Initial Principal Amount: $1,784,692.48 | Dated as of February 27, 2015 |
1. | INTEREST AND PAYMENTS |
(a) | The unpaid Principal Amount will accrue interest at an annual rate equal to (1) ten percent (10%) from January 1, 2015 through February 28, 2015, and (2) fifteen percent (15%), commencing March 1, 2015, compounding on a quarterly basis (the “Interest”). Interest on the outstanding principal amount will be computed on the basis of a year of 360 days and the actual number of days elapsed. Interest on the unpaid balance of this Note for the period from January 1, 2015 to February 28, 2015 shall be due and payable on March 1, 2015. Interest on the unpaid balance of this Note for the period commencing March 1, 2015 shall accrue until such time as it is due and payable in arrears in accordance with the following schedule (any interest so accrued and not yet paid, the “Accrued Interest”): |
(i) | Beginning on December 31, 2015 and continuing on the last day of each month thereafter, if (and only if) Maker has achieved a minimum EBITDA of at least $4,500,000 measured on a trailing twelve month basis as of the last day of such month, Maker shall pay interest in an amount equal to 1/6th of the amount of the Accrued Interest outstanding as of the last day of the applicable twelve-month period in which such minimum EBITDA was first achieved, plus for any consecutive succeeding month in which such minimum EBITDA was achieved, the accrued and unpaid interest in respect of the immediately preceding month. Each such interest payment shall be made within 45 days following the last day of the applicable measurement period (e.g., payment for EBITDA exceeding $4,500,000 for the twelve months ended December 31, 2015 is due February 14, 2016). For purposes of this Note, “EBITDA” shall have the meaning |
(ii) | Any remaining interest accrued and not yet paid shall be due and payable in full on July 6, 2017 (the “Maturity Date”). |
(b) | If any amounts required to be paid by Maker under this Note (including without limitation, principal or interest payable) remain unpaid after such amounts are due, then Maker shall pay interest on the aggregate, outstanding principal balance hereunder from the date Maker’s failure to make such payment until such past due amounts are paid in full, at a per annum rate equal to fifteen percent (15.0%) compounding on a quarterly basis. All computations of default interest shall be based on a year of 360 days and actual days elapsed. |
(c) | The Principal Amount, subject to any reduction as provided in the Merger Agreement and Section 1(f) below, will be payable in accordance with the following schedule, with any remaining Principal Amount to be due and payable in full on the Maturity Date (subject to any deferrals contemplated by Section 1(f) below): |
(d) | All payments on this Note will be made by wire transfer of immediately available funds to an account designated by Payee to Maker in writing, provided that Payee may change such account by providing not less than two Business Days written notice prior to any applicable payment date under Paragraph 1(a) and (c). If any payment on this Note becomes due on a day that is not a Business Day, such payment will be due on the next succeeding Business Day. Upon delivery of any payment on this Note to Payee, Maker shall have no further duty, liability or obligation with respect to delivery thereof to the Stockholders. |
(e) | Maker may, without premium or penalty, at any time and from time to time, prepay all or any portion of the outstanding amounts under this Note. |
(f) | Maker may reduce the Principal Amount, or withhold and set off against any portion of the Principal Amount, to the extent provided in, and in accordance with the terms and conditions, of the Merger Agreement including, without limitation, (i) by any Excess Closing Date Adjustment, (ii) by any adjustment pursuant to Section 7.15 of the Merger Agreement and (iii) by any adjustment pursuant to Article IX of the Merger Agreement. Any reduction of, or withholding or set off against, this Note pursuant to this Section 1(f), shall be applied against the payments of the Principal Amount (starting with the first payment on the six month anniversary of the Closing Date until such payment is reduced to $0 and, thereafter, against the next due payments in the same manner). In the event of any such reduction, withholding or set off (as provided by and permitted under the Merger Agreement), any and all Interest whether accrued or previously paid with respect to the applicable portion of the Principal Amount will automatically be cancelled and shall not be due or payable under this Note at any time (or, if previously paid, such subsequent payments under Section 1(h) shall be reduced, on a dollar for dollar basis, by the amount of such previously paid Interest). For the avoidance of doubt, such cancellation of Interest shall not be given effect for purposes of calculating the portion of the Principal Amount required to be reduced, withheld or set off to satisfy the obligations under the Merger Agreement. |
(g) | Notwithstanding anything in this Note or the Merger Agreement to the contrary, in the event that Maker is prohibited from making any payments of principal or interest (the “Prohibited Payments”) pursuant to the terms of that certain Loan Agreement, dated as of the date hereof, by and among Maker and its subsidiaries, as borrowers, Main Street Capital |
(h) | Upon the happening or occurrence of a Change in Control, Payee may, at Payee’s sole discretion, require Maker to prepay this Note, in whole or in part, upon ten (10) days prior written notice. For purposes of this Note, a “Change in Control” means the sale of all or substantially all of Maker’s and its subsidiaries’ assets, taken as a whole, or a merger, reorganization, consolidation, or sale of voting securities such that Maker’s equityholders as of the date hereof and their affiliates do not directly or indirectly hold a majority of the voting securities of Maker (or the surviving entity to any such merger or consolidation) immediately following the closing of such transaction; provided, however, that in no event shall a “Change of Control” be deemed to have occurred hereunder if a Change of Control (as defined in the Senior Loan Agreement) has not occurred under the Senior Loan Agreement. |
(i) | While any obligation remains owing under this Note, Maker shall not, and shall cause its subsidiaries, not to make any distributions or pay any dividends to any person on account of any equity ownership interest in Maker or any subsidiary (other than (i) those payable solely in equity securities issued by Maker or such subsidiary, (ii) those from any subsidiary to Maker) and (iii) dividends to holders of Maker’s Series B-1 Convertible Preferred Stock (“Series B-1 Preferred”) and Series A-2 Convertible Preferred Stock (Series A- 2 Preferred”) on account of such Series B-1 Preferred or Series A-2 Preferred beginning on January 1, 2013, payable quarterly in arrears, in an aggregate amount not to exceed $160,000 in each quarter in accordance with the terms of the Certificate of Designations, Preferences and Rights of Series B-1 Convertible Preferred Stock of Glowpoint, Inc. and the Certificate of Designations, Preferences and Rights of Series A-2 Convertible Preferred Stock of Glowpoint, Inc., each as in effect on the date hereof, provided that Maker shall not make any such payment with respect to the Series B-1 Preferred or Series A-2 Preferred if, after giving effect to such payment, Maker’s cash balance would be less than 200% of the outstanding principal balance of this Note as of the date of such payment. |
(j) | Upon the happening or occurrence of any Event of Default other than an Event of Default specified in clause (iii) of the definition of “Event of Default”, Payee may at its option declare immediately due and payable the entire unpaid Principal Amount of, and all accrued and unpaid Interest on, this Note, in which event the entire unpaid Principal Amount of, and all accrued and unpaid interest on, this Note shall become immediately due and payable. Upon the happening or occurrence of an Event of Default specified in clause (iii) of the definition of “Event of Default”, the entire unpaid Principal Amount of, and all accrued and unpaid Interest on, this Note shall automatically become immediately due and payable, without further notice or demand. Upon the happening or occurrence of any Event of default, Payee may also exercise, pursue, enforce, and/or realize upon any available right to remedy provided at law or in equity. The remedies provided for in this Note shall be cumulative and concurrent and may be pursued singularly, successively, or concurrently against Maker in the sole discretion of Payee. |
(i) | Subject to Section 1(g) above, Maker’s failure to pay all or any part of the Interest hereunder on the date due and payable and such failure continues for three (3) Business Days after such due date; |
(ii) | Subject to Section 1(g) above, Maker’s failure to pay all or any part of the Principal Amount hereunder on the date due and payable and such failure continues for three (3) Business Days after such due date; |
(iii) | Maker makes a payment with respect to the Series B-1 Preferred or Series A-2 Preferred in violation of this Note; or |
(iv) | Maker or any other person obligated to pay any part of the indebtedness evidenced or governed by this Note: (1) commences any case, proceeding, or other action seeking reorganization, arrangement, adjustment, liquidation, dissolution, or composition of it or its debts under any debtor relief laws; or (2) in any involuntary case, proceeding, or other action commenced against it which seeks to have an order for relief entered against it, as debtor, or seeks reorganization, arrangement, adjustment, liquidation, dissolution, or composition of it or its debts under any law relating to bankruptcy, insolvency, reorganization, or relief of debtors, and (i) fails to obtain a dismissal of such case or proceeding or (ii) converts the case from one chapter of the Federal Bankruptcy Code to another chapter, or (iii) is the subject of an order for relief; or (3) applies or consents to have a trustee, receiver, custodian, intervenor, liquidator, or other similar official appointed for or take possession of all or any part of its property or has any court take jurisdiction of its property which continues for a period of sixty (60) days. |
2. | MISCELLANEOUS |
(a) | No Waiver. No delay or forbearance by act or omission on the part of Payee in the exercise of any power, option, right, or remedy under this Note, or in the collection of any money under this Note, shall operate as, or constitute, a waiver of Payee’s right to exercise any such power, right, option, or remedy or to collect any such money, nor render Payee liable for damages or to account for any such money not collected. No single or partial exercise of, or failure to exercise, any power, right, option, or remedy provided to Payee under this Note shall preclude any other or further exercise of any such power, right, option, or remedy or the exercise of any other power, right, option, or remedy provided under this Note or at law or in equity. |
(b) | Acceptance of Late or Partial Payments. Payee may accept late or partial payment of any amount due under this Note; provided, however, that acceptance of one or more late or partial payments shall not constitute a waiver of any default nor of any of Payee’s rights to receive timely payment of any other payment. Acceptance of any payment, whether partial or otherwise, after the happening or occurrence of an Event of Default and the acceleration of the due date of this Note shall not constitute a reinstatement of the pre- acceleration payment schedule, nor shall it impair any of Payee’s rights or remedies under this Note. |
(c) | Compliance with Usury Laws. All agreements between Maker and Payee are hereby expressly limited so that in no contingency or event shall the amount paid or agreed to be paid to the Payee for the use, forbearance, or detention of the money to be loaned under this Note, exceed the maximum amount permissible under the laws of Delaware. If, at the time of any interest payment, the payment amount due under this Note transcends the legal limit, the obligation shall be reduced to the legal limit. If the Payee should ever receive as interest an amount that exceeds the highest lawful rate, the amount that would be excessive as interest shall be applied to the reduction of the principal amount owing under this Note, and not to the payment of interest. |
(d) | Waiver. Maker waives presentment for payment, notice of nonpayment, protest, demand, notice of protest, notice of intent to accelerate, notice of acceleration and dishonor, diligence in enforcement and indulgences of every kind and without further notice hereby agrees to renewals, extensions, exchanges or releases of collateral, indulgences or partial payments, either before or after maturity. |
(e) | Assignments and Successors. This Note may not be assigned or transferred by Payee without the prior written consent of Maker. Any purported assignment or transfer without such prior written consent will be void. Subject to the foregoing, this Note will inure to the benefit of the permitted assigns of Payee. |
(f) | Governing Law. This Note shall be governed by and construed in accordance with the laws of the State of Delaware applicable to contracts made and performed in such State. |
(g) | Resolution of Conflicts; Arbitration. Any claim or dispute arising out of or related to this Note, or the interpretation, making, performance, breach or termination thereof, shall be finally settled by binding arbitration in the County of Denver, State of Colorado in accordance with the then current Commercial Arbitration Rules of the American Arbitration Association and judgment upon the award rendered may be entered in any court having jurisdiction thereof. The arbitrator(s) shall have the authority to grant any equitable and legal remedies that would be available in any judicial proceeding instituted to resolve a dispute. |
(h) | This Note amends and restates that certain replacement Second Amended and Restated Nonnegotiable Promissory Note in the original principal amount of $1,884,692.48 made by Maker payable to Payee dated February 24, 2014 and any amendments, modifications, replacements or substitutions thereto, in its entirety, but this Note does not constitute a novation thereof or of any obligations of Maker thereunder. |
Glowpoint, Inc. | |
By: /s/ David Clark | |
Name: David Clark | |
Title: Chief Financial Officer, Treasurer and Secretary |