Exhibit 3
SECURITY AGREEMENT
This Security Agreement (this "Agreement"), dated as of May 12, 2003, is made by
ACT Teleconferencing Services, Inc., a Minnesota corporation (the "Company"),
and the Co-Borrowers listed on the signature page of this Agreement (the
"Co-Borrowers" and, together with the Company, the "Borrower"), in favor of
NewWest Mezzanine Fund LP, a Colorado limited partnership, in its capacity as
Collateral Agent (the "Collateral Agent"), for the benefit of NewWest Mezzanine
Fund LP, a Colorado limited partnership, in its capacity as a lender, and KCEP
Ventures II, L.P., a Missouri limited partnership, Convergent Capital Partners
I, L.P., a Delaware limited partnership, and Xxxxx X. Xxxxxxx Management Trust
dated October 8, 1992 (collectively, "Lenders"). In consideration of Lenders'
provision of financing to Borrower pursuant to the terms and conditions of a
Note Agreement dated as of the date of this Agreement among Borrower, Lenders
and ACT Teleconferencing, Inc. (as such Note Agreement may be amended,
supplemented, amended and restated, renewed or otherwise modified from time to
time hereafter, the "Note Agreement"), and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
Borrower and the Collateral Agent, for the benefit of Lenders, agree as follows:
1. Definitions.
(a) Whenever the following terms are used in this Agreement, they
shall be defined as follows:
"Collateral" shall mean all of Borrower's assets and property,
whether now owned or existing or hereafter acquired or arising
regardless of where located, including (i) all of Borrower's
"Equipment," "General Intangibles," "Inventory", "Investment Property"
and "Receivables" (all as defined below); (ii) all proceeds including,
without limitation, proceeds of any insurance policies, and all
products of all of Borrower's Equipment, General Intangibles,
Inventory and Receivables; (iii) all of Borrower's books and records
related to any of the foregoing; (iv) all of Borrower's rights, title
and interest in and to all cash, accounts, deposits and similar sums;
and (v) all of the foregoing, whether now owned or existing or
hereafter acquired or arising, or in which Borrower now has or
hereafter acquires any rights.
"Equipment" shall mean all of Borrower's now owned and hereafter
acquired equipment and fixtures, including, without limitation,
tangible personal property not otherwise described in this Agreement,
furniture, machinery, vehicles, computers and associated hardware and
equipment and trade fixtures, together with any and all attachments,
accessions, parts and appurtenances thereto, substitutions therefor
and replacements thereof.
"General Intangibles" shall mean all choses in action, causes of
action and all other intangible personal property of Borrower of every
kind and nature (other than Receivables), now owned and hereafter
acquired, including, without limitation, corporate or other business
records, inventions, designs, patents, patent applications, service
marks, service xxxx applications, service names, trademarks, trademark
applications, trade names, trade secrets, goodwill, registrations,
copyrights, all intellectual property used by Borrower in the
operation of computers and associated hardware and other equipment,
licenses, franchises, customer lists, tax refunds, tax refund claims,
pension plan refunds and reversions, rights and claims against
carriers and shippers, rights to indemnification and mineral rights.
"Inventory" shall mean and include all of Borrower's now owned
and hereafter acquired goods, merchandise and other personal property
furnished under any contract of service or intended for sale, rental
or lease, including, without limitation, all farm products, all
product and sales catalogs and literature, raw materials, minerals,
work-in-process, finished goods and materials and supplies of any
kind, nature or description which are used or consumed in Borrower's
business or are or might be used in connection with the manufacture,
packing, shipping, advertising, selling or finishing of such goods,
merchandise and other personal property and all documents of title or
documents representing the same.
"Investment Property" shall mean "investment property" as defined
in the UCC.
"Receivables" shall mean and include all of Borrower's now
existing and hereafter arising or acquired accounts, receivables and
all present and future rights of Borrower to payment for goods sold,
rented or leased or for services rendered, including, without
limitation, those which are not evidenced by instruments or chattel
paper, and whether or not they have been earned by performance;
proceeds of any letters of credit on which Borrower is named as
beneficiary; contract rights; chattel paper; instruments; documents;
insurance proceeds; and all such obligations whatsoever owing to
Borrower, together with all instruments and all documents of title
representing any of the foregoing, all rights in any merchandise or
goods which any of the same may represent, and all right, title,
security and guaranties with respect to each of the foregoing,
including, without limitation, any right of stoppage in transit.
(b) Unless the context requires otherwise, any capitalized term not
defined this Agreement shall have the meaning given to such term in the
Note Agreement. Any accounting terms used in this Agreement which are not
specifically defined shall have the meanings customarily given them in
accordance with GAAP. All other terms contained in this Agreement shall,
unless the context indicates otherwise, have the meanings provided for by
the UCC to the extent such terms are defined.
2. Grant of Security Interest; Term; Perfection.
(a) As security for the due and punctual payment and performance of
the Obligations in full, Borrower hereby grants to the Collateral Agent,
for the benefit of Lenders, a security interest in all of the Collateral.
This Agreement shall terminate on the later to occur of (i) the full
performance, payment and satisfaction of the Obligations in cash or cash
equivalents and (ii) the termination of the Note Agreement. Until
termination of this Agreement, the security interest of the Collateral
Agent, for the benefit of Lenders, in the Collateral, and all proceeds and
products thereof, shall continue in full force and effect.
(b) Borrower hereby irrevocably authorizes the Collateral Agent, on
behalf of Lenders, to file any financing statement deemed appropriate by
the Collateral Agent in its sole discretion in order to perfect the
security interest granted by this Agreement. Until the termination of this
Agreement, Borrower shall perform any and all steps requested by the
Collateral Agent to perfect, maintain and protect the security interest of
the Collateral Agent for the benefit of Lenders in the Collateral,
including, without limitation, executing and filing financing and
continuation statements in form and substance satisfactory to the
Collateral Agent, maintaining a perpetual inventory and complete and
accurate stock records, delivering to the Collateral Agent warehouse
receipts covering that portion of the Collateral located in warehouses and
for which warehouse receipts are issued, transferring Inventory to
warehouses approved by the Collateral Agent, delivering to the Collateral
Agent all certificates of title with respect to Borrower's motor vehicles
or other similar titled property, placing notations on Borrower's books of
account to disclose the security interest of the Collateral Agent for the
benefit of Lenders in such books, taking such other steps as deemed
necessary by the Collateral Agent to protect Lenders' interest in the
Inventory and delivering to the Collateral Agent all letters of credit on
which Borrower is named as a beneficiary. The Collateral Agent may file one
or more financing statements disclosing the security interest granted to
the Collateral Agent for the benefit of Lenders under this Agreement
without Borrower's signature appearing on such financing statements and
Borrower shall pay the costs of, or incidental to, any recording or filing
of any financing statements concerning the Collateral. Borrower agrees that
a carbon, photographic or other reproduction of this Agreement or of a
financing statement is sufficient as a financing statement. If any
Inventory is in the possession or control of any warehouseman or any of
Borrower's agents or processors, Borrower shall notify such warehousemen,
agents or processors of the security interest of the Collateral Agent for
the benefit of Lenders in such Inventory and instruct them, upon the
Collateral Agent's request, to hold all such Inventory for the account of
the Collateral Agent, on behalf of Lenders, and subject to the Collateral
Agent's instructions. Borrower shall pay or cause to be paid all taxes,
assessments and governmental charges levied or assessed or imposed upon or
with respect to the Collateral or any part thereof; provided, however, that
no such taxes, assessments or governmental charges need be paid during such
period as they are being contested in good faith by Borrower, in
appropriate proceedings promptly commenced and diligently prosecuted, if
adequate reserves in accordance with GAAP have been set aside on Borrower's
books, and the continuance of such contest shall neither result in any part
of the Collateral or the premises or any other property of Borrower being
made the subject of any proceeding in foreclosure, or of any levy or
execution, which shall not have been stayed or dismissed, or the subject of
any seizure or other loss nor prevent the Collateral Agent, for the benefit
of Lenders, from acquiring and/or maintaining a perfected security interest
in the Collateral after the Closing Date or with respect to any future
advances under the Note Agreement; and provided, further, that Borrower
will promptly pay such tax, assessment or charge when the dispute is
finally settled. If Borrower fails to pay such taxes, assessments and
governmental charges, the Collateral Agent may (but shall not be required
to) pay the same and charge the cost to Borrower's account as part of the
Obligations payable on demand and secured by the Collateral. In order to
protect or perfect the security interest which the Collateral Agent is
granted for the benefit of Lenders under this Agreement, the Collateral
Agent may, in its sole discretion, discharge any lien or encumbrance or
bond on the Collateral, pay any insurance, maintain guards, pay any service
bureau and obtain any record and charge the same to Borrower's account as
an advance under this Agreement and part of the Obligations, payable on
demand and secured by the Collateral. The Collateral Agent may notify
Borrower's customers or account debtors, at any time and from time to time,
that the Receivables have been assigned to the Collateral Agent for the
benefit of Lenders and of the security interest of the Collateral Agent for
the benefit of Lenders in the Receivables, and if, upon an Event of
Default, the Collateral Agent shall desire that Borrower's customers or
account debtors make payment directly to the Collateral Agent for the
benefit of Lenders, the Collateral Agent, as Borrower's irrevocable
attorney-in-fact, shall be entitled to notify such customers and account
debtors to make payments directly to the Collateral Agent for the benefit
of Lenders, in the Collateral Agent's name and to such address as the
Collateral Agent may designate. Borrower understands and agrees that the
Collateral Agent has no obligation whatsoever to, but the Collateral Agent,
at its sole discretion, may, take any steps to collect any of Borrower's
Receivables, and that all costs of collection and other expenses incurred
in connection therewith shall be charged to Borrower's account.
(c) The Collateral Agent shall have no duty of care with respect to
the Collateral except that the Collateral Agent shall exercise reasonable
care with respect to the Collateral in its custody. The Collateral Agent
shall be deemed to have exercised reasonable care if such property is
accorded treatment substantially equal to that which the Collateral Agent
accords its own property, or if the Collateral Agent takes such action with
respect to the Collateral as Borrower shall request in writing. No failure
to comply with any such request of Borrower nor any omission to do any such
act requested by Borrower shall be deemed a failure to exercise reasonable
care, nor shall the Collateral Agent's failure to take steps to preserve
rights against any parties or property be deemed to be failure to exercise
reasonable care with respect to the Collateral in the Collateral Agent's
custody.
3. Set-Off and Related Matters. All moneys, securities and other
properties of Borrower and the proceeds thereof now or hereafter held or
received by the Collateral Agent from or for the account of Borrower,
including any and all deposits (general or special), account balances and
credits of Borrower with the Collateral Agent at any time existing, shall
be deemed Collateral under this Agreement and held as security for the
Obligations and may be set-off and applied against any Obligations. The
rights given to the Collateral Agent under this Agreement are cumulative
with the other rights and remedies of the Collateral Agent, for the benefit
of Lenders, including other rights of set-off.
4. Collateral Agent as Borrower's Attorney.
(a) Upon the occurrence of an Event of Default, Borrower hereby
appoints the Collateral Agent, or any other Person whom the Collateral
Agent may designate, as Borrower's attorney, with power: (i) to send
requests for verification of Receivables to customers or account
debtors; (ii) to sign and endorse Borrower's name on any checks,
notes, acceptances, money orders, drafts or other forms of payment or
security in payment of Receivables or from the sale of Inventory or
that may otherwise come into the Collateral Agent's possession; (iii)
to sign Borrower's name on any invoice or xxxx of lading relating to
any Receivable, on drafts against customers, on schedules and
assignments of Receivables, on notices of assignment, financing
statements and other public records, on verifications of accounts and
on notices to customers; (iv) to collect, enforce, compromise, settle
and adjust all Receivables and take other actions with respect thereto
as the Collateral Agent determines in its sole discretion; (v) to give
receipts in Borrower's name and to perform such other acts in
connection with the Receivables as the Collateral Agent in its sole
discretion may determine to be appropriate; (vi) to notify the post
office authorities to change the address for delivery of Borrower's
mail to an address designated by the Collateral Agent, which may be a
post office box opened by the Collateral Agent for such purpose or any
other address, at the Collateral Agent's sole discretion; (vii) to
receive, open and dispose of all mail addressed to Borrower; and
(viii) to do all things necessary to perfect the security interest of
the Collateral Agent, for the benefit of Lenders, in the Collateral,
to preserve and protect the Collateral and to otherwise carry out this
Agreement. All such acts shall be at the cost of Borrower, and
Borrower hereby ratifies and approves all acts of such attorney.
Neither the Collateral Agent nor the attorney will be liable for any
acts or omissions nor for any error of judgment or mistake of fact or
law. This power, being coupled with an interest, is irrevocable until
the Obligations have been fully satisfied and this Agreement
terminated. Borrower agrees to execute and deliver promptly to the
Collateral Agent all instruments necessary or appropriate, as
determined in the Collateral Agents sole discretion, to further the
Collateral Agent's exercise of the rights and powers granted it in
this Section 4.
(b) So long as no Event of Default shall have occurred and be
continuing:
(i) Borrower shall be entitled to receive dividends to the
extent permitted by the Note Agreement and to exercise any and
all voting and other consensual rights, in each case pertaining
to the common stock of any of Borrower's Subsidiaries for any
purpose not inconsistent with the terms of this Agreement or the
Note Agreement; provided, however, that Borrower shall not
exercise or refrain from exercising any such right if, in the
judgment of the Collateral Agent, such action or inaction would
have a material adverse effect on the value of the Collateral or
any part thereof, and, provided, further, that Borrower shall
give the Collateral Agent prior written notice of the manner in
which it intends to exercise, or the reasons for refraining from
exercising, any right pertaining to such stock or any part
thereof which is material to the interests of the Collateral
Agent and Lenders.
(ii) The Collateral Agent shall execute and deliver (or
cause to be executed and delivered) to Borrower all such proxies
and other instruments as Borrower may reasonably request for the
purpose of enabling Borrower to exercise the voting and other
rights that it is entitled to exercise pursuant to paragraph (i)
above.
Upon the occurrence of an Event of Default, and after notice to Borrower by
the Collateral Agent, all rights of Borrower to receive dividends or to
exercise the voting and other consensual rights that it would otherwise be
entitled to exercise pursuant to Section 4(b)(i) shall cease, and all such
rights shall thereupon become vested in the Collateral Agent who shall
thereupon have the sole right to exercise such voting and other consensual
rights on behalf of Lenders.
5. Examination of Collateral and Records. The Collateral Agent shall,
upon reasonable notice to Borrower and during normal business hours, have
access to and the right to examine and inspect the Collateral and all of
Borrower's books and records relating to the Collateral. Notwithstanding
the foregoing, upon the occurrence of an Event of Default, the Collateral
Agent shall at all times thereafter have access to and the right to examine
and inspect the Collateral and all of Borrower's books and records relating
thereto.
6. Warranties and Representations. Borrower warrants and represents
that:
(a) The Collateral has not suffered damage or destruction which
renders it inoperable and, under applicable zoning, use, environmental
protection and other laws, ordinances, rules and regulations, such
properties may be used for the present use and purpose as described in
the Agreement.
(b) Borrower has good, indefeasible and merchantable title to and
ownership of the Collateral, free and clear of all Liens except for
Permitted Liens.
(c) Without limiting the foregoing, no portion of the real
property constituting a portion of the Collateral is located in an
"area of special flood hazard," as that term is defined in the
regulations of the Federal Insurance Administration, Department of
Housing and Urban Development, under the National Flood Insurance Act
of 1968, as amended (24 C.F.R. Section 1909.1).
(d) Borrower has executed UCC financing statements, containing
sufficient legal descriptions of the Collateral and otherwise in form
and substance sufficient for filing in every governmental, municipal
or other office in every jurisdiction necessary to perfect the
security interest of the Collateral Agent for the benefit of Lenders
in the Collateral. The Financing Documents and/or financing statements
with respect thereto have been filed for record in all public offices
wherein such filing is necessary to perfect, fully preserve and
protect the lien of the Collateral Agent for the benefit of Lenders
under the Financing Documents against creditors, and the Collateral
Agent, for the benefit of Lenders, has a perfected security interest
in the Collateral specifically described therein.
(e) Other than Borrower's current name, neither Borrower nor any
of its Subsidiaries has used any names during the last five years
(either as a company name, trade name, assumed name, business name,
fictitious name or otherwise) and has no present plans to use any such
names.
(f) The principal place of business of Borrower, the office where
its chief executive offices and accounting offices are located, the
office where Borrower keeps its records concerning the Receivables and
General Intangibles, Borrower's registered office, and the location of
all of Borrower's Inventory, Equipment and other tangible Collateral
is 0000 Xxxx Xxxxxxxxx, Xxxxx 000, Xxxxxx, Xxxxxxxx 00000-0000, and
such location is the sole location for Borrower's business and the
Collateral.
(g) The federal employer identification number and organizational
number of each Borrower is as follows:
Borrower FEIN Org. No.
ACT Teleconferencing Services, Inc. 00-0000000 19941088983
ACT VideoConferencing, Inc. 00-0000000 20011209669
ACT Proximity, Inc. 00-0000000 20011241877
ACT Research, Inc. 19891112377
7. Covenants. Until the Obligations are fully paid, performed and
satisfied and this Agreement is terminated, Borrower covenants that it
shall:
(a) Defend in good faith the Collateral against the claims and
demands of all persons;
(b) Advise the Collateral Agent in writing, at least thirty (30)
days prior thereto, of any change in Borrower's principal place of
business, registered office or other places of business, or the
opening of any new places of business, or any change in Borrower's
name or the adoption by Borrower of trade names, assumed names or
fictitious names, and, in such event, Borrower shall promptly execute
and deliver to the Collateral Agent (and Borrower agrees that the
Collateral Agent may execute and deliver the same as Borrower's
irrevocable attorney-in-fact) new UCC financing statements describing
the Collateral specified in this Agreement and otherwise in form and
substance sufficient for recordation wherever necessary or
appropriate, as determined in the Collateral Agent's sole discretion,
to perfect or continue perfected the security interest of the
Collateral Agent for the benefit of Lenders in the Collateral based
upon such new places of business or registered offices or changes in
or adoption of names, and Borrower shall pay all filing and recording
fees and taxes in connection with the filing or recordation of such
financing statements and shall immediately reimburse the Collateral
Agent therefor if the Collateral Agent pays the same;
(c) If any commercial tort claim arises after the date of this
Agreement, Borrower shall notify the Collateral Agent of such claim
and promptly execute a supplement to this Agreement to specifically
identify any such commercial tort claim for purposes of confirming the
security interest of the Collateral Agent for the benefit of Lenders
in such claim.
(d) Notify the Collateral Agent in writing immediately upon the
creation of any Receivables with respect to which the account debtor
is the United States of America or any state, city, county or other
governmental authority or any department, agency or instrumentality of
any of them, or any foreign government or instrumentality thereof or
any business which is located in a foreign country;
(e) Xxxx its books and records of Receivables to indicate the
security interest granted to the Collateral Agent for the benefit of
Lenders under this Agreement;
(f) Immediately notify the Collateral Agent in writing of any
information which Borrower has or may receive with respect to the
Collateral which might in any manner materially adversely affect the
value thereof or the rights of the Collateral Agent for the benefit of
Lenders with respect thereto;
(g) Maintain the Equipment in good operating condition and
repair, make all necessary replacements thereof so that the value and
operating efficiency thereof shall at all times be maintained and
preserved, promptly inform the Collateral Agent of any material
additions to or deletions from the Equipment and immediately upon
demand therefor by the Collateral Agent, deliver to the Collateral
Agent any and all evidences of ownership of the Equipment (including,
without limitation, certificates of title and applications for title);
and if Borrower fails to keep and maintain the Equipment in good
operating condition and repair or to make necessary replacements
thereof, the Collateral Agent may (but shall not be required to) so
maintain, repair or replace all or any part of the Equipment and
charge the cost thereof to Borrower's account as part of the
Obligations payable on demand and secured by the Collateral;
(h) Insure the Collateral in the name of the Collateral Agent,
for the benefit of Lenders, against loss or damage by fire, theft,
burglary, pilferage, loss in transit and such other hazards as the
Collateral Agent shall specify in amounts and under policies by
insurers acceptable to the Collateral Agent, and the policies or a
certificate thereof signed by the insurer evidencing that such
insurance coverage is in effect for periods of not less than one (1)
year shall be delivered to the Collateral Agent within five (5)
Business Days after the issuance of the policies to Borrower and after
each renewal thereof and all premiums thereon shall be paid by
Borrower monthly in advance; each such policy shall name the
Collateral Agent for the benefit of Lenders (and no other party other
than the Bank) as mortgagee under a New York Standard Mortgage clause
or other similar clause acceptable to the Collateral Agent, shall
contain a lender's loss payable clause acceptable to the Collateral
Agent and shall provide that such policy may not be amended or
canceled without thirty (30) days prior written notice to the
Collateral Agent; and if Borrower fails to do so, the Collateral Agent
may (but shall not be required to) procure such insurance and charge
the cost to Borrower's account as part of the Obligations payable on
demand and secured by the Collateral, the premises and other security
for the Obligations;
(i) Not permit any part of the Collateral (except for Inventory
in the ordinary course of business) or any of the records concerning
the same to be removed from the locations referred to in Section 6(f)
above or any other location at which any of the same may hereafter be
located and shall not move or change its principal place of business,
registered office or other place of businesses, or open new places of
business, or change its name or adopt trade names, assumed names or
fictitious names, without notification to the Collateral Agent as
provided in Section 7(b) above;
(j) Not permit any of the Equipment to be sold, transferred or
otherwise disposed of or to become a fixture to real property not
mortgaged to the Collateral Agent, for the benefit of Lenders, or an
accession to other personal property not constituting part of the
Collateral except as otherwise permitted under the Note Agreement;
(k) Not, except for Permitted Liens and except as otherwise
provided in this Agreement or in the Note Agreement, encumber, pledge,
mortgage, grant a security interest in, assign, sell, lease or
otherwise dispose of or transfer, whether by sale, merger,
consolidation, liquidation, dissolution or otherwise, any of the
Collateral; and
(l) If any of the Equipment is sold by Borrower, transferred or
otherwise disposed of and (i) (A) such sale, transfer or disposition
is effected without replacement of the Equipment so sold, transferred
or disposed of or (B) such Equipment is replaced by Equipment leased
by Borrower, then Borrower shall deliver all of the cash proceeds of
any such sale, transfer or disposition to the Bank for application to
the Bank Indebtedness or, if not so delivered and applied, to the
Collateral Agent, which proceeds shall be applied to the repayment of
the Obligations, or (ii) such sale, transfer or disposition is made in
connection with the purchase by Borrower of replacement Equipment,
Borrower shall use the proceeds of such sale, transfer or disposition
to finance the purchase by Borrower of replacement Equipment and shall
deliver to the Collateral Agent written evidence of the use of the
proceeds for such purchase.
8. Rights and Remedies of Collateral Agent.
(a) If any Event of Default shall occur and be continuing, the
Collateral Agent, for the benefit of Lenders, shall have, in addition
to all other rights provided in this Agreement, the Note Agreement and
the other Financing Documents and available at law and in equity, the
rights and remedies of a secured party under the UCC, and further, the
Collateral Agent may, without notice, demand or legal process of any
kind (except as may be required by law), all of which Borrower waives,
at any time or times, take physical possession of the Collateral and
maintain such possession on Borrower's premises at no cost to the
Collateral Agent, convert raw materials Inventory to work-in-process
Inventory, convert work-in-process Inventory to finished goods
Inventory, or remove the Collateral, or any part thereof, to such
other place(s) as the Collateral Agent may desire, or Borrower shall,
upon the Collateral Agent's demand, at Borrower's own cost and
expense, assemble the Collateral and make it available to the
Collateral Agent, at a place convenient to the Collateral Agent, and
the Collateral Agent may sell and deliver any or all Collateral held
by or for the Collateral Agent, for the benefit of Lenders, at public
or private sale(s), for cash, upon credit or otherwise, at such prices
and upon such terms as the Collateral Agent deems advisable, at the
Collateral Agent's sole discretion, and may, postpone or adjourn any
sale of the Collateral from time to time by an announcement at the
time and place of sale or by announcement at the time and place of
such postponed or adjourned sale, without being required to give a new
notice of sale. Borrower agrees that the Collateral Agent has no
obligation to preserve rights to the Collateral against prior parties.
Borrower acknowledges that portions of the Collateral could be
difficult to preserve and dispose of and further subject to complex
maintenance and management. Accordingly, the Collateral Agent shall
have the widest possible latitude to preserve and protect the
Collateral and the security interest of the Collateral Agent for the
benefit of Lenders therein, and the Collateral Agent, at its sole
option, shall have the unqualified right to appoint a receiver,
without notice or hearing, for the preservation, possession,
protection and disposition of all or part of the Collateral and the
collection and protection for the Collateral Agent of any proceeds of
use or disposition of the Collateral and to do any other thing and
exercise any other right or remedy which the Collateral Agent may,
with or without judicial process, do or exercise on behalf of Lenders.
Any requirement of reasonable notice shall be met if such notice is
mailed postage prepaid to Borrower at its address as set forth in the
Note Agreement at least ten (10) days before the time of sale or other
disposition. The proceeds of sale shall be applied first to all costs
and expenses of sale, including attorneys' fees, and second to the
payment (in whatever order the Collateral Agent elects) of all
Obligations. The Collateral Agent will return any excess to Borrower
and Borrower shall remain liable to Lenders for any deficiency. The
rights and remedies of the Collateral Agent for the benefit Lenders
under this Agreement shall be cumulative and not exclusive of any
other right or remedy which the Collateral Agent or Lenders may have.
(b) Borrower shall pay to the Collateral Agent, on demand and as
part of the Obligations, all costs and expenses, including court
costs, attorneys' fees and costs of sale, incurred by the Collateral
Agent in exercising any of its rights or remedies under this
Agreement.
9. Waiver; Amendments; Successors and Assigns.
(a) Any and all rights of the Collateral Agent for the benefit of
Lenders with respect to the Collateral and the security interest
granted under this Agreement shall continue unimpaired,
notwithstanding the release or substitution of any Collateral at any
time(s), or of any rights or interests therein, or any delay,
extension of time, renewal, compromise or other indulgence granted by
the Collateral Agent and/or Lenders in reference to any Obligations,
and Borrower hereby waives all notice of any such delay, extension,
release, substitution, renewal, compromise or other indulgence.
(b) Failure by the Collateral Agent, on behalf of Lenders, to
exercise any right, remedy or option under this Agreement or any
present or future supplement hereto or in any other agreement between
Borrower and the Collateral Agent and/or Lenders or delay by the
Collateral Agent in exercising the same will not operate as a waiver
by the Collateral Agent or any Lender of its right to exercise any
such right, remedy or option. No waiver by the Collateral Agent will
be effective unless it is in writing and then only to the extent
specifically stated.
(c) This Agreement cannot be changed or terminated orally.
(d) The Collateral Agent and Lenders shall have the right to
assign this Agreement. Borrower may not assign, transfer or otherwise
dispose of any of its rights or obligations under this Agreement, by
operation of law or otherwise, and any such assignment, transfer or
other disposition without the prior written consent of the Collateral
Agent and the Majority Purchaser shall be void. All of the rights,
privileges, remedies and options given to the Collateral Agent for the
benefit of Lenders under this Agreement shall inure to the benefit of
the respective successors and assigns of the Collateral Agent and
Lenders, and all the terms, conditions, covenants, provisions and
warranties of this Agreement shall inure to the benefit of and shall
bind the representatives, successors and assigns of Borrower, the
Collateral Agent and Lenders, respectively.
10. Miscellaneous.
(a) Wherever possible, each provision of this Agreement shall be
interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement shall be
prohibited by or invalid under applicable law, such provision shall be
ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining
provisions of this Agreement.
(b) This Agreement has been delivered and accepted at and shall
be deemed to have been made at Denver, Colorado. This Agreement shall
be interpreted and the rights and liabilities of the parties hereto
determined in accordance with the internal laws of the State of
Colorado and all other laws of mandatory application.
(c) BORROWER HEREBY CONSENTS TO THE JURISDICTION OF ANY STATE OR
FEDERAL COURT LOCATED WITHIN THE COUNTY OF DENVER, STATE OF COLORADO
AND IRREVOCABLY AGREES THAT, SUBJECT TO THE COLLATERAL AGENT'S
ELECTION, ALL ACTIONS OR PROCEEDINGS ARISING OUT OF OR RELATING TO
THIS AGREEMENT OR THE OTHER FINANCING DOCUMENTS SHALL BE LITIGATED IN
SUCH COURTS. BORROWER ACCEPTS FOR ITSELF AND IN CONNECTION WITH ITS
PROPERTIES, GENERALLY AND UNCONDITIONALLY, THE NONEXCLUSIVE
JURISDICTION OF THE AFORESAID COURTS AND WAIVES ANY DEFENSE OF FORUM
NON CONVENIENS, AND IRREVOCABLY AGREES TO BE BOUND BY ANY JUDGMENT
RENDERED THEREBY IN CONNECTION WITH THIS AGREEMENT, THE NOTE, OR ANY
OTHER FINANCING DOCUMENT. BORROWER DESIGNATES AND APPOINTS CT
CORPORATION SYSTEM AND SUCH OTHER PERSONS AS MAY HEREAFTER BE SELECTED
BY BORROWER WHICH IRREVOCABLY AGREE IN WRITING TO SO SERVE AS ITS
AGENT TO RECEIVE ON ITS BEHALF SERVICE OF ALL PROCESS IN ANY SUCH
PROCEEDINGS IN ANY SUCH COURT, SUCH SERVICE BEING HEREBY ACKNOWLEDGED
BY BORROWER TO BE EFFECTIVE AND BINDING SERVICE IN EVERY RESPECT. A
COPY OF ANY SUCH PROCESS SO SERVED SHALL BE MAILED BY THE COLLATERAL
AGENT BY REGISTERED MAIL TO BORROWER AT ITS ADDRESS PROVIDED IN THE
NOTE AGREEMENT AND SHALL BE DEEMED TO HAVE BEEN RECEIVED BY BORROWER
FIVE (5) DAYS AFTER BEING SO MAILED. IF ANY AGENT APPOINTED BY
BORROWER REFUSES TO ACCEPT SERVICE, BORROWER HEREBY AGREES THAT
SERVICE UPON IT BY MAIL SHALL CONSTITUTE SUFFICIENT NOTICE. NOTHING IN
THIS AGREEMENT SHALL AFFECT THE RIGHT TO SERVE PROCESS IN ANY OTHER
MANNER PERMITTED BY LAW OR SHALL LIMIT THE RIGHT OF PURCHASER TO BRING
PROCEEDINGS AGAINST BORROWER IN THE COURTS OF ANY OTHER JURISDICTION.
(d) EACH OF BORROWER AND THE COLLATERAL AGENT HEREBY WAIVES THE
RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING BASED UPON,
ARISING OUT OF, OR IN ANY WAY RELATING TO: (A) THIS AGREEMENT OR ANY
OF THE FINANCING DOCUMENTS, OR (B) ANY OTHER PRESENT OR FUTURE
INSTRUMENT OR AGREEMENT BETWEEN THE COLLATERAL AGENT AND BORROWER; OR
(C) ANY CONDUCT, ACTS OR OMISSIONS OF BORROWER OR THE COLLATERAL AGENT
OR ANY OF THEIR RESPECTIVE DIRECTORS, OFFICERS, EMPLOYEES, AGENTS,
PARTNERS, REPRESENTATIVES, ATTORNEYS OR ANY OTHER PERSONS AFFILIATED
WITH BORROWER OR THE COLLATERAL AGENT; IN EACH OF THE FOREGOING CASES,
WHETHER SOUNDING IN TORT OR OTHERWISE. EACH OF BORROWER AND THE
COLLATERAL AGENT ALSO WAIVES ANY BOND OR SURETY OR SECURITY UPON SUCH
BOND WHICH MIGHT, BUT FOR THIS WAIVER, BE REQUIRED OF THE COLLATERAL
AGENT. THE SCOPE OF THIS WAIVER IS INTENDED TO BE ALL-ENCOMPASSING OF
ANY AND ALL DISPUTES THAT MAY BE FILED IN ANY COURT AND THAT RELATE TO
THE SUBJECT MATTER OF THIS AGREEMENT, INCLUDING CONTRACT CLAIMS, TORT
CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW AND STATUTORY
CLAIMS. EACH OF BORROWER AND THE COLLATERAL AGENT ACKNOWLEDGES THAT
THIS WAIVER IS A MATERIAL INDUCEMENT TO ENTER INTO A BUSINESS
RELATIONSHIP, THAT EACH HAS ALREADY RELIED ON THE WAIVER IN ENTERING
INTO THIS AGREEMENT AND THAT EACH WILL CONTINUE TO RELY ON THE WAIVER
IN THEIR RELATED FUTURE DEALINGS. THIS WAIVER IS IRREVOCABLE, MEANING
THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING, AND THE
WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS
OR MODIFICATIONS TO THIS AGREEMENT, THE FINANCING DOCUMENTS, OR TO ANY
OTHER DOCUMENTS OR AGREEMENTS RELATING TO THE NOTE. EACH OF BORROWER
AND THE COLLATERAL AGENT FURTHER WARRANTS AND REPRESENTS THAT EACH HAS
REVIEWED THIS WAIVER WITH ITS LEGAL COUNSEL, AND THAT EACH KNOWINGLY
AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION
WITH LEGAL COUNSEL. IN THE EVENT OF LITIGATION, THIS AGREEMENT MAY BE
FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.
(e) Borrower covenants, warrants and represents to the Collateral
Agent, for the benefit of Lenders, that all of Borrower's
representations and warranties contained in this Agreement are true at
this time, shall survive the execution and delivery of this Agreement
and shall remain true in all material respects until the Obligations
are fully performed, paid and satisfied, subject to such changes as
may not be prohibited hereby or do not constitute Events of Default
under this Agreement.
(f) All of the Obligations shall constitute one loan secured by
the security interest of the Collateral Agent for the benefit of
Lenders in the Collateral and by all other security interests,
mortgages, liens, claims and encumbrances now and from time to time
hereafter granted by Borrower to the Collateral Agent for the benefit
of Lenders. The Collateral Agent may, in its sole discretion, (i)
exchange, enforce, waive or release any such security or portion
thereof, (ii) apply such security and direct the order or manner of
sale thereof as the Collateral Agent may, from time to time,
determine, and (iii) settle, compromise, collect or otherwise
liquidate any such security in any manner following the occurrence of
any Event of Default without affecting or impairing its right to take
any other further action with respect to any security or any part
thereof.
(g) Borrower shall reimburse the Collateral Agent for all
reasonable attorneys' fees and for all costs, fees, expenses and
liabilities incurred by the Collateral Agent or for which the
Collateral Agent becomes obligated in connection with or arising out
of (i) the negotiation and preparation of this Agreement, any
amendment of this Agreement, and any agreements, documents and
instruments in any way relating hereto, (ii) the enforcement by the
Collateral Agent of any of its rights, on behalf of Lenders, under
this Agreement, (iii) any transaction contemplated by this Agreement,
(iv) any inspection and/or audit and/or verification of the Collateral
and/or Borrower and (v) meeting to discuss any Event of Default and
the course of action to be taken in connection therewith; the
foregoing to include, without limitation, all fees for the employment
of professionals, all lien search and title search fees, all filing
and recording fees and all travel expenses. All of the foregoing shall
be part of the Obligations, payable upon demand, and secured by the
Collateral.
(h) The Note Agreement and the terms and provisions thereof are
hereby incorporated in this Agreement in their entirety by this
reference. Any notice or notification required, permitted or
contemplated under this Agreement shall be provided in accordance with
the provisions of the Note Agreement.
(i) Borrower recognizes that, in the event Borrower fails to
perform, observe or discharge any of its obligations or liabilities
under this Agreement, any remedy of law may prove to be inadequate
relief to the Collateral Agent and Lenders; therefore, Borrower agrees
that, if the Collateral Agent so requests, the Collateral Agent, for
the benefit of Lenders, shall be entitled to temporary and permanent
injunctive relief in any such case without the necessity of proving
actual damages.
(j) Borrower hereby irrevocably authorizes and empowers any
attorney-at-law to appear for Borrower in any action upon or in
connection with this Agreement at any time after the Loans and/or
other Obligations become due, as this Agreement provided, in any court
in or of the State of Colorado or elsewhere, and waives the issuance
and service of process with respect thereto, and irrevocably
authorizes and empowers any such attorney-at-law to confess judgment
in favor of the Collateral Agent and Lenders against Borrower, the
amount due thereon or hereon, plus interest as this Agreement
provided, and all costs of collection, and waives and releases all
errors in said proceedings and judgments and all rights of appeal from
the judgment rendered. Borrower agrees and consents that the attorney
confessing judgment on behalf of Borrower may also be counsel to the
Collateral Agent, Lenders or any Affiliate of a Lender, waives any
conflict of interest which might otherwise arise, and consents to the
Collateral Agent paying such confessing attorney a reasonable legal
fee or allowing such attorney's reasonable fees to be paid from the
proceeds of collection of the Loans and/or Obligations or proceeds of
any Collateral, the Premises or any other security for the Loans and
the other Obligations.
(k) THIS AGREEMENT, TOGETHER WITH THE OTHER FINANCING DOCUMENTS,
CONSTITUTES A WRITTEN AGREEMENT AND REPRESENTS THE FINAL AGREEMENT
BETWEEN THE PARTIES, AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE
ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
(l) THE PARTIES TO THIS AGREEMENT HEREBY ACKNOWLEDGE AND AGREE
THAT THIS AGREEMENT CONTAINS INDEMNIFICATION OBLIGATIONS PURSUANT TO
SECTION 10(g) AND THE NOTE AGREEMENT.
11. Security Interest in favor of Bank. Simultaneously with the
execution and delivery of this Agreement, Borrower is granting to Vectra
Bank Colorado, National Association (the "Bank") a senior security interest
in certain collateral to secure the payment in full of certain obligations
of Borrower to the Bank. To the extent that any obligation of Borrower
pursuant to this Agreement is inconsistent with the obligations of Borrower
pursuant to the security interest in favor of the Bank, then the terms of
the security interest in favor of the Bank shall govern, pursuant to and to
the extent provided in the terms and conditions of the Intercreditor
Agreement between the Bank and Lenders dated as of the date of this
Agreement.
[Remainder of Page Intentionally Left Blank]
BORROWER:
ACT Teleconferencing Services, Inc.
By ____________________________________
Its ____________________________________
ACT VideoConferencing, Inc.
By ___________________________________
Its ___________________________________
ACT Proximity, Inc.
By ________________________________
Its ________________________________
ACT Research, Inc.
By ________________________________
Its ________________________________
Accepted at Denver, Colorado as of _________, 2003, by:
COLLATERAL AGENT, FOR THE BENEFIT OF LENDERS:
NewWest Mezzanine Fund LP
By Touchstone Capital Group LLLP,
General Partner
By:______________________________
Xxxxx Xxxxx, Managing General Partner
