The disclosures contained in Item 3.02 below are incorporated herein by reference.
On August 3, 2011, in connection with efforts to restructure its capitalization, Glowpoint, Inc.(the "Company") consummated a number of transactions.
Pursuant to a Series B Preferred Consent and Exchange Agreement (the "Series B Exchange Agreement"), dated August 3, 2011, entered into with the holder of the Series B Preferred Stock, par value $0.0001 (the "Series B Preferred Stock"), the Company issued 100 shares of a new Series B-1 Preferred Stock, par value $0.0001 per share (the "Series B-1 Preferred Stock"), in exchange for cancelling all of its issued and outstanding Series B Preferred Stock. As a result of the exchange, there are currently 100 shares of Series B-1 Preferred Stock outstanding and no shares of Series B Preferred Stock outstanding. This description of the Series B Exchange Agreement does not purport to be complete and is qualified in its entirety by reference to the Series B Exchange Agreement, which is filed as an exhibit to this report and is incorporated herein by reference.
Each share of Series B-1 Preferred Stock has a stated value of $100,000 per share (the "Stated Value") and a liquidation preference equal to the Stated Value together with all accrued and unpaid dividends. The Series B-1 Preferred Stock is not convertible into common stock. The Series B-1 Preferred Stock is senior to all other classes of equity and, commencing on January 1, 2013, is entitled to cumulative dividends at a rate of 4% per annum, payable quarterly, based on the Stated Value. Commencing January 1, 2014, the cumulative dividend rate increases to 6% per annum, payable quarterly, based on the Stated Value. The Company may, at its option at any time, redeem all or a portion of the outstanding shares of Series B-1 Preferred Stock by paying the Stated Value together with all accrued and unpaid dividends.
The Series B-1 Preferred Stock was issued in exchange for the Series B Preferred Stock pursuant to the provisions of Section 3(a)(9) of the Securities Act of 1933, as amended (the "Securities Act").
The Company and the holders of the new Series B-1 Preferred Stock also entered into a Stockholders Agreement, dated August 3, 2011 (the "Stockholders Agreement"), which provides for a mandatory redemption of the Series B-1 Preferred Stock upon the completion of a "public offering" (as such term is defined in the Stockholders Agreement) that satisfies certain conditions. This description of the Stockholders Agreement does not purport to be complete and is qualified in its entirety by reference to the Stockholders Agreement, which is filed as an exhibit to this report and is incorporated herein by reference.
On August 3, 2011, certain holders of the Company's Series A-2 Preferred Stock, par value $0.0001 (the "Series A-2 Preferred Stock"), converted 965.47 shares of Series A-2 Preferred Stock, in accordance with their terms, at a conversion rate of 2,500 shares of Common Stock for each share of Series A-2 Preferred Stock. As a result of such conversion, the Company issued 2,413,675 shares of Common Stock and 93.85 shares of Series A-2 Preferred Stock remain outstanding. The 2,413,675 shares of Common Stock were issued upon conversion of the Series A Preferred Stock pursuant to the provisions of Section 3(a)(9) of the Securities Act.
As a result of the transactions mentioned in this Form 8-K, the Company currently has 25,113,701 shares of Common Stock issued and outstanding.
In connection with the Series B Exchange Agreement, on August 3, 2011, the Company amended its Amended and Restated Articles of Incorporation by filing a Certificate of Designations, Preferences and Rights of Perpetual Series B-1 Preferred Stock with the Secretary of State of the State of Delaware to create a new series of preferred stock, the Series B-1 Preferred Stock. The terms of the Series B-1 Preferred Stock are described under Item 3.02 herein and are incorporated herein by reference.
| Glowpoint, Inc. |
| By: | /s/ John R. McGovern |
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| Name: John R. McGovern | |
| Title: Chief Financial Officer |
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Exhibit No.
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Description
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EX-3.1
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Certificate of Designations, Preferences and Rights of Perpetual Series B-1 Preferred Stock.
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EX-10.1
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Series B Preferred Consent and Exchange Agreement, by and among the Company and certain holders of Series B Preferred Stock, dated August 3, 2011.
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EX-10.2
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Stockholders Agreement, by and among the Company and holders of Series B-1 Preferred Stock, dated August 3, 2011.
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Exhibit 3.1
CERTIFICATE OF DESIGNATIONS, PREFERENCES AND RIGHTS OF
PERPETUAL SERIES B-1 PREFERRED STOCK OF
GLOWPOINT, INC.
The undersigned, the President of Glowpoint, Inc., a Delaware corporation (the "Corporation"), in accordance with the provisions of the Delaware General Corporation Law, does hereby certify that, pursuant to the authority conferred upon the Board of Directors by the Amended and Restated Certificate of Incorporation of the Corporation, the following resolution creating a series of Perpetual Series B-1 Preferred Stock, was duly adopted on August 2, 2011.
RESOLVED, that pursuant to the authority expressly granted to and vested in the Board of Directors of the Corporation by provisions of the Amended and Restated Certificate of Incorporation of the Corporation (the "Certificate of Incorporation"), there hereby is created out of the shares of Preferred Stock, par value $0.0001 per share, of the Corporation authorized in Article IV of the Certificate of Incorporation (the "Preferred Stock"), a series of Preferred Stock of the Corporation, to be named "Perpetual Series B-1 Preferred Stock,” consisting of One Hundred (100) shares, which series shall have the following designations, powers, preferences and relative and other special rights and the following qualifications, limitations and restrictions:
1.
Designation and Rank . The designation of such series of the Preferred Stock shall be the Perpetual Series B-1 Preferred Stock, par value $0.0001 per share (the “Series B-1 Preferred Stock”). The maximum number of shares of Series B-1 Preferred Stock shall be One Hundred (100) shares. The Series B-1 Preferred Stock shall rank senior to the Series A-2 Convertible Preferred Stock, par value $0.0001 per share (the “Series A-2 Preferred Stock”), the Series D Convertible Preferred Stock, par value $0.0001 per share (the “Series D Preferred Stock”) and the common stock, par value $0.0001 per share (the "Common Stock"), and to all other classes and series of equity securities of the Company which by their terms rank junior to the Series B-1 Preferred Stock ("Junior Stock"). The Corporation shall not create any series of equity securities that by their terms rank senior or pari passu to the Series B-1 Preferred Stock, without the affirmative vote or consent of the holders of at least ninety (90%) percent of the shares of the issued and outstanding Series B-1 Preferred Stock.
2.
Dividends .
(a)
Rate . Holders of Series B-1 Preferred Stock shall be entitled to receive, on each share of Series B-1 Preferred Stock, out of funds legally available for the payment of dividends under Delaware law, cumulative cash dividends with respect to each Dividend Period (as defined below) at the “Applicable Per Annum Rate” (as defined below) on (i) the amount of $100,000 per share of Series B-1 Preferred Stock and (ii) the amount of accrued and unpaid dividends on such share of Series B-1 Preferred Stock, if any (giving effect to (A) any dividends paid through the Dividend Payment Date (as defined below) that begins such Dividend Period (other than the initial Dividend Period) and (B) any dividends (including dividends thereon at a Applicable Per Annum Rate to the date of payment) paid during such Dividend Period). The “ Applicable Per Annum Rate ” is (i) four percent (4%) per annum commencing on January 1, 2013 and (ii) six percent (6%) per annum commencing on January 1, 2014. Such dividends shall begin to accrue and be cumulative from the period beginning on January 1, 2013 (“Dividend Accrual Date”), shall compound on each Dividend Payment Date (i.e., no dividends shall accrue on other dividends unless and until the first Dividend Payment Date for such other dividends has passed without such other dividends having been paid on such date) and shall accrue and be payable in arrears (as provided below in this Section 2(a)), but only when, as and if declared by the Board of Directors on or before the tenth business day after the end of each March 31, June 30, September 30, and December 31 quarterly period (each, a “Dividend Payment Date”), commencing on January 1, 2013; provided that if any such Dividend Payment Date would otherwise occur on a day that is not a Business Day, such Dividend Payment Date shall instead be (and any dividend payable on Series B-1 Preferred Stock on such Dividend Payment Date shall instead be payable on) the immediately succeeding business day. Dividends payable on the Series B-1 Preferred Stock in respect of any Dividend Period shall be computed on the basis of a 360-day year consisting of twelve 30-day months. The amount of dividends payable on the Series B-1 Preferred Stock on any date prior to the end of a Dividend Period, and for the initial Dividend Period, shall be computed on the basis of a 360-day year consisting of twelve 30-day months, and actual days elapsed over a 30-day month. No dividends shall accrue or be payable on the Series B-1 Preferred Stock from the date of issuance through and including December 31, 2012.
Dividends that are payable on Series B-1 Preferred Stock on any Dividend Payment Date will be payable to holders of record of Series B-1 Preferred Stock as they appear on the stock register of the Corporation on the applicable record date, which shall be the 15th calendar day before such Dividend Payment Date (as originally scheduled) or such other record date fixed by the Board of Directors that is not more than 60 nor less than 10 days prior to such Dividend Payment Date (each, a “Dividend Record Date”). Any such day that is a Dividend Record Date shall be a Dividend Record Date whether or not such day is a Business Day.
Each dividend period (a “Dividend Period”) shall commence on and include a Dividend Payment Date (other than the initial Dividend Period, which shall commence on and include January 1, 2013) and shall end on and include the calendar day next preceding the next Dividend Payment Date. Dividends payable in respect of a Dividend Period shall be payable in arrears on the first Dividend Payment Date after such Dividend Period.
Holders of Series B-1 Preferred Stock shall not be entitled to any dividends, whether payable in cash, securities or other property, other than dividends (if any) declared and payable on the Series B-1 Preferred Stock as specified in this Section 2 (subject to the other provisions of this Certificate of Designations), out of funds legally available for the payment of dividends under Delaware law. In the event funds are not legally available for the payment of dividends under Delaware law, dividends shall continue to accrue until such time as such funds are available.
(b)
Priority of Dividends . So long as any share of Series B-1 Preferred Stock remains outstanding, no dividend shall be declared or paid on the Series A-2 Preferred Stock and Common Stock or any other shares of Junior Stock (other than a dividend payable solely in Junior Stock), and no Series A-2 Preferred Stock, Common Stock or Junior Stock shall be purchased, redeemed or otherwise acquired for consideration by the Corporation, directly or indirectly (other than as a result of a reclassification of Junior Stock for or into other Junior Stock, or the exchange or conversion of one share of Junior Stock for or into another share of Junior Stock during a Dividend Period, unless all accrued and unpaid dividends for all past Dividend Periods, including the latest completed Dividend Period (including, if applicable as provided in Section 2(a) above, dividends on such amount), on all outstanding shares of Series B-1 Preferred Stock have been declared and paid in full (or declared and a sum sufficient for the payment thereof has been set aside for the benefit of the holders of shares of Series B-1 Preferred Stock on the applicable record date).
When dividends are not paid (or declared and a sum sufficient for payment thereof set aside for the benefit of the holders thereof on the applicable record date) on any Dividend Payment Date in full upon the Series B-1 Preferred Stock, all dividends declared on the Series B-1 Preferred Stock shall be declared pro rata so that the respective amounts of such dividends declared shall bear the same ratio to each other as all accrued and unpaid dividends per share on the Series B-1 Preferred Stock (including, if applicable as provided in Section 2(a) above, dividends on such amount) bear to each other.
3.
Voting Rights .
(a)
Class Voting Rights . The Series B-1 Preferred Stock shall have the following class voting rights. So long as any shares of the Series B-1 Preferred Stock remain outstanding, the Corporation shall not, without the affirmative vote or consent of the holders of at least ninety (90%) percent of the shares of the Series B-1 Preferred Stock outstanding at the time, given in person or by proxy, either in writing or at a meeting, in which the holders of the Series B-1 Preferred Stock vote separately as a class: (i) amend, alter or repeal the provisions of the Series B-1 Preferred Stock so as to adversely affect any right, preference, privilege or voting power of the Series B-1 Preferred Stock; (ii) effect any distribution with respect to Junior Stock; or (iii) authorize or create, or increase the authorized amount of, any shares of any class or series of capital stock of the Corporation ranking senior or pari-passu to the Series B-1 Preferred Stock with respect to either or both the payment of dividends and/or the distribution of assets on any liquidation, dissolution or winding up of the Corporation.
(b)
General Voti
4.
Liquidation Preference .
(a)
In the event of any liquidation, dissolution or winding up of the affairs of the Corporation, whether voluntary or involuntary, holders of Series B-1 Preferred Stock shall be entitled to receive for each share of Series B-1 Preferred Stock, out of the assets of the Corporation or proceeds thereof (whether capital or surplus) available for distribution to stockholders of the Corporation, and after satisfaction of all liabilities and obligations to creditors of the Corporation, before any distribution of such assets or proceeds is made to or set aside for the holders of Series A-2 Preferred Stock or Common Stock and any other stock of the Corporation ranking junior to the Series B-1 Preferred Stock as to such distribution, payment in full in an amount equal to the sum of (i) $100,000 per share and (ii) the accrued and unpaid dividends thereon (including, if applicable as provided in Section 2(a) above, dividends on such amount), whether or not declared, to the date of payment.
(b)
If in any distribution described in Section 4(a) above the assets of the Corporation or proceeds thereof are not sufficient to pay the Liquidation Preferences (as defined below) in full to all holders of Series B-1 Preferred Stock and all holders of any stock of the Corporation ranking equally with the Series B-1 Preferred Stock as to such distribution, the amounts paid to the holders of Series B-1 Preferred Stock and to the holders of all such other stock shall be paid pro rata in accordance with the respective aggregate Liquidation Preferences of the holders of Series B-1 Preferred Stock and the holders of all such other stock. In any such distribution, the “Liquidation Preference” of any holder of stock of the Corporation shall mean the amount otherwise payable to such holder in such distribution (assuming no limitation on the assets of the Corporation available for such distribution), including an amount equal to any declared but unpaid dividends (and, in the case of any holder of stock, including the Series B-1 Preferred Stock, on which dividends accrue on a cumulative basis, an amount equal to any accrued and unpaid dividends (including, if applicable, dividends on such amount), whether or not declared, as applicable), provided that the Liquidation Preference for any share of Series B-1 Preferred Stock shall be determined in accordance with Section 4(a) above.
(c)
If the Liquidation Preference has been paid in full to all holders of Series B-1 Preferred Stock and all holders of any stock of the Corporation ranking equally with the Series B-1 Preferred Stock as to such distribution, the holders of other stock of the Corporation shall be entitled to receive all remaining assets of the Corporation (or proceeds thereof) according to their respective rights and preferences.
(d)
For purposes of this Section 4, the merger or consolidation of the Corporation with any other corporation or other entity, including a merger or consolidation in which the holders of Series B-1 Preferred Stock receive cash, securities or other property for their shares, or the sale, lease or exchange (for cash, securities or other property) of all or substantially all of the assets of the Corporation, shall not constitute a liquidation, dissolution or winding up of the Corporation.
5.
Conversion . The holder of Series B-1 Preferred Stock shall have no right to exchange or convert such shares into any other securities without the written approval or consent of the Corporation, and the affirmative vote or consent of the holders of at least ninety (90%) percent of the shares of the issued and outstanding Series B-1 Preferred Stock.
6.
Redemption Rights .
(a)
Optional Redemption . The Corporation, at its option, may redeem, in whole at any time or in part from time to time, the shares of Series B-1 Preferred Stock at the time outstanding, upon notice given as provided in Section 6(c) below, at a redemption price equal to the sum of (i) $100,000 per share and (ii) the accrued and unpaid dividends thereon (including, if applicable as provided in Section 2(a) above, dividends on such amount), whether or not declared, to the redemption date, provided that the minimum number of shares of Series B-1 Preferred Stock redeemable at any time is the lesser of (i) one share of Series B-1 Preferred Stock and (ii) the number of shares of Series B-1 Preferred Stock outstanding. The redemption price for any shares of Series B-1 Preferred Stock shall be payable on the redemption date to the holder of such shares against surrender of the certificate(s) evidencing such shares to the Corporation or its agent. Any declared but unpaid dividends payable on a redemption date that occurs subsequent to the Dividend Record Date for a Dividend Period shall not be paid to the holder entitled to receive the redemption price on the redemption date, but rather shall be paid to the holder of record of the redeemed shares on such Dividend Record Date relating to the Dividend Payment Date as provided in Section 2 above.
(b)
No Sinking Fund . The Series B-1 Preferred Stock will not be subject to any mandatory redemption, sinking fund or other similar provisions. Holders of Series B-1 Preferred Stock will have no right to require redemption of any shares of Series B-1 Preferred Stock; provided , however , in the event of any liquidation, dissolution or winding up of the affairs of the Corporation, whether voluntary or involuntary, holders of Series B-1 Preferred Stock shall be entitled to receive for each share of Series B-1 Preferred Stock, out of the assets of the Corporation or proceeds thereof (whether capital or surplus) available for distribution to stockholders of the Corporation, and after satisfaction of all, liabilities and obligations to creditors of the Corporation, before any distribution of such assets or proceeds is made to or set aside for the holders of Series A-2 Preferred Stock or Common Stock and any other stock of the Corporation ranking junior to the Series B-1 Preferred Stock as to such distribution, payment in full in an amount equal to the sum of (i) $100,000 per share and (ii) the accrued and unpaid dividends thereon (including, if applicable as provided in Section 2(a) above, dividends on such amount), whether or not declared, to the date of payment.
(c)
Notice of Redemption . Notice of every redemption of shares of Series B-1 Preferred Stock shall be given by first class mail, postage prepaid, addressed to the holders of record of the shares to be redeemed at their respective last addresses appearing on the books of the Corporation. Such mailing shall be at least 30 days and not more than 60 days before the date fixed for redemption. Any notice mailed as provided in this Subsection 6(c) shall be conclusively presumed to have been duly given, whether or not the holder receives such notice, but failure duly to give such notice by mail, or any defect in such notice or in the mailing thereof, to any holder of shares of Series B-1 Preferred Stock designated for redemption shall not affect the validity of the proceedings for the redemption of any other shares of Series B-1 Preferred Stock. Each notice of redemption given to a holder shall state: (1) the redemption date; (2) the number of shares of Series B-1 Preferred Stock to be redeemed and, if less than all the shares held by such holder are to be redeemed, the number of such shares to be redeemed from such holder; (3) the redemption price; and (4) the place or places where certificates for such shares are to be surrendered for payment of the redemption price.
(d)
Partial Redemption . In case of any redemption of part of the shares of Series B-1 Preferred Stock at the time outstanding, the shares to be redeemed shall be selected either pro rata or in such other manner as the Corporation may determine to be fair and equitable. Subject to the provisions hereof, the Corporation shall have full power and authority to prescribe the terms and conditions upon which shares of Series B-1 Preferred Stock shall be redeemed from time to time. If fewer than all the shares represented by any certificate are redeemed, a new certificate shall be issued representing the unredeemed shares without charge to the holder thereof.
(e)
Effectiveness of Redemption . If notice of redemption has been duly given and if on or before the redemption date specified in the notice all funds necessary for the redemption have been paid by the Corporation, then, notwithstanding that any certificate for any share so called for redemption has not been surrendered for cancellation, on and after the redemption date, dividends shall cease to accrue on all shares so called for redemption, all shares so called for redemption shall no longer be deemed outstanding and all rights with respect to such shares shall forthwith on such redemption date cease and terminate, except only the right of the holders thereof to receive the amount payable on such redemption without interest.
7.
Vote to Change the Terms of or Issue Preferred Stock or Incur Indebtedness . The affirmative vote at a meeting duly called for such purpose, or the written consent without a meeting, of the holders of not less than ninety (90%) percent of the issued and outstanding shares of Series B-1 Preferred Stock, shall be required for (i) any change to this Certificate of Designation or the Corporation’s Certificate of Incorporation which would amend, alter, change or repeal any of the powers, designations, preferences and rights of the Series B-1 Preferred Stock; or (ii) the incurrence by the Corporation of any indebtedness, other than normal course trade payables and other than a commercial lending facility of up to Twenty Million ($20,000,000) Dollars.
8.
Lost or Stolen Certificates . Upon receipt by the Corporation of evidence satisfactory to the Corporation of the loss, theft, destruction or mutilation of any Preferred Stock certificates representing the shares of Series B-1 Preferred Stock, and, in the case of loss, theft or destruction, of any indemnification undertaking by the holder to the Corporation and, in the case of mutilation, upon surrender and cancellation of the Preferred Stock certificate(s), the Corporation shall execute and deliver new Preferred Stock certificate(s) of like tenor and date.
9.
Remedies, Characterizations, Other Obligations, Breaches and Injunctive Relief . The remedies provided in this Certificate of Designation shall be cumulative and in addition to all other remedies available under this Certificate of Designation, at law or in equity (including a decree of specific performance and/or other injunctive relief), no remedy contained herein shall be deemed a waiver of compliance with the provisions giving rise to such remedy and nothing herein shall limit a holder’s right to pursue actual damages for any failure by the Corporation to comply with the terms of this Certificate of Designation. The Corporation acknowledges that a breach by it of its obligations hereunder will cause irreparable harm to the holders of the Series B-1 Preferred Stock and that the remedy at law for any such breach may be inadequate. The Corporation therefore agrees that, in the event of any such breach or threatened breach, the holders of the Series B-1 Preferred Stock shall be entitled, in addition to all other available remedies, to an injunction restraining any breach, without the necessity of showing economic loss and without any bond or other security being required.
10.
Specific Shall Not Limit General; Construction . No specific provision contained in this Certificate of Designation shall limit or modify any more general provision contained herein.
11.
Failure or Indulgence Not Waiver . No failure or delay on the part of a holder of Series B-1 Preferred Stock in the exercise of any power, right or privilege hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such power, right or privilege preclude other or further exercise thereof or of any other right, power or privilege.
IN WITNESS WHEREOF, the undersigned has executed and subscribed this Certificate of Designations, Preferences and Rights of Perpetual Series B-1 Preferred Stock and does affirm the foregoing as true this 3 rd day of August, 2011.
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GLOWPOINT, INC. |
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By: _____________________________ |
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Joseph Laezza, President |
1
Exhibit 10.1
SERIES B PREFERRED CONSENT AND EXCHANGE AGREEMENT
THIS SERIES B PREFERRED CONSENT AND EXCHANGE AGREEMENT (this “Agreement”) is dated as of August 3, 2011, by and among Glowpoint, Inc., a Delaware corporation (the “Company”), and the holders of the Company’s Perpetual Series B 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 B Preferred Stock (the “Series B Certificate of Designation”) requires the affirmative vote or consent of the holders of at least two-thirds (2/3) of the outstanding shares of Perpetual Series B Preferred Stock, par value $0.0001 (“Series B 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 B 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 B-1 perpetual preferred stock, par value $0.0001 per share, stated value $100,000 per share (“Series B-1 Preferred Stock”), that (i) will rank senior to the Series B 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 B-1 Preferred Stock and subject to the terms and conditions set forth herein, the Company and the Holders desire to cancel and retire the Series B Preferred Stock and forfeit any and all rights thereunder in exchange for shares of the Series B-1 Preferred Stock. The Series B-1 Preferred Stock is sometimes 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 B-1 Preferred Stock . The Holders, representing more than two-thirds (2/3) of the outstanding shares of Series B Preferred Stock, hereby consent to the creation of the Series B-1 Preferred Stock with the rights and preferences set forth in the Certificate of Designation of the Relative Rights and Preferences of the Perpetual Series B-1 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.
2.
Securities Exchange .
(a)
Upon the following terms and subject to the conditions contained herein, the Holders agree to deliver to the Company the Series B Preferred Stock in exchange for the Series B-1 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 B Preferred Stock shall be exchanged on a one-for-one basis into validly issued, fully paid and non-assessable shares of Series B-1 Preferred Stock.
(b)
The closing under this Agreement (the “Closing”) shall take place at the Company’s offices 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 B Preferred Stock, or an indemnification undertaking with respect to such shares of Series B Preferred Stock in the event of the loss, theft or destruction of such shares of Series B Preferred Stock. At the Closing, the Company shall issue to the Holders the Series B-1 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 B 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 B 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 B 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 law, statute, rule, regulation, or any existing applicable decree (including federal and state securities laws and regulations), 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)(except with respect to federal and state securities laws) 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 each Holder’s representations and warranties set forth in this Agreement will be exempt from the registration requirements of the Securities Act.
(f)
Except for the filing of the Certificate of Designation or any filings under federal or state securities laws required in connection with the transactions contemplated by this Agreement, no consent, approval or authorization of or designation, declaration or filing with any governmental authority on the part of the Company is required in connection with the valid execution and delivery of this Agreement or the offer, sale or issuance of the Securities or the consummation of the transactions contemplated by this Agreement.
(g)
The Company has complied and will comply with all applicable federal and state securities laws in connection with the offer, issuance and delivery of the Securities hereunder. Neither the Company nor anyone acting on its behalf, directly or indirectly, has or will sell, offer to sell or solicit offers to buy any of the Securities, or similar securities to, or solicit offers with respect thereto from, or enter into any preliminary conversations or negotiations relating thereto with, any person, or has taken or will take any action so as to bring the issuance and sale of any of the Securities under the registration provisions of the Securities Act and applicable state securities laws. Neither the Company nor any of its affiliates, nor any person acting on its or their behalf, has engaged in any form of general solicitation or general advertising (within the meaning of Regulation D under the Securities Act) in connection with the offer or sale of any of the Securities.
(h)
The Company represents that it has not paid, and shall not pay, any commissions or other remuneration, directly or indirectly, to any Holder or to any third party for the solicitation of the exchange of the Series B Preferred Stock pursuant to this Agreement.
(i)
The Company covenants and agrees that promptly following the Closing Date, all shares of Series B Preferred Stock that are exchanged for Series B-1 Preferred Stock pursuant to the terms set forth herein will be cancelled and retired by the Company.
(j)
There is no action, suit, claim, investigation or proceeding pending or, to the knowledge of the Company, threatened against the Company which questions the validity of this Agreement or the transactions contemplated hereby or any action taken or to be taken pursuant thereto. There is no action, suit, claim, investigation or proceeding pending or, to the knowledge of the Company, threatened, against or involving the Company or any subsidiary, or any of their respective properties or assets which, if adversely determined, is reasonably likely to result in a Material Adverse Effect.
(k)
The authorized capital stock of the Company and the shares thereof issued and outstanding as of March 31, 2011 are set forth on Schedule 4(k) attached hereto. All of the outstanding shares of the Company’s Common Stock and any other outstanding security of the Company have been duly and validly authorized, and are fully paid and non-assessable. Prior to the Closing, the Series B Preferred Stock is the only Preferred Stock currently issued and outstanding. Except as set forth in this Agreement or on Schedule 4(k) attached hereto, as of the Closing Date, no shares of Common Stock are entitled to preemptive rights and there are no registration rights or outstanding options, warrants, scrip, rights to subscribe to, call or commitments of any character whatsoever relating to, or securities or rights convertible into, any shares of capital stock of the Company. The Company is not a party to, and its executive officers have no knowledge of, any agreement restricting the voting or transfer of any shares of the capital stock of the Company. The Company has furnished or made available to the Holders true and correct copies of the Company’s certificate of incorporation as in effect on the date hereof, and the Company’s bylaws as in effect on the date hereof.
5.
Conditions Precedent to the Obligation of the Company to Issue the Series B-1 Preferred Stock . The obligation hereunder of the Company to issue and deliver the Series B-1 Preferred Stock to each Holder is subject to the satisfaction or waiver, at or before the Closing Date, of each of the conditions set forth below. These conditions are for the Company’s sole benefit and may be waived by the Company at any time in its sole discretion.
(a)
Each Holder shall have executed and delivered this Agreement.
(b)
The Company shall have filed the Certificate of Designation with the Delaware Secretary of State, in substantially the form attached hereto as Exhibit B.
(c)
Each Holder shall have performed, satisfied and complied in all material respects with all covenants, agreements and conditions required by this Agreement to be performed, satisfied or complied with by such Holder at or prior to the Closing Date.
(d)
Each of the representations and warranties of each Holder in this Agreement shall be true and correct in all material respects (except for those representations and warranties that are qualified by materiality or Material Adverse Effect, which shall be true and correct in all respects) as of the date when made and as of the Closing Date as though made at that time, except for representations and warranties that are expressly made as of a particular date, which shall be true and correct in all material respects (except for those representations and warranties that are qualified by materiality or Material Adverse Effect, which shall be true and correct in all respects) as of such date.
6.
Conditions Precedent to the Obligation of the Holders to Accept the Series B-1 Preferred Stock . The obligation hereunder of each Holder to accept the Series B-1 Preferred Stock is subject to the satisfaction or waiver, at or before the Closing Date, of each of the conditions set forth below. These conditions are for each Holder’s sole benefit and may be waived by each Holder at any time in its sole discretion.
(a)
The Company shall have executed and delivered this Agreement.
(b)
The Company shall have filed the Certificate of Designation with the Delaware Secretary of State, in substantially the form attached hereto as Exhibit B.
(c)
The Company shall have performed, satisfied and complied in all material respects with all covenants, agreements and conditions required by this Agreement to be performed, satisfied or complied with by the Company at or prior to the Closing Date.
(d)
Each of the representations and warranties of the Company in this Agreement shall be true and correct in all material respects (except for those representations and warranties that are qualified by materiality or Material Adverse Effect, which shall be true and correct in all respects) as of the date when made and as of the Closing Date as though made at that time, except for representations and warranties that speak as of a particular date, which shall be true and correct in all material respects (except for those representations and warranties that are qualified by materiality or Material Adverse Effect, which shall be true and correct in all respects) as of such date.
(e)
No statute, regulation, executive order, decree, ruling or injunction shall have been enacted, entered, promulgated or endorsed by any court or governmental authority of competent jurisdiction which prohibits the consummation of any of the transactions contemplated by this Agreement at or prior to the Closing Date.
(f)
As of the Closing Date, no action, suit or proceeding before or by any court or governmental agency or body, domestic or foreign, shall be pending against or affecting the Company, or any of its properties, which questions the validity of this Agreement or the transactions contemplated thereby or any action taken or to be taken pursuant thereto. As of the Closing Date, no action, suit, claim or proceeding before or by any court or governmental agency or body, domestic or foreign, shall be pending against or affecting the Company, or any of its properties, which, if adversely determined, is reasonably likely to result in a Material Adverse Effect.
(g)
No Material Adverse Effect shall have occurred at or before the Closing Date.
(h)
The Company shall have delivered on the Closing Date to the Holders a secretary’s certificate, dated as of the Closing Date, as to (i) the resolutions of the board of directors of the Company authorizing the transactions contemplated by this Agreement, (ii) the Company’s certificate of incorporation, (iii) the Company’s bylaws, each as in effect at the Closing, and (iv) the authority and incumbency of the officers of the Company executing this Agreement.
(i)
The certificates representing the shares of Series B-1 Preferred Stock shall have been duly executed and delivered to the Holders.
(j)
At the Closing, the Holders shall have received an opinion of counsel to the Company, dated the Closing Date, in the form of Exhibit C hereto.
(k)
The Company shall have executed and delivered the Registration Rights Agreement, dated the date hereof, to each Holder.
7.
Legend . Each certificate representing the Securities shall be stamped or otherwise imprinted with a legend substantially in the following form (in addition to any legend required by applicable state securities or “ blue sky ” laws):
“THE SECURITIES REPRESENTED BY THIS CERTIFICATE (THE “ SECURITIES ”) HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ SECURITIES ACT ”) OR ANY STATE SECURITIES LAWS AND MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS REGISTERED UNDER THE SECURITIES ACT AND UNDER APPLICABLE STATE SECURITIES LAWS OR GLOWPOINT, INC. SHALL HAVE RECEIVED AN OPINION OF COUNSEL THAT REGISTRATION OF SUCH SECURITIES UNDER THE SECURITIES ACT AND UNDER THE PROVISIONS OF APPLICABLE STATE SECURITIES LAWS IS NOT REQUIRED.”
The Company agrees to reissue certificates representing any of the Securities, without the legend set forth above if at such time, prior to making any transfer of any such Securities, such holder thereof shall give written notice to the Company describing the manner and terms of such transfer and removal as the Company may reasonably request, and provided the conditions set forth in this paragraph shall have been met. Such proposed transfer will not be effected until: (a) the Company has either (i) received an opinion of counsel that the registration of the Securities is not required in connection with such proposed transfer; or (ii) filed a registration statement under the Securities Act covering such proposed disposition has been filed by the Company with the Securities and Exchange Commission, which registration statement has become effective under the Securities Act; and (b) the Company has received an opinion of counsel that either: (i) the registration or qualification under the securities or “blue sky” laws of any state is not required in connection with such proposed disposition, or (ii) compliance with applicable state securities or “blue sky” laws has been effected. The Company will use reasonable efforts to respond to any such notice from a Holder within five (5) business days. In the case of any proposed transfer under this Section 7, the Company will use reasonable efforts to comply with any such applicable state securities or “blue sky” laws, but shall in no event be required, in connection therewith, to qualify to do business in any state where it is not then qualified or to take any action that would subject it to tax or to the general service of process in any state where it is not then subject. The restrictions on transfer contained in this Section 7 shall be in addition to, and not by way of limitation of, any other restrictions on transfer contained in any other section of this Agreement.
8.
Fees and Expenses . Each party shall pay the fees and expenses of its advisors, counsel, accountants and other experts, if any, and all other expenses, incurred by such party incident to the negotiation, preparation, execution, delivery and performance of this Agreement, provided , however , that the Company shall pay the reasonable legal fees of a single law firm and expenses (exclusive of disbursements and out-of-pocket expenses) incurred collectively by the Holders in connection with the preparation, negotiation, execution and delivery of this Agreement and the other transaction documents.
9.
Indemnification .
(a)
The Company hereby agrees to indemnify and hold harmless each Holder and its officers, directors, shareholders, members, managers, employees, agents and attorneys against any and all losses, claims, damages, liabilities and reasonable expenses (collectively “ Claims ”) incurred by each such person in connection with defending or investigating any such Claims, whether or not resulting in any liability to such person, to which any such indemnified party may become subject, insofar as such Claims arise out of or are based upon any breach of any representation, warranty, covenant or agreement made by the Company in this Agreement.
(b)
Each Holder hereby agrees to indemnify and hold harmless the Company and its officers, directors, shareholders, members, managers, employees, agents and attorneys against any and all Claims incurred by each such person in connection with defending or investigating any such Claims, whether or not resulting in any liability to such person, to which any such indemnified party may become subject, insofar as such Claims arise out of or are based upon any breach of any representation, warranty, covenant or agreement made by such Holder in this Agreement.
10.
Governing Law; Consent to Jurisdiction . This Agreement shall be governed by and interpreted in accordance with the laws of the State of New York without giving effect conflicts of law principles that would result in the application of the substantive laws of another jurisdiction. Each of the parties consents to the exclusive jurisdiction of the Federal courts whose districts encompass any part of the County of New York located in the City of New York in connection with any dispute arising under this Agreement and hereby waives, to the maximum extent permitted by law, any objection, including any objection based on forum non conveniens, to the bringing of any such proceeding in such jurisdictions. Each party waives its right to a trial by jury. Each party to this Agreement irrevocably consents to the service of process in any such proceeding by the mailing of copies thereof by registered or certified mail, postage prepaid, to such party at its address set forth herein. Nothing herein shall affect the right of any party to serve process in any other manner permitted by law.
11.
Notices . All notices and other communications provided for or permitted hereunder shall be made in writing by hand delivery, express overnight courier, registered first class mail, or telecopier (provided that any notice sent by telecopier shall be confirmed by other means pursuant to this Section 11), initially to the address set forth below, and thereafter at such other address, notice of which is given in accordance with the provisions of this Section.
(a)
if to the Company:
Glowpoint, Inc.
430 Mountain Avenue
Murray Hill, New Jersey 07974
Attention: President
Tel. No.: (973) 855-3411
Fax No.: (908)
464-2482
and
Glowpoint, Inc.
430 Mountain Avenue
Murray Hill, New Jersey 07974
Attention: Legal Department
Tel. No.: (973) 855-3411
Fax No.: (973) 556-1272
(b)
if to the Holders:
At the address of such Holder set forth on Exhibit A to this Agreement;
All such notices and communications shall be deemed to have been duly given: when delivered by hand, if personally delivered; when receipt is acknowledged, if telecopied; or when actually received or refused if sent by other means.
12.
Confidentiality . Each Holder acknowledges and agrees that the existence of this Agreement and the information contained herein and in the Exhibits hereto (collectively, “Confidential Information”) is of a confidential nature and shall not, without the prior written consent of the Company, be disclosed by such Holder to any person or entity, other than such Holder’s personal financial and legal advisors for the sole purpose of evaluating an investment in the Company, and that it shall not, without the prior written consent of the Company, directly or indirectly, make any statements, public announcements or release to trade publications or the press with respect to the subject matter of this Agreement. Notwithstanding the foregoing, a Holder may use or disclose Confidential Information to the extent Holder is legally compelled to disclose such Confidential Information, provided, however, that prior to any such compelled disclosure, Holder shall give the Company reasonable advance notice of any such disclosure and shall cooperate with the Company in protecting against any such disclosure and/or obtaining a protective order narrowing the scope of such disclosure and/or use of the Confidential Information. Each Holder further acknowledges and agrees that the information contained herein and in the other documents relating to this transaction may be regarded as material non-public information under United States federal securities laws, and that United States federal securities laws prohibit any person who has received material non-public information relating to the Company from purchasing or selling securities of the Company, or from communicating such information to any person under circumstances in which it is reasonably foreseeable that such person is likely to purchase or sell securities of the Company. Accordingly, until such time as any such non-public information has been adequately disseminated to the public, each Holder shall not purchase or sell any securities of the Company, or communicate such information to any other person. The Company shall also file with the Securities and Exchange Commission a Current Report on Form 8-K (the “ Form 8-K ”) describing the material terms of the transactions contemplated hereby as soon as practicable following the Closing Date, but in no event more than two (2) Trading Days following the Closing Date, which Form 8-K shall be subject to prior review and comment by the Holders. " Trading Day " means any day during which The New York Stock Exchange shall be open for business.
13.
Entire Agreement . This Agreement constitutes the entire understanding and agreement of the parties with respect to the subject matter hereof and supersedes all prior and/or contemporaneous oral or written proposals or agreements relating thereto all of which are merged herein. This Agreement may not be amended or any provision hereof waived in whole or in part, except by a written amendment signed by all of the parties hereto.
14.
Counterparts . This Agreement may be executed by facsimile signature and in counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.
[SIGNATURE PAGE TO PREFERRED CONSENT & EXCHANGE AGREEMENT]
IN WITNESS WHEREOF, this Agreement was duly executed on the date first written above.
GLOWPOINT, INC.
By:
Name:
Title:
Holder:
By:
Name:
Title:
2
Exhibit 10.2
STOCKHOLDERS AGREEMENT
This STOCKHOLDERS AGREEMENT (this “ Agreement ”) is made as of August 3, 2011 by and among the Stockholders listed on Schedule I hereto (individually, a “ Stockholder ”) and Glowpoint, Inc. , a Delaware corporation (the “ Company ”).
WHEREAS, the Stockholders are the holders of the shares of Series B-1 preferred stock, par value $0.0001 per share (the “ Preferred Stock ”), of the Company, which was created pursuant to the Certificate of Designations, Preferences and Rights of Perpetual Series B-1 Preferred Stock filed by the Company on August 3, 2011 (the “ Certificate of Designations ”);
WHEREAS, the Company is party to that certain Loan and Security Agreement dated as of June 16, 2010, between the Company and Silicon Valley Bank (as amended, the “ Loan Agreement ”);
WHEREAS, the Stockholders desire to promote their mutual interests and the interests of the Company by providing in this Agreement for the terms and conditions governing the redemption of the Preferred Stock; and
WHEREAS, the Board of Directors of the Company has determined that it is in the best interests of the Company that the Company enter into this Agreement.
NOW, THEREFORE, in consideration of the covenants and agreements set forth herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby mutually acknowledged, the parties hereto covenant and agree as follows:
1. GENERAL PROVISIONS
1.1
Shares Subject to this Agreement . The Stockholders expressly agree that the terms of this Agreement shall apply to all shares of Preferred Stock that it now owns or hereafter acquires by any means (including securities convertible into, or exchangeable for, shares of Preferred Stock), including without limitation by purchase, assignment or operation of law, or as a result of any stock dividend, stock split, reorganization, reclassification, whether voluntary or involuntary, or other similar transaction, and to any shares of Preferred Stock of any successor-in-interest of the Company, whether by sale, merger, consolidation or other similar transaction, or by purchase, assignment or operation of law (all of the foregoing, the “ Shares ”).
1.2
Instrument of Adherence . Any person that is not already a party to this Agreement and acquires any shares of the Preferred Stock after the date of this Agreement shall become an additional party to this Agreement as a “Stockholder” by executing and delivering an Instrument of Adherence in substantially the form attached hereto as Exhibit A . Schedule I shall be amended to reflect the addition of any such additional party to this Agreement.
1.3
Legends. The Company will cause all certificates or other instruments representing shares of the Preferred Stock now issued and outstanding or hereafter issued and to which the provisions of this Agreement apply to be endorsed with the following legends (in addition to any legend required by applicable state securities or “ blue sky ” laws):
“THE SECURITIES REPRESENTED BY THIS CERTIFICATE (THE “ SECURITIES ”) HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ SECURITIES ACT ”) OR ANY STATE SECURITIES LAWS AND MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS REGISTERED UNDER THE SECURITIES ACT AND UNDER APPLICABLE STATE SECURITIES LAWS OR GLOWPOINT, INC. SHALL HAVE RECEIVED AN OPINION OF COUNSEL THAT REGISTRATION OF SUCH SECURITIES UNDER THE SECURITIES ACT AND UNDER THE PROVISIONS OF APPLICABLE STATE SECURITIES LAWS IS NOT REQUIRED.”
“THE SHARES EVIDENCED BY THIS CERTIFICATE ARE SUBJECT TO A STOCKHOLDERS AGREEMENT AMONG THE COMPANY AND THE STOCKHOLDERS (AS DEFINED THEREIN) DATED AS OF AUGUST 3, 2011, AS AMENDED FROM TIME TO TIME, A COPY OF WHICH IS AVAILABLE FOR INSPECTION AT THE OFFICES OF THE COMPANY OR MAY BE OBTAINED FROM THE COMPANY UPON REQUEST AND WITHOUT CHARGE.”
2. REDEMPTION
2.1
Mandatory Redemption . In the event of a Public Offering (as defined below), the Company and the Stockholders shall effect a redemption (the “ Redemption ”) of all (and not less than all) of the outstanding Shares for cash at a price per Share (the “ Redemption Payment ”) equal to 100% of the Liquidation Preference (as defined in the Certificate of Designations) if, and only if, the following conditions are satisfied: (a) the aggregate Redemption Payment does not exceed $11,000,000; (b) after giving effect to the Redemption, the Company shall have remaining net proceeds from the Public Offering (the “ Net Proceeds ”) of not less than $5,000,000; and (c) there shall be no Default or Event of Default (each, as defined in the Loan Agreement) at the time of, or after giving effect to, the Redemption. As used herein, a “ Public Offering ” shall be deemed to have occurred at such time as the Company raises and receives proceeds of not less than $20,000,000 from the issuance of new equity securities of the Company. Notwithstanding the foregoing, if the Public Offering generates proceeds of less than $20,000,000, then the Company and the Stockholders shall effect the Redemption, so long as the foregoing conditions are otherwise satisfied, with a Redemption Payment that is reduced proportionately, which the parties expressly acknowledge will result in a Redemption of fewer than all of the outstanding Shares.
2.2
Mechanics of Redemption . Within ten (10) business days following a Public Offering and the satisfaction of the conditions set forth in Section 2.1 above, the Company shall deliver written notice of Redemption (" Notice of Redemption ") to each Stockholder, which Notice of Redemption shall indicate (a) the number of Shares held by such Stockholder, (b) the Redemption Payment, as calculated pursuant to Section 2.1 above and (c) the date upon which the Redemption shall occur (the “ Redemption Date ”). On or prior to the Redemption Date, the Stockholders shall surrender to the Company the certificate or certificates representing the Shares (or an indemnification undertaking with respect to such Shares in the event of the loss, theft or destruction of a certificate) at the corporate offices of the Company. The Company shall deliver the Redemption Payment within two (1) business days of receipt of such certificate(s). From and after the Redemption, all rights of the holders of the Preferred Stock as a holder of such Preferred Stock shall cease with respect to any redeemed shares of Preferred Stock, and such shares shall not thereafter be transferred on the books of the Company or be deemed to be outstanding for any purpose whatsoever.
3. MISCELLANEOUS
3.1
Fees and Expenses . Each party shall pay the fees and expenses of its advisors, counsel, accountants and other experts, if any, and all other expenses, incurred by such party incident to the negotiation, preparation, execution, delivery and performance of this Agreement; provided , however , that the Company shall pay the reasonable legal fees of a single law firm and expenses (exclusive of disbursements and out-of-pocket expenses) incurred collectively by the Holders in connection with the preparation, negotiation, execution and delivery of this Agreement and the other transaction documents.
3.2
Notices . All notices and other communications provided for or permitted hereunder shall be made in writing by hand delivery, express overnight courier, registered first class mail, or telecopier (provided that any notice sent by telecopier shall be confirmed by other means pursuant to this Section 3.2), initially to the address set forth below, and thereafter at such other address, notice of which is given in accordance with the provisions of this Section.
(a)
if to the Company:
Glowpoint, Inc.
430 Mountain Avenue
Murray Hill, New Jersey 07974
Attention: President
Tel. No.: (973) 855-3411
Fax No.: (973) 923-3352
and
Glowpoint, Inc.
430 Mountain Avenue
Murray Hill, New Jersey 07974
Attention: Legal Department
Tel. No.: (973) 855-3411
Fax No.: (973) 556-1272
(b)
if to the Holders:
At the address of such Holder set forth on Exhibit A to this Agreement;
All such notices and communications shall be deemed to have been duly given: when delivered by hand, if personally delivered; when receipt is acknowledged, if telecopied; or when actually received or refused if sent by other means.
0.1
Entire Agreement . This Agreement constitutes the entire understanding and agreement of the parties with respect to the subject matter hereof and supersedes all prior and/or contemporaneous oral or written proposals or agreements relating thereto all of which are merged herein. This Agreement may not be amended or any provision hereof waived in whole or in part, except by a written amendment signed by all of the parties hereto.
0.2
Amendments and Waivers . The terms and provisions of this Agreement may be amended or waived only by written agreement executed by the Company and by Stockholders holding at least seventy-five percent (75%) of the Shares held by all Stockholders. No failure or delay by a party hereto in exercising any right, power or remedy under this Agreement, and no course of dealing among the parties hereto, shall operate as a waiver of any such right, power or remedy of the party. No single or partial exercise of any right, power or remedy under this Agreement by a party hereto, nor any abandonment or discontinuance of steps to enforce any such right, power or remedy, shall preclude such party from any other or further exercise thereof or the exercise of any other right, power or remedy hereunder. The election of any remedy by a party hereto shall not constitute a waiver of the right of such party to pursue other available remedies. No notice to or demand on a party not expressly required under this Agreement shall entitle the party receiving such notice or demand to any other or further notice or demand in similar or other circumstances or constitute a waiver of the rights of the party giving such notice or demand to any other or further action in any circumstances without such notice or demand.
0.3
Termination . This Agreement shall terminate upon the liquidation or dissolution of the Company. This Agreement shall also terminate with respect to any Stockholder when such Stockholder no longer holds any Shares or the right to acquire any Shares (except in connection with any transfer of Shares in violation of this Agreement, whereby such Stockholder shall continue to be bound until such Shares are transferred in accordance with this Agreement).
0.4
Benefit . All statements, representations, warranties, covenants and agreements in this Agreement shall be binding on the parties hereto and shall inure to the benefit of the respective successors and permitted assigns of each party hereto. Nothing in this Agreement shall be construed to create any rights or obligations except among the parties hereto, and no person or entity shall be regarded as a third party beneficiary of this Agreement.
0.5
Governing Law; Consent to Jurisdiction . This Agreement shall be governed by and interpreted in accordance with the laws of the State of New York without giving effect conflicts of law principles that would result in the application of the substantive laws of another jurisdiction. Each of the parties consents to the exclusive jurisdiction of the Federal courts whose districts encompass any part of the County of New York located in the City of New York in connection with any dispute arising under this Agreement and hereby waives, to the maximum extent permitted by law, any objection, including any objection based on forum non conveniens, to the bringing of any such proceeding in such jurisdictions. Each party waives its right to a trial by jury. Each party to this Agreement irrevocably consents to the service of process in any such proceeding by the mailing of copies thereof by registered or certified mail, postage prepaid, to such party at its address set forth herein. Nothing herein shall affect the right of any party to serve process in any other manner permitted by law.
0.6
Severability . In the event that any court of competent jurisdiction shall determine that any provision, or any portion thereof, contained in this Agreement shall be unenforceable in any respect, then such provision shall be deemed limited to the extent that such court deems it enforceable, and as so limited shall remain in full force and effect. In the event that such court shall deem any such provision, or portion thereof, wholly unenforceable, the remaining provisions of this Agreement shall nevertheless remain in full force and effect.
0.7
Headings and Captions . The headings and captions of the various subdivisions of this Agreement are for convenience of reference only and shall in no way modify or affect the meaning or construction of any of the terms or provisions hereof.
0.8
Enforcement . Each of the parties hereto acknowledges and agrees that the rights acquired by each party hereunder are unique and that irreparable damage would occur in the event that any of the provisions of this Agreement to be performed by the other parties were not performed in accordance with their specific terms or were otherwise breached. Accordingly, in addition to any other remedy to which the parties hereto are entitled at law or in equity, each party hereto shall be entitled to an injunction or injunctions to prevent breaches of this Agreement by any other party and to enforce specifically the terms and provisions hereof in any federal or state court to which the parties have agreed hereunder to submit to jurisdiction.
0.9
Counterparts . This Agreement may be executed by facsimile signature and in counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement or caused this Agreement to be executed by their duly authorized representatives, as of the date first written above.
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GLOWPOINT, INC.
By:_________________________ Name: Title: |
STOCKHOLDER:
By:_________________________ Name: Title: |
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