EXHIBIT
10.1
NOTE EXCHANGE
AGREEMENT
THIS NOTE EXCHANGE
AGREEMENT (this “Agreement”), dated December 31, 2008,
by and among Glowpoint, Inc., a Delaware corporation (the
“Company”), and the holder of the Company’s
Senior Secured Convertible Promissory Notes whose signature appears
on the signature page attached hereto (the
“Holder”).
Preliminary
Statement
WHEREAS, the Holder
currently holds Senior Secured Convertible Promissory Notes issued
by the Company with an aggregate principal value of approximately
$4.2 million, which are convertible into shares of the
Company’s common stock, par value $0.0001 per share
(“Common Stock”), at a conversion price of $0.50 per
share;
WHEREAS, the Holder
will retain approximately $1 million of its Senior Secured
Convertible Promissory Notes and exchange approximately $3.3
million of the Senior Secured Convertible Promissory Notes (the
“Notes”) pursuant to this Agreement;
WHEREAS, in
consideration for the issuance of warrants to acquire a number of
shares of Common Stock equal to the product of (i) the result of
(x) 1.875 times the outstanding principal balance plus any accrued
but unpaid interest under $1.5 million of the Notes divided by (y)
0.75, times (ii) 0.2, substantially in the form of the Series A-3
warrants issued in connection with the Series A Convertible
Preferred Stock Purchase Agreement, dated November 25, 2008 (the
“Series A Stock Purchase Agreement”);
WHEREAS, in
consideration for the additional issuance of warrants (together
with the warrants issued pursuant to the immediately preceding
recital, the “Amendment Warrants”) to acquire a number
of shares of Common Stock equal to the product of (i) the result of
(x) 1.875 times the remaining outstanding principal balance (i.e.,
approximately $1.7 million of principal) plus any accrued but
unpaid interest under the Notes divided by (y) 0.75, times (ii)
0.5, substantially in the form of the Series A-3 warrants issued in
connection with the Series A Stock Purchase Agreement;
WHEREAS, in
consideration for the Company agreeing to exchange and consolidate,
at the election of any holder that is exchanging Notes, all
warrants previously issued to such holder into a single warrant per
warrantholder in substantially the form of Series A-3 warrant
issued in connection with the Series A Stock Purchase Agreement;
and
WHEREAS, subject to the
terms and conditions set forth herein, the Company and the Holder
desire to cancel and retire the Notes and forfeit any and all
rights thereunder in exchange for shares of newly-created Series A
Convertible Preferred Stock, par value $0.0001 per share, stated
value $7,500 per share (the “Series A Preferred
Stock”). The Series A Preferred Stock and the shares of
Common Stock issuable upon conversion of the Series A 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.
Securities
Exchange .
(a)
Upon the following
terms and subject to the conditions contained herein, the Holder
agrees to deliver to the Company the Notes in exchange for the
Series A Preferred Stock. In consideration of and in express
reliance upon the representations, warranties, covenants, terms and
conditions of this Agreement, the delivered Notes shall be
exchanged into that number of validly issued, fully paid and
non-assessable shares of Series A Preferred Stock as is determined
by dividing ( x ) the principal amount of such Notes
together with all accrued and unpaid interest through and including
the Closing Date (as defined below) by ( y )
$4,000.
(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 4 and 5 hereof (the
“Closing Date”).
(c)
At the Closing, the
Holder shall deliver to the Company for cancellation the Notes, or
an indemnification undertaking with respect to such Notes in the
event of the loss, theft or destruction of such Notes. At the
Closing, the Company shall issue to the Holder the Series A
Preferred Stock, each in the amounts set forth on Exhibit A
attached hereto.
2.
Representations,
Warranties and Covenants of the Holder . The Holder hereby makes the
following representations and warranties to the Company, and
covenants for the benefit of the Company:
(a)
The Holder is 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 the Holder and
is a valid and binding agreement and obligation of Holder
enforceable against it 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 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)
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 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)
Holder is an
“accredited investor” as defined under Rule 501 of
Regulation D promulgated under the Securities Act.
(e)
Holder is and will be
acquiring the Securities for 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, 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.
(f)
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.
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).
(g)
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.
(h)
Holder acknowledges
that the Securities were not offered to 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 Holder was invited by any of the foregoing means of
communications. 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.
(i)
Holder owns and holds,
beneficially and of record, the entire right, title, and interest
in and to the Notes (including, without limitation, accrued and
unpaid interest thereon) set forth opposite Holder’s name on
Exhibit A, free and clear of all rights and Encumbrances (as
defined below). Holder has full power and authority to
transfer and dispose of the Notes (including, without limitation,
accrued and unpaid interest thereon) set forth opposite
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 Notes set forth opposite 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.
3.
Representations,
Warranties and Covenants of the Company . The Company represents and
warrants to Holder, and covenants for the benefit of 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 the 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 law, statute, rule, regulation,
or any existing applicable decree, judgment or order by any court,
federal or state regulatory body, administrative agency, or other
governmental body having jurisdiction over the Company, or any of
its material properties or assets or (iii) result in the creation
or imposition of any material lien, charge or encumbrance upon any
material property or assets of the Company or any of its
subsidiaries pursuant to the terms of any agreement or instrument
to which any of them is a party or by which any of them may be
bound or to which any of their property or any of them is subject
except in the case of clauses (i)(B), (ii) or (iii) for any such
conflicts, breaches, or defaults or any liens, charges, or
encumbrances which would not have a Material Adverse
Effect.
(e)
The delivery and
issuance of the Securities in accordance with the terms of and in
reliance on the accuracy of Holder’s representations and
warranties set forth in this Agreement will be exempt from the
registration requirements of the Securities Act.
(f)
No consent, approval or
authorization of or designation, declaration or filing
wi
