Exhibit
10.4
NOTE EXCHANGE AGREEMENT
THIS NOTE EXCHANGE AGREEMENT (this
“Agreement”), dated as of March 16, 2009, 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 (the
“Notes”) issued by the Company with an aggregate
principal value of approximately $1.1 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, 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 under $1.042 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-1
Convertible Preferred Stock Purchase Agreement, dated November 25,
2008 (the “Series A-1 Stock Purchase Agreement”);
and
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
$27,302 of principal) 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-1 Stock Purchase
Agreement;
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-1
Convertible Preferred Stock, par value $0.0001 per share, stated
value $7,500 per share (the “Series A-1 Preferred
Stock”). The Series A-1 Preferred Stock and the shares
of Common Stock issuable upon conversion of the Series A-1
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-1 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-1 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-1 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)
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)
Holder is an “accredited
investor” as defined under Rule 501 of Regulation D
promulgated under the Securities Act.
(f)
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.
(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. 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)
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)
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.
(j)
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.
(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.
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 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 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
