THIS SERIES A-1
PREFERRED CONSENT AND EXCHANGE AGREEMENT (this
“Agreement”) is dated as of August 11, 2009, by and
among Glowpoint, Inc., a Delaware corporation (the
“Company”), and the holders of the Company’s
Series A-1 Convertible Preferred Stock set forth on Exhibit A
attached hereto (each a “Holder” and collectively the
“Holders”).
Preliminary
Statement
WHEREAS,
Section 3(a) of the Company’s Certificate of Designations,
Preferences and Rights of Series A-1 Preferred Stock (the
“Series A-1 Certificate of Designation”) requires the
affirmative vote or consent of the holders of at least two-third
(2/3rds) of the outstanding shares of Series A-1 convertible
preferred stock, par value $0.0001 (“Series A-1 Preferred
Stock”), in order to, among other things, (i) authorize,
create, issue or increase the authorized or issued amount of any
class of debt or equity securities, ranking pari passu or senior to
the Series A-1 Preferred Stock, with respect to the distribution of
assets on liquidation, dissolution or winding up; or (ii)
repurchase, redeem or pay dividends on, shares of common stock or
any other shares of the Company's stock;
WHEREAS, the
Company and the Holders desire to create a new Series A-2
convertible preferred stock, par value $0.0001 per share, stated
value $7,500 per share (“Series A-2 Preferred Stock”),
that (i) will rank senior to the Series A-1 Preferred Stock with
respect to the distribution of assets on liquidation, dissolution
or winding up and (ii) will be entitled to the payment of cash
dividends; and
WHEREAS, after the creation of the Series A-2
Preferred Stock and subject to the terms and conditions set forth
herein, the Company and the Holders desire to cancel and retire the
Series A-1 Preferred Stock and forfeit any and all rights
thereunder in exchange for shares of the Series A-2 Preferred
Stock. The Series A-2 Preferred Stock and the shares of
Common Stock issuable upon conversion of the Series A-2 Preferred
Stock are sometimes collectively referred to herein as the
“Securities”.
NOW, THEREFORE,
in consideration of the foregoing and for other good and valuable
consideration, the receipt and sufficiency of which are hereby
agreed and acknowledged, the parties hereby agree as
follows:
1. Creation of
Series A-2 Preferred Stock . The Holders,
representing more than two-third (2/3rds) of the outstanding shares
of Series A-1 Preferred Stock, hereby consent to the creation of
the Series A-2 Preferred Stock with the rights and preferences set
forth in the Certificate of Designation of the Relative Rights and
Preferences of the Series A-2 Convertible Preferred Stock in the
form attached hereto as Exhibit B (the “Certificate of
Designation”). The Holders approve the terms of
the Certificate of Designation in all respects and direct the
Company to file it with the Delaware Secretary of State.
(a) Upon the following
terms and subject to the conditions contained herein, the Holders
agree to deliver to the Company the Series A-1 Preferred Stock in
exchange for the Series A-2 Preferred Stock. In
consideration of and in express reliance upon the representations,
warranties, covenants, terms and conditions of this Agreement, the
delivered shares of Series A-1 Preferred Stock shall be exchanged
on a one-for-one basis into validly issued, fully paid and
non-assessable shares of Series A-2 Preferred Stock.
(b) The closing under
this Agreement (the “Closing”) shall take place at the
offices of Kramer Levin Naftalis & Frankel LLP, 1177 Avenue of
the Americas, New York, NY 10036 upon the satisfaction of each of
the conditions set forth in Sections 5 and 6 hereof (the
“Closing Date”).
(c) At the Closing,
the Holders shall deliver to the Company for cancellation the
shares of Series A-1 Preferred Stock, or an indemnification
undertaking with respect to such shares of Series A-1 Preferred
Stock in the event of the loss, theft or destruction of such shares
of Series A-1 Preferred Stock. At the Closing, the
Company shall issue to the Holders the Series A-2 Preferred Stock,
each in the amounts set forth on Exhibit A attached
hereto.
3.
Representations, Warranties and Covenants of the Holders
. Each of the Holders hereby makes the following
representations and warranties to the Company, and covenants for
the benefit of the Company, with respect solely to itself and not
with respect to any other Holder:
(a) If a Holder is an
entity, such Holder is a corporation, limited liability company or
partnership duly incorporated or organized, validly existing and in
good standing under the laws of the jurisdiction of its
incorporation or organization.
(b) This Agreement has
been duly authorized, validly executed and delivered by each Holder
and is a valid and binding agreement and obligation of each Holder
enforceable against such Holder in accordance with its terms,
subject to limitations on enforcement by general principles of
equity and by bankruptcy or other laws affecting the enforcement of
creditors’ rights generally, and each Holder has full power
and authority to execute and deliver the Agreement and the other
agreements and documents contemplated hereby and to perform its
obligations hereunder and thereunder.
(c) Each Holder
understands that the Securities are being offered and sold to it in
reliance on specific provisions of Federal and state securities
laws and that the Company is relying upon the truth and accuracy of
the representations, warranties, agreements, acknowledgments and
understandings of each Holder set forth herein for purposes of
qualifying for exemptions from registration under the Securities
Act of 1933, as amended (the “Securities Act”) and
applicable state securities laws.
(d) The execution,
delivery and performance of this Agreement by the Holder and the
consummation by the Holder of the transactions contemplated hereby
do not and will not (i) violate any provision of the Holder’s
charter or organizational documents, (ii) conflict with, or
constitute a default (or an event which with notice or lapse of
time or both would become a default) under, or give to others any
rights of termination, amendment, acceleration or cancellation of,
any agreement, mortgage, deed of trust, indenture, note, bond,
license, lease agreement, instrument or obligation to which the
Holder is a party or by which the Holder’s respective
properties or assets are bound, or (iii) result in a violation of
any federal, state, local or foreign statute, rule, regulation,
order, judgment or decree (including federal and state securities
laws and regulations) applicable to the Holder or by which any
property or asset of the Holder are bound or affected, except, for
such conflicts, defaults, terminations, amendments, acceleration,
cancellations and violations as would not, individually or in the
aggregate, materially and adversely affect the Holder’s
ability to perform its obligations under this Agreement.
(e) Each Holder is an
“accredited investor” as defined under Rule 501 of
Regulation D promulgated under the Securities Act, with sufficient
knowledge and experience in financial matters as to be capable of
evaluating the risks and merits of the transaction contemplated
hereby.
(f) Each Holder is and
will be acquiring the Securities for such Holder’s own
account, for investment purposes, and not with a view to any resale
or distribution in whole or in part, in violation of the Securities
Act or any applicable securities laws; provided ,
however , that by making the representations herein, such
Holder does not agree to hold the Securities for any minimum or
other specific term and reserves the right to dispose of the
Securities at any time in accordance with Federal and state
securities laws applicable to such disposition.
(g) The offer and sale
of the Securities is intended to be exempt from registration under
the Securities Act, by virtue of Section 3(a)(9) and/or 4(2)
thereof. Each Holder understands that the Securities
purchased hereunder are “restricted securities,” as
that term is defined in the Securities Act and the rules
thereunder, have not been registered under the Securities Act, and
that none of the Securities can be sold or transferred unless they
are first registered under the Securities Act and such state and
other securities laws as may be applicable or the Company receives
an opinion of counsel reasonably acceptable to the Company that an
exemption from registration under the Securities Act is available
(and then the Securities may be sold or transferred only in
compliance with such exemption and all applicable state and other
securities laws).
(h) Each Holder has
not employed any broker or finder or incurred any liability for any
brokerage or investment banking fees, commissions, finders’
structuring fees, financial advisory fees or other similar fees in
connection with any of the transactions contemplated by this
Agreement.
(i) Each Holder
acknowledges that the Securities were not offered to such Holder by
means of any form of general or public solicitation or general
advertising, or publicly disseminated advertisements or sales
literature, including (i) any advertisement, article, notice or
other communication published in any newspaper, magazine, or
similar media, or broadcast over television or radio, or (ii) any
seminar or meeting to which such Holder was invited by any of the
foregoing means of communications. Each Holder, in
making the decision to purchase the Securities, has relied upon
independent investigation made by it and the representations,
warranties and agreements set forth in this Agreement and the other
transaction documents and has not relied on any information or
representations made by third parties. Each Holder
acknowledges and agrees that it is fully satisfied with the terms
of (including, without limitation, the consideration to be received
by it in) the transaction contemplated herein.
(j) Each Holder owns
and holds, beneficially and of record, the entire right, title, and
interest in and to the shares of Series A-1 Preferred Stock set
forth opposite such Holder’s name on Exhibit A, free and
clear of all rights and Encumbrances (as defined
below). Each Holder has full power and authority
to transfer and dispose of the shares of Series A-1 Preferred Stock
set forth opposite such Holder’s name on Exhibit A, free and
clear of any right or Encumbrance other than restrictions under the
Securities Act and applicable state securities
laws. Other than the transactions contemplated by this
Agreement, there is no outstanding vote, plan, pending proposal, or
other right of any person to acquire all or any of the shares of
Series A-1 Preferred Stock set forth opposite such Holder’s
name on Exhibit A. “Encumbrances” shall mean
any security or other property interest or right, claim, lien,
pledge, option, charge, security interest, contingent or
conditional sale, or other title claim or retention agreement,
interest or other right or claim of third parties, whether
perfected or not perfected, voluntarily incurred or arising by
operation of law, and including any agreement (other than this
Agreement) to grant or submit to any of the foregoing in the
future.
(k) Independent
Investment . Except as may be disclosed in any
filings by a Holder with the Securities and Exchange Commission,
Holder has not agreed to act with any other holder of any Company
securities for the purpose of acquiring, holding, voting or
disposing of the Securities purchased hereunder for purposes of
Section 13(d) under the Securities and Exchange Act of 1934, as
amended, and each Holder is acting independently with respect to
its investment in the Securities. The decision of each
Holder to purchase Securities pursuant to this Agreement has been
made by such Holder independently of any other Holder and
independently of any information, materials, statements or opinions
as to the business, affairs, operations, assets, properties,
liabilities, results of operations, condition (financial or
otherwise) or prospects of the Company or of its subsidiaries which
may have been made or given by any other Holder or by any agent or
employee of any other Holder, and no Holder or any of its agents or
employees shall have any liability to any Holder (or any other
person) relating to or arising from any such information,
materials, statements or opinions.
4.
Representations, Warranties and Covenants of the Company
. The Company represents and warrants to each Holder,
and covenants for the benefit of each Holder, as
follows:
(a) The Company has
been duly incorporated and is validly existing and in good standing
under the laws of the state of Delaware, with full corporate power
and authority to own, lease and operate its properties and to
conduct its business as currently conducted, and is duly registered
and qualified to conduct its business and is in good standing in
each jurisdiction or place where the nature of its properties or
the conduct of its business requires such registration or
qualification, except where the failure to register or qualify
would not have a Material Adverse Effect. For purposes
of this Agreement, “Material Adverse Effect” shall mean
any material adverse effect on the business, operations,
properties, prospects, or financial condition of the Company and
its subsidiaries and/or any condition, circumstance, or situation
that would prohibit or otherwise materially interfere with the
ability of the Company to perform any of its obligations under this
Agreement in any material respect.
(b) The Securities
have been duly authorized by all necessary corporate action and,
when paid for or issued in accordance with the terms hereof, the
Securities shall be validly issued and outstanding, fully paid and
nonassessable, free and clear of all liens, encumbrances and rights
of refusal of any kind.
(c) This Agreement has
been duly authorized, validly executed and delivered on behalf of
the Company and is a valid and binding agreement and obligation of
the Company enforceable against the Company in accordance with its
terms, subject to limitations on enforcement by general principles
of equity and by bankruptcy or other laws affecting the enforcement
of creditors’ rights generally, and the Company has full
power and authority to execute and deliver the Agreement and the
other agreements and documents contemplated hereby and to perform
its obligations hereunder and thereunder.
(d) The execution and
delivery of this Agreement and the consummation of the transactions
contemplated by this Agreement by the Company, will not (i)
conflict with or result in a breach of or a default under any of
the terms or provisions of, (A) the Company’s certificate of
incorporation or by-laws, or (B) of any material provision of any
indenture, mortgage, deed of trust or other material agreement or
instrument to which the Company is a party or by which it or any of
its material properties or assets is bound, (ii) result in a
violation of any provision of any la
