrower) which could
reasonably be expected to result, either separately or in the aggregate, in any
Material Adverse Change.  Borrower will
promptly inform Silicon in writing of any claim, proceeding, litigation or
investigation in the future threatened or instituted against Borrower involving
any single claim of $50,000 or more, or
involving $100,000  or more in the aggregate.

 

3.11  Use
of Proceeds. 
All proceeds of all Loans shall be used solely for lawful business
purposes.  Borrower is not purchasing or
carrying any “margin stock” (as defined in Regulation U of the Board of
Governors of the Federal Reserve System) and no part of the proceeds of any
Loan will be used to purchase or carry any “margin stock” or to extend credit
to others for the purpose of purchasing or carrying any “margin stock.”

 

4.  ACCOUNTS.

 

4.1  Representations
Relating to Accounts.  Borrower represents and warrants to
Silicon as follows:  Each Account with
respect to which Loans are requested by Borrower shall, on the date each Loan
is requested and made, (i) represent an undisputed bona fide existing
unconditional obligation of the Account Debtor created by the sale, delivery,
and acceptance of goods or the rendition of services, or the non-exclusive
licensing of Intellectual Property, in the ordinary course of Borrower’s
business, and (ii) meet the Minimum Eligibility Requirements set forth in
Section 8 below.

 

4.2  Representations
Relating to Documents and Legal Compliance. 
Borrower represents and warrants to
Silicon as follows:  All statements made
and all unpaid balances appearing in all invoices, instruments and other documents
evidencing the Accounts are and shall be true and correct and all such
invoices, instruments and other documents and all of Borrower’s books and
records are and shall be genuine and in all respects what they purport to
be.  All sales and other transactions
underlying or giving rise to each Account shall comply in all material respects
with all applicable laws and governmental rules and regulations.  To the best of Borrower’s knowledge, all
signatures and endorsements on all documents, instruments, and agreements
relating to all Accounts are and shall be genuine, and
all such documents, instruments and agreements are and shall be legally
enforceable in accordance with their terms.

 

4.3  Schedules
and Documents relating to Accounts.  Borrower shall deliver to Silicon
transaction reports and schedules of collections, as provided in the Schedule,
on Silicon’s standard forms; provided, however, that Borrower’s failure to
execute and deliver the same shall not affect or limit Silicon’s security
interest and other rights in all of Borrower’s Accounts, nor shall Silicon’s
failure to advance or lend against a specific Account affect or limit Silicon’s
security interest and other rights therein. If requested by Silicon, Borrower
shall furnish Silicon with copies (or, at Silicon’s request, originals) of all
contracts, orders, invoices, and other similar documents, and all shipping
instructions, delivery receipts, bills of lading, and other evidence of
delivery, for any goods the sale or disposition of which gave rise to such
Accounts, and Borrower warrants the genuineness of all of the foregoing.  Borrower shall also furnish to Silicon an
aged accounts receivable trial balance as provided in the Schedule.  In addition, Borrower shall deliver to
Silicon, on its request, the originals of all instruments, chattel paper,
security agreements, guarantees and other documents and property evidencing or
securing any Accounts, in the same form as received, with all necessary
indorsements, and copies of all credit memos.

 

4.4  Collection
of Accounts.  Borrower shall have the right to collect all
Accounts, unless and until a Default or an Event of Default has occurred and is
continuing.  Whether or not an Event of
Default has occurred and is continuing, Borrower shall hold all payments on,
and proceeds of, Accounts in trust for Silicon, and Borrower shall immediately
deliver all such payments and proceeds to Silicon in their original form, duly
endorsed, to be applied to the Obligations in such order as Silicon shall
determine.  Silicon may, in its good
faith business judgment, require that all proceeds of Collateral be deposited
by Borrower into a lockbox account, or such other “blocked account” as Silicon
may specify, pursuant to a blocked account agreement in such form as Silicon may
specify in its good faith business judgment.

 

4.5. 
Remittance of Proceeds.  All proceeds arising from the disposition of
any Collateral shall be delivered, in kind, by Borrower to Silicon in the
original form in which received by Borrower not later than the following
Business Day after receipt by Borrower, to be applied to the Obligations in
such order as Silicon shall determine; provided that, if no Default or Event of
Default has occurred and is continuing, Borrower shall not be obligated to
remit to Silicon the proceeds of the sale of worn out or obsolete Equipment
disposed of by Borrower in good faith in an arm’s length transaction for an
aggregate purchase 

 

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price of $25,000 or less (for all such transactions in
any fiscal year).  Borrower agrees that
it will not commingle proceeds of Collateral with any of Borrower’s other funds
or property, but will hold such proceeds separate and apart from such other
funds and property and in an express trust for Silicon.  Nothing in this Section limits the
restrictions on disposition of Collateral set forth elsewhere in this
Agreement.

 

4.6  Disputes.
 Borrower shall notify
Silicon promptly of all disputes or claims relating to Accounts.  Borrower shall not forgive (completely or
partially), compromise or settle any Account for less than payment in full, or
agree to do any of the foregoing, except that Borrower may do so, provided
that: (i) Borrower does so in good faith, in a commercially reasonable manner,
in the ordinary course of business, and in arm’s length transactions, which are
reported to Silicon on the regular reports provided to Silicon; (ii) no Default
or Event of Default has occurred and is continuing; and (iii) taking into
account all such discounts, settlements and forgiveness, the total outstanding
Loans will not exceed the Credit Limit.

 

4.7  Returns.  Provided no Event of Default has occurred and
is continuing, if any Account Debtor returns any Inventory to Borrower,
Borrower shall promptly determine the reason for such return and promptly issue
a credit memorandum to the Account Debtor in the appropriate amount.  In the event any attempted return occurs
after the occurrence and during the continuance of any Event of Default,
Borrower shall hold the returned Inventory in trust for Silicon,
and immediately notify Silicon of the return of the Inventory.

 

4.8  Verification.  Silicon may, from time to time, verify
directly with the respective Account Debtors the validity, amount and other
matters relating to the Accounts, by means of mail, telephone or otherwise,
either in the name of Borrower or Silicon or such other name as Silicon may
choose.

 

4.9  No
Liability.  Silicon
shall not be responsible or liable for any shortage or discrepancy in, damage
to, or loss or destruction of, any goods, the sale or other disposition of
which gives rise to an Account, or for any error, act, omission, or delay of
any kind occurring in the settlement, failure to settle, collection or failure
to collect any Account, or for settling any Account in good faith for less than
the full amount thereof, nor shall Silicon be deemed to be responsible for any
of Borrower’s obligations under any contract or agreement giving rise to an
Account.  Nothing herein shall, however,
relieve Silicon from liability for its own gross negligence or willful
misconduct.

 

5.  ADDITIONAL DUTIES OF
BORROWER.

 

5.1  Financial
and Other Covenants. 
Borrower shall at all times comply with the financial and other
covenants set forth in the Schedule.

 

5.2  Insurance.  Borrower shall, at all times insure all of
the tangible personal property Collateral and carry such other business
insurance, with insurers reasonably acceptable to Silicon, in such form and
amounts as Silicon may reasonably require and that are customary and in
accordance with standard practices for Borrower’s industry and locations, and
Borrower shall provide evidence of such insurance to Silicon.  All such insurance policies shall name
Silicon as an additional loss payee, and shall contain a lenders loss payee
endorsement in form reasonably acceptable to Silicon.  Upon receipt of the proceeds of any such
insurance, Silicon shall apply such proceeds in reduction of the Obligations as
Silicon shall determine in its good faith business judgment, except that,
provided no Default or Event of Default has occurred and is continuing, Silicon
shall release to Borrower insurance proceeds with respect to Equipment totaling
less than $100,000, which shall be utilized by Borrower for the replacement of
the Equipment with respect to which the insurance proceeds were paid.  Silicon may require reasonable assurance that
the insurance proceeds so released will be so used.  If Borrower fails to provide or pay for any
insurance, Silicon may, but is not obligated to, obtain the same at Borrower’s
expense.  Borrower shall promptly deliver
to Silicon copies of all material reports made to insurance companies.

 

5.3  Reports.  Borrower, at its expense, shall provide
Silicon with the written reports set forth in the Schedule, and such other
written reports with respect to Borrower (including budgets, sales projections,
operating plans and other financial documentation), as Silicon shall from time
to time specify in its good faith business judgment.

 

5.4  Access
to Collateral, Books and Records.  At reasonable times, and on one Business Day’s
notice, Silicon, or its agents, shall have the right to inspect the Collateral,
and the right to audit and copy Borrower’s books and records.  Silicon shall take reasonable steps to keep
confidential all information obtained in any such inspection or audit, but
Silicon shall have the right to disclose any such information to its
subsidiaries or affiliates in connection with their business with Borrower and
to its auditors, regulatory agencies, and attorneys, and pursuant to any
subpoena or other legal process.  The
foregoing inspections and audits shall be at Borrower’s expense and the charge
therefor shall be $750 per person per day (or such higher amount as shall
represent Silicon’s then current standard charge for the same), plus reasonable
out-of-pocket expenses. In the event Borrower and Silicon schedule an audit
more than 10 days in advance, and Borrower seeks to reschedules the audit with
less than 10 days written notice to Silicon, then (without limiting any of
Silicon’s rights or remedies), Borrower shall pay Silicon a cancellation fee of
$1,000 plus any out-of-pocket expenses incurred by Silicon, to compensate
Silicon for the anticipated costs and expenses of the cancellation.

 

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5.5  Negative
Covenants. 
Except as may be permitted in the Schedule, Borrower shall not, without
Silicon’s prior written consent (which shall be a matter of its good faith
business judgment), do any of the following: 
(i) merge or consolidate with another corporation or entity; (ii)
acquire any assets, except in the ordinary course of business; (iii) enter into
any other transaction outside the ordinary course of business; (iv) sell or
transfer any Collateral, except for the sale of finished Inventory in the
ordinary course of Borrower’s business, and except for the sale of obsolete or
unneeded Equipment in the ordinary course of business; (v) store any Inventory
or other Collateral with any warehouseman or other third party; (vi) sell any
Inventory on a sale-or-return, guaranteed sale, consignment, or other
contingent basis; (vii) make any loans of any money or other assets except that
Borrower may make loans or advances to foreign subsidiaries up to an aggregate
of $600,000.00 per fiscal quarter; (viii) incur any debts, outside the
ordinary course of business, which would result in a Material Adverse Change;
(ix) guarantee or otherwise become liable with respect to the obligations of
another party or entity; (x) pay or declare any dividends on Borrower’s stock
(except for dividends payable solely in stock of Borrower); (xi) redeem,
retire, purchase or otherwise acquire, directly or indirectly, any of Borrower’s
stock; (xii) make any change in Borrower’s capital structure which would result
in a Material Adverse Change; or (xiii)  engage
in any material line of business other than those lines of business conducted
by Borrower and its subsidiaries on the date hereof and any business reasonably
related, complementary or incidental thereto or reasonable extensions thereof,
provided that Borrower will not, without prior written notice, change its state
of incorporation; or (xiv) dissolve or elect to dissolve.  Transactions permitted by the foregoing
provisions of this Section are only permitted if no Default or Event of Default
would occur as a result of such transaction.

 

5.6  Litigation
Cooperation. 
Should any third-party suit or proceeding be instituted by or against
Silicon with respect to any Collateral or relating to Borrower, Borrower shall,
without expense to Silicon, make available Borrower and its officers, employees
and agents and Borrower’s books and records, to the extent that Silicon may
deem them reasonably necessary in order to prosecute or defend any such suit or
proceeding.

 

5.7  Further
Assurances. 
Borrower agrees, at its expense, on request by Silicon, to execute all
documents and take all actions, as Silicon, may, in its good faith business
judgment, deem necessary or useful in order to perfect and maintain Silicon’s
perfected first-priority security interest in the Collateral (subject to
Permitted Liens), and in order to fully consummate the transactions
contemplated by this Agreement.

 

6.  TERM.

 

6.1  Maturity
Date.  This Agreement shall
continue in effect until the maturity date set forth on the Schedule (the “Maturity
Date”), subject to Section 6.3 below.

 

6.2  Early
Termination. 
This Agreement may be terminated prior to the Maturity Date as
follows:  (i) by Borrower, effective
three Business Days after written notice of termination is given to Silicon; or
(ii) by Silicon at any time after the occurrence and during the continuance of
an Event of Default, without notice, effective immediately.  If this Agreement is terminated by Borrower
or by Silicon under this Section 6.2, Borrower shall pay to Silicon a
termination fee in an amount equal to the amount specified in the Schedule,
provided that no termination fee shall be charged if the credit facility
hereunder is replaced with a new facility from another division of Silicon
Valley Bank.  The termination fee shall
be due and payable on the effective date of termination and thereafter shall
bear interest at a rate equal to the highest rate applicable to any of the
Obligations.

 

6.3  Payment
of Obligations. 
On the Maturity Date or on any earlier effective date of termination,
Borrower shall pay and perform in full all Obligations, whether evidenced by
installment notes or otherwise, and whether or not all or any part of such
Obligations are otherwise then due and payable. 
Without limiting the generality of the foregoing, if on the Maturity
Date, or on any earlier effective date of termination, there are any
outstanding Letters of Credit issued by Silicon or issued by another
institution based upon an application, guarantee, indemnity or similar
agreement on the part of Silicon, then on such date Borrower shall provide to
Silicon cash collateral in an amount equal to 105% of the face amount of all
such Letters of Credit plus all interest, fees and cost due or to become due in
connection therewith (as estimated by Silicon in its good faith business
judgment), to secure all of the Obligations relating to said Letters of Credit,
pursuant to Silicon’s then standard form cash pledge agreement.  Notwithstanding any termination of this
Agreement, all of Silicon’s security interests in all of the Collateral and all
of the terms and provisions of this Agreement shall continue in full force and
effect until all Obligations have been paid and performed in full; provided
that Silicon may, in its sole discretion, refuse to make any further Loans
after termination.  No termination shall
in any way affect or impair any right or remedy of Silicon, nor shall any such
termination relieve Borrower of any Obligation to Silicon, until all of the
Obligations have been paid and performed in full.  Upon payment and performance in full of all
the Obligations and termination of this Agreement, Silicon shall promptly
terminate its financing statements with respect to the Borrower and deliver to
Borrower such other documents as may be required to fully terminate Silicon’s
security interests.

 

6

 

7.  EVENTS OF DEFAULT AND
REMEDIES.

 

7.1  Events
of Default. 
The occurrence of any of the following events shall constitute an “Event
of Default” under this Agreement, and Borrower shall give Silicon immediate
written notice thereof: (a) Any warranty, representation, statement, report or
certificate made or delivered to Silicon by Borrower or any of Borrower’s
officers, employees or agents, now or in the future, shall be untrue or
misleading in a material respect when made or deemed to be made; or (b)
Borrower shall fail to pay when due any Loan or any interest thereon or any
other monetary Obligation; or (c) the total Loans and other Obligations
outstanding at any time shall exceed the Credit Limit; or (d) Borrower shall
fail to comply with any of the financial covenants set forth in the Schedule,
or shall fail to perform any other non-monetary Obligation which by its nature
cannot be cured, or shall fail to permit Silicon to conduct an inspection or
audit as specified in Section 5.4 hereof; or (e) Borrower shall fail to perform
any other non-monetary Obligation, which failure is not cured within five
Business Days after the date due; or (f) if 20% or more of consolidated total
assets of Borrower is attached, seized, levied on, or comes into possession of
a trustee or receiver and the attachment, seizure or levy is not removed in 10
days, or if Borrower is enjoined, restrained, or prevented by court order from
conducting a material part of its business or if a judgment or other claim
becomes a Lien on a material portion of Borrower’s assets, or if a notice of
lien, levy, or assessment is filed against any of Borrower’s assets by any
government agency and not paid within 10 days after Borrower receives notice,
provided that these are not Events of Default if stayed or if a bond is posted
pending contest by Borrower; or (g) any default or event of default occurs
under any obligation secured by a Permitted Lien, which is not cured within any
applicable cure period or waived in writing by the holder of the Permitted
Lien; or (h) Borrower breaches any material contract or obligation, which has
resulted or may reasonably be expected to result in a Material Adverse Change;
or (i) dissolution, termination of existence, insolvency or business failure of
Borrower; or appointment of a receiver, trustee or custodian, for all or any
part of the property of, assignment for the benefit of creditors by, or the
commencement of any proceeding by Borrower under any reorganization,
bankruptcy, insolvency, arrangement, readjustment of debt, dissolution or
liquidation law or statute of any jurisdiction, now or in the future in effect;
or (j) the commencement of any proceeding against Borrower or any guarantor of
any of the Obligations under any reorganization, bankruptcy, insolvency,
arrangement, readjustment of debt, dissolution or liquidation law or statute of
any jurisdiction, now or in the future in effect, which is not cured by the
dismissal thereof within 30 days after the date commenced; or (k) revocation or
termination of, or limitation or denial of liability upon, any guaranty of the
Obligations or any attempt to do any of the foregoing, or commencement of
proceedings by any guarantor of any of the Obligations under any bankruptcy or
insolvency law; or (l) revocation or termination of, or limitation or denial of
liability upon, any pledge of any certificate of deposit, securities or other
property or asset of any kind pledged by any third party to secure any or all
of the Obligations, or any attempt to do any of the foregoing, or commencement
of proceedings by or against any such third party under any bankruptcy or insolvency
law; or (m) Borrower makes any payment on account of any indebtedness or
obligation which has been subordinated to the Obligations other than as
permitted in the applicable subordination agreement, or if any Person who has
subordinated such indebtedness or obligations terminates or in any way limits
his subordination agreement; or (n) there shall be a Change in Control where “Change
in Control” is a transaction in which any “person” or “group” (within the
meaning of Section 13(d) and 14(d)(2) of the Securities Exchange Act of 1934,
as amended) becomes the “beneficial owner” (as defined in Rule 13d-3 under the
Securities Exchange Act of 1934, as amended), directly or indirectly, of
greater than 35% of the shares of all classes of stock then outstanding of
Borrower ordinarily entitled to vote in the election of directors, without the
prior written consent of Silicon; or (o) Borrower shall generally not pay its
debts as they become due, or Borrower shall conceal, remove or transfer any
part of its property, with intent to hinder, delay or defraud its creditors, or
make or suffer any transfer of any of its property which may be fraudulent
under any bankruptcy, fraudulent conveyance or similar law; or (p) a Material
Adverse Change shall occur.  Silicon may cease
making any Loans hereunder during any of the above cure periods,
and thereafter if an Event of Default has occurred and is continuing.

 

7.2  Remedies.  Upon the occurrence and during the
continuance of any Event of Default, and at any time thereafter, Silicon, at
its option, and without notice or demand of any kind (all of which are hereby
expressly waived by Borrower), may do any one or more of the following: (a)
Cease making Loans or otherwise extending credit to Borrower under this
Agreement or any other Loan Document; (b) Accelerate and declare all or any
part of the Obligations to be immediately due, payable, and performable,
notwithstanding any deferred or installment payments allowed by any instrument
evidencing or relating to any Obligation; (c) Take possession of any or all of
the Collateral wherever it may be found, and for that purpose Borrower hereby
authorizes Silicon without judicial process to enter onto any of Borrower’s
premises without interference to search for, take possession of, keep, store,
or remove any of the Collateral, and remain on the premises or cause a
custodian to remain on the premises in exclusive control thereof, without
charge for so long as Silicon deems it necessary, in its good faith business
judgment, in order to complete the enforcement of its rights under this
Agreement or any other agreement; provided, however, that should Silicon seek
to take possession of any of the Collateral by court process, Borrower hereby
irrevocably waives: (i) any bond and any surety or security relating thereto
required by any statute, court rule or otherwise as an incident to such
possession; (ii) any demand for possession prior to the commencement of any
suit or action to recover possession thereof; and (iii) any requirement that
Silicon retain possession of, and not dispose of, any such Collateral until
after trial or final judgment; (d) Require Borrower to assemble any or all of
the Collateral and make it available to Silicon at places designated by Silicon
which are reasonably convenient to Silicon and Borrower, and to remove the
Collateral to such locations as Silicon 

 

7

 

may
deem advisable; (e) Complete the processing, manufacturing or repair of any
Collateral prior to a disposition thereof and, for such purpose and for the
purpose of removal, Silicon shall have the right to use Borrower’s premises,
vehicles, hoists, lifts, cranes, and other Equipment and all other property
without charge; (f) Sell, lease or otherwise dispose of any of the Collateral,
in its condition at the time Silicon obtains possession of it or after further
manufacturing, processing or repair, at one or more public and/or private
sales, in lots or in bulk, for cash, exchange or other property, or on credit,
and to adjourn any such sale from time to time without notice other than oral
announcement at the time scheduled for sale. 
Silicon shall have the right to conduct such disposition on Borrower’s
premises without charge, for such time or times as Silicon deems reasonable, or
on Silicon’s premises, or elsewhere and the Collateral need not be located at
the place of disposition.  Silicon may
directly or through any affiliated company purchase or lease any Collateral at
any such public disposition, and if permissible under applicable law, at any
private disposition.  Any sale or other
disposition of Collateral shall not relieve Borrower of any liability Borrower
may have if any Collateral is defective as to title or physical condition or
otherwise at the time of sale; (g) Demand payment of, and collect any Accounts
and General Intangibles comprising Collateral and, in connection therewith,
Borrower irrevocably authorizes Silicon to endorse or sign Borrower’s name on
all collections, receipts, instruments and other documents, to take possession
of and open mail addressed to Borrower and remove therefrom payments made with
respect to any item of the Collateral or proceeds thereof, and, in Silicon’s
good faith business judgment, to grant extensions of time to pay, compromise
claims and settle Accounts and the like for less than face value; (h) Offset
against any sums in any of Borrower’s general, special or other Deposit
Accounts with Silicon against any or all of the Obligations; and (i) Demand and
receive possession of any of Borrower’s federal and state income tax returns
and the books and records utilized in the preparation thereof or referring
thereto.  All reasonable attorneys’ fees,
expenses, costs, liabilities and obligations incurred by Silicon with respect
to the foregoing shall be added to and become part of the Obligations, shall be
due on demand, and shall bear interest at a rate equal to the highest interest
rate applicable to any of the Obligations. 
Without limiting any of Silicon’s rights and remedies, from and after
the occurrence and during the continuance of any Event of Default, the interest
rate applicable to the Obligations shall be increased by an additional three
percent per annum (the “Default Rate”).

 

7.3  Standards
for Determining Commercial Reasonableness.  Borrower and Silicon agree that a sale or
other disposition (collectively, “sale”) of any Collateral which complies with
the following standards will conclusively be deemed to be commercially
reasonable:  (i) Notice of the sale is
given to Borrower at least ten days prior to the sale, and, in the case of a
public sale, notice of the sale is published at least five days before the sale
in a newspaper of general circulation in the county where the sale is to be
conducted; (ii) Notice of the sale describes the collateral in general,
non-specific terms; (iii) The sale is conducted at a place designated by
Silicon, with or without the Collateral being present; (iv) The sale commences
at any time between 8:00 a.m. and 6:00 p.m; 
(v) Payment of the purchase price in cash or by cashier’s check or wire
transfer is required; (vi) With respect to any sale of any of the Collateral,
Silicon may (but is not obligated to) direct any prospective purchaser to
ascertain directly from Borrower any and all information concerning the
same.  Silicon shall be free to employ
other methods of noticing and selling the Collateral, in its discretion, if
they are commercially reasonable.

 

7.4  Power
of Attorney. 
Upon the occurrence and during the continuance of any Event of Default,
without limiting Silicon’s other rights and remedies, Borrower grants to
Silicon an irrevocable power of attorney coupled with an interest, authorizing
and permitting Silicon (acting through any of its employees, attorneys or
agents) at any time, at its option, but without obligation, with or without
notice to Borrower, and at Borrower’s expense, to do any or all of the
following, in Borrower’s name or otherwise, but Silicon agrees that if it
exercises any right hereunder, it will do so in good faith and in a
commercially reasonable manner:  (a)
Execute on behalf of Borrower any documents that Silicon may, in its good faith
business judgment, deem advisable in order to perfect and maintain Silicon’s
security interest in the Collateral, or in order to exercise a right of
Borrower or Silicon, or in order to fully consummate all the transactions
contemplated under this Agreement, and all other Loan Documents; (b) Execute on
behalf of Borrower, any invoices relating to any Account, any draft against any
Account Debtor and any notice to any Account Debtor, any proof of claim in
bankruptcy, any Notice of Lien, claim of mechanic’s, materialman’s or other
lien, or assignment or satisfaction of mechanic’s, materialman’s or other lien;
(c) Take control in any manner of any cash or non-cash items of payment or
proceeds of Collateral; endorse the name of Borrower upon any instruments, or
documents, evidence of payment or Collateral that may come into Silicon’s
possession; (d) Endorse all checks and other forms of remittances received by
Silicon; (e) Pay, contest or settle any lien, charge, encumbrance, security
interest and adverse claim in or to any of the Collateral, or any judgment
based thereon, or otherwise take any action to terminate or discharge the same;
(f) Grant extensions of time to pay, compromise claims and settle Accounts and
General Intangibles for less than face value and execute all releases and other
documents in connection therewith; (g) Pay any sums required on account of
Borrower’s taxes or to secure the release of any liens therefor, or both; (h)
Settle and adjust, and give releases of, any insurance claim that relates to
any of the Collateral and obtain payment therefor; (i) Instruct any third party
having custody or control of any books or records belonging to, or relating to,
Borrower to give Silicon the same rights of access and other rights with
respect thereto as Silicon has under this Agreement; and (j) Take any action or
pay any sum required of Borrower pursuant to this Agreement and any other Loan
Documents, including without limitation, the
completion and delivery of previously executed Assignments of trademarks and
patents at or after any sale

 

8

 

under
Section 7.2(f) above. 
Any and all reasonable sums paid and any and all reasonable costs,
expenses, liabilities, obligations and attorneys’ fees incurred by Silicon with
respect to the foregoing shall be added to and become part of the Obligations,
shall be payable on demand, and shall bear interest at a rate equal to the
highest interest rate applicable to any of the Obligations.  In no event shall Silicon’s rights under the
foregoing power of attorney or any of Silicon’s other rights under this
Agreement be deemed to indicate that Silicon is in control of the business,
management or properties of Borrower.

 

7.5  Application
of Proceeds. 
All proceeds realized as the result of any sale of the Collateral shall
be applied by Silicon first to the reasonable costs, expenses, liabilities,
obligations and attorneys’ fees incurred by Silicon in the exercise of its
rights under this Agreement, second to the interest due upon any of the
Obligations, and third to the principal of the Obligations, in such order as
Silicon shall determine in its sole discretion. 
Any surplus shall be paid to Borrower or other persons legally entitled
thereto; Borrower shall remain liable to Silicon for any deficiency.  If, Silicon, in its good faith business
judgment, directly or indirectly enters into a deferred payment or other credit
transaction with any purchaser at any sale of Collateral, Silicon shall have
the option, exercisable at any time, in its good faith business judgment, of
either reducing the Obligations by the principal amount of purchase price or
deferring the reduction of the Obligations until the actual receipt by Silicon
of the cash therefor.

 

7.6  Remedies
Cumulative. 
In addition to the rights and remedies set forth in this Agreement,
Silicon shall have all the other rights and remedies accorded a secured party
under the Colorado Uniform Commercial Code and under all other applicable laws,
and under any other instrument or agreement now or in the future entered into
between Silicon and Borrower, and all of such rights and remedies are
cumulative and none is exclusive. 
Exercise or partial exercise by Silicon of one or more of its rights or
remedies shall not be deemed an election, nor bar Silicon from subsequent
exercise or partial exercise of any other rights or remedies.  The failure or delay of Silicon to exercise
any rights or remedies shall not operate as a waiver thereof, but all rights
and remedies shall continue in full force and effect until all of the
Obligations have been fully paid and performed.

 

8.  DEFINITIONS.  As used in this Agreement, the following terms have the
following meanings:

 

“Account
Debtor” means the obligor on an Account.

 

“Accounts”
means all present and future “accounts” as defined in the Colorado Uniform
Commercial Code in effect on the date hereof with such additions to such term
as may hereafter be made, and includes without limitation all accounts
receivable and other sums owing to Borrower.

 

 “Affiliate” means, with respect to any
Person, a relative, partner, shareholder, director, officer, or employee of
such Person, or any parent or subsidiary of such Person, or any Person
controlling, controlled by or under common control with such Person.

 

“Business
Day” means a day on which Silicon is open for business.

 

“Code”
means the Uniform Commercial Code as adopted and in effect in the State of
Colorado from time to time.

 

“Collateral”
has the meaning set forth in Section 2 above.

 

“continuing”
and “during the continuance of” when used with reference to a Default or
Event of Default means that the Default or Event of Default has occurred and
has not been either waived in writing by Silicon or cured within any applicable
cure period.

 

“Default”
means any event which with notice or passage of time or both, would constitute
an Event of Default.

 

“Default
Rate” has the meaning set forth in Section 7.2 above.

 

“Deposit
Accounts” means all present and future “deposit accounts” as defined in the
Colorado Uniform Commercial Code in effect on the date hereof with such
additions to such term as may hereafter be made, and includes, without limitation,
all general and special bank accounts, demand accounts, checking accounts,
savings accounts and certificates of deposit.

 

  “Eligible Accounts” means Accounts and
General Intangibles arising in the ordinary course of Borrower’s business from
the sale of goods or the rendition of services, or the non-exclusive licensing
of Intellectual Property, which Silicon, in its good faith business judgment,
shall deem eligible for borrowing. 
Without limiting the fact that the determination of which Accounts are
eligible for borrowing is a matter of Silicon’s good faith business judgment,
the following (the “Minimum Eligibility Requirements”) are the minimum
requirements for a Account to be an Eligible Account:  (i) the Account must not be outstanding for
more than 90 days from its invoice date (the “Eligibility Period”), (ii)
the Account must not represent progress billings, or be due under a fulfillment
or requirements contract with the Account Debtor, (iii) the Account must not be
subject to any contingencies (including Accounts arising from sales on
consignment, guaranteed sale or other terms pursuant to which payment by the
Account Debtor may be conditional), (iv) the Account must not be owing from an
Account Debtor with whom Borrower has any dispute (whether or not relating to
the particular Account), (v) the Account must not be 

 

9

 

owing
from an Affiliate of Borrower or another Borrower, (vi) the Account must not be
owing from an Account Debtor which is subject to any insolvency or bankruptcy
proceeding, or whose financial condition is not acceptable to Silicon, or
which, fails or goes out of a material portion of its business, (vii) the
Account must not be owing from the United States or any department, agency or
instrumentality thereof (unless there has been compliance, to Silicon’s
satisfaction, with the United States Assignment of Claims Act), (viii) the
Account must not be owing from an Account Debtor located outside the United
States or Canada (unless pre-approved by Silicon in its discretion in writing,
or backed by a letter of credit satisfactory to Silicon, or FCIA insured
satisfactory to Silicon), and (ix) the Account must not be owing from an
Account Debtor to whom Borrower is or may be liable for goods purchased from
such Account Debtor or otherwise (but, in such
case, the Account will be deemed not eligible only to the extent of any amounts
owed by Borrower to such Account Debtor) except for up to $1,200,000.00
of contra accounts of AT&T Corp. may be included subject to receipt by
Silicon of an acceptable non-offset letter from AT&T Corp. Accounts owing
from one Account Debtor will not be deemed Eligible Accounts to the extent they
exceed 25% except 35% for AT&T Corp. of the total Accounts outstanding.  In addition, if more than 50% of the Accounts
owing from an Account Debtor are outstanding for a period longer than their
Eligibility Period (without regard to unapplied credits) or are otherwise not
eligible Accounts, then all Accounts owing from that Account Debtor will be
deemed ineligible for borrowing.  Silicon
may, from time to time, in its good faith business judgment, revise the Minimum
Eligibility Requirements, upon written notice to Borrower.

 

“Equipment”
means all present and future “equipment” as defined in the Colorado Uniform
Commercial Code in effect on the date hereof with such additions to such term
as may hereafter be made, and includes without limitation all machinery,
fixtures, goods, vehicles (including motor vehicles and trailers), and any
interest in any of the foregoing.

 

“Event
of Default” means any of the events set forth in Section 7.1 of this
Agreement.

 

“GAAP”
means generally accepted accounting principles consistently applied.

 

“General
Intangibles” means all present and future “general intangibles” as defined
in the Colorado Uniform Commercial Code in effect on the date hereof with such
additions to such term as may hereafter be made, and includes without
limitation all Intellectual Property, payment intangibles, royalties, contract
rights, goodwill, franchise agreements, purchase orders, customer lists, route
lists, telephone numbers, domain names, claims, income tax refunds, security
and other deposits, options to purchase or sell real or personal property,
rights in all litigation presently or hereafter pending (whether in contract,
tort or otherwise), insurance policies (including without limitation key man,
property damage, and business interruption insurance), payments of insurance
and rights to payment of any kind.

 

“good faith business judgment” means honesty in
fact and good faith (as defined in Section 1201 of the Code) in the exercise of
Silicon’s business judgment.

 

“including” means including (but not limited to).

 

“Intellectual
Property” means all present and future (a) copyrights, copyright rights,
copyright applications, copyright registrations and like protections in each
work of authorship and derivative work thereof, whether published or
unpublished, (b) trade secret rights, including all rights to unpatented inventions
and know-how, and confidential information; (c) mask work or similar
rights available for the protection of semiconductor chips; (d) patents, patent
applications and like protections including without limitation improvements,
divisions, continuations, renewals, reissues, extensions and
continuations-in-part of the same; (e) trademarks, servicemarks, trade styles,
and trade names, whether or not any of the foregoing are registered, and all
applications to register and registrations of the same and like protections,
and the entire goodwill of the business of Borrower connected with and
symbolized by any such trademarks; (f) computer software and computer software
products; (g) designs and design rights; (h) technology; (i) all claims for
damages by way of past, present and future infringement of any of the rights
included above; (j) all licenses or other rights to use any property or rights
of a type described above.

 

“Inventory”
means all present and future “inventory” as defined in the Colorado Uniform
Commercial Code in effect on the date hereof with such additions to such term
as may hereafter be made, and includes without limitation all merchandise, raw
materials, parts, supplies, packing and shipping materials, work in process and
finished products, including without limitation such inventory as is
temporarily out of Borrower’s custody or possession or in transit and including
any returned goods and any documents of title representing any of the above.

 

“Investment
Property” means all present and future investment property, securities,
stocks, bonds, debentures, debt securities, partnership interests, limited
liability company interests, options, security entitlements, securities
accounts, commodity contracts, commodity accounts, and all financial assets
held in any securities account or otherwise, and all options and warrants to
purchase any of the foregoing, wherever located, and all other securities of
every kind, whether certificated or uncertificated.

 

10

 

“Loan
Documents” means, collectively, this Agreement, the Representations, and
all other present and future documents, instruments and agreements between
Silicon and Borrower, including, but not limited to those relating to this
Agreement, and all amendments and modifications thereto and replacements
therefor.

 

“Material
Adverse Change” means any of the following: (i) a material adverse change
in the business, operations, or financial or other condition of the Borrower,
or (ii) a material impairment of the prospect of repayment of any portion of
the Obligations; or (iii) a material impairment of the value or priority of
Silicon’s security interests in the Collateral.

 

“Obligations”
means all present and future Loans, advances, debts, liabilities, obligations,
guaranties, covenants, duties and indebtedness at any time owing by Borrower to
Silicon, whether evidenced by this Agreement or any note or other instrument or
document, or otherwise, whether arising from an extension of credit, opening of
a letter of credit, banker’s acceptance, loan, guaranty, indemnification or
otherwise, whether direct or indirect (including, without limitation, those
acquired by assignment and any participation by Silicon in Borrower’s debts
owing to others), absolute or contingent, due or to become due, including,
without limitation, all interest, charges, expenses, fees, attorney’s fees,
expert witness fees, audit fees, letter of credit fees, collateral monitoring
fees, closing fees, facility fees, termination fees, minimum interest charges
and any other sums chargeable to Borrower under this Agreement or under any
other Loan Documents.

 

“Other
Property” means the following as defined in the Colorado Uniform Commercial
Code in effect on the date hereof with such additions to such term as may
hereafter be made, and all rights relating thereto: all present and future “commercial
tort claims” (including without limitation any commercial tort claims
identified in the Representations), “documents”, “instruments”, “promissory
notes”, “chattel paper”, “letters of credit”, “letter-of-credit rights”, “fixtures”,
“farm products” and “money”; and all other goods and personal property of every
kind, tangible and intangible, whether or not governed by the Colorado Uniform
Commercial Code.

 

“Payment” means
all checks, wire transfers and other items of payment received by Silicon
(including proceeds of Accounts and payment of the Obligations in full) for
credit to Borrower’s outstanding Loans or, if the balance of the Loans have
been reduced to zero, for credit to its Deposit Accounts.

 

“Permitted
Liens” means the following:  (i)
purchase money security interests in specific items of Equipment; (ii) leases
of specific items of Equipment; (iii) liens for taxes not yet payable; (iv)
additional security interests and liens consented to in writing by Silicon,
which consent may be withheld in its good faith business judgment; (v) security
interests being terminated substantially concurrently with this Agreement;
(vi) liens of materialmen, mechanics, warehousemen, carriers, or other
similar liens arising in the ordinary course of business and securing
obligations which are not delinquent; (vii) liens incurred in connection
with the extension, renewal or refinancing of the indebtedness secured by liens
of the type described above in clauses (i) or (ii) above, provided that any
extension, renewal or replacement lien is limited to the property encumbered by
the existing lien and the principal amount of the indebtedness being extended,
renewed or refinanced does not increase; and (viii) Liens in favor of customs
and revenue authorities which secure payment of customs duties in connection
with the importation of goods; and as otherwise provided in the Schedule.  Silicon will have the right to require, as a
condition to its consent under subparagraph (iv) above, that the holder of the
additional security interest or lien sign an intercreditor agreement on Silicon’s
then standard form, acknowledge that the security interest is subordinate to
the security interest in favor of Silicon, and agree not to take any action to
enforce its subordinate security interest so long as any Obligations remain
outstanding, and that Borrower agree that any uncured default in any obligation
secured by the subordinate security interest shall also constitute an Event of
Default under this Agreement.

 

“Person”
means any individual, sole proprietorship, partnership, joint venture, trust,
unincorporated organization, association, corporation, government, or any
agency or political division thereof, or any other entity.

 

“Representations”
means the written Representations and Warranties provided by Borrower to
Silicon referred to in the Schedule.

 

“Reserves”
means, as of any date of determination, such amounts as Silicon may from time
to time establish and revise in its good faith business judgment, reducing the
amount of Loans, Letters of Credit and other financial accommodations which
would otherwise be available to Borrower under the lending formula(s) provided
in the Schedule:  (a) to reflect events,
conditions, contingencies or risks which, as determined by Silicon in its good
faith business judgment, do or may adversely affect (i) the Collateral or any
other property which is security for the Obligations or its value (including
without limitation any increase in delinquencies of Accounts), (ii) the assets,
business or prospects of Borrower or any Guarantor, or (iii) the security
interests and other rights of Silicon in the Collateral (including the
enforceability, perfection and priority thereof); or (b) to reflect Silicon’s
good faith belief that any collateral report or financial information furnished
by or on behalf of Borrower or any Guarantor to Silicon is or may have been
incomplete, inaccurate or misleading in any material respect; or (c) in respect
of any state of facts which Silicon determines in good faith constitutes an
Event of Default or may, with notice or passage of time or both, constitute an
Event of Default.

 

11

 

“Subordinated Debt”
means debt incurred by Borrower subordinated to Borrower’s indebtedness owed to
Silicon and which is reflected in a written agreement in a manner and form
acceptable to Silicon in its sole discretion and approved by Silicon in
writing.

 

Other Terms.  All accounting terms used in this Agreement,
unless otherwise indicated, shall have the meanings given to such terms in
accordance with GAAP, consistently applied. 
All other terms contained in this Agreement, unless otherwise indicated,
shall have the meanings provided by the Code, to the extent such terms are
defined therein.

 

9.  GENERAL PROVISIONS.

 

9.1  Interest
Computation; Float Charge.  In computing
interest on the Obligations, all Payments received after 12:00 Noon (Pacific Standard
Time) on any day shall be deemed received on the next Business Day. In
addition, Silicon shall be entitled to charge Borrower a “float” charge in an
amount equal to three Business Days interest, at the interest rate applicable
to the Loans, on all Payments received by Silicon.  Said float charge is not included in interest
for purposes of computing Minimum Monthly Interest (if any) under this
Agreement.  The float charge for each
month shall be payable on the last day of the month.  Silicon shall not, however, be required to
credit Borrower’s account for the amount of any item of payment, which is
unsatisfactory to Silicon in its good faith business judgment, and Silicon may
charge Borrower’s loan account for the amount of any item of payment which is
returned to Silicon unpaid.

 

9.2  Application
of Payments.  All payments
with respect to the Obligations may be applied, and in Silicon’s good faith
business judgment reversed and re-applied, to the Obligations, in such order
and manner as Silicon shall determine in its good faith business judgment.

 

9.3  Charges
to Accounts.  Silicon may,
in its discretion, require that Borrower pay monetary Obligations in cash to
Silicon, or charge them to Borrower’s Loan account, in which event they will
bear interest at the same rate applicable to the Loans.  Silicon may also, in its discretion, charge
any monetary Obligations to Borrower’s Deposit Accounts maintained with
Silicon.

 

9.4  Monthly
Accountings. 
Silicon shall provide Borrower monthly with an account of advances,
charges, expenses and payments made pursuant to this Agreement.  Such account shall be deemed correct,
accurate and binding on Borrower and an account stated (except for reverses and
reapplications of payments made and corrections of errors discovered by
Silicon), unless Borrower notifies Silicon in writing to the contrary within 60
days after such account is rendered, describing the nature of any alleged
errors or omissions.

 

9.5  Notices.  All notices to be given under this Agreement
shall be in writing and shall be given either personally or by reputable
private delivery service or by regular first-class mail, or certified mail
return receipt requested, addressed to Silicon or Borrower at the addresses
shown in the heading to this Agreement, or at any other address designated in
writing by one party to the other party. 
Notices to Silicon shall be directed to the Commercial Finance Division,
to the attention of the Division Manager or the Division Credit Manager.  All notices shall be deemed to have been
given upon delivery in the case of notices personally delivered, or at the
expiration of one Business Day following delivery to the private delivery
service, or two Business Days following the deposit thereof in the United
States mail, with postage prepaid.

 

9.6  Severability.  Should any provision of this Agreement be
held by any court of competent jurisdiction to be void or unenforceable, such
defect shall not affect the remainder of this Agreement, which shall continue
in full force and effect.

 

9.7  Integration.  This Agreement and such other written
agreements, documents and instruments as may be executed in connection herewith
are the final, entire and complete agreement between Borrower and Silicon and
supersede all prior and contemporaneous negotiations and oral representations
and agreements, all of which are merged and integrated in this Agreement.  There are no oral understandings,
representations or agreements between the parties which are not set forth in
this Agreement or in other written agreements signed by the parties in
connection herewith.

 

9.8  Waivers;
Indemnity. 
The failure of Silicon at any time or times to require Borrower to
strictly comply with any of the provisions of this Agreement or any other Loan
Document shall not waive or diminish any right of Silicon later to demand and
receive strict compliance therewith.  Any
waiver of any default shall not waive or affect any other default, whether
prior or subsequent, and whether or not similar.  None of the provisions of this Agreement or
any other Loan Document shall be deemed to have been waived by any act or
knowledge of Silicon or its agents or employees, but only by a specific written
waiver signed by an authorized officer of Silicon and delivered to
Borrower.  Borrower waives the benefit of
all statutes of limitations relating to any of the Obligations or this
Agreement or any other Loan Document, and Borrower waives demand, protest,
notice of protest and notice of default or dishonor, notice of payment and
nonpayment, release, compromise, settlement, extension or renewal of any
commercial paper, instrument, account, General Intangible, document or guaranty
at any time held by Silicon on which Borrower is or may in any way be liable,
and notice of any action taken by Silicon, unless expressly required by this
Agreement. Borrower hereby agrees to indemnify Silicon and its affiliates,
subsidiaries, parent, 

 

12

 

directors,
officers, employees, agents, and attorneys, and to hold them harmless from and
against any and all claims, debts, liabilities, demands, obligations, actions,
causes of action, penalties, costs and expenses (including reasonable attorneys’
fees), of every kind, which they may sustain or incur based upon or arising out
of any of the Obligations, or any relationship or agreement between Silicon and
Borrower, or any other matter, relating to Borrower or the Obligations;
provided that this indemnity shall not extend to damages proximately caused by
the indemnitee’s own gross negligence or willful misconduct.  Notwithstanding any provision in this
Agreement to the contrary, the indemnity agreement set forth in this Section
shall survive any termination of this Agreement and shall for all purposes
continue in full force and effect.

 

9.9  No
Liability for Ordinary Negligence.  Neither Silicon, nor any of its directors,
officers, employees, agents, attorneys or any other Person affiliated with or
representing Silicon shall be liable for any claims, demands, losses or
damages, of any kind whatsoever, made, claimed, incurred or suffered by
Borrower or any other party through the ordinary negligence of Silicon, or any
of its directors, officers, employees, agents, attorneys or any other Person
affiliated with or representing Silicon, but nothing herein shall relieve
Silicon from liability for its own gross negligence or willful misconduct.

 

9.10  Amendment.  The terms and provisions of this Agreement
may not be waived or amended, except in a writing executed by Borrower and a
duly authorized officer of Silicon.

 

9.11  Time
of Essence. 
Time is of the essence in the performance by Borrower of each and every
obligation under this Agreement.

 

9.12  Attorneys
Fees and Costs. 
Borrower shall reimburse Silicon for all reasonable attorneys’ fees and
all filing, recording, search, title insurance, appraisal, audit, and other
reasonable costs incurred by Silicon, pursuant to, or in connection with, or
relating to this Agreement (whether or not a lawsuit is filed), including, but
not limited to, any reasonable attorneys’ fees and costs Silicon incurs in
order to do the following: prepare and negotiate this Agreement and all present
and future documents relating to this Agreement; obtain legal advice in
connection with this Agreement or Borrower; enforce, or seek to enforce, any of
its rights; prosecute actions against, or defend actions by, Account Debtors;
commence, intervene in, or defend any action or proceeding; initiate any
complaint to be relieved of the automatic stay in bankruptcy; file or prosecute
any probate claim, bankruptcy claim, third-party claim, or other claim;
examine, audit, copy, and inspect any of the Collateral or any of Borrower’s
books and records; protect, obtain possession of, lease, dispose of, or
otherwise enforce Silicon’s security interest in, the Collateral; and otherwise
represent Silicon in any litigation relating to Borrower.  In satisfying Borrower’s obligation hereunder
to reimburse Silicon for attorneys fees, Borrower may, for convenience, issue
checks directly to Silicon’s attorneys, but Borrower acknowledges and agrees
that Silicon’s
attorneys are representing only Silicon and not Borrower in connection
with this Agreement.  If either Silicon
or Borrower files any lawsuit against the other predicated on a breach of this
Agreement, the prevailing party in such action shall be entitled to recover its
reasonable costs and attorneys’ fees, including (but not limited to) reasonable
attorneys’ fees and costs incurred in the enforcement of, execution upon or
defense of any order, decree, award or judgment.  All attorneys’ fees and costs to which
Silicon may be entitled pursuant to this Paragraph shall immediately become
part of Borrower’s Obligations, shall be due on demand, and shall bear interest
at a rate equal to the highest interest rate applicable to any of the
Obligations.

 

9.13  Benefit
of Agreement. 
The provisions of this Agreement shall be binding upon and inure to the
benefit of the respective successors, assigns, heirs, beneficiaries and
representatives of Borrower and Silicon; provided, however, that Borrower may
not assign or transfer any of its rights under this Agreement without the prior
written consent of Silicon, and any prohibited assignment shall be void.  No consent by Silicon to any assignment shall
release Borrower from its liability for the Obligations.

 

9.14  Joint
and Several Liability. 
If Borrower consists of more than one Person, their liability shall be
joint and several, and the compromise of any claim with, or the release of, any
Borrower shall not constitute a compromise with, or a release of, any other
Borrower.

 

9.15  Limitation
of Actions.  Any claim or
cause of action by Borrower against Silicon, its directors, officers,
employees, agents, accountants or attorneys, based upon, arising from, or
relating to this Loan Agreement, or any other Loan Document, or any other
transaction contemplated hereby or thereby or relating hereto or thereto, or
any other matter, cause or thing whatsoever, occurred, done, omitted or
suffered to be done by Silicon, its directors, officers, employees, agents,
accountants or attorneys, shall be barred unless asserted by Borrower by the
commencement of an action or proceeding in a court of competent jurisdiction by
the filing of a complaint within one year after the first act, occurrence or
omission upon which such claim or cause of action, or any part thereof, is
based, and the service of a summons and complaint on an officer of Silicon, or
on any other person authorized to accept service on behalf of Silicon, within
thirty (30) days thereafter.  Borrower
agrees that such one-year period is a reasonable and sufficient time for
Borrower to investigate and act upon any such claim or cause of action.  The one-year period provided herein shall not
be waived, tolled, or extended except by the written consent of Silicon in its
sole discretion.  This provision shall
survive any termination of this Loan Agreement or any other Loan Document.

 

13

 

9.16  Paragraph
Headings; Construction. 
Paragraph headings are only used in this Agreement for convenience.  Borrower and Silicon acknowledge that the
headings may not describe completely the subject matter of the applicable
paragraph, and the headings shall not be used in any manner to construe, limit,
define or interpret any term or provision of this Agreement. This Agreement has
been fully reviewed and negotiated between the parties and no uncertainty or
ambiguity in any term or provision of this Agreement shall be construed
strictly against Silicon or Borrower under any rule of construction or
otherwise.

 

9.17  Governing
Law; Jurisdiction; Venue. 
This Agreement and all acts and transactions hereunder and all rights
and obligations of Silicon and Borrower shall be governed by the laws of the
State of Colorado.  As a material part of
the consideration to Silicon to enter into this Agreement, Borrower (i) agrees
that all actions and proceedings relating directly or indirectly to this
Agreement shall, at Silicon’s option, be litigated in courts located within
Colorado, and that the exclusive venue therefor shall be the City and County of
Denver, Colorado; (ii) consents to the jurisdiction and venue of any such court
and consents to service of process in any such action or proceeding by personal
delivery or any other method permitted by law; and (iii) waives any and all
rights Borrower may have to object to the jurisdiction of any such court, or to
transfer or change the venue of any such action or proceeding.

 

9.18 Borrower Liability.  Each Borrower except the Parent hereby appoints the Parent as agent for
such Borrower for all purposes hereunder, including with respect to requesting
Loans hereunder. Each Borrower hereunder shall be jointly and severally
obligated to repay all Loans made hereunder, regardless of which Borrower
actually receives the proceeds of said Loan, as if each Borrower hereunder
directly received all Loans. 
Notwithstanding any other provision of this Agreement or other related
document, each Borrower irrevocably waives all rights that it may have at law
or in equity (including, without limitation, any law subrogating Borrower to
the rights of Silicon under this Agreement) to seek contribution,
indemnification or any other form of reimbursement from any other Borrower, or
any other Person now or hereafter primarily or secondarily liable for any of
the Obligations, for any payment made by Borrower with respect to the
Obligations in connection with this Agreement or otherwise and all rights that
it might have to benefit from, or to participate in, any security for the
Obligations as a result of any payment made by Borrower with respect to the
Obligations in connection with this Agreement or otherwise.  Any agreement providing for indemnification,
reimbursement or any other arrangement prohibited under this Section shall be
null and void.  If any payment is made to
a Borrower in contravention of this Section, such Borrower shall hold such
payment in trust for Silicon and such payment shall be promptly delivered to
Silicon for application to the Obligations, whether matured or unmatured.

 

14

 

9.18  Mutual
Waiver of Jury Trial.  BORROWER
AND SILICON EACH HEREBY WAIVE THE RIGHT TO TRIAL BY JURY IN ANY ACTION OR
PROCEEDING BASED UPON, ARISING OUT OF, OR IN ANY WAY RELATING TO, THIS
AGREEMENT OR ANY OTHER PRESENT OR FUTURE INSTRUMENT OR AGREEMENT BETWEEN
SILICON AND BORROWER, OR ANY CONDUCT, ACTS OR OMISSIONS OF SILICON OR BORROWER
OR ANY OF THEIR DIRECTORS, OFFICERS, EMPLOYEES, AGENTS, ATTORNEYS OR ANY OTHER
PERSONS AFFILIATED WITH SILICON OR BORROWER, IN ALL OF THE FOREGOING CASES,
WHETHER SOUNDING IN CONTRACT OR TORT OR OTHERWISE.

 

	
  Borrower:

  	
   

  	
  Silicon:

  
	
   

  	
   

  	
   

  
	
  ACT TELECONFERENCING, INC.

  	
  SILICON VALLEY BANK

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By

  	
   

  	
   

  	
  By

  	
   

  	
   

  
	
   

  	
  President or Vice President

  	
   

  	
  Title

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By

  	
   

  	
   

  	
   

  
	
   

  	
  Secretary or Ass’t Secretary

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
  Borrower:

  	
  Borrower:

  
	
   

  	
   

  
	
  ACT
  TELECONFERENCING SERVICES, INC.

  	
  ACT PROXIMITY, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
  By

  	
   

  	
   

  	
  By

  	
   

  	
   

  
	
   

  	
  President or Vice President

  	
   

  	
   

  	
  President or Vice President

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By

  	
   

  	
   

  	
  By

  	
   

  	
   

  
	
   

  	
  Secretary or Ass’t Secretary

  	
   

  	
   

  	
  Secretary or Ass’t Secretary

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Borrower:

  	
  Borrower:

  
	
   

  	
   

  
	
  ACT
  VIDEOCONFERENCING, INC.

  	
  ACT
  RESEARCH INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
  By

  	
   

  	
   

  	
  By

  	
   

  	
   

  
	
   

  	
  President or Vice President

  	
   

  	
   

  	
  President or Vice President

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By

  	
   

  	
   

  	
  By

  	
   

  	
   

  
	
   

  	
  Secretary or Ass’t Secretary

  	
   

  	
   

  	
  Secretary or Ass’t Secretary

  	
   

  
										

 

15

 

Silicon Valley Bank

 

Schedule to

 

Loan and Security Agreement

 

	
  Borrower:

  	
  ACT Teleconferencing, Inc.

  	
  Date:

  	
  November     , 2004

  	
   

  
	
  and

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  ACT Teleconferencing Services,
  Inc.

  	
   

  	
   

  
	
  and

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  ACT Videoconferencing, Inc.

  	
   

  	
   

  
	
  and

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  ACT Proximity, Inc.

  	
   

  	
   

  	
   

  
	
  and

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  ACT Research Inc.

  	
   

  	
   

  	
   

  

 

 

This Schedule forms an
integral part of the Loan and Security Agreement between Silicon Valley Bank
and the above-named borrowers of even date, which borrowers are jointly and
severally liable for all Obligations.

 

1.   CREDIT
LIMIT

(Section
1.1):

 

A.  For Revolving
Loans:

An amount not to exceed the lesser of:  (i) $3,500,000.00
at any one time outstanding (the “Maximum Credit Limit”); or (ii) the sum of
(a) and (b) below:

(a)  80% (an
“Advance Rate”) of the amount of Borrower’s Eligible Accounts (as defined in
Section 8 above) owing from an Account Debtor located in the United States,
plus

(b)  60% (an
“Advance Rate”) of Borrower’s “earned unbilled” Accounts that are otherwise
Eligible Accounts owing from an Account Debtor located in the United States,
provided that Loans made against such earned unbilled Accounts may not exceed $600,000.00 at any time;

 

minus the aggregate amount of all Letters of Credit
(including drawn but unreimbursed Letters of Credit) outstanding from time to
time plus obligations for Cash Management Services plus 10% of the total of FX
Forward Contracts, all as defined below, outstanding from time to time, plus
Reserves.

 

Silicon may, from time to
time, modify the Advance Rates, in its good faith business judgment, upon
notice to the Borrower, based on changes in collection experience with respect
to Accounts, its evaluation of other issues or factors relating to the Accounts
or other Collateral.  In addition,
Silicon may, in its sole discretion, reserve against Loans which would 

 

 

otherwise
be available hereunder such sums as Silicon shall determine in its good faith
business judgment.

 

PLUS

B. For Term Loans:

(i)            Silicon
will make two Term Loans to Borrower (each a “Term Loan “ and,
collectively, “Term Loans”) not exceeding the aggregate amount of $1,000,000.00 (a “Credit Limit”).  The number of Term Loans is limited to two
(2).  The first Term Loan in the amount
of $500,000.00 shall be made at
such time as Borrower has provided evidence to Silicon that Borrower has
maintained a Fixed Charge Coverage Ratio (as defined in Section 5 of this
Schedule) of at least 1.15 to 1.00 for three consecutive months.  So long as no Event of Default has occurred
and is continuing, the second Term Loan shall be made not sooner than the first
Term Loan may be made and not later than the first anniversary of this
Agreement and only upon the receipt by Silicon of a Forced Liquidation Value
Equipment Appraisal acceptable to Silicon supporting the amount of the second
Term Loan requested, up to but not exceeding $500,000.00.

 

(ii)           Each
Term Loan shall immediately amortize and be payable in 36 equal payments of
principal plus interest accrued thereon beginning the first day of the month
following the date such Term Loan is made and continuing on the first day of
each month thereafter.  The final payment
is due on the date 36 months after each Term Loan is made and shall include all
outstanding principal and all accrued unpaid interest.  When repaid, Term Loans may not be
reborrowed.

 

(iii)          Term
Loans accrue interest on the outstanding principal balance at a per annum rate
equal to the sum of (a) the U.S. Treasury note yield to maturity for a
term equal of 36 months as quoted in The Wall Street Journal on the day of the
Term Loan, plus (b) five percent (5.00%).

 

(iv)          Borrower
shall pay Silicon a first Term Loan Fee of $5,000.00 payable at the time the
first Term Loan is made and a second Term Loan Fee in an amount equal to one
percent (1.00%) of the amount of the second Term Loan requested, payable at the
time the second Term Loan is made.

 

(v)           Nothing
in this part is intended to contravene the other terms and conditions of this
Agreement which relate to or may be limited to the Loans made as revolving
Loans.

 

Letter of Credit Sublimit

(Section 1.6):                               A face principal amount outstanding of up to $500,000.00, provided that the aggregate of all Letters of
Credit outstanding from time to time plus obligations for Cash Management
Services defined below plus 10% of the total of FX Forward Contracts defined
below outstanding from time to time shall not, at any time, exceed $500,000.00.

 

Cash
Management

Sublimit:                                     $500,000.00,
provided that the aggregate of all Letters of Credit outstanding from time to
time plus obligations for Cash Management Services defined below plus 10% of
the total of FX Forward Contracts defined below outstanding from time to time
shall not, at any time, exceed $500,000.00.

 

2

 

Cash
Management

Services and Reserves:            Borrower
may use Loans available hereunder, up to the Cash Management Sublimit set forth above, for Silicon’s Cash Management
Services (as defined below), including, merchant services, business credit
card, ACH and other services identified in the cash management services
agreement related to such service (the “Cash Management Services”).  Silicon may, in its sole discretion, reserve
against Loans which would otherwise be available hereunder such sums as Silicon
shall determine in its good faith business judgment in connection with the Cash
Management Services, and Silicon may charge to Borrower’s Loan account, any
amounts that may become due or owing to Silicon in connection with the Cash
Management Services.  Borrower agrees to
execute and deliver to Silicon all standard form applications and agreements of
Silicon in connection with the Cash Management Services, and, without limiting
any of the terms of such applications and agreements, Borrower will pay all
standard fees and charges of Silicon in connection with the Cash Management
Services.  The Cash Management Services
shall terminate on the Maturity Date.

 

Foreign Exchange

Contract Sublimit:                    $50,000.00, provided
that the aggregate of all Letters of Credit outstanding from time to time plus
obligations for Cash Management Services plus 10% of the total of FX Forward
Contracts defined below outstanding from time to time shall not, at any time,
exceed $50,000.00. 

 

FX Forward Contracts:                            Borrower
may enter into foreign exchange forward contracts with Silicon, on its standard
forms, under which Borrower commits to purchase from or sell to Silicon a set
amount of foreign currency more than one business day after the contract date
(the “FX Forward Contracts”); provided that (1) at the time the FX Forward
Contract is entered into Borrower has Loans available to it under this
Agreement in an amount at least equal to 10% of the amount of the FX Forward
Contract; (2) the total FX Forward Contracts at any one time outstanding may
not exceed 10 times the amount of the Foreign Exchange Contract Sublimit set
forth above. Silicon shall have the right to withhold, from the Loans otherwise
available to Borrower under this Agreement, a reserve (which shall be in
addition to all other reserves) in an amount equal to 10% of the total FX
Forward Contracts from time to time outstanding, and in the event at any time
there are insufficient Loans available to Borrower for such reserve, Borrower
shall deposit and maintain with Silicon cash collateral in an amount at all
times equal to such deficiency, which shall be held as Collateral for all
purposes of this Agreement. Silicon may, in its discretion, terminate the FX
Forward Contracts at any time that an Event of Default occurs and is
continuing. Borrower shall execute all standard form applications and
agreements of Silicon in connection with the FX Forward Contracts, and without
limiting any of the terms of such

 

3

 

applications
and agreements, Borrower shall pay all standard fees and charges of Silicon in
connection with the FX Forward Contracts. 

 

2.  INTEREST. 

 

Interest
Rate (Section 1.2):

 

A
rate equal to the “Prime Rate” in effect from time to time, plus 1.50% per
annum.  Interest
shall be calculated on the basis of a 360-day year for the actual number of
days elapsed.  “Prime Rate” means the
rate announced from time to time by Silicon as its “prime rate;” it is a base
rate upon which other rates charged by Silicon are based, and it is not
necessarily the best rate available at Silicon. 
The interest rate applicable to the Obligations shall change on each
date there is a change in the Prime Rate. The interest rate is subject to the
potential increases described in Section 5 below.

 

Minimum
Monthly Interest:

 

In the event that the
aggregate amount of interest earned by Bank in any month is less than
$10,000.00 (the “Minimum Monthly Interest”), Borrower shall pay to Bank
additional interest equal to (i) the Minimum Monthly Interest minus (ii) the
aggregate amount of all interest earned by Bank in such month.  Such additional interest shall be payable on
the first day of the next month.

 

3. 
FEES (Section 1.4): 

 

Loan
Fee:                              $30,000.00, payable concurrently herewith.

 

Collateral
Handling Fee: $1,000.00, payable monthly.

 

4.  MATURITY DATE

(Section
6.1):                                   The
date 364 days from the date of this Agreement.

 

5.  FINANCIAL COVENANTS

(Section 5.1):

 

Borrower shall
comply with each of the following covenants. 
Compliance shall be determined as of the end of each month, except as
otherwise specifically provided below:

 

Minimum
Tangible Net Worth:

Borrower shall maintain a minimum Tangible Net Worth
of not less than the following sum: (i) $6,000,000.00; plus (ii) 50% of all consideration
received after the dated hereof for equity securities of ACT Teleconferencing,
Inc. plus (iii) 50% of Borrower’s consolidated positive net income (giving no
effect to any losses) in respect of each fiscal quarter ending after the date
hereof, commencing

 

4

 

with the quarter ending 12/31/04 and continuing to 12/31/05 and thereafter
unless Silicon amends such requirement.

 

Minimum
Fixed Charge Coverage Ratio:

 

Borrower will
maintain a minimum ratio of (i) EBITDA for the specified period to (ii) the sum
of the current maturities of long term debt and capitalized leases paid, cash
paid interest, cash paid taxes, cash paid dividends, and unfunded capital
expenditures for such period (the “Fixed Charge Coverage Ratio”), measured
monthly on a rolling three-month basis, (a) of at least 1.15 to 1.00 from and
after the time the first Term Loan is made under Section 1B of this Schedule,
tested initially the first month after such first Term Loan is made, until September 30, 2005; and (b) on and
after September 30, 2005, of at least 1.25 to 1.00. As examples only, assuming
the first Term Loan was made the date of this Agreement, for the month ending
December 31, 2004, Borrower shall maintain said fixed charge coverage ratio of
1.15 to 1.00 for the three-month period consisting of October, November and
December of 2004; and for the month ending October 31, 2005, Borrower shall
maintain said fixed charge coverage ratio of 1.25 to 1.00 for the three-month
period consisting of August, September and October of 2005.

 

Definitions.           For
purposes of the foregoing financial covenants, the following term shall have
the following meaning:

 

“EBITDA”
is Borrower’s consolidated earnings before interest expense, income taxes, depreciation,
amortization of intangible assets and other non-cash charges made to Borrower’s
income, determined in accordance with GAAP.

 

“Tangible Net Worth” is, on any date, the consolidated total assets of Borrower and its
Subsidiaries minus (i) any amounts attributable to (a) goodwill, (b) intangible
items including unamortized debt discount and expense, patents, trade and
service marks and names, copyrights and research and development expenses
except prepaid expenses, and (c) reserves not already deducted from assets,
minus (ii) Total Liabilities.

 

“Total
Liabilities” is on any day, obligations
that should, under GAAP, be classified as liabilities on Borrower’s
consolidated balance sheet, including all indebtedness.

 

6.  REPORTING.

(Section 5.3):

 

Borrower
shall provide Silicon with the following:

 

1.       Weekly
transaction reports and schedules of collections, on Silicon’s standard form.

 

2.       Monthly
accounts receivable agings, aged by invoice date, together with a borrowing
base certificate in such form as Silicon shall specify, signed by the Chief
Financial Officer of Borrower, within 20 days after the end of each month.

 

5

 

3.       Monthly
accounts payable agings, aged by invoice date, and
outstanding or held check registers, if any, within 20 days after the end of
each month.

 

4.       Monthly
reconciliations of accounts receivable agings (aged by invoice date),
transaction reports, and general ledger, within 20 days after the end of each
month.

 

5.       Monthly
unaudited consolidated and consolidating financial statements, as soon as
available, and in any event within 30 days after the end of each month.

 

6.       Monthly
Compliance Certificates, within 30 days after the end of each month, in such
form as Silicon shall reasonably specify, signed by the Chief Financial Officer
of Borrower, certifying that as of the end of such month Borrower was in full
compliance with all of the terms and conditions of this Agreement, and setting
forth calculations showing compliance with the financial covenants set forth in
this Agreement and such other information as Silicon shall reasonably request,
including, without limitation, a statement that at the end of such month there
were no held checks.

 

7.       Quarterly
schedules of cash transfers to foreign subsidiaries, as soon as available, and
in any event within 20 days after the end of each fiscal quarter of Borrower.

 

8.       Quarterly
unaudited consolidated and consolidating financial statements, as soon as
available, and in any event within 45 days after the end of each fiscal quarter
of Borrower, together with Borrower’s report to the SEC on 10-Q for such fiscal
quarter.

 

9.       Annual
operating budgets (including income statements, balance sheets and cash flow
statements, by month) for the upcoming fiscal year of Borrower within 30 days
prior to the end of each fiscal year of Borrower.

 

10.     Annual
consolidated and consolidating financial statements, as soon as available, and
in any event within 90 days following the end of Borrower’s fiscal year,
audited by, and with an unqualified opinion of, independent certified public
accountants acceptable to Silicon, together with Borrower’s report to the SEC
on 10-K for such fiscal year.

 

Borrower’s 10K and 10Q
reports required to be delivered pursuant to Subsections 8 and 11 above shall
be deemed to have been delivered on the date on which Borrower posts such
report or provides a link thereto on Borrower’s website on the Internet;
provided, that Borrower shall provide paper copies to Bank of the Compliance
Certificates and all other reporting required by Section 5.3.

 

6

 

7.  NEGATIVE
COVENANTS - EXCEPTIONS

(Section 5.5)

 

Notwithstanding
the provisions of Section 5.5 (viii), Borrower may, without Silicon’s prior
written consent, take the following actions:

 

Borrower may incur the
following types of debt: (a) Borrower’s indebtedness to Bank under this
Agreement or any other Loan Document; (b) indebtedness up to the amount shown
on Annex 7 attached hereto which
is existing on the date hereof and owing to the creditor(s) named on such Annex 7; (c) indebtedness to trade
creditors and with respect to surety bonds and similar obligations; (d)
Guaranties of permitted indebtedness; (e) indebtedness consisting of interest
rate, currency, or commodity swap agreements, interest rate cap or collar
agreements or arrangements designated to protect a Person against fluctuations
in interest rates, currency exchange rates, or commodity prices; (f)
indebtedness between Borrower and any of its subsidiaries, or among any of
Borrower’s subsidiaries; (g) indebtedness with respect to documentary letters
of credit; (h) Capitalized leases and purchase money indebtedness secured by
Permitted Liens; (i) indebtedness of entities acquired in any permitted merger
or acquisition transaction; (j) Subordinated Debt and (k) refinanced
indebtedness permitted above, provided that the amount of such indebtedness is
not increased except by an amount equal to a reasonable premium or other
reasonable amount paid in connection with such refinancing and by an amount
equal to any existing, but unutilized, commitment thereunder.

 

8.  EARLY
TERMINATION

(Section 6.2)

 

Borrower shall pay an amount equal to (a) 3.00% of the
aggregate of the Maximum Credit Limit plus the amount of the Term Loans
disbursed if termination occurs on the anniversary of the date of this
Agreement or within the first 12 months following the date of this Agreement;
(b) 2.00% of the aggregate amount of the Term Loans disbursed if termination
occurs on the second anniversary of the date of this Agreement or within the 12
months following the first anniversary of the date of this Agreement; and (c)
1.00% of the aggregate amount of the Term Loans disbursed if termination occurs
within the 12 months following the second anniversary of the date of this
Agreement

 

9.  DEFINITIONS                “Permitted Liens” shall also mean:

 

(a)  Liens existing on the date hereof which are
identified on and in favor of the respective lienholders named on Annex 9 attached hereto and Liens arising
under this Agreement or other
Loan Documents;

(b)  Liens for taxes, fees, assessments or other
government charges or levies, either not delinquent or being contested in good
faith and for which Borrower maintains adequate reserves on its Books, if they
have no priority over any of Bank’s security interests;

(c)  Liens (including with respect to capital
leases) (i) on property (including accessions, additions, parts, replacements,
fixtures, improvements and attachments thereto, and the proceeds

 

7

 

thereof) acquired or held
by Borrower or its subsidiaries incurred for financing such property (including
accessions, additions, parts, replacements, fixtures, improvements and
attachments thereto, and the proceeds thereof), or (ii) existing on property
(and accessions, additions, parts, replacements, fixtures, improvements and
attachments thereto, and the proceeds thereof) when acquired, if the Lien is
confined to such property (including accessions, additions, parts,
replacements, fixtures, improvements and attachments thereto, and the proceeds
thereof);

(d)  Liens incurred in the extension, renewal or
refinancing of the indebtedness secured by Liens described in (a) through (c)
and (e) through (p), but any extension, renewal or replacement Lien must be
limited to the property encumbered by the existing Lien and the principal
amount of the indebtedness it secures may not increase;

(e)  Licenses or sublicenses granted in the
ordinary course of Borrower’s business and any interest or title of a licensor
or under any license or sublicense, if the licenses and sublicenses permit
granting Bank a security interest;

(f)  Leases or subleases granted in the ordinary
course of Borrower’s business, including in connection with Borrower’s leased
premises or leased property;

(g)  Liens in favor of custom and revenue
authorities arising as a matter of law to secure the payment of custom duties
in connection with the importation of goods;

(h)  Liens on insurance proceeds securing the
payment of financed insurance premiums;

(i)  Customary Liens granted in favor of a trustee
to secure fees and other amounts owing to such trustee under an indenture or
other similar agreement;

(j)
 Liens on assets acquired in mergers and
acquisitions not prohibited by the covenant limiting mergers and acquisitions;

(k)  Liens consisting of pledges of cash, cash
equivalents or government securities to secure swap or foreign exchange
contracts or letters of credit;

(l)  Liens arising from judgments, decrees or
attachments in circumstances not constituting an Event of Default;

(m)  Carriers’, warehousemen’s, mechanics’,
material men’s, repairmen’s or other like Liens arising in the ordinary course
of business which are not overdue for a period of more than 30 days or which
are being contested in good faith and by appropriate proceeding if adequate
reserves with respect thereto are maintained on the books of the applicable
Person;

(n)  Pledges or deposits in the ordinary course of
business in connection with workers’ compensation, unemployment insurance and
other social security legislation;

(o)  Deposits to secure the performance of bids,
trade contracts (other than for borrowed money), contracts for the purchase of
property, leases, statutory obligations, surety and appeal bonds, performance
bonds and other obligations of a like nature, in each case, incurred in the
ordinary course of business and not representing an obligation for borrowed
money; and

(p)  Easements, rights-of-way, restrictions and
other similar encumbrances affecting real property which do not materially
detract from the value of the property subject thereto or materially interfere
with the ordinary conduct of the business of the applicable Person; and

(q)  Liens on any capital stock of Borrower’s
foreign subsidiaries, which are superior to Silicon’s security interest
pursuant to a written subordination agreement in such form as Silicon shall
specify.

 

8

 

10.          BORROWER INFORMATION:

 

Borrower
represents and warrants that the information set forth in the Representations
and Warranties of the Borrower dated November 4, 2004, previously submitted to
Silicon (the “Representations”) is true and correct as of the date hereof.

 

11.          ADDITIONAL PROVISIONS

 

(1)           Banking Relationship.  Borrower shall at all times maintain its
primary banking relationship with Silicon. 
Without limiting the generality of the foregoing, Borrower shall, at all
times, after 90 days from the date of this Agreement, maintain on deposit with
Silicon not less than 85% of its
total consolidated cash, cash equivalents, and investments held at financial
institutions within the United States. As to any deposit accounts maintained
with other financial institutions, within 90 days from the date of this
Agreement, Borrower shall cause such other financial institutions to enter into
an account control agreement in form acceptable to Silicon in its good faith
business judgment in order to perfect Silicon’s first-priority security
interest in said deposit accounts.  As to
any investment accounts maintained with SVB Securities, Borrower shall cause
SVB Securities to enter into a control agreement in form acceptable to Silicon
in its good faith business judgment in order to perfect Silicon’s first-priority
security interest in said investment accounts.

 

(2)
          Subordination
of Debt.  All present and future
indebtedness of Borrower for borrowed money which is secured by any assets of
Borrower shall, at all times, be subordinated to the Obligations pursuant to a
subordination agreement on Silicon’s standard form or otherwise satisfactory to
Silicon in its sole discretion.  Borrower
represents and warrants that there is no secured debt for borrowed money
presently outstanding, except for that described on Annex 11–(2) attached hereto. 
Prior to incurring any such debt in the future, Borrower shall obtain
Silicon’s prior written consent and cause the person to whom such debt will be
owed to execute and deliver to Silicon a subordination agreement on Silicon’s
standard form.

 

(3)           Conditions Precedent.  The making of the first Loan hereunder is
subject to the following conditions precedent: 
Silicon shall have received: (a) an opinion of Borrower’s counsel in
form reasonably satisfactory to Silicon; (b) a UCC search with respect to each
Borrower in the Office of the Secretary of State of the state of incorporation
of each respective Borrower, showing the respective UCC-1 Financing Statement
in favor of Silicon to be of record and showing no other filings (other than
those with respect to Permitted Liens or otherwise permitted by Silicon); (c)
an Intellectual Property Security Agreement on Silicon’s standard form executed
by each Borrower, together with related Assignments in blank of copyrights,
patents or trademarks, as the case may be; (e) certificates of resolutions
authorizing the execution and delivery of this Agreement and the Intellectual
Property Security Agreement by each Borrower; (f) an initial borrowing base
certificate indicating the amount of credit available under the Credit Limit
specified above in Section 1 of this Schedule; (g) the Loan Fee specified above
in Section 3 of this Schedule, (h) evidence satisfactory to Silicon (by way of
a payoff letter from such bank 

 

9

 

and a payment of proceeds
instruction letter from Borrower to Silicon) to assure Silicon that the
proceeds of the first Loan hereunder shall be used only to pay Borrower’s
existing indebtedness owing to Vectra Bank Colorado, National Association and
that any and all liens on Borrower’s assets such bank may have shall promptly
be terminated and released, (i) such number of Consents to Removal of Personal
Property (or other landlord waivers) in form acceptable to Silicon relating to
the real property leased or rented by each Borrower as Silicon requires, (j)
such Intercreditor Agreements and Subordination Agreements as are contemplated
above in Section 11(2) of this Schedule, and (k) a letter from AT&T Corp
agreeing not to offset against accounts receivable in a form acceptable to
Silicon.

 

(4)           Conditions Subsequent.  Within 30 days after the date Borrower’s
current lease of space at 910 15th Street, Denver, Co 80202 expires
in May, 2005, Borrower shall deliver to Silicon a Consent to Removal of
Personal Property (or other landlord waiver) in form acceptable to Silicon
relating to the real property leased or rented at such Denver location or at
such other location to which Borrower may have decided to relocate the
operations conducted at such Denver location. 
In the event Borrower is unable to deliver such Consent to Removal of
Personal Property (or other landlord waiver) in form acceptable to Silicon
within the time required, it shall be an Event of Default under this Agreement
at such time.

 

(5)
          Intellectual
Property. Borrower shall provide written notice to Bank of any new
application filed by Borrower in the United States Patent and Trademark Office
for a patent or to register a trademark or service mark within 30 days of any
such filing.  Borrower shall not register
any Intellectual Property with the United States Copyright Office unless it:
(i) has given at least fifteen (15) days’ prior notice to Bank of its intent to
register such Intellectual Property and has provided Bank with a copy of the
application it intends to file with the United States Copyright Office
(excluding exhibits thereto); (ii) executes a security agreement or such other
documents as Bank may reasonably request in order to maintain the perfection
and priority of Bank’s security interest in the Intellectual Property proposed
to be registered with the United States Copyright Office; and (iii) records
such security documents with the United States Copyright Office
contemporaneously with filing the application(s) with the United States
Copyright Office.  Borrower shall
promptly provide to Bank a copy of the application(s) filed with the United
States Copyright Office, together with evidence of the recording of the
security documents necessary for Bank to maintain the perfection and priority
of its security interest in such Intellectual Property.

 

10

 

	
  Borrower:

  	
   

  	
  Silicon:

  
	
   

  	
   

  	
   

  
	
  ACT TELECONFERENCING, INC.

  	
  SILICON VALLEY BANK

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By

  	
   

  	
   

  	
  By

  	
   

  	
   

  
	
   

  	
  President or Vice President

  	
   

  	
  Title

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By

  	
   

  	
   

  	
   

  
	
   

  	
  Secretary or Ass’t Secretary

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
  Borrower:

  	
  Borrower:

  
	
   

  	
   

  
	
  ACT
  TELECONFERENCING SERVICES, INC.

  	
  ACT PROXIMITY, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
  By

  	
   

  	
   

  	
  By

  	
   

  	
   

  
	
   

  	
  President or Vice President

  	
   

  	
   

  	
  President or Vice President

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By

  	
   

  	
   

  	
  By

  	
   

  	
   

  
	
   

  	
  Secretary or Ass’t Secretary

  	
   

  	
   

  	
  Secretary or Ass’t Secretary

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Borrower:

  	
  Borrower:

  
	
   

  	
   

  
	
  ACT
  VIDEOCONFERENCING, INC.

  	
  ACT
  RESEARCH INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
  By

  	
   

  	
   

  	
  By

  	
   

  	
   

  
	
   

  	
  President or Vice President

  	
   

  	
   

  	
  President or Vice President

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By

  	
   

  	
   

  	
  By

  	
   

  	
   

  
	
   

  	
  Secretary or Ass’t Secretary

  	
   

  	
   

  	
  Secretary or Ass’t Secretary

  	
   

  
										

 

11

 

ANNEX
7

Amount
of Existing Debt and Names of Creditors

 

 

ANNEX
9

Description
of Existing Liens and Related Lienholders

 

 

ANNEX
11-(2)

Description
of Existing Secured Debt

(Debt
of Borrower to be subordinated)Exhibit
10.2

 

NINTH
WAIVER, AMENDMENT AND FORBEARANCE AGREEMENT

 

This Ninth Waiver, Amendment and Forbearance Agreement (“Amendment”) is
effective as of November 12, 2004 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. 
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 forbear in connection with
certain current Events of Default 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.  In addition, Holdings is
changing its principal bank relationship from Vectra Bank Colorado, National
Association to Silicon Valley Bank which necessitates certain amendments to the
Note Agreement.

 

NOW, THEREFORE, in consideration of the foregoing premises and the
mutual covenants hereinafter stated, the parties hereby agree as follows:

 

1.                                       Waivers and
Amendments.

 

(a)                                  Clause (b) of Section 6.7
of the Note Agreement (Indebtedness) is amended and restated to read as
follows:

 

“(b) the Bank Indebtedness, provided that the total amount of such Bank
Indebtedness does not exceed $3.0 million (as reduced by the amount of all
principal payments on any term loan portion of the Bank Indebtedness and the
amount of all commitment reductions on any revolving loan portion of the Bank
Indebtedness)”

 

(b)                                 Section 7.1 of
the Note Agreement (Events of Default) is amended to delete the following
sentence, which was added in the Eighth Waiver, Amendment and Forebearance
Agreement to the Note Agreement dated August 16, 2004 (the “Eighth
Amendment”):

 

“Notwithstanding the foregoing, if the Bank does not extend the October 30,
2004 maturity date of the Bank Indebtedness, then Holdings’ failure to repay
all outstanding Bank Indebtedness on October 30, 2004 (and any default
under any other Indebtedness caused by such failure to repay all outstanding
Bank Indebtedness on October 30, 2004) shall not be deemed to be an Event
of Default until the earlier of (i) the date the Bank or any other person
commences any enforcement action under the Bank Agreement or otherwise, or (ii)
December 31, 2004.”

 

Purchasers hereby waive any Event of Default
relating to Holdings’ failure to repay all indebtedness owed to Vectra Bank,
Colorado National Association on October 30, 2004.

 

 

(c)                                  The definition of “Bank”
in the Definitions Schedule to the Note Agreement is hereby amended and
restated to read:

 

“Bank,” as of November 15, 2004, means Silicon Valley Bank.

 

(d)                                 The definition of “Bank
Indebtedness” in the Definitions Schedule to the Note Agreement is hereby
amended and restated to read:

 

“Bank Agreement” means the Loan and Security Agreement between the
Company and the Bank dated on or about November 15, 2004.

 

(e)                                  The definition of “Bank
Indebtedness” in the Definitions Schedule to the Note Agreement is hereby
amended and restated to read:

 

“Bank Indebtedness” shall mean all Indebtedness to the Bank incurred in
connection with the Bank Agreement, so long as the total principal amount of
Indebtedness owed to the Bank does not exceed $3.0 million (as reduced by the
amount of all principal payments on any term loan portion of the Bank
Indebtedness and the amount of all commitment reductions on any revolving loan
portion of the Bank Indebtedness).

 

(f)                                    The definition of “Intercreditor
Agreement” in the Definitions Schedule to the Note Agreement is hereby
amended and restated to read:

 

“Intercreditor Agreement” means the Intercreditor Agreement, dated as
of November 15, 2004, among the Bank and the Purchaser, setting forth the
rights and obligations of the parties as to payments upon the Bank Indebtedness
and the Note.

 

(g)                                 The Purchasers hereby
waive any Event of Default relating to Holdings’ failure to raise $2.5 million
in equity financing by September 30, 2004.

 

2.                                       Forbearance.  The Specified Defaults attached as Exhibit A
to the Eighth Amendment are hereby amended to add the failure to engage an
investment banker as required by Section 3(a) of the Eighth Amendment by September 30,
2004.  The Purchaser hereby confirms
that, so long as Holdings and Services comply with all terms and conditions of
the Note Agreement, as amended by this Amendment (other than the Specified
Defaults set forth in Exhibit A to the Eighth Amendment, as amended by this
Amendment), the Purchaser agrees to forbear, until December 31, 2004, from
(i) accelerating or demanding immediate payment of the Obligations, and (ii)
exercising remedies against Borrower under the Note Agreement.  Such agreement to forbear is effective only
for such Specified Defaults and not for any other defaults of covenants or
obligations so listed by Purchaser or for any time periods not so listed by
Purchaser.

 

3.                                      Covenants
of Holdings and Services.  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.

 

4.                                       Conditions
to Effectiveness.  The effectiveness
of this Amendment is expressly conditioned upon (i) 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

 

2

 

Research,
Inc.), and the Principals; (ii) evidence satisfactory to the Purchaser that all
events of default under any other promissory notes or loan agreements have been
waived and such Amendments are in full force and effect; and (iii) repayment by
Holdings of all amounts owed to Vectra Bank Colorado, National Association and
termination of the Revolving Credit and Term Loan Agreement between the Company
and Vectra Bank Colorado, National Association, dated as of 0ctober 16, 2002.

 

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.

 

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 Specified Defaults, as amended by this Amendment, 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,

 

3

 

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 and the other
Financing Documents and payment in full of the Obligations.

 

8.                                       Governing
Law.  This Amendment and all matters
concerning this Amendment shall be governed by the laws of the State of
Colorado for contracts entered into and to be performed in such state without
regard to principles of conflicts of laws.

 

9.                                       Entire
Agreement.  Except as modified by
this Amendment, the Note Agreement and the Financing Documents remain in full
force and effect.  The Note Agreement,
together with the other Financing Documents, embody the entire agreement and
understanding among the parties to this Amendment, and supersedes all prior
agreements and understandings among the parties relating to the subject matter
of the Note Agreement and the Financing Documents as modified by this
Amendment.

 

10.                                 Counterparts;
Telecopy Execution.  This Amendment
may be executed in any number of separate counterparts, each of which, when
taken together, shall constitute one and the same instrument, admissible into
evidence, notwithstanding the fact that all parties have not signed the same
counterpart.  Delivery of an executed
counterpart of this Amendment by facsimile shall be equally as effective as
delivery of a manually executed counterpart of this Amendment.  Any party delivering an executed counterpart
of this Amendment by facsimile shall also deliver a manually executed
counterpart of this Amendment, but the failure to deliver a manually executed
counterpart shall not affect the validity, enforceability, and binding effect
of this Amendment.

 

[Signature page follows]

 

4

 

IN WITNESS WHEREOF, the
parties hereto have executed this Amendment effective as of the day, month and
year first above written.

 

HOLDINGS: ACT Teleconferencing, Inc.

 

	
  By

  	
  /s/ Gene Warren

  	
   

  
	
  Its

  	
  CEO

  	
   

  
	
   

  
	
  BORROWER/SERVICES: ACT Teleconferencing
  Services, Inc.

  
	
   

  
	
  By

  	
  /s/ Gene Warren

  	
   

  
	
  Its

  	
  CEO

  	
   

  
	
   

  
	
  CO-BORROWER: ACT VideoConferencing,
  Inc.

  
	
   

  
	
  By 

  	
  /s/ Gene Warren

  	
   

  
	
  Its

  	
  CEO

  	
   

  
	
   

  
	
  CO-BORROWER: ACT
  Proximity, Inc.

  
	
   

  
	
  By 

  	
  /s/ Gene Warren

  	
   

  
	
  Its

  	
  CEO

  	
   

  
	
   

  
	
  CO-BORROWER: ACT Research,
  Inc.

  
	
   

  
	
  By 

  	
  /s/ Gene Warren

  	
   

  
	
  Its

  	
  CEO

  	
   

  
	
   

  
	
  PRINCIPALS:

  
	
   

  
	
  /s/ Gene Warren

  	
   

  
	
  Gene Warren

  
	
   

  
	
   

  	
   

  
	
  Gerald D. Van Eeckhout

  

 

 

Accepted as of the date of this
Amendment:

 

	
  INVESTORS:

  
	
   

  
	
  NEWWEST
  MEZZANINE FUND LP

  
	
  By
  Touchstone Capital Group LLLP, General Partner

  
	
   

  
	
  /s/ David
  L. Henry

  	
   

  
	
  David L.
  Henry, Managing General Partner

  
	
   

  
	
  KCEP VENTURES
  II, L.P.

  
	
  By KCEP II.,
  LC, General Partner

  
	
   

  
	
   

  	
   

  
	
  Terry
  Matlack, Managing Director

  
	
   

  
	
  CONVERGENT
  CAPITAL PARTNERS I, L.P.

  
	
  By
  Convergent Capital, LLC, General Partner

  
	
   

  
	
   

  	
   

  
	
  Keith S.
  Bares, Executive Vice President

  
	
   

  
	
  JAMES F.
  SEIFERT MANAGEMENT TRUST DATED OCTOBER 8, 1992

  
	
  By James F.
  Seifert and Nancy L. Seifert, as Trustees and not individually

  
	
   

  
	
   

  	
   

  
	
  James F.
  Seifert, Trustee

  
	
   

  
	
   

  	
   

  
	
  Nancy L.
  Seifert, Trustee

  

 

 

	
  Accepted as of the date of this Amendment:

  
	
   

  
	
  INVESTORS:

  
	
   

  
	
  NEWWEST MEZZANINE FUND LP

  
	
  By Touchstone Capital Group LLLP, General Partner

  
	
   

  
	
   

  	
   

  
	
  David L. Henry, Managing General Partner

  
	
   

  
	
  KCEP VENTURES II, L.P.

  
	
  By KCEP II, LC, General Partner

  
	
   

  
	
   

  
	
  /s/ Terry Matlack

  	
   

  
	
  Terry Matlack, Managing Director

  
	
   

  
	
  CONVERGENT CAPITAL PARTNERS I, L.P.

  
	
  By Convergent Capital, LLC, General Partner

  
	
   

  
	
   

  	
   

  
	
  Keith S. Bares, Executive Vice President

  
	
   

  
	
  JAMES F. SEIFERT MANAGEMENT TRUST DATED OCTOBER 8, 1992

  
	
  By James F. Seifert and Nancy L. Seifert, as Trustees and not
  individually

  
	
   

  
	
   

  	
   

  
	
  James F. Seifert, Trustee

  
	
   

  
	
   

  	
   

  
	
  Nancy L. Seifert, Trustee

  

 

 

	
  Accepted as of the date of this Amendment:

  
	
   

  
	
  INVESTORS:

  
	
   

  
	
  NEWWEST MEZZANINE FUND LP

  
	
  By Touchstone Capital Group LLLP, General Partner

  
	
   

  
	
   

  	
   

  
	
  David L. Henry, Managing General Partner

  
	
   

  
	
  KCEP VENTURES II, L.P.

  
	
  By KCEP II, LC, General Partner

  
	
   

  
	
   

  	
   

  
	
  Terry Matlack, Managing Director

  
	
   

  
	
  CONVERGENT CAPITAL PARTNERS I, L.P.

  
	
  By Convergent Capital, LLC, General Partner

  
	
   

  
	
   

  
	
  /s/ Keith S. Bares

  	
   

  
	
  Keith S. Bares, Executive Vice President

  
	
   

  
	
  JAMES F. SEIFERT MANAGEMENT TRUST DATED OCTOBER 8, 1992

  
	
  By James F. Seifert and Nancy L. Seifert, as Trustees and not
  individually

  
	
   

  
	
   

  	
   

  
	
  James F. Seifert, Trustee

  
	
   

  
	
   

  	
   

  
	
  Nancy L. Seifert, Trustee

  

 

 

	
  /s/ James F. Seifert

  	
   

  
	
  James F. Seifert, Trustee

  
	
   

  
	
  /s/ Nancy L. Seifert

  	
   

  
	
  Nancy L. Seifert, Trustee

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00074-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00074-of-00352.parquet"}]]