-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, M6qnaOFCH9JdokWFjNcPi7biyH/vzOh0Vcj7cDtlZgFDCsZUCWl4MapmeUf/rOmz xp9eSjUu8NOIzGu55e0gtw== 0001125282-04-001874.txt : 20040430 0001125282-04-001874.hdr.sgml : 20040430 20040430171110 ACCESSION NUMBER: 0001125282-04-001874 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 20040430 ITEM INFORMATION: ITEM INFORMATION: Acquisition or disposition of assets ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 20040430 FILER: COMPANY DATA: COMPANY CONFORMED NAME: GLOWPOINT INC CENTRAL INDEX KEY: 0000746210 STANDARD INDUSTRIAL CLASSIFICATION: TELEPHONE COMMUNICATIONS (NO RADIO TELEPHONE) [4813] IRS NUMBER: 770312442 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-25940 FILM NUMBER: 04770661 BUSINESS ADDRESS: STREET 1: 225 LONG AVENUE CITY: HILLSIDE STATE: NJ ZIP: 07205 BUSINESS PHONE: 8054828277 MAIL ADDRESS: STREET 1: 225 LONG AVENUE CITY: HILLSIDE STATE: NJ ZIP: 07205 FORMER COMPANY: FORMER CONFORMED NAME: WIRE ONE TECHNOLOGIES INC DATE OF NAME CHANGE: 20000606 FORMER COMPANY: FORMER CONFORMED NAME: VIEW TECH INC DATE OF NAME CHANGE: 19950418 FORMER COMPANY: FORMER CONFORMED NAME: VIEWTECH INC DATE OF NAME CHANGE: 19950418 8-K 1 b331676_8k.txt FORM 8-K UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 -------------------------- FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of Report (Date of earliest event reported) April 30, 2004 Glowpoint, Inc. ---------------------------------------------------------------------------- (Exact name of Registrant as Specified in its Charter) Delaware 0-25940 77-0312442 ---------------------------------------------------------------------------- (State or other (Commission File Number) (I.R.S. Employer Jurisdiction of Incorporation) Identification No.) 225 Long Avenue Hillside, NJ 07205 ---------------------------------------------------------------------------- (Address of Principal Executive Officers) (Zip Code) (973) 282-2000 ---------------------------------------------------------------------------- (Registrant's telephone number, including area code) ---------------------------------------------------------------------- (Former name or former address, if changed since past report) Item 2. Acquisition or Disposition of Assets On April 16, 2003, Glowpoint, Inc. (the "Company") entered into an agreement with Tandberg, Inc. ("Tandberg") to acquire certain assets of Tandberg's wholly owned subsidiary, Network Systems LLC, formerly NuVision ("Network System"). The assets include Network System's customer contracts, equipment, intellectual property relating to the NuVision brand and telecommunications contracts with MCI Corporation, AT&T Corporation and Sprint Communications. The Company acquired the assets for $1.00 and the assumption of Network System's obligations under the foregoing contracts. The terms of the transaction are more fully set forth in the Asset Purchase Agreement attached hereto as Exhibit 10.1. On April 16, 2003, the Company and Tandberg entered into an agreement to form a strategic alliance. The strategic alliance includes the designation of Tandberg as a certified marketing representative and agent for the Company's IP-based video communications services, the recognition of the Company's Certified Program as an external testing partner for Tandberg's hardware and software products and the designation of the Company as Tandberg's exclusive IP-based video communications provider for Tandberg's corporate use in North America. The terms of the transactions are more fully set forth in the Certified Agent Agreement attached hereto as Exhibit 10.2. Item 7. Financial Statements, Pro Forma Financial Information and Exhibits (a) Financial Statements of Businesses Acquired. None required. (b) Pro Forma Financial Information. None required. (c) Exhibits. Exhibit No. Description - ----------- ----------- 10.1 Asset Purchase Agreement, dated as of April 16, 2004, by and between Glowpoint, Inc. and Tandberg, Inc. 10.2 Certified Agent Agreement, dated as of April 16, 2004, between Glowpoint, Inc. and Tandberg, Inc. 99.1 Text of press release dated April 28, 2004 99.2 Transcript of April 28, 2004 conference call Item 12. Results of Operations and Financial Condition On April 28, 2004, the Company announced via press release and conference call the Company's financial results for its three month period ended March 31, 2004. A copy of the press release is attached hereto as Exhibit 99.1. A copy of the transcript of the conference call is attached hereto as Exhibit 99.2. SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. GLOWPOINT, INC. Dated: April 30, 2004 /s/ David C. Trachtenberg ------------------------- David C. Trachtenberg Chief Executive Officer & President EX-10.1 2 b331676ex10_1.txt ASSET PURCHASE AGREEMENT Exhibit 10.1 ASSET PURCHASE AGREEMENT This Asset Purchase Agreement (this "Agreement") is made as of the 16th day of April, 2004, by and between Glowpoint, Inc., a Delaware corporation ("Buyer") and Tandberg, Inc., a Delaware corporation ("Tandberg" and, together with its wholly owned subsidiary, Network Systems, LLC ("Network"), referred to herein as "Seller"). W I T N E S S E T H: WHEREAS, Seller desires to sell, and Buyer desires to purchase, certain assets and rights (collectively, the "Assets") owned or used by Seller in the business (the "Business") currently conducted by Network, upon the terms and subject to the conditions set forth in this Agreement; and WHEREAS, as consideration for such asset sale and purchase, (i) Buyer shall pay Seller the sum of $1.00 in cash, and (ii) Buyer shall assume certain liabilities of Seller, upon the terms and subject to the conditions set forth in this Agreement. NOW, THEREFORE, in consideration of the foregoing premises and the mutual promises, agreements, representations, warranties, and covenants herein contained, the parties hereby agree as follows: 1. Closing 1.1 Closing Date. The closing (the "Closing") of the transactions contemplated hereby shall be held on the date hereof (the "Closing Date") at the offices of counsel to Buyer, Morrison & Foerster LLP, 1290 Avenue of the Americas, New York, New York 10104, or on such other date or at such other location as may be mutually agreed upon by the parties. 1.2 Sale of Assets. At the Closing, Seller shall sell to Buyer, free and clear of all liens, mortgages, security interests, encumbrances, pledges, charges, restrictions on transfer, or adverse claims (collectively, "Liens"), and Buyer shall buy from Seller, all of Seller's right, title and interest in the Assets, including, without limitation, the following: (a) Seller's entire right, title and interest in, to and under all of Seller's network services customer contracts, agreements, arrangements and other commitments, oral or written, with any customer (each, a "Customer") of the Business (collectively, the "Customer Contracts"); (b) computer equipment and other tangible property used in the Business, including two Tandberg Codecs in good operating condition, and any related documentation and user materials necessary to support the Customer Contracts, and Seller's rights under all related warranties; (c) all intellectual property owned by Seller relating to the NuVision brand, whether now in existence or in development stage, including, without limitation, all United States, international or foreign: (i) patents, patent applications and statutory invention registrations, including reissuances, divisions, continuations, continuations in part, extensions and reexaminations thereof, all inventions, and rights provided by international treaties or conventions with respect to the foregoing, and all improvements thereto; (ii) trademarks, service marks, trade dress, logos, proprietary icons, trade names, corporate names, internet domain names and other source identifiers (whether or not registered) including all common law rights therein, and registrations and applications for registration therefor, all rights provided by international treaties or conventions with respect to the foregoing, and all reissuances, extensions and renewals and all goodwill associated therewith; (iii) confidential and proprietary information, including trade secrets, technology, technical data, know-how, formulae, databases, research, product plans, markets, developments, inventions, discoveries, processes, formulas, algorithms, designs, drawings, business strategies and customer and supplier lists; and (iv) all other proprietary rights, in each case, whether owned or leased; (d) Seller's entire right, title and interest in, to and under (i) Seller's contracts with MCI Corporation, AT&T Corporation and Sprint Communications relating to the Business (collectively, the "Vendor Contracts") and (ii) Seller's agreement with Macrologic (the "Ancillary Agreement"); (e) The pro-rata portion of all prepayments relating to the Assets received by Seller prior to the Closing for amounts due with respect to such Assets after the Closing; (f) all rights of Seller under express or implied warranties relating to the Assets; (g) all claims, causes of action, choses in action, rights of recovery and rights of set-off of any kind relating to the Assets and arising on or after or otherwise relating to the period commencing on the Closing Date; (h) all existing business and marketing records relating to the Assets, including accounting and operating records, asset ledgers, inventory records, budgets, databases, event calendars, information and data respecting leased or owned equipment, files, books, correspondence and mailing lists, creative, promotional and advertising materials and brochures, and other business records; and (i) all media, including, without limitation disks, tapes and compact discs, and other tangible property necessary for the transfer of the Assets from Seller to Buyer pursuant to the terms and conditions of this Agreement. 2 Without limitation of the foregoing, or the definition of "Assets" contained herein, Schedule 1.2 hereto sets forth a description of specific Assets that are being transferred pursuant to this Agreement. 1.3 Bill of Sale. The sale and delivery of the Assets shall be effected by a Bill of Sale and Assignment and Assumption Agreement in substantially the form of Exhibit A (the "Bill of Sale") and such endorsements, assignments and other instruments of transfer and conveyance, agreements, and documents reasonably satisfactory in form and substance to Buyer and its counsel as may be requested by Buyer. 1.4 No Other Liabilities or Obligations Assumed. Schedule 1.4 sets forth the liabilities of Seller to be assumed by Buyer as of the Closing (the "Assumed Liabilities"), which Assumed Liabilities Buyer hereby assumes. Except as specifically set forth in Schedule 1.4, Buyer expressly does not, and shall not, assume or be deemed to have assumed under this Agreement or by reason of any transaction contemplated hereunder or otherwise, any debts, liabilities (contingent or otherwise) or obligations of Seller of any nature whatsoever, whether the same are direct or indirect, fixed or contingent, or known or unknown, whether arising under an agreement or contract or otherwise. Notwithstanding any other provision of this Agreement, the Assumed Liabilities shall not include (a) any debts, liabilities (contingent or otherwise) or obligations of Seller with respect to those Assumed Liabilities referred to in this Section arising out of any contract, agreement, commitment or lease (i) required to be listed but not listed on Schedule 1.4 hereto regardless of any knowledge thereof on the part of Buyer or (ii) the benefits of which are not validly assigned to Buyer, or (b) any liabilities or obligations of Seller (whether direct or indirect, contingent or otherwise) relating to Seller's employees or arising (i) under or in connection with any employee benefit plan or (ii) under Title IV or Section 302 of the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), Section 412 of the Internal Revenue Code of 1986, as amended (the "Code") or Section 4980B of the Code. Seller shall, and hereby covenants to Buyer that it will as of the Closing Date or when due, satisfy all of its liabilities or obligations that are not Assumed Liabilities. 1.5 Purchase Price; Allocation. (a) Purchase Price. The consideration to be paid by Buyer for the Assets shall consist of: (i) The sum of One Dollar ($1.00); and (ii) Buyer's assumption of the Assumed Liabilities. (b) Allocation. Within 30 days following the Closing Date, Buyer shall prepare and finalize a schedule setting forth an allocation of the consideration described in Section 1.5(a) among the Assets (the "Allocation Schedule"). Each party agrees to report the transactions contemplated hereby for federal income tax and all other tax purposes (including, without limitation, for purposes of Section 1060 of the Code) in a manner consistent with the Allocation Schedule, and in accordance with all applicable rules and regulations, and to take no position inconsistent with the allocation set forth therein in any administrative or judicial examination or other proceeding. Each of Buyer and Seller shall timely file the appropriate forms in accordance with the requirements of Section 1060 of the Code and this Section. 3 1.6 Excluded Assets. Anything to the contrary notwithstanding, the Assets shall not include any of the following rights, properties or assets (the "Excluded Assets"): (a) This Agreement, and any of the other documents to be executed in connection herewith (collectively, the "Other Transaction Documents"), or any right, title or interest of Seller hereunder or thereunder; (b) All cash, cash equivalents, bank accounts and letters of credit of or for the benefit of Seller; (c) All accounts receivable related to the Assets and arising prior to the Closing; (d) All real property and all leasehold interests related to the Assets; (e) Any records relating to the internal governance of Network; (f) Credits from Vendors to the extent relating to the period prior to the Closing Date; or (g) Claims set forth in Network Systems LLC vs. American Whole Health. 2. Representations and Warranties of Seller Seller hereby represents and warrants to Buyer as follows: 2.1 Organization and Standing. Tandberg (a) is a corporation duly incorporated, validly existing and in good standing under the laws of the State of Delaware, (b) has full right, power and authority to enter into and perform and do all things contemplated under this Agreement and the Other Transaction Documents necessary to give effect to the provisions of this Agreement and such Other Transaction Documents. Network is a duly constituted, validly existing Delaware limited liability company and has all necessary authority to own and lease the Assets and to carry on and operate the Business as now being conducted and proposed to be conducted by it under existing agreements, (c) is duly qualified or licensed to do business and is in good standing as a foreign corporation in every jurisdiction in which the character of the Assets or nature of the Business requires such qualification, and (d) does not own any of the Assets, and does not conduct any of the Business, through any other corporation, limited liability company, partnership or other entity. 2.2 Authorization and Binding Obligations. The execution, delivery and performance by Seller of this Agreement and the Other Transaction Documents have been duly and validly authorized by all necessary corporate action. This Agreement and the Other Transaction Documents have been duly executed and delivered by Seller and constitute valid and binding agreements of Seller, enforceable in accordance with their respective terms, except as their enforceability may be limited by bankruptcy, insolvency, moratorium or other laws relating to or affecting creditors' rights generally and the exercise of judicial discretion in accordance with general equitable principles. 4 2.3 No Contravention. The execution, delivery and performance of this Agreement and the Other Transaction Documents, the consummation of the transactions contemplated hereby and thereby and the compliance with the provisions hereof and thereof by Seller do not (a) violate any provision of the certificate of incorporation or bylaws of Seller, (b) conflict with, result in the breach of, or constitute a default under, or result in the creation of any Lien upon any of the Assets, or require any authorization, consent, approval, exemption or other action by or notice to any third party, court or other governmental or administrative body, under the provisions of any agreement or other instrument to which Seller is a party or by which any of the Assets are bound or affected or (c) violate any laws, regulations, orders or judgments applicable to Seller. 2.4 Compliance with Laws. Seller has complied with, and is now in compliance with, all laws, rules, regulations, orders, judgments and decrees of any governmental, regulatory or administrative body, agency or authority, or any court or judicial authority (each, an "Authority") applicable to the Business. Seller possesses each franchise, license, permit, authorization, certification, consent, variance, permission, order or approval of or from any Authority, and has filed all filings, notices or recordings with any such Authority (collectively, "Licenses") material to, or necessary for the conduct of, the Business and is now and, has at all times in the past, been in compliance with each of such Licenses. Each such License is identified on Schedule 2.4. No proceeding or other action is pending or, to the best knowledge of Seller, threatened to revoke, amend, or limit any License, and Seller has no basis to believe that any such proceeding or action would result from the consummation of the transactions contemplated by this Agreement or by the Other Transaction Documents, or that any such License would not be renewed in the ordinary course. 2.5 Tax Matters. Except as set forth on Schedule 2.5, Seller has, within the times and in the manner prescribed by law, filed all required tax returns, including sales and use tax returns, has paid or provided for all taxes, including sales and use taxes owed by Seller, with respect to the Assets (whether or not shown on any tax return to be due and owing by it), has paid or provided for all deficiencies or other assessments of taxes, interest or penalties owed by it, and all such tax returns were correct and complete in all material respects when filed. No taxing Authority has asserted, or will successfully assert, any claim for the assessment of any additional taxes of any nature with respect to any periods covered by any such tax returns, and all taxes or other charges required to be withheld or collected by Seller with respect to the Assets have been duly withheld or collected and, to the extent required, have been paid to the proper taxing Authority or properly segregated or deposited as required by law. 2.6 Litigation. Except as set forth on Schedule 2.6, there is no pending or, to the best knowledge of Seller, threatened adverse claim, dispute, governmental investigation, suit, action, arbitration, legal, administrative or other proceeding of any nature, domestic or foreign, criminal or civil, at law or in equity, by or against or otherwise affecting the Assets. 5 2.7 Agreements. (a) Schedule 2.7(a) sets forth a true and complete list of the Customer Contracts, the Vendor Contracts and the Ancillary Agreement. True and complete copies of each such contract have been delivered to Buyer. (b) To the best knowledge of Seller, each such contract is the valid and binding obligation of the other contracting party, enforceable in all material respects in accordance with its terms against the other contracting party, except as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, arrangement, moratorium or other similar laws and by general principles of equity, has not been cancelled in whole or in part and is in full force and effect. (c) Except as set forth on Schedule 2.7(c), Seller has fulfilled all material obligations required to have been performed by it prior to the date hereof with respect to each such contract, and Seller has no reason to believe that the other contracting party will not be able to fulfill all of its or his obligations when due in respect thereof. (d) To the best knowledge of Seller, no other contracting party to any such contract is now in breach thereof, and there are not now, nor have there been in the twelve (12) month period prior to the date hereof, any material disputes between Seller and any other contracting party. (e) Seller shall use its best efforts to ensure that each such contract shall be validly assigned to Buyer at Closing. (f) Seller is not a party to, or bound by, any agreement or commitment that restricts the conduct of the Business anywhere in the world. (g) Schedule 2.7(g) sets forth a true and complete list of each proposed agreement, commitment, arrangement, or other understanding under current discussion between Seller and any third party that would, or reasonably could be expected to, be required to be disclosed pursuant to any provision of this Agreement, if same had been executed prior to and remained in effect as of the date hereof. True and complete copies of the most recent draft of each such agreement and all other documents evidencing the current state of such discussions have been delivered to Buyer. 2.8 Customers. Schedule 2.8 lists all customers (the "Customers") of the Business with whom Seller has done business within twelve (12) months prior to the Closing Date. Except as set forth on Schedule 2.8, none of the Customers has prepaid its account in whole or in part or otherwise provided any kind of credit to Seller with respect to services to be delivered by Seller at any time following the Closing Date. The relationships of Seller with the persons listed in Schedule 2.8 are good commercial working relationships, and, except as listed on Schedule 2.8, no such person has canceled or otherwise terminated, or threatened to cancel or terminate, its relationship with Seller, or decreased or limited materially, or threatened to decrease or limit materially, its business done with Seller, and Seller has no reason to believe that any such person would not continue its business relationship with Buyer following the Closing on substantially the same terms as such person has heretofore done business with Seller. 6 2.9 Tangible Property. Except as set forth on Schedule 2.9, Seller has good and marketable title to each item of tangible personal property that is an Asset, free and clear of all liens and other encumbrances, and, with immaterial exceptions, each such item of tangible personal property is in good operating condition and repair, ordinary wear and tear excepted, and useable in the ordinary course of business. Schedule 2.9 contains a complete and accurate list setting forth a description of each item of tangible property that is an Asset, and describes the nature of Seller's interest in any property listed thereon that is not owned entirely by Seller free and clear of any Lien. Except as set forth on Schedule 2.9, Seller has not granted, transferred, or assigned any right, title or interest in or to any Asset to any person or entity. 2.10 Intellectual Property. (a) Seller owns, Buyer shall receive at Closing, and Seller's intellectual property includes, all assets described in Section 1.2(c) used by Seller in the Business. (b) Seller has promulgated and used best efforts to protect the trade secrets of the Business. There has been no material unauthorized disclosure of any trade secrets of the Business by any person or entity. (c) No intellectual property right or other claims have been asserted by any person or entity to the use of any Asset, and Seller is not aware of any valid basis for any such claim. To the best knowledge of Seller, the use of any Asset by Seller does not infringe on the intellectual property rights or other rights of any person or entity. (d) As of the Closing Date, all intellectual property purchased by Buyer pursuant to this Agreement is and shall be useable in the same form as on the Closing Date, under the same circumstances as on the Closing Date, and in the ordinary course of the Business as such business actually has been operated prior to the Closing Date. (e) Seller (i) has good and marketable title to each intangible Asset, including, but not limited to, each item of intellectual property used in and material to, or necessary for the operation of, the Business, free and clear of any Lien, and (ii) is the sole and rightful owner of all right, title and interest in and to each intangible Asset, and has the unrestricted right to market, license and otherwise exploit each intangible Asset. 2.11 Certain Transactions. Since December 31, 2003, Seller has not: (i) suffered any change, event or condition that, individually or in the aggregate, has had or could reasonably be expected to have a material adverse effect upon the Business or Seller's ability to consummate the transactions contemplated herein; (ii) sold, transferred, leased, assigned or otherwise disposed of any Asset of the Business, except in the ordinary course of business, consistent with past custom and practice; 7 (iii) made any tax election or settled or compromised any federal, state, local or other tax liability either not in accordance with past practice, or which has had or could reasonably be expected to have a material adverse effect upon the Assets, except as set forth on Schedule 2.11(iii); (iv) taken any action that was intended or may reasonably be expected to result in any of the representations and warranties set forth in this Agreement being or becoming untrue; (v) except in the ordinary course of business consistent with past practice and custom, created, renewed, amended or terminated or given notice of a proposed renewal, amendment of termination of, any Customer Contracts, Vendor Contract or any other material contract, agreement or lease by which any of the Assets are bound; or (vi) agreed to do any of the foregoing. 2.12 No Undisclosed Liabilities. Except as set forth on the Schedules to this Agreement, Seller has no liability, indebtedness, obligation, expense, claim, deficiency, guaranty or endorsement of any type, whether accrued, absolute, contingent, matured, unmatured or other with respect to the Assets. 2.13 Accounts Payable. Seller has provided Buyer with an accurate and complete breakdown and aging of all accounts payable of Seller with respect to the Customer Contracts, the Vendor Contracts and the other Assets as of the Closing Date. 2.14 Assets. Except for the Excluded Assets, the Assets are all of the assets, properties, goodwill, and rights of every nature, kind and description, whether tangible or intangible, real, personal or mixed, wherever located, used in and material to, or necessary for the operation of, the Business. 2.15 Brokers or Finders. Seller has not incurred, and will not incur, directly or indirectly, any liability for brokerage or finders' fees or agents' commissions or any similar charges in connection with this Agreement, the Other Transaction Documents or any transaction contemplated hereby or thereby. Seller shall indemnify and hold Buyer harmless with respect to any claim by any broker, agent, or finder claiming to have acted on behalf of Seller, respecting the subject matter hereof. 3. Representations and Warranties of Buyer Buyer represents and warrants to Seller as follows: 3.1 Organization and Standing. Buyer is a corporation duly incorporated, validly existing and in good standing under the laws of the State of Delaware, with full corporate right, power and authority to enter into and perform and do all things contemplated under this Agreement and the Other Transaction Documents to which it is a party necessary to give effect to the provisions of this Agreement and such Other Transaction Documents. 8 3.2 Authorization and Binding Obligations. The execution, delivery and performance by Buyer of this Agreement and the Other Transaction Documents to which Buyer is a party have been duly and validly authorized by all necessary corporate action. This Agreement and the Other Transaction Documents to which Buyer is a party have been duly executed and delivered by Buyer and constitute valid and binding agreements of Buyer, enforceable in accordance with their respective terms, except as their enforceability may be limited by bankruptcy, insolvency, moratorium or other laws relating to or affecting creditors' rights generally and the exercise of judicial discretion in accordance with general equitable principles. 3.3 No Contravention. The execution, delivery and performance of this Agreement and the Other Transaction Documents to which Buyer is a party, the consummation of the transactions contemplated hereby and thereby and the compliance with the provisions hereof and thereof by Buyer do not (a) violate any provision of the certificate of incorporation or bylaws of Buyer, (b) conflict with, result in the breach of, or constitute a default under, or require any authorization, consent, approval, exemption or other action by or notice to any third party, court or other governmental or administrative body, under the provisions of any agreement or other instrument to which Buyer is a party or by which the property of Buyer is bound, or (c) violate any laws, regulations, orders or judgments applicable to Buyer. 3.4 Brokers or Finders. Buyer has not incurred, and will not incur, directly or indirectly, any liability for brokerage or finders' fees or agents' commissions or any similar charges in connection with this Agreement, the Other Transaction Documents or any transaction contemplated hereby or thereby. Buyer shall indemnify and hold Seller harmless with respect to any claim by any broker, agent, or finder claiming to have acted on behalf of Buyer respecting the subject matter hereof. 4. Closing Conditions and Deliveries 4.1 Conditions to Buyer's Obligations. The obligations of Buyer under this Agreement are subject to the fulfillment on or before the Closing of each of the following conditions, except such conditions as may be waived by Buyer: (a) Delivery of Other Transaction Documents. Seller shall have delivered to Buyer the following Other Transaction Documents, duly executed by the Seller: (i) the Bill of Sale and Assignment and Assumption Agreement; and (ii) such other instruments of sale, transfer, conveyance or assignment as Buyer and its counsel reasonably shall have requested prior to the Closing Date for the sale, transfer, conveyance and assignment of the Assets to Buyer. (b) Secretary's Certificate. Tandberg shall have delivered to Buyer a certification of the secretary of Tandberg, dated the Closing Date, (i) attaching resolutions of the board of directors of Tandberg in connection with the authorization and approval of the execution, delivery and performance by Tandberg of this Agreement and the Other Transaction Documents to which Tandberg is a party, certified as being in full force and effect as of the Closing Date; and (ii) setting forth the incumbency of the officers of Tandberg who have executed and delivered this Agreement and each of the Other Transaction Documents to which Tandberg is a party, including therein a signature specimen of each such officer. 9 (c) Good Standing Certificate. Network shall have delivered to Buyer a certificate, dated as of the Closing Date or within three (3) Business Days prior to the Closing Date, executed by the proper official, as to the good standing of Network in State of Delaware. (d) Consents. Seller shall have delivered to Buyer all written consents which are required under any contract or agreement being assigned to Buyer hereunder; provided, however, that as to any such contract or agreement the assignment of which by its terms requires prior consent of any of the parties thereto, if such consent is not obtained prior to or on the Closing Date, Seller shall take all actions reasonably necessary to obtain such consents. 4.2 Conditions to Seller's Obligations. The obligations of Seller under this Agreement are subject to the fulfillment on or before the Closing of each of the following conditions, except such conditions as may be waived by Seller: (a) Other Transaction Documents. Buyer shall have delivered to Seller the Bill of Sale and Assignment and Assumption Agreement, duly executed by Buyer. (b) Secretary's Certificate. Buyer shall have delivered to Seller a certification of the secretary of Buyer, dated the Closing Date, (i) attaching resolutions of the board of directors of Buyer in connection with the authorization and approval of the execution, delivery and performance by Buyer of this Agreement and the Other Transaction Documents to which Buyer is a party, certified as being in full force and effect as of the Closing Date; and (ii) setting forth the incumbency of the officers of Buyer who have executed and delivered this Agreement and each of the Other Transaction Documents to which Buyer is a party, including therein a signature specimen of each such officer. 5. Indemnification 5.1 Indemnification by Seller. Seller shall indemnify and hold harmless Buyer, its successors and assigns, at all times after the Closing Date, against and in respect of: (a) Liabilities of Seller. Other than liabilities expressly assumed by Buyer as provided in Section 1.4 of this Agreement, all liabilities and obligations of Seller of any kind or nature whatsoever relating to Seller, whether accrued, absolute, fixed, contingent or otherwise, known or unknown; (b) Misrepresentations. Any damage, loss, cost, expense or liability (including reasonable attorneys' fees) resulting to Buyer from any false, misleading or inaccurate representation, breach of warranty or non-fulfillment of any agreement or condition on the part of Seller under this Agreement or any Other Transaction Document to which Seller is a party or from any misrepresentation in or any omission from any certificate, schedule or other instrument furnished or to be furnished to Buyer hereunder; (c) Taxes. Any tax, including any use or sales tax, for which Seller is or may be liable in respect of the Assets prior to the Closing; 10 (d) Conduct of Business. Except as set forth on Schedule 5.1(d), any claim arising out of or in connection with the conduct of the Business prior to the Closing; and (e) Actions and Suits. All claims, actions, suits, proceedings, demands, assessments, judgments, costs and expenses, including, without limitation, legal fees and expenses, incident to any of the foregoing. 5.2 Indemnification by Buyer. Buyer shall indemnify and hold harmless Seller, at all times after the Closing Date, against and in respect of: (a) Assumed Liabilities. All Assumed Liabilities; (b) Misrepresentations. Any damage, loss, cost, expense or liability (including reasonable attorneys' fees) resulting to Seller from any false, misleading or inaccurate representation, breach of warranty or non-fulfillment of any agreement or condition on the part of Buyer under this Agreement or any Other Transaction Document to which Buyer is a party or from any misrepresentation in or any omission from any certificate or other instrument furnished or to be furnished to Seller hereunder; (c) Taxes. Any tax, including any use or sales tax, for which Buyer is or may be liable in respect of the Assets subsequent to the Closing; (d) Conduct of Business. Any claim arising out of or in connection with the conduct of the Business subsequent to the Closing; and (e) Actions and Suits. All claims, actions, suits, proceedings, demands, assessments, judgments, costs and expenses, including, without limitation, legal fees and expenses, incident to any of the foregoing. 5.3 Indemnification Procedure. (a) A party that may be entitled to indemnification pursuant to Section 5.1 or 5.2 (the "Indemnitee") shall promptly give written notice (a "Notice of Claim") to the party liable for such indemnification (the "Indemnitor"). A Notice of Claim shall set forth (a) a description, in reasonable detail, of the facts and circumstances with respect to the subject matter of such claim or potential claim for indemnification, and (b) the anticipated total amount of the indemnification claim (including any costs or expenses which have been or may be reasonably incurred in connection therewith). Upon receipt of a Notice of Claim, the Indemnitor may elect to cure the circumstances giving rise to the indemnification claim (the "Event of Loss") within thirty (30) days after the date of receipt of the Notice of Claim. If such cure cannot be effected within such 30-day period, payment of the amount of actual damage, loss, cost, expense or liability (including reasonable attorneys' fees) (collectively, "Damages") due to the Indemnitee as set forth in the Notice of Claim shall be made by Indemnitor no later than the thirtieth (30th) day after the date of the Notice of Claim (or such later date as the Indemnitor receives written notice that the Indemnitee has suffered Damages). The Indemnitee's failure to give prompt notice or to provide copies of documents or to furnish relevant data shall not constitute a defense (in whole or in part) to any claim by the Indemnitee against the Indemnitor for indemnification, except and only to the extent that such failure shall have caused or increased such liability or adversely affected the ability of the Indemnitor to defend against or reduce its liability. 11 (b) If the Indemnitor shall reject any Damages as to which a Notice of Claim is sent by the Indemnitee, the Indemnitor shall give written notice of such rejection to the Indemnitee within thirty (30) days after the date of receipt of the Notice of Claim. (c) If any Notice of Claim relates to any claim made against an Indemnitee by a third person, the Notice of Claim shall state the nature, basis and amount of such claim. The Indemnitor shall have the right, at its election, by written notice to the Indemnitee, to assume the defense of the claim as to which such notice has been given. Except as provided in the next sentence, if the Indemnitor so elects to assume such defense, it shall diligently and in good faith defend such claim and shall keep the Indemnitee reasonably informed of the status of such defense, and the Indemnitee shall cooperate fully with the Indemnitor in the defense of such claim, provided that in the case of any settlement providing for remedies other than monetary damages for which indemnification is provided, the Indemnitee shall have the right to approve the settlement, which approval shall not be unreasonably withheld or delayed. If the Indemnitor does not so elect to defend any claim as aforesaid or shall fail to defend any claim diligently and in good faith (after having so elected), the Indemnitee may assume the defense of such claim and take such other action as it may elect to defend or settle such claim as it may determine in its reasonable discretion, provided that the Indemnitor shall have the right to approve any settlement, which approval will not be unreasonably withheld or delayed. 6. Post-Closing Covenants 6.1 Further Assurances; Cooperation. The parties shall, at any time, and from time to time, after the Closing Date, execute and deliver such further instruments of conveyance and transfer and take such additional action as may be reasonably necessary to effect, consummate, confirm or evidence the transactions contemplated by this Agreement and the Other Transaction Documents, including, without limitation (i) inventorying and listing of the Assets, (ii) using their best efforts to obtain any third party consents not obtained as of the Closing Date, (iii) filing of tax returns, including, without limitation, the filing of sales and use tax returns and notices as any party hereto may reasonably require, and (iv) cooperating to facilitate the transition of Customers of the Business to Buyer. 6.2 Delivery of Assets; Additional Assets. (a) Seller agrees that it will transfer or make available to Buyer, promptly after the receipt thereof, any property that Seller receives after the Closing Date in respect of the Assets transferred or intended to be transferred to Buyer under this Agreement. (b) To facilitate Buyer's operation of the Business subsequent to the Closing, Seller agrees to make available for purchase by Buyer, at Buyer's option, one Tandberg MCU, one Tandberg gateway and TMS software with sufficient licensing. The purchase price for any of such additional assets shall be equal to Seller's cost for such assets. 12 6.3 Transition Services. For a period of 60 days following the Closing or such shorter period as Buyer shall notify Seller (the "Transition Period"), Seller shall maintain, at the expense of the Business, all employees, premises and infrastructure related to the Assets, except as otherwise agreed by the parties. During the Transition Period (including any extension thereof pursuant to this Section 6.3), the costs incurred by Seller pursuant to the previous sentence shall be paid as an expense of the Business; provided, however, that Buyer shall receive net income from the Customer Contracts in an amount at least equal to Thirty Thousand Dollars ($30,000.00) per month, calculated on a pro rata basis with respect to the actual duration of the Transition Period. To the extent Buyer does not receive such agreed upon minimum net income from the Customer Contracts in any month during the Transition Period (or the applicable pro rata portion of such minimum net income for the final part of the Transition Period if such part is shorter than a month), Seller shall make up the shortfall by a direct payment to Buyer for such month (or shorter period) no later than 30 days after the end of such month (or such shorter period). Subject to the preceding sentence, all employment-related liabilities arising out of the termination of any employees of the Business, whether terminated before Closing or during or at the end of the Transition Period shall be expenses of the Business; provided, however, that no severance payments to employees of the Business that become employees of Seller or Buyer prior to the end of the Transition Period shall be expenses of the Business; and provided, further that Seller shall promptly reimburse Buyer for any such employment-related liabilities for any employee of the Business that becomes an employee of Seller at any time within twelve (12) months of the date of this Agreement. During the Transition Period, Seller shall remain responsible for all billing and collections related to the Assets. During the Transition Period, Seller and Buyer shall each designate an employee dedicated to the transfer of the Assets and related transfer of information and systems integration to Buyer, including all call center, technical support, marketing and billing information related to the Assets. During the Transition Period, Seller shall afford Buyer's employees and other authorized representatives, access during normal business hours to Seller's employees related to the Assets in order to effectuate the transfer of the Assets. Buyer shall conduct these activities in a reasonable manner during regular business hours using reasonable efforts to minimize interferences to the business operations of Seller. Seller shall undertake to promptly and completely provide all disclosures requested by Buyer or its agents. Buyer shall have the right, upon written notice within 30 days following the Closing, at Buyer's expense, to cause Seller to use its good faith efforts to extend its maintenance of, and Buyer's access to (as described in this Section 6.3), Seller's employees related to the Assets for an additional period of 60 days following the Transition Period. At any time during the Transition Period, Buyer shall have the right to make offers of employment to employees of the Business. 6.4 Marketing. Seller shall cooperate with Buyer to develop and jointly market with Buyer to Seller's current ISDN telecommunications Customers a video communications service (the "Service"), including, but not limited to, a package bundling Buyer's IP-based video communications service (the "Glowpoint Service") and Seller equipment and hardware used in connection with the Glowpoint Service. Seller shall use its reasonable best efforts to maintain its Customers and market the Service to its Customers. During the Transition Period and for a period of one year thereafter, Seller shall cooperate with Buyer to issue joint communications to the Customers with respect to the transactions effected by this Agreement and the Service. 13 6.5 Exclusivity. (a) (i) Except as set forth in clause (ii) of this Section 6.5(a), for a period of three years following the Closing (the "Exclusivity Period"), the Glowpoint Service shall be the exclusive IP-based video communications service used by Seller and offered or marketed by Seller to the Customers. During the Exclusivity Period, Buyer shall not offer or market to the Customers video communications hardware manufactured by a competitor of Seller without Seller's prior approval and (ii) the Exclusivity Period shall immediately terminate if and when Buyer, or the Assets acquired by Buyer hereunder, are transferred to a competitor of Tandberg, Inc. set forth on Schedule 6.5(a)(ii). (b) During the Exclusivity Period, Seller shall purchase from Buyer the corporate telecommunication services that Seller currently purchases from AT&T, Sprint and MCI (collectively, the "Vendors"), including through Network, at least the services set forth on Schedule 6.5(b). Seller agrees that any services currently acquired by Seller from the Vendors that have committed terms will be kept active for the duration of such terms. If Seller elects to cancel any of such services prior to the expiration of the term, Seller will be responsible for paying any early termination fees incurred by Buyer as a result of such cancellation. During the first year of the Exclusivity Period, the Glowpoint Service shall be offered to Seller at the lower of (i) the lowest rates then offered by Buyer to any customer with lesser or comparable usage volume or (ii) the rates in effect on the Closing Date. Thereafter, Buyer may raise the rates charged to Seller upon providing thirty (30) days written notice to Seller that Buyer's own direct costs for the relevant communications services have increased. Any such increase shall be limited to a percentage increase equal to the percentage increase in Buyer's actual costs for such services. 6.6 Non-Solicitation; Non-Competition. (a) For a period of two (2) years from the Closing Date, Seller shall not, without Buyer's prior written consent, directly or indirectly, (i) solicit the employment of any officer, senior manager or other key employee of Buyer or any subsidiary of Buyer or (ii) hire any officer, senior manager or other key employee whose employment Buyer or any subsidiary of Buyer has terminated within 90 days of such solicitation or hire; provided, however, that this Section 6.6(a) shall not prevent advertisements, solicitations, position listings or notices of employment opportunities that are published or made available to the public or hiring of personnel responding thereto. (b) For a period of three (3) years from the Closing Date, Seller shall not, directly or indirectly, for purposes competitive with the Business, call on, solicit, or take away for Seller or for any other person or entity, any person or entity who or that is or was a customer of Buyer or any of Buyer's subsidiaries during such three-year period, or that was a Customer of Seller on the Closing Date. 6.7 Employee Matters. (a) Buyer does not and will not assume the sponsorship of, the responsibility for contributions to, or any liability under or in connection with, any employee benefit plan of Seller relating to employees of the Business. Buyer will in no event be deemed to be a successor employer (within the meaning of Treasury Regulation Section 54.4980B-2) of Seller for purposes of applying the provisions of Section 4980B of the Code following the Closing with respect to any current or former employee of Seller. 14 (b) Seller shall be responsible for, and Buyer does not and will not assume, any liability (direct or indirect, contingent or otherwise) that may arise under or in connection with any state or local law similar to the Worker Adjustment and Retraining Notification Act, 29 U.S. Stat. ss. 2010 et. seq., as a result of the transactions contemplated hereby. 7. Miscellaneous 7.1 Governing Law. This Agreement shall be governed in all respects by the laws of the State of New Jersey, without giving effect to any conflict of law provision (whether of the State of New Jersey or any other jurisdiction that would cause the application of the laws of any jurisdiction other than the State of New Jersey). 7.2 Jurisdiction. Any suit, action or proceeding seeking to enforce any provision of, or based on any matter arising out of or in connection with, this Agreement, the Other Transaction Documents or the transactions contemplated hereby or thereby shall be brought exclusively in either the state courts located in Union County, New Jersey or the United States District Court located in Newark, New Jersey, and each of the parties hereby expressly submits to such jurisdiction and venue of such court (and of the appropriate appellate courts therefrom) in any such suit, action or proceeding and irrevocably waives, to the fullest extent permitted by law, any objection that it may now or hereafter have to the laying of the venue of any such suit, action or proceeding in any such court or that any such suit, action or proceeding brought in any such court has been brought in an inconvenient forum. 7.3 Survival. Except as otherwise expressly provided herein, the several representations, warranties, covenants, and agreements of the parties contained in this Agreement or in any Other Transaction Document shall be deemed to be material and to have been relied upon by Buyer and Seller notwithstanding any investigation made by Buyer or Seller, shall survive the Closing Date and shall remain operative and in full force and effect for a period of two (2) years following the Closing Date, except insofar as an indemnification claim has been asserted by any party and has not been resolved prior to the end of such two-year period; provided, however, that the representations and warranties of Seller set forth in Section 2.5 shall survive for the period of the applicable statute of limitations, and the respective representations, warranties, covenants and agreements of Buyer and Seller contained in Sections 2.13, 2.15, 3.4, 5, 6, and 7 shall continue without any time limitation. 7.4 Notices. Any notices authorized to be given hereunder shall be in writing and deemed given, if delivered personally or by overnight courier, on the date of delivery, if a Business Day, or if not a Business Day, on the first Business Day following delivery, or if mailed, three days after mailing by registered or certified mail, return receipt requested, and in each case, addressed, as follows: 15 If to Buyer: Glowpoint, Inc. 225 Long Avenue Hillside, New Jersey 07205 Attention: David C. Trachtenberg, President and CEO Facsimile: (973) 391-9776 and a copy to: Morrison & Foerster LLP 1290 Avenue of the Americas New York, New York 10104 Attention: Michael J.W. Rennock, Esq. Facsimile: (212) 468-7900 If to Seller: Tandberg Inc. 1860 Michael Faraday Drive, Suite 250 Reston, Virginia 20190 Attention: Brad Johnston, President Facsimile: (703) 709-4232 and a copy to: Klett, Rooney, Lieber, Schorling, P.C. 550 Broad Street, Suite 810 Newark, New Jersey 07102 Attention: Steven B. Peri, Esq. Facsimile: (973) 273-9430 or if delivered by facsimile, on a Business Day before 4:00 p.m. local time of addressee, on transmission confirmed electronically, or if at any other time or day on the first Business Day succeeding transmission confirmed electronically, to the facsimile numbers provided above, or to such other address or facsimile number as any party shall specify to the other, pursuant to the foregoing notice provisions. When used in this Agreement, the term "Business Day" shall mean a day other than a Saturday, Sunday or a day on which commercial banks in New York, New York are generally closed for business. 7.5 Entire Agreement; Amendments. This Agreement and the Other Transaction Documents (i) set forth the entire agreement of the parties respecting the subject matter hereof, (ii) supersede any prior and contemporaneous understandings, agreements, or representations by or among the parties, written or oral, to the extent they related in any way to such subject matter , and (iii) may not be amended orally, and no right or obligation of any party may be altered, except as expressly set forth in a writing signed by such party. 16 7.6 Counterparts. This Agreement may be executed in any number of counterparts, each of which shall for all purposes be deemed an original, and all such counterparts shall together constitute but one document. 7.7 Headings. The section and subsection headings do not constitute any part of this Agreement and are inserted herein for convenience of reference only. 7.8 Public Announcements. The parties shall, after consultation, issue a joint press release or otherwise make a public statement concerning the transactions contemplated by this Agreement containing disclosure which is mutually agreeable to the parties; provided, however, that prior to the issuance of such press release, neither party shall make any press release or other public statement concerning the matters covered by this Agreement without the approval of the other party, except to the extent that, in the opinion of counsel for the party making the release or statement, such release or statement is required by law or applicable regulation, and shall, in any event, to the extent practicable, permit the other party an opportunity to review any such release or statement prior to dissemination. 7.9 Waiver. No waiver of a breach of, or default under, any provision of this Agreement shall be deemed a waiver of such provision or of any subsequent breach or default of the same or similar nature or of any other provision or condition of this Agreement. 7.10 Binding Effect and Assignment. This Agreement shall be binding upon and shall inure to the benefit of the parties and their successors and assigns. Neither Seller nor Buyer may assign any obligation under this Agreement except with the prior written consent of the other party hereto. 7.11 Expenses. Each party shall bear its own expenses incurred with respect to the preparation of this Agreement and the Other Transaction Documents and the consummation of the transactions contemplated hereby and thereby. 17 IN WITNESS WHEREOF, the undersigned have executed this Asset Purchase Agreement as of the date first written above. BUYER: ------ GLOWPOINT, INC. By: /s/ David C. Trachtenberg ------------------------- Name: David C. Trachtenberg Title: President and Chief Executive Officer SELLER: ------- TANDBERG, INC. By: /s/ Brad Johnston ----------------- Name: Brad Johnston Title: President EX-10.2 3 b331676ex10_2.txt CERTIFIED AGENT AGREEMENT Exhibit 10.2 CERTIFIED AGENT AGREEMENT This AGREEMENT is entered into effective as of April 16, 2004 (the "Effective Date"), between Glowpoint, Inc. ("GlowPoint"), a Delaware corporation having offices at 225 Long Avenue, Hillside, New Jersey 07205, and Tandberg, Inc. ("Certified Agent"), a Delaware corporation having offices at 1860 Michael Faraday Drive, Suite 250, Reston, Virginia 20190. Whereas: 1. GlowPoint desires in the geographic locations in the United States, Puerto Rico and Canada where GlowPoint does business, or may do business in the future, (hereinafter the "Territory") to engage Certified Agent to assist GlowPoint in marketing certain GlowPoint services directly to Certified Agent's customers (hereinafter "Customers"); and 2. Certified Agent desires to market GlowPoint's services to Customers and to refer sales agents ("Referred Agents") for GlowPoint's services to GlowPoint and represents that it has the necessary marketing capabilities to do so. NOW, THEREFORE, the parties agree as follows: 1.0 APPOINTMENT 1.1 GlowPoint appoints Certified Agent, and Certified Agent accepts such appointment, to be an authorized GlowPoint marketing representative and agent in the Territory for the limited purposes of (i) referring Referred Agents to GlowPoint and (ii) marketing to Customers in accordance with the terms and conditions of this Agreement the GlowPoint IP-based video communications services, (the "GlowPoint Services"). The GlowPoint Services are referred to herein as the "Services". 1.2 Certified Agent acknowledges and agrees that it has no exclusive right to market the Services, and that no franchise is granted to Certified Agent. GlowPoint expressly reserves the right both to contract with others to market the Services and to itself directly engage in such marketing, subject to Section 3.5. 1.3 The relationship of the parties under this Agreement shall be, and shall at all times remain, one of independent contractors and not that of employer and employee, franchiser and franchisee or joint venturers. This Agreement does not establish or constitute Certified Agent as GlowPoint's representative or agent for any purpose other than the solicitation of orders, and the provision of Customer support, for the Services on behalf of GlowPoint to the extent authorized under Section 2. Certified Agent is not authorized to accept orders or to make contracts in GlowPoint's name, or to transact any business in the name of GlowPoint, or otherwise to assume or create any obligation or responsibility binding upon GlowPoint, in any matter whatsoever. 1.4 All persons furnished by Certified Agent in the performance of its duties hereunder shall be considered solely Certified Agent's employees, sales representatives or agents, and Certified Agent shall be solely responsible for all payment of its employees' unemployment, Social Security and other taxes, including contributions from Certified Agent when required by law. 2.0 CERTIFIED AGENT'S RESPONSIBILITIES 2.1 Certified Agent shall devote its commercially reasonable efforts to promote and market the Services to Customers in the Territory. 2.2 Those of Certified Agent's personnel designated by it to sell the Services shall be adequately trained and knowledgeable of the specifications, features and advantages of the Services. [LOGO] 2.3 Certified Agent shall assist GlowPoint in supporting Customers of the Services solicited by Certified Agent. Said responsibilities shall include, but are not limited to, soliciting orders and assisting GlowPoint in resolving any Customer complaints. 2.4 Certified Agent is authorized to receive, but is not authorized to accept (i.e., contractually bind GlowPoint), any Customer subscription agreements or other offers to purchase Services. 2.5 Certified Agent shall comply with all applicable requirements of Federal, state and local laws, ordinances, administrative rules and regulations relating to Certified Agent's performance of its obligations under this Agreement. Certified Agent represents that it is not by law or agreement with others prohibited from entering into or performing this Agreement. 2.6 All costs and expenses incurred by Certified Agent in performing its services under this Agreement, including (by way of example only) rentals, salaries, telephone, traveling and living expenses (including, without limitation, those incurred by Certified Agent's employees in connection with any GlowPoint training session) and other marketing and sales expenses shall be borne by Certified Agent and shall not be reimbursable by GlowPoint. 2.7 CERTIFIED AGENT SHALL MAKE NO REPRESENTATIONS OR WARRANTIES RELATING TO THE SERVICES EXCEPT AS MAY BE SET FORTH IN SALES LITERATURE PROVIDED TO CERTIFIED AGENT BY GLOWPOINT, OR AS SET FORTH IN THE FORMS OF ORDERS PROVIDED TO CERTIFIED AGENT BY GLOWPOINT FOR USE IN THE SOLICITATION OF CUSTOMERS. ALL PRICES QUOTED AND OTHER TERMS AND CONDITIONS FOR THE SERVICES MARKETED UNDER THIS AGREEMENT SHALL BE THOSE, AND ONLY THOSE, PROVIDED BY GLOWPOINT. 2.8 NEITHER GLOWPOINT NOR CERTIFIED AGENT SHALL MAKE ANY EXPRESS OR IMPLIED AGREEMENTS, GUARANTEES OR REPRESENTATIONS, OR INCUR ANY DEBT, IN THE NAME OR ON BEHALF OF THE OTHER. GLOWPOINT'S USE OF CERTIFIED AGENT TO MARKET THE SERVICES AND TO PERFORM THE CUSTOMER SUPPORT AND OTHER SERVICES UNDERTAKEN BY CERTIFIED AGENT IN THIS AGREEMENT IS NOT AN IMPLIED ENDORSEMENT OF CERTIFIED AGENT'S INDEPENDENT BUSINESS, AND NO SUCH REPRESENTATION SHALL BE MADE BY CERTIFIED AGENT. 2.9 Certified Agent shall conduct its business with respect to the marketing of the Glowpoint Services in a manner that reflects favorably on GlowPoint and its Services. Certified Agent shall not disparage GlowPoint or its products or services, nor disparage GlowPoint's competitors or the products or services of such competitors. 2.10 Certified Agent shall be responsible for the compatibility of any non-GlowPoint hardware or software furnished separately by Certified Agent to any Customer with the Services provided under this Agreement. 2.11 Certified Agent shall use commercially reasonable efforts to refer potential Referred Agents to GlowPoint (each, a "Lead" and collectively the "Leads"). Certified Agent shall submit Leads to GlowPoint on a mutually acceptable referral form. GlowPoint reserves the right to reject any Lead, for any or no reason, within fourteen (14) days of GlowPoint's receipt of such Lead. No sales agent that is a direct sales agent of GlowPoint as of the date of this Agreement shall qualify as a Lead unless consented to by GlowPoint in its sole discretion. Certified Agent, in consultation with Glowpoint, will use commercially reasonable efforts to identify and sign up Certified Agent's current distribution partners as Leads. All Leads accepted by GlowPoint shall be set forth on a schedule in the form of Schedule C hereto. GlowPoint shall provide an updated version of Schedule C to Certified Agent on a quarterly basis. 2 [LOGO] 3.0 GLOWPOINT'S RESPONSIBILITIES 3.1. GlowPoint's sole compensation to Certified Agent for Certified Agent's performance of its responsibilities under this Agreement with respect to the GlowPoint Services shall be commissions ("GlowPoint Services Commissions") of "GlowPoint Services Commissionable Revenues" (as detailed in Schedule A), determined as follows: Subject to Section 3.5, GlowPoint shall, by the end of each calendar month, remit to Certified Agent a payment in the amount of any GlowPoint Services Commissions to which Certified Agent is entitled in respect of GlowPoint Services Commissionable Revenues arising during the previous calendar month, together with a statement indicating the basis upon which such GlowPoint Services Commissions have been calculated. "GlowPoint Services Commissionable Revenues" shall mean the charges that are billed and actually received by GlowPoint (net of any associated discounts or credits and exclusive of all taxes, installation or removal charges and other similar charges) in respect of the GlowPoint Services that are delivered by GlowPoint (a) pursuant to Customer contracts for the GlowPoint Services procured by Certified Agent (as determined by GlowPoint, subject to Section 4.1 below) (each a "Certified Agent's GlowPoint Services Customer Contract"), and (b)(i) during the term of Certified Agent's appointment under this Agreement (the "Term") and (ii) if the Term is terminated by GlowPoint (other than by a Termination for Cause (as defined in Section 5.1)) or Certified Agent, during the 180 days immediately following such termination. GlowPoint's obligation to pay GlowPoint Services Commissions hereunder shall cease immediately following a Termination for Cause by GlowPoint. GlowPoint may amend the GlowPoint Services Commission structure, effective upon 60 days' prior notice to Certified Agent (or upon immediate notice, in the case of an added service). If GlowPoint pays a GlowPoint Services Commission to Certified Agent based upon GlowPoint Services Commissionable Revenue that is subsequently refunded or credited back to any Customer, or if any GlowPoint Services Commission is paid to Certified Agent in error, GlowPoint may, upon notice to Certified Agent, deduct the amount of such GlowPoint Services Commission from future GlowPoint Services Commissions otherwise payable to Certified Agent or require Certified Agent to repay such GlowPoint Services Commission to GlowPoint. 3.2 Intentionally Omitted. 3.3 Section 3.1 shall not apply to contracts for the Services by any governmental entity or pursuant to a GSA contract (collectively, the "Government Contracts") procured by Certified Agent. Government Contracts and commissions to Certified Agent for procuring Government Contracts ("Government Commissions") shall be governed by the provisions of Schedule A. 3.4 GlowPoint's sole compensation to Certified Agent for Customer contracts procured by a Referred Agent shall be commissions ("Referral Commissions") in the amount of $100 per billable subscriber location for each such Customer contract for GlowPoint Services procured by a Referred Agent. Subject to Section 3.5, GlowPoint shall, by the end of each calendar month, remit to Certified Agent a payment in the amount of any Referral Commissions to which Certified Agent is entitled in respect of Customer contracts procured by a Referred Agent during the previous calendar month, together with a statement indicating the basis upon which such Referral Commissions have been calculated. GlowPoint's obligation to pay Referral Commissions hereunder shall cease immediately following a Termination for Cause by GlowPoint or thirty (30) days following the termination of the Term by Certified Agent. GlowPoint may amend the Referral Commission structure, effective upon 60 days' prior notice to Certified Agent (or upon immediate notice, in the case of an added service). If GlowPoint pays a Referral Commission to Certified Agent that is subsequently refunded or credited back to any Customer, or if any Referral Commission is paid to Certified Agent in error, GlowPoint may, upon notice to Certified Agent, deduct the amount of such Referral Commission from future Referral Commissions otherwise payable to Certified Agent or require Certified Agent to repay such Referred Commission to GlowPoint. 3.5 Any GlowPoint Services Commissions, Government Commissions or Referral Commissions (collectively, the "Commissions") payable to Certified Agent shall be offset against and reduced by the amounts owed by Certified Agent to GlowPoint each month for GlowPoint's provision to Certified Agent of the network services for Certified Agent's corporate use, as described in that certain Asset Purchase Agreement, dated the date hereof, between Certified Agent and GlowPoint. In no event shall Certified Agent be entitled to any Commissions for Services delivered by GlowPoint pursuant to Customer contracts procured by an agent or sales representative of Certified Agent who is a direct sales agent for the Service at the time this Agreement is entered into and executed between GlowPoint and Certified Agent. 3 [LOGO] 3.6 GlowPoint shall provide Certified Agent, for purposes of marketing the Services, with electronic only versions of Customer contracts, order forms, promotional brochures, sales literature and other sales aids, which materials (as they may be revised from time to time by GlowPoint) Certified Agent shall use in the performance of its duties under this Agreement. 3.7 GlowPoint shall provide and maintain a help desk for Certified Agent and for Customers to contact for technical information and support, as well as trouble reporting and resolution, with respect to the Services, subject to Schedule B. 3.8 GlowPoint shall promptly review all Customer contracts and orders for the Services submitted by Certified Agent for GlowPoint's possible acceptance. GlowPoint reserves the right to reject, for any or no reason, within fourteen (14) days of GlowPoint's receipt, any such proposed contract or order. GlowPoint may, in addition, upon thirty (30) days' notice to Certified Agent and Customer (except in the case of Customer's failure to pay GlowPoint for the Services or Customer's malfeasance, for which no advance notice shall be required) terminate a Customer's contract at any time in GlowPoint's sole discretion. GlowPoint is not obligated to renew any Customer contract that has expired or otherwise terminated. 3.9 GlowPoint shall be solely responsible for providing, maintaining, billing (on a GlowPoint invoice) and collecting for the Services. All title to, and risk of loss from, the Services shall remain with GlowPoint. 3.10 GlowPoint shall conduct its business in a manner that reflects favorably on Certified Agent, its products and services. GlowPoint shall not disparage Certified Agent or its products or services, nor disparage Certified Agent's competitors or the products or services of such competitors. 4.0 CUSTOMER AND EMPLOYEE CONTACTS 4.1 To avoid Customer confusion, GlowPoint and Certified Agent shall coordinate their respective marketing of the Services to Customers. Without limitation of the foregoing, GlowPoint or Certified Agent (as the case may be) shall, upon receipt of notice from the other party, refrain from marketing the Services to a potential customer of the Services to whom an employee or other authorized sales representative or agent of such other party is already actively marketing the Services, and any contract for the purchase of the GlowPoint Services resulting from any such marketing activities by Certified Agent shall be deemed a "Certified Agent's GlowPoint Services Customer Contract" for purposes of Section 3.1 above. Certified Agent may not in any event market the Services to residential customers. 4.2 Certified Agent shall not, during or for a period of six (6) months following the expiration or other termination of the Term, solicit any Customer to which Certified Agent has sold any Service during the Term to purchase any service that is competitive with such Service. 4.3 GlowPoint shall not, during or for a period of six (6) months following the expiration or other termination of the Term, solicit, other than through Certified Agent, any Customer to which Certified Agent has sold any Service during the Term to purchase any videoconferencing product or service that Certified Agent then actively sells to such Customer. 4.4 For all purposes of this Section 4, the term "Customer" shall encompass (if applicable in a given case) only the particular division, subsidiary or other operating unit (any of the foregoing, a "Unit") of a larger entity to which Unit Certified Agent has during the Term actively sold videoconferencing equipment or services, unless Certified Agent has actively sold such products or services during the Term to a majority of such entity's Units, in which case the term "Customer" shall encompass the larger entity. 5.0 TERM AND TERMINATION 5.1 The Term shall commence as of the Effective Date and shall continue for a period of twelve (12) months unless earlier terminated by either party upon thirty (30) days' notice to the other party, provided that either party may terminate the Term upon notice with immediate effect if the other party has failed to perform or abide by any of such other party's material obligations under this Agreement (a "Termination for Cause"). This Agreement will automatically renew for successive 12-month periods, and shall remain subject to thirty (30) days' notice of termination and immediate termination for cause by either party, unless either party elects not to renew the Agreement by sending a written notice to the other party no later than thirty (30) days prior to the then scheduled expiration of the Term. 4 [LOGO] 5.2 Except as otherwise provided herein, upon a termination of the Term for any reason, neither party shall have any liability to the other, for either compensation or damages of any kind or nature whatsoever arising from such termination or otherwise, whether on account of the loss by Certified Agent of present or prospective Commissions, or expenditures, investments or commitments made in connection therewith, or in connection with the establishment, development or maintenance of Certified Agent's business, or on account of any other cause or thing whatsoever, except that no such termination shall prejudice or otherwise affect the respective rights or liabilities of the parties with respect to (a) Certified Agent's entitlement to Commissions procured prior to such termination, or (b) compensatory damages to which either party may be entitled arising from a Termination for Cause. GlowPoint Services Commission payments to the Certified Agent will be governed by Section 3.1 and Schedule A. Government Commission payments to the Certified Agent will be governed by Section 3.3 and Schedule A. Referral Commission payment to Certified Agent will be governed by Section 3.4 and Schedule A. 5.3 Upon a termination of the Term for any reason, Certified Agent shall immediately: discontinue any and all use of the Marks (as defined in Section 7.1), including but not limited to such use in advertising or business materials of Certified Agent; remove and return to GlowPoint, or destroy at GlowPoint's request (and provide GlowPoint with evidence of such destruction), all promotional material or other information supplied to Certified Agent without charge by GlowPoint; and cease representing itself, in any manner, as an agent of GlowPoint. 6.0 INDEMNIFICATION 6.1 Each party (the "Indemnitor") shall at all times defend, indemnify and hold harmless the other party, its affiliates and suppliers and all of the respective officers, directors, shareholders, employees, successors and assigns of each of the foregoing (collectively, the "Indemnified Parties") from and against, and pay and reimburse the Indemnified Parties for, any and all liabilities, obligations, losses, damages, out-of-pocket costs and expenses (including interest, penalties and reasonable attorneys' fees and expenses incurred in the investigation or defense of any of the same or in asserting any of their respective rights hereunder) to the extent arising out of or relating to any alleged act or omission of the Indemnitor in the performance of the activities contemplated hereby or any failure by the Indemnitor to abide by any of its covenants set forth herein. 6.2 If a third party asserts any claim against an Indemnified Party for which an Indemnitor is responsible under Section 6.1: (a) such Indemnified Party shall give such Indemnitor written notice promptly after such Indemnified Party has actual knowledge of such claim and shall permit such Indemnitor (at such Indemnitor's expense) to assume the defense of any claim or any litigation resulting therefrom; provided that the failure by such Indemnified Party to give such notice shall not relieve such Indemnitor of its indemnification obligations under this Agreement except to the extent that such failure results in a failure of actual notice to such Indemnitor and, as a result, such Indemnitor is materially damaged; (b) counsel selected by such Indemnitor to conduct the defense of such claim or litigation must be reasonably satisfactory to such Indemnified Party; and (c) such Indemnified Party may participate in such defense at its sole expense. Such indemnitor shall not, in the defense of any such claim or litigation, consent to the entry of any judgment or enter into any settlement that provides for injunctive or other non-monetary relief affecting any Indemnified Party or that does not include as an unconditional term thereof a release by the claimant or plaintiff from all liability with respect to such claim or litigation in favor of such Indemnified Party. 7.0 MARKETING; TRADEMARKS; STRATEGIC ALLIANCE 7.1 GlowPoint grants Certified Agent non-exclusive permission to utilize the GlowPoint and any other GlowPoint-designated trademarks, insignia and symbols set forth via notice to Certified Agent (herein "Marks") (the ownership of all of which Marks by GlowPoint shall be deemed acknowledged by Certified Agent at first use) in Certified Agent's advertising and promotion of the Services, provided that such use is consistent with this Agreement and GlowPoint's generally applied standards and guidelines, as they may be revised from time to time; provided, further, that GlowPoint reserves the right to withdraw this grant with respect to any Mark upon immediate notice to Certified Agent in the event that GlowPoint discontinues the use of such Mark to identify Services. 5 [LOGO] 7.2 All Certified Agent-initiated advertisements or promotions (including, without limitation, any materials appearing on web sites) that use Marks or make any reference thereto, or that Certified Agent otherwise uses in connection with its marketing of the Services, shall be subject to prepublication review and written approval by GlowPoint with respect to, but not limited to, context, style, appearance, composition, timing and media. Certified Agent may not use, include or refer to any Mark in any unsolicited email. 7.3 Advertising by Certified Agent, including, without limitation, any materials on web sites, that shows and identifies products or services marketed by Certified Agent for companies other than GlowPoint may not use the Marks unless said products or services are clearly separated from and not associated with the Marks. Certified Agent shall not use Marks in any way to imply GlowPoint's endorsement of non-GlowPoint products or services. Certified Agent shall not alter or remove any Mark applied to the Services. 7.4 Certified Agent's marketing of the Services shall include: (a) at least quarterly sales and marketing planning sessions between the appropriate representatives of Certified Agent and GlowPoint; (b) compliance with the demonstration requirements set forth in Schedule B; and (c) at least quarterly webcasts between Certified Agent's President and GlowPoint's Chief Executive Officer, which will be distributed to the sales and marketing employees and representatives of Certified Agent and GlowPoint. 7.5 Upon the execution of this Agreement, Certified Agent and GlowPoint shall announce, pursuant to and in the manner contemplated by Section 12.5, the strategic alliance (the "Strategic Alliance") between the parties including (i) the ability of GlowPoint to provide an end-to-end Tandberg-branded hardware and software experience over the GlowPoint network, (ii) the transfer of the customer base of Certified Agent's wholly owned subsidiary, Network Systems, LLC, to GlowPoint, (iii) the designation of GlowPoint as Certified Agent's exclusive IP service provider for its corporate use in North America, and (iv) the ability of Customers and prospective customers to experience the Tandberg-branded hardware and software end-to-end solution over the GlowPoint network in Certified Agent's principal demonstration facilities. 7.6 Certified Agent appoints GlowPoint, and GlowPoint accepts such appointment, to be an external testing partner of Certified Agent, whereby GlowPoint shall be authorized to test the use and compatibility of the Services with Certified Agent's hardware and software and any upgrades and improvements thereof. For purposes of this Section 7.6, Certified Agent agrees to provide to GlowPoint any upgrades of or improvements to Certified Agent's hardware or software during the Term of this Agreement. Certified Agent and GlowPoint agree to collaborate and cooperate with each other during the Term with respect to research and development efforts relating to IP based video communications solutions. 7.7 Upon announcement of the Strategic Alliance, Certified Agent shall display the GlowPoint logo and identify GlowPoint as a strategic alliance partner on Certified Agent's WWW.TANDBERGUSA.COM website with the same prominence as the other strategic alliance partners of Certified Agent identified on such website. Certified Agent agrees not to enter into a strategic alliance partnership with any competitor of GlowPoint for a period of at least six (6) months after the date of this Agreement. 7.8 Certified Agent agrees to launch a "strategic service provider partner program" within six (6) months after the date of this Agreement. Certified Agent agrees that it shall name GlowPoint as the first IP-based video communications service provider in such program. 7.9 Glowpoint shall not use any of Certified Agent's trademarks, copyrighted materials or insignia without specific permission to do so in each instance, and shall discontinue any such use upon receipt of Certified Agent's written request to do so or upon the termination of this Agreement. 6 [LOGO] 8.0 USE OF INFORMATION This Agreement, all information provided by any Customer to Certified Agent in its capacity as a representative of GlowPoint, all Customer contracts for any Services, and all technical and business information, including customer lists, customer data and all other customer information, in whatever form obtained by or furnished to Certified Agent under or in contemplation of this Agreement (all hereinafter designated "Information"), shall remain the exclusive property of GlowPoint. Such Information (i) shall be treated in confidence by Certified Agent and used by Certified Agent only for the purpose of performing Certified Agent's obligations under this Agreement; (ii) shall not be reproduced or copied by Certified Agent in whole or in part, except as necessary for use as authorized in this Agreement; (iii) shall not be disclosed by Certified Agent to any third party; (iv) shall be made available only to such employees of Certified Agent who have a need to have access to such Information and have agreed to comply with the terms of this Section; and (v) shall, together with any copies thereof, be returned, destroyed, or, if in the form of software recorded on an erasable storage medium, erased when no longer needed by Certified Agent or the Term terminates, whichever occurs first. Certified Agent shall adhere to the requirements of this Section 8 for at least two (2) years following the expiration or other termination of the Term. 9.0 LIMITATION OF LIABILITY 9.1 GLOWPOINT'S AGGREGATE LIABILITY FOR ANY LOSSES OR OTHER DAMAGES OF ANY NATURE INCURRED BY CERTIFIED AGENT UNDER THIS AGREEMENT SHALL BE LIMITED TO DIRECT, PROVEN DAMAGES IN AN AMOUNT NOT TO EXCEED THE GREATER OF: (i) THE AGGREGATE AMOUNT OF ANY COMMISSIONS TO WHICH CERTIFIED AGENT IS ENTITLED UNDER SECTIONS 3.1 THROUGH 3.4 AS APPLICABLE AND (ii) ONE MILLION DOLLARS ($1,000,000). 9.2 NEITHER PARTY SHALL BE LIABLE TO THE OTHER PARTY FOR ANY INCIDENTAL, CONSEQUENTIAL, PUNITIVE OR ANY OTHER INDIRECT LOSS OR DAMAGE, INCLUDING LOST PROFITS OR LOST REVENUES, ARISING OUT OF OR RELATED TO THIS AGREEMENT OR ANY OBLIGATION RESULTING THEREFROM, OR THE USE OR PERFORMANCE OF ANY SERVICE. 9.3 GLOWPOINT SHALL HAVE NO LIABILITY TO CERTIFIED AGENT FOR ANY DAMAGES, LOSS, COST OR EXPENSE RESULTING FROM, INCLUDING WITHOUT LIMITATION ANY COMMISSIONS THAT MIGHT HAVE BEEN EARNED HEREUNDER BUT FOR, GLOWPOINT'S INABILITY OR FAILURE TO PROVIDE SERVICES TO ANY CUSTOMER OR FOR ANY DELAYS IN THE PROVISION OF SERVICES TO ANY CUSTOMER OR IN THE EVENT OF GLOWPOINT'S TERMINATION OR BREACH OF ANY CUSTOMER SERVICE CONTRACT OR IN THE EVENT OF ANY DISCONTINUATION OF ANY SERVICES. 9.4 THE LIMITATIONS OF LIABILITY SET FORTH IN THIS SECTION 9 SHALL APPLY: (i) REGARDLESS OF THE FORM OF ACTION, WHETHER IN CONTRACT, TORT OR OTHERWISE; (ii) WHETHER OR NOT DAMAGES WERE FORESEEABLE OR A PARTY HAS BEEN ADVISED OF THE POSSIBILITY THEREOF AND (iii) NOTWITHSTANDING ANY OTHER PROVISION OF THIS AGREEMENT. THESE LIMITATIONS OF LIABILITY SHALL SURVIVE FAILURE OF ANY EXCLUSIVE REMEDIES PROVIDED IN THIS AGREEMENT. 10.0 FORCE MAJEURE Neither party shall be held responsible for any delay or failure in performance to the extent that such delay or failure in performance is caused by fires, embargoes, floods, wars, the elements, labor disputes, government requirements, acts of God, inability to secure raw materials or transportation facilities, acts or omissions of carriers or suppliers or other cause beyond such party's control, whether or not similar to any of the foregoing; provided, however, that performance by each party of its obligations hereunder shall not be excused by reason of an act of government authority in the exercise of its enforcement powers against such party for the alleged violation of any law, rule or regulation. 7 [LOGO] 11.0 ASSIGNMENT Neither party shall assign any right or interest under this Agreement, or delegate any work or other obligation or duty to be performed or owed by it under this Agreement; any attempted assignment or delegation in contravention of the foregoing shall be null and void unless approved in writing by the other party. Either party may assign this Agreement, in whole or in part, to any company under common control with such party, successor-in-interest or successor upon notice to the other party. 12.0 MISCELLANEOUS 12.1 Except to the extent expressly provided otherwise in this Agreement, all notices under this Agreement shall be in writing and shall be given in person or by certified or registered mail or by overnight courier, addressed to Certified Agent at the address set forth at the beginning of this Agreement and to GlowPoint at the address set forth at the beginning of this Agreement, Attention: GlowPoint Sales Administration, or to such other address as either party may designate by notice pursuant hereto. Each party may, in addition, send notices to the other party electronically to the email address for such other party set forth below. 12.2 The construction, interpretation and performance of this Agreement shall be governed by the law of the State of New Jersey, excluding its choice of law provisions. Any litigation concerning this Agreement shall be commenced exclusively in either the state courts located in Union County, New Jersey, or the United States District Court located in Newark, New Jersey, and each party consents to jurisdiction and venue therein. In the event of any legal action between the parties with respect to this Agreement, the prevailing party will be entitled to recover its reasonable attorneys' fees and court costs. 12.3 If any paragraph, or clause thereof, of these terms and conditions shall be held to be invalid or unenforceable in any jurisdiction in which these terms and conditions apply, then for such jurisdiction the meaning of such paragraph or clause shall be construed so as to render it enforceable to the extent feasible; and if no feasible interpretation would save such paragraph or clause from invalidity or unenforceability, it shall be severed from these terms and conditions with the remainder remaining in full force and effect. 12.4 This Agreement has been executed and delivered by the parties and shall become effective simultaneously with the Asset Purchase Agreement between the parties dated the date hereof and, to the extent applicable, shall be read in conjunction therewith. In all other respects, the terms and conditions contained in this Agreement supersede all prior oral or written understandings between the parties, and constitute the entire agreement between them, concerning the subject matter of this Agreement. Except as set forth in the Reciprocal Non-Disclosure and Confidentiality Agreement dated November 19, 2003 between the parties hereto, there are no understandings or representations, express or implied, concerning such subject matter that are not expressly set forth in this Agreement. This Agreement may not be modified or amended except by a writing signed by both parties. 12.5 The parties shall, after consultation, issue a press release substantially in the form of Schedule D hereto, or otherwise make a public statement concerning the transactions contemplated by this Agreement containing disclosure which is mutually agreeable to the parties; provided, however, that prior to the issuance of such press release, neither party shall make any press release or other public statement concerning the matters covered by this Agreement without the approval of the other party, except to the extent that, in the opinion of counsel for the party making the release or 8 [LOGO] statement, such release or statement is required by law or applicable regulation, and shall, in any event, to the extent practicable, permit the other party an opportunity to review any such release or statement prior to dissemination. 9 [LOGO] IN WITNESS WHEREOF, the parties have caused this Agreement to be signed by their duly authorized representatives. GLOWPOINT, INC. TANDBERG, INC. By: /s/ David C. Trachtenberg By: /s/ Brad Johnston -------------------------- ------------------ Name: David C. Trachtenberg Name: Brad Johnston ----------------------------- -------------- Title: President and Chief Executive Officer Title: President ------------------------------------- --------- Date: April 16, 2004 Date: April 16, 2004 --------------- ------------- Email__________________________ Email: _____________________ 10 EX-99.1 4 b331676ex99_1.txt PRESS RELEASE Exhibit 99.1 [LOGO] NEWS ANNOUNCEMENT FOR IMMEDIATE RELEASE Contact: Michael Wachs, CEOcast for GlowPoint 212-732-4300, ext. 225 investors@glowpoint.com GlowPoint Reports First Quarter Results 45% Year-over-Year Revenue Growth 74% Year-over-Year Billable Subscriber Location Growth and 177% Sequential Increase in Gross Margin Drive Improved Operating Results HILLSIDE, N.J. -- April 28, 2004 -- Glowpoint, Inc. (NASDAQ: GLOW), the nation's first and leading carrier-grade, IP-based video communications service provider, today announced financial results from continuing operations for the first quarter ended March 31, 2004. Summary Financial Results From Continuing Operations (in thousands, except per share data) - ------------------------------------------------------------------------------- Three Months Ended March 31, - ------------------------------------------------------------------------------- 2004 2003 - ------------------------------------------------------------------------------- Net revenue $3,225 $2,227 - ------------------------------------------------------------------------------- Gross margin 485 (67) - ------------------------------------------------------------------------------- Net loss (1) $(8,214) $(4,649) - ------------------------------------------------------------------------------- Net loss per share, basic & diluted $(0.25) $(0.12) - ------------------------------------------------------------------------------- EBITDA (2) $(1,929) $(1,158) - ------------------------------------------------------------------------------- (1) Net loss includes discontinued AV and VS operations. (2) Earnings before interest, taxes, depreciation and amortization (EBITDA) is not a standard financial measurement under accounting principles generally accepted in the United States of America ("GAAP"). EBITDA should not be considered as an alternative to net loss or cash flow from operating activities as a measure of liquidity or as an indicator of operating performance or any measure of performance derived in accordance with GAAP. EBITDA has been provided to more clearly present the financial results that management uses to internally evaluate its business. Management believes that this non-GAAP financial measure allows investors and management to evaluate and compare the Company's operating results from continuing operations from period to period in a meaningful and consistent manner. Reconciliation of the non-GAAP financial measure to the most directly comparable financial measure reported in accordance with GAAP is presented in a separate section at the end of this press release. GlowPoint Reports First Quarter Results For the quarter ended March 31, 2004, total revenue increased 44.8% to $3.2 million from $2.2 million in the quarter ended March 31, 2003. Subscription and related revenue for the 2004 period rose 91.2% to $2.4 million from $1.3 million in the year-ago first quarter and 14.2% from the 2003 fourth quarter level of $2.1 million. Billable subscriber locations on the GlowPoint network during the first quarter increased 73.7% to 1,211 up from 697 in the first quarter of 2003 and 5.4% from the fourth quarter 2003 level of 1,149. Average monthly subscription and related revenue per subscriber location at $690 increased 5.5% from the fourth quarter 2003 level of $654. This is the first time in four quarters that this metric has increased, driven by the introduction in January of GlowPoint's new "All You Can See" unlimited video calling plans and other product enhancements previously announced. Non-subscription revenue related to bridging, events and other one-time fees fell 17.1% to $791,000 from $954,000 in the year-ago first quarter, but was up 13.8% from the 2003 fourth quarter level of $695,000 due to the reversal of the seasonality influences of the fourth quarter holiday period. "GlowPoint's focus on growing our core subscription-based video communications business is beginning to drive positive operational results," said David C. Trachtenberg, Chief Executive Officer and President of GlowPoint. "Our actions over the past two quarters laid the foundation for GlowPoint to drive profitable revenue through an expanded and diversified sales partner channel." Operating expenses for the quarter ended March 31, 2004 rose 59% to $4.0 million from $2.5 million in the quarter ended March 31, 2003, but declined 10% from the 2003 fourth quarter level of $4.4 million. Trachtenberg continued, "With double digit revenue growth, we improved our gross margin 177.4% from 5.4% during the fourth quarter of last year to 15% in our first quarter of 2004. And, with GlowPoint's "All You Can See" unlimited video calling plans and improvements to our operational efficiencies, we continue to manage to a 35% gross margin target for our core subscription business by the fourth quarter of 2004." The following chart summarizes operating highlights of GlowPoint's core subcription business:
- -------------------------------------------------------------------------------------------------------------- Q1 Q1 Y/Y Q4 Q/Q 2004 2003 % 2003 % Change ---- ---- Change ---- -------- ------ - -------------------------------------------------------------------------------------------------------------- Billable Subscriber Locations (1) 1,211 697 73.7% 1,149 5.4% - -------------------------------------------------------------------------------------------------------------- Average Billable Subscriber Locations (2) 1,176 576 104.3% 1,087 8.2% - -------------------------------------------------------------------------------------------------------------- Subscription and Related Revenue (in 000s) $2,434 $1,273 91.2% $2,132 14.2% - --------------------------------------------------------------------------------------------------------------
GlowPoint Reports First Quarter Results - -------------------------------------------------------------------------------------------------------------- Non-Subscription Revenue (in 000s) $791 $954 (17.1%) $695 13.8% - -------------------------------------------------------------------------------------------------------------- Total Revenue (in 000s) $3,225 $2,227 44.8% $2,827 14.1% - -------------------------------------------------------------------------------------------------------------- Average Monthly Subscription Revenue Per Location (3) $690 $737 (6.4%) $654 5.5% - -------------------------------------------------------------------------------------------------------------- Number of Customers 285 194 46.9% 271 5.2% - -------------------------------------------------------------------------------------------------------------- Billable Subscriber Locations per Customer (4) 4.25 3.59 18.3% 4.24 0.2% - -------------------------------------------------------------------------------------------------------------- Subscriber Location Backlog (5) 35 327 (89.3%) 91 (61.5%) - -------------------------------------------------------------------------------------------------------------- Gross Margin 15.0% (3.0%) NA 5.4% 177.4% - -------------------------------------------------------------------------------------------------------------- Variable Gross Margin (6) 54.1% 42.0% 28.9% 51.0% 6.1% - --------------------------------------------------------------------------------------------------------------
(1) Total number subscriber locations that were generating revenue for the Company, as of the last day in each period. Multiple endpoints or circuits can be linked to a billable subscriber location. (2) Calculated as a weighted average number of billable subscriber locations, based on the number of days a location was on the network during each respective period. (3) Calculated as subscription and related revenue divided by average billable subscriber locations, divided by three, then multiplied by 1,000. (4) Calculated as billable subscriber locations divided by the number of customers. (5) Represents the Company's estimate of billable subscriber locations under contract but not yet generating revenue for the Company, at the end of the periods shown. This estimate assumes no material changes that would precipitate a customer from canceling a contract. The Company can give no assurance as to whether these contracts will be executed. While the Company may, from time to time, issue updated guidance with respect to its subscriber location backlog, it assumes no obligation to do so. (6) Calculated by dividing revenues less variable costs of revenue by revenue. The Company ended the first quarter of 2004 with $13.6 million in cash, cash equivalents and escrowed cash. At the end of 2003, GlowPoint had $4.5 million in cash, cash equivalents and escrowed cash. During the first quarter, the Company completed a private placement, raising net proceeds of $12.5 million. "The pieces are in place for us to achieve our objective of reaching our cash-flow break-even run-rate by the end of the year," Trachtenberg said. "We just announced our strategic alliance with TANDBERG and the acquisition of the NuVision customer base which will positively impact both our top and bottom line for the second quarter and beyond." Trachtenberg concluded, "New products, distribution partners and an expanded customer base, combined with a strong balance sheet, give us confidence in GlowPoint's future and our ability to capitalize on profitable growth opportunities." GlowPoint Reports First Quarter Results The Company will hold a conference call later today to discuss these results. The call will take place from 5:00 p.m. to 6:00 p.m. EST. Mr. Trachtenberg, Christopher Zigmont, Chief Financial Officer and Mike Brandofino, Chief Technology Officer will host the call. Interested participants should call (617) 801-9711 and use pass code 85537690. There will be a playback available until May 5, 2004. To listen to the playback, please call 888-286-8010 and use pass code 43525695. This call is being webcast by CCBN and can be accessed at GlowPoint's website at WWW.GLOWPOINT.COM. The webcast will also be distributed over CCBN's Investor Distribution Network to both institutional and individual investors. Individual investors can listen to the call through CCBN's individual investor center at WWW.COMPANYBOARDROOM.COM or by visiting any of the investor sites in CCBN's Individual Investor Network such as America Online's Personal Finance Channel, Fidelity Investments(R) (Fidelity.com) and others. Institutional investors can access the call via CCBN's password protected event management site, StreetEvents (WWW.STREETEVENTS.COM). An online archive of the broadcast will be available through these websites through 11:59 p.m. Tuesday, May 12, 2004. About GlowPoint Glowpoint, Inc. (NASDAQ: GLOW) is the nation's first and leading carrier-grade, IP-based video communications service provider. GlowPoint is a member of the Cisco Powered Network Program, and operates a video communications service featuring broadcast quality images with telephone-like reliability, features and ease-of-use. The GlowPoint network spans three continents and carries over 8,000 video calls per month through the United States, Canada, Europe and Asia. Since the network was launched in 2000, GlowPoint has carried over 17.4 million video conferencing minutes in video calls. GlowPoint is headquartered in Hillside, New Jersey. To learn more about GlowPoint, visit us at WWW.GLOWPOINT.COM. # # # The statements contained herein, other than historical information, are or may be deemed to be forward-looking statements and involve factors, risks and uncertainties that may cause actual results in future periods to differ materially from such statements. These factors, risks and uncertainties include market acceptance and availability of new video communication services; the nonexclusive and terminable-at-will nature of sales agent agreements; rapid technological change affecting demand for the Company's services; competition from other video communications service providers; and the availability of sufficient financial resources to enable the Company to expand its operations, as well as other risks detailed from time to time in the Company's filings with the Securities and Exchange Commission. GLOWPOINT, SCHEDULEPOINT PARTNERPOINT, CUSTOMERPOINT and GLOWPOINT WEBCASTING are service marks of Glowpoint, Inc. All other marks are trademarks or service marks of their respective owners. TABLES TO FOLLOW Glowpoint, Inc. Consolidated Balance Sheets
March 31, 2004 December 31, 2003 -------------- ----------------- (Unaudited) ASSETS Current assets: Cash and cash equivalents............................................ $ 13,312,698 $ 4,184,897 Escrowed cash........................................................ 335,644 335,188 Accounts receivable-net of allowance for doubtful accounts of $108,021 and $71,620 respectively................................ 2,599,803 2,305,552 Other current assets................................................. 1,369,794 1,439,978 -------------- -------------- Total current assets............................................. 17,617,939 8,265,615 Furniture, equipment and leasehold improvements-net....................... 13,074,274 13,024,055 Goodwill - net............................................................ 2,547,862 2,547,862 Other assets.............................................................. 274,163 149,574 -------------- -------------- Total assets..................................................... $ 33,514,238 $ 23,987,106 ============== ============== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable..................................................... $ 1,707,316 $ 2,368,484 Accrued expenses..................................................... 1,161,190 900,690 Deferred revenue..................................................... 795,720 -- Current portion of capital lease obligations......................... 127,374 131,182 -------------- -------------- Total current liabilities........................................ 3,791,600 3,400,356 -------------- -------------- Noncurrent liabilities: Capital lease obligations, less current portion...................... 756 34,972 -------------- -------------- Total noncurrent liabilities..................................... 756 34,972 -------------- -------------- -------------- -------------- Total liabilities................................................ 3,792,356 3,435,328 -------------- -------------- Commitments and contingencies Subordinated debentures................................................... -- 4,888,000 Discount on subordinated debentures....................................... -- (3,149,805) -------------- -------------- Subordinated debentures, net......................................... -- 1,738,195 -------------- -------------- Stockholders' Equity: Preferred stock, $.0001 par value; 5,000,000 shares authorized, 203,667 shares outstanding....................................... -- -- Common stock, $.0001 par value; 100,000,000 authorized; 37,166,262 and 30,543,672 shares outstanding, respectively.................. 3,717 3,054 Treasury stock, 39,891 shares at cost................................ (239,742) (239,742) Deferred compensation................................................ (1,804,445) (1,650,607) Additional paid-in capital........................................... 156,798,542 137,449,109 Accumulated deficit.................................................. (125,036,190) (116,748,231) -------------- -------------- Total stockholders' equity....................................... 29,721,882 18,813,583 -------------- -------------- Total liabilities and stockholders' equity....................... $ 33,514,238 $ 23,987,106 ============== ==============
Glowpoint, Inc. Consolidated Statements of Operations (Unaudited)
Three Months Ended March 31, ------------------------------------ 2004 2003 ------------ ------------ Net revenues .......................................... $ 3,224,950 $ 2,226,858 Cost of revenues ...................................... 2,739,753 2,294,287 ------------ ------------ Gross margin ....................................... 485,197 (67,429) ------------ ------------ Operating expenses Research and development ........................... 326,646 301,538 Selling ............................................ 1,835,155 985,141 General and administrative ......................... 1,882,099 1,234,664 ------------ ------------ Total operating expenses .............................. 4,043,900 2,521,343 ------------ ------------ ------------ ------------ Loss from continuing operations ....................... (3,558,703) (2,588,772) ------------ ------------ Other (income) expense Amortization of deferred financing costs ........... 84,796 45,509 Interest income .................................... (1,520) (5,189) Interest expense ................................... 53,021 373,050 Amortization of discount on subordinated debentures 3,165,036 534,625 Loss on extinguishment of debt ..................... 1,354,000 -- ------------ ------------ Total other expenses, net ............................. 4,655,333 947,995 ------------ ------------ Net loss from continuing operations ................... (8,214,036) (3,536,767) Loss from discontinued AV operations .................. -- (793,022) Loss from discontinued VS operations .................. -- (319,478) ------------ ------------ Net loss attributable to common stockholders .......... $ (8,214,036) $ (4,649,267) ============ ============ Net loss from continuing operations per share: Basic and diluted .................................. $ (0.25) $ (0.12) ============ ============ Loss from discontinued operations per share: Basic and diluted .................................. $ -- $ (0.04) ============ ============ Net loss attributable to common stockholders per share: Basic and diluted .................................. $ (0.25) $ (0.16) ============ ============ Weighted average number of common shares: Basic and diluted .................................. 32,391,261 29,029,894 ============ ============
Glowpoint, Inc. Consolidated Statements of Cash Flows (Unaudited)
Three Months Ended March 31, --------------------------------- 2004 2003 -------------- -------------- Cash flows from Operating Activities Net loss........................................................... $ (8,214,036) $ (4,649,267) Adjustments to reconcile net loss to net cash provided (used) by operating activities: Depreciation and amortization.................................. 1,340,458 1,756,285 Amortization of deferred financing costs....................... 84,796 45,509 Amortization of discount on subordinated debentures............ 3,165,036 534,625 Loss on extinguishment of debt................................. 1,354,000 -- Non-cash compensation.......................................... 288,786 243,543 Increase (decrease) in cash attributable to changes in assets and liabilities, net of effects of acquisitions: Escrowed cash.............................................. (456) -- Accounts receivable........................................ (294,251) 2,568,209 Inventory.................................................. -- 496,260 Net assets of discontinued AV operations................... -- 2,177,363 Other current assets....................................... (331,590) (995,185) Other assets............................................... (209,385) (8,471) Accounts payable........................................... (661,168) (903,793) Accrued expenses........................................... 186,577 (465,182) Deferred revenue........................................... 795,720 12,767 -------------- -------------- Net cash provided (used) by operating activities...... (2,495,513) 812,663 -------------- -------------- Cash flows from Investing Activities Purchases of furniture, equipment and leasehold improvements....... (988,903) (515,275) -------------- -------------- Net cash used by investing activities.......................... (988,903) (515,275) -------------- -------------- Cash flows from Financing Activities Proceeds from common stock offering................................ 12,543,737 -- Costs of exchange/issuance of subordinated debentures.............. (15,232) (36,316) Exercise of warrants and options, net.............................. 121,735 41,214 Proceeds from bank loans........................................... -- 25,788,354 Payments on bank loans............................................. -- (28,112,292) Deferred financing costs........................................... -- (5,774) Payments on capital lease obligations.............................. (38,023) (78,082) -------------- -------------- Net cash provided (used) by financing activities............... 12,612,217 (2,402,896) -------------- -------------- Increase (decrease) in cash and cash equivalents...................... 9,127,801 (2,105,508) Cash and cash equivalents at beginning of period...................... 4,184,897 2,762,215 -------------- -------------- Cash and cash equivalents at end of period............................ $ 13,312,698 $ 656,707 ============== ============== Supplement disclosures of cash flow information: Cash paid during the period for: Interest........................................................... $ 8,504 $ 72,873 ============== ============== Taxes.............................................................. $ -- $ -- ============== ==============
Non-cash financing and investing activities: Preferred stock dividends of $73,923 were accrued during the three months ended March 31, 2004. Equipment with costs totaling $232,100 was acquired under capital lease arrangements during the three months ended March 31, 2003. Glowpoint, Inc. EBITDA Reconciliation (Unaudited)
Three Months Ended March 31, --------------------------------- 2004 2003 -------------- -------------- Net loss from continuing operations........................................ $ (8,214,036) $ (3,536,767) Depreciation and amortization....................................... 1,340,458 1,374,285 Amortization of deferred financing costs............................ 84,796 45,509 Amortization of discount on subordinated debentures................. 3,165,036 534,625 Loss on extinguishment of debt...................................... 1,354,000 -- Non-cash compensation............................................... 288,786 243,543 Interest expense, net............................................... 51,501 180,651 -------------- -------------- EBITDA from continuing operations.......................................... (1,929,459) (1,158,154) EBITDA loss from discontinued AV operations................................ -- (793,022) EBITDA gain from discontinued VS operations................................ -- 62,522 -------------- -------------- Total EBITDA............................................................... $ (1,929,459) $ (1,888,654) ============== ==============
EX-99.2 5 b331676ex99_2.txt CCBN STREET EVENTS Exhibit 99.2 FINAL TRANSCRIPT - -------------------------------------------------------------------------------- CCBN StreetEvents(SM) - -------------------------------------------------------------------------------- CCBN StreetEvents Conference Call Transcript GLOW - Q1 2004 Glowpoint, Inc. Earnings Conference Call Event Date/Time: Apr. 28. 2004 / 5:00PM ET Event Duration: N/A - ----------------- --------------------- ------------ -------------------- --- CCBN StreetEvents streetevents@ccbn.com 617.603.7900 www.streetevents.com 1 - ----------------- --------------------- ------------ -------------------- --- (C) 2004 CCBN.com, Inc. Republished with permission. No part of this publication may be reproduced or transmitted in any form or by any means without the prior written consent of CCBN.com, Inc. FINAL TRANSCRIPT - -------------------------------------------------------------------------------- GLOW - Q1 2004 Glowpoint, Inc. Earnings Conference Call - -------------------------------------------------------------------------------- CORPORATE PARTICIPANTS Chris Zigmont Glowpoint, Inc. - CFO David Trachtenberg Glowpoint, Inc. - President and CEO Michael Brandofino Glowpoint, Inc. - Chief Technology Officer CONFERENCE CALL PARTICIPANTS Nigel Gonzalez Lee Brokerage - Analyst Joe Halpern Halpern Capital - Analyst Gary Habib Whittaker Securities - Analyst Greg McArthur Viewpoint 2000 - Analyst Frank Costa Wachovia Securities - Analyst PRESENTATION - -------------------------------------------------------------------------------- Operator Good afternoon everyone and welcome to the Glowpoint Inc. First Quarter Results Conference Call. On the phone with us today we have David Trachtenberg, CEO, and Chris Zigmont, CFO and Mike Brandofino, CTO of Glowpoint. Before we begin I would like to remind everyone that all participants are in a listen-only mode. We will be facilitating a question-and-answer session towards the end of today's conference. If at any time do you require assistance, please press star, followed by zero and a coordinator will be happy to assist is you. I would also like to remind listeners that this call is being webcast live over the Internet, and that a webcast replay will also be available on the company's web site, www.glowpoint.com, following the call. I would now like to introduce Glowpoint's CFO, Chris Zigmont, who will review the Safe Harbor information and the company's financial results with you now. Please proceed, sir. - -------------------------------------------------------------------------------- Chris Zigmont - Glowpoint, Inc. - CFO Thank you. The statements contained herein, other than historical information, are or may be deemed to be forward-looking statements and involve factors, risks, and uncertainties that may cause actual results in future periods to differ materially from such statements. These factors, risks, and uncertainties include market acceptance and availability of new video communications services, the non-exclusive and terminable at-will nature of sales agent agreements, rapid technological change affecting demand for the company's services, competition from other video communication service providers, and the availability of sufficient financial resources to enable the company to expand its operations, as well as other risks detailed from time to time in the company's filings with the Securities and Exchange Commission. Today's call and webcast may include non-GAAP financial measures within the meaning of SEC Regulation G. When required, a reconciliation of all non-GAAP financial measures to the most directly comparable financial measure calculated and presented in accordance with GAAP can be found in today's press release. And now to our first quarter results. Total revenues rose 45% to $3.2 million in Q1 2004 from $2.2 million in the year ago quarter, and rose 14% sequentially in Q1 from Q4 2003. These summary level figures, though impressive, - ----------------- --------------------- ------------ -------------------- --- CCBN StreetEvents streetevents@ccbn.com 617.603.7900 www.streetevents.com 2 - ----------------- --------------------- ------------ -------------------- --- (C) 2004 CCBN.com, Inc. Republished with permission. No part of this publication may be reproduced or transmitted in any form or by any means without the prior written consent of CCBN.com, Inc. FINAL TRANSCRIPT - -------------------------------------------------------------------------------- GLOW - Q1 2004 Glowpoint, Inc. Earnings Conference Call - -------------------------------------------------------------------------------- do not tell the full story of our Q1 results. Glowpoint's core subscription and related revenue components actually grew 91% to $2.4 million in Q1, from $1.3 million in the year ago quarter and grew 14% sequentially from $2.1 million in Q4 2003. Average billable subscriber locations grew 104% to 1,176 in Q1 2004, from 576 in the year ago quarter, and grew 8% sequentially in Q1, from 1,087 in Q4 2003. At March 31st, 2004, there were 1,211 billable subscriber locations, which was up 74% from the 697 billable subscriber locations at March 31st, 2003 and up 5% from the December 31st, 2003 level of 1,149. David will talk more about the net billable subscriber locations installed over the first quarter in his comments. Average monthly subscription and related revenue per subscriber location at $690 increased 5.5% from the Q4 2003 level of $654, which is the first time in four quarters that this metric has increased. This turn around was partly driven by the pass through of the USF to our customers, but was equally impacted by the discontinuance of the $199 per month, Pay As You Go plan at the end of 2003, and the introduction in early January of 2004 of our All You Can See unlimited video calling plans, which start at a minimum $499 per month price point. We expect to see steady improvements in this metric during the course of 2004. Non-subscription revenue fell 17% to $791,000 from $954,000 in the year ago quarter, an increase 14% sequentially in Q1 from $695,000 in Q4 2003. The quarter-over-quarter increase is mainly due to the reversal of the seasonality influences of the November and December holiday season. The year-over-year impact was driven by an overall decline in H.320 or ISDN bridging services, and the continued growth of endpoints with built in multi-point bridging capabilities. It should be noted that a small percentage of revenue related to the NFL draft event on ESPN was recognized in Q1 2004 for services rendered and that the remainder of this revenue will be recognized in Q2 2004. David will provide more detail in his comments on what we hope will become an annual event for Glowpoint. In addition, in Q2 2004, this category of revenue will see a significant increase as we begin to recognize revenue from the customers obtained in the Tandberg/NuVision acquisition. We are initially anticipating a revenue run rate from this customer base ranging from $700,000 to $850,000 per quarter. Of course, both top and bottom line will be prorated in the second quarter from the April 16th close date. David will provide more detail on this significant strategic alliance in his comments. Cost of revenues for the three months ended March 31st, 2004 rose 19% to $2.7 million, from $2.3 million in the three months ended March 31st, 2003. Cost of revenues in Q1 2004 was virtually flat with Q4 2003 levels. The 19% year-over-year cost increase was directly related to the 74% increase in the number of billable subscriber locations and the related total last mile costs to get them hooked into the Glowpoint service. In effect, total monthly network costs, that is infrastructure, plus access costs, per billable subscriber location, declined from $616 in the fourth quarter of 2003 to $591 in the first quarter of 2004. The result of revenue and cost of revenue movements was that our gross margin improved 177% in Q1 2004 versus Q4 2003, coming in at 15%, up from 5.4% in Q4. And our variable gross margin, which is calculated by dividing revenues, less variable costs of revenue, by revenue, rose from 51% in the fourth quarter 2003 to 54% in the first quarter of 2004. The year-over-year improvements were even more impressive. Gross margin improved from negative 3%, to positive -- to the positive 15% level achieved in Q1 2004. And variable gross margin increased from 42% in the year ago quarter to 54% in Q1. The big drivers in these positive movements in gross margin have been the reduction in network costs that we identified in the fourth quarter, the pass through of the USF that had not previously been charged to our customers, the beginning impact of new customers coming on with our higher margin All You Can See unlimited video calling plans, which we've targeted at a 60 to 65% margin level, and improving the margins on legacy accounts through very targeted transition to our new unlimited annual subscription plans. As we announced during our last call, we still expect to manage to a 35% gross margin target for our core subscription business by the fourth quarter of 2004 and to increase our variable gross margin to 60% on our core subscription revenue over the coming months and quarters. Our total gross margins and variable gross margins, however, will be impacted by the Tandberg/NuVision acquisition. The NuVision revenue stream is immediately bottom line profitable. However, the gross margin of this ISDN business is at or around 20%, versus our 60 to 65% target for our core IP subscription plans. That is one key reason why we will be working with our new customers to transition their ISDN video to Glowpoint's IP-based All You Can See plans. Operating expenses for the three months ended March 31st, 2004 rose 59% to $4 million from $2.5 million in the three months ended March 31st, 2003, but declined 10% from the 2003 fourth quarter level of $4.4 million dollars. This decline was primarily driven by a $400,000 decrease in non-cash expense related to the issuance of restrictive stock. As previously announced, in the first quarter of 2004, the company raised gross proceeds of $13.7 million through a private placement of its common stock and warrants with private investors. Net proceeds from the private placement totaled $12.5 million. The proceeds are expected to be used for sales and marketing initiatives and have strengthened the balance sheet, giving customers, distributors and vendors confidence in the future of the company. - ----------------- --------------------- ------------ -------------------- --- CCBN StreetEvents streetevents@ccbn.com 617.603.7900 www.streetevents.com 3 - ----------------- --------------------- ------------ -------------------- --- (C) 2004 CCBN.com, Inc. Republished with permission. No part of this publication may be reproduced or transmitted in any form or by any means without the prior written consent of CCBN.com, Inc. FINAL TRANSCRIPT - -------------------------------------------------------------------------------- GLOW - Q1 2004 Glowpoint, Inc. Earnings Conference Call - -------------------------------------------------------------------------------- With the completion of the private placement, we chose to terminate our line of credit with JPMorgan Chase. In addition to the savings and loan fees, this will allow to us negotiate a new line of credit with improved loan availability at some future date. The company also converted $4.89 million from debt to preferred stock in the first quarter 2004. The conversion leaves the company debt-free, other than customary payables. We believe that the strength of our balance sheet will give us the runway and the credibility necessary to execute fully against our current plan. In the first quarter 2004, excluding some extraordinary one-time cash disbursements, the company, as anticipated, had net usage of cash of approximately $2.7 million. For the next two quarters, the company expects its total cash burn to average approximately $2 million per quarter, and expects this rate to improve in the subsequent quarters. One of the key underlying reasons for this trend is the expectation of continuing progress in our collection efforts. Our DSO figure declined from 74 days at December 31st, 2003, to 57 days at March 31st, 2004, a 23% improvement. Though it will be difficult to match the Q1 improvements in future quarters, we believe that we will show continuing progress as 2004 plays out. We ended the first quarter of 2004 with $13.76 million of cash, cash equivalents and escrowed cash, and we continue to believe that we have sufficient cash resources to reach our break-even point. Lastly, based on the most current information available, and with the expectation that we will be reviewing and refining this estimate as the year progresses, the company continues to believe that it can achieve operating profitability at a $2.2 million monthly revenue run rate level, expected to be achieved by the end of 2004. The Tandberg/NuVision acquisition, though accretive, does not significantly change this projection. With that, let me turn the call over to David. - -------------------------------------------------------------------------------- David Trachtenberg - Glowpoint, Inc. - President and CEO Thank you, Chris. I'm David Trachtenberg, Chief Executive Officer and President of Glowpoint. There have been a lot of exciting changes since my arrival at Glowpoint six months ago. While the objective of this call is to share details on our first quarter results, I will also be highlighting some of the more recent developments in the second quarter, including the strategic alliance with Tandberg announced last week. I will also provide some continued guidance on the rest of our 2004 fiscal year. Glowpoint's mission and mantra is to make video an integral business communications tool and I am even more convinced, six months into my tenure as CEO, that the only way to affect this evolution is for the market to understand that Glowpoint's video solution is simple, spontaneous and affordable. That means Glowpoint will continue to take down barriers in order to make video easier and more productive to use, and to sell. That is and will remain our guiding principle, coupled with our focus on the bottom line, driving profitable revenue for the bottom line, faster and more efficiently. Like the fourth quarter 2003, the first quarter of this year was a building quarter, during which the company continued to focus on the basics of our core business. As we discussed on our last call, we kicked off 2004 with a new Glowpoint, with new products, new partners and customer online automated tools and new distribution channels in the market. We focused a good part of the quarter on rolling out and implementing our new product and sales strategies, including training and activating our key distribution partners so they could begin the Glowpoint sales cycle. The results from the strategic and operational focus are beginning to impact the company's results as Chris just described. In addition to Chris's comments and analysis, Glowpoint reduced its subscriber location backlog from 91 down to 35. As I mentioned in our last call, Glowpoint's backlog should be kept to a minimum, as we increase our efficiencies in going from an order to a billable subscriber location. In fact, we reduced our days to billable by an additional 38% from the fourth quarter of last year to the first quarter of 2004. That means that we have reduced our days to billable a total of 50% since the third quarter of last year. While we believe that there's always room for improvement, the current average 25 days from local order date to customer location billable date is a metric that we will continue to target based on our current operational plan. This is good news for getting customers and revenue on the Glowpoint service faster, coupled with the improvements that Chris and the finance team have made with reducing DSOs, means that this revenue becomes cash into the company at a faster pace as well. Our improvements have come from making better decisions using better data. The proverbial cleanup of our databases and our operations begun in the fourth quarter of last year will continue and is expected to impact the results over the quarters to come. For example, Glowpoint added 146 new billable subscriber locations on to the network over the first quarter. Yet the new billable subscriber locations improved by 62 to 1,211 by the end of the first quarter. Our growth was reduced by 84 disconnects, and as always the details of these numbers need to be looked at to understand this key metric. First, to put the disconnects into perspective. The 84 occurred as follows: 54 in January, or 65% of the total, 19 in February, and 11 - ----------------- --------------------- ------------ -------------------- --- CCBN StreetEvents streetevents@ccbn.com 617.603.7900 www.streetevents.com 4 - ----------------- --------------------- ------------ -------------------- --- (C) 2004 CCBN.com, Inc. Republished with permission. No part of this publication may be reproduced or transmitted in any form or by any means without the prior written consent of CCBN.com, Inc. FINAL TRANSCRIPT - -------------------------------------------------------------------------------- GLOW - Q1 2004 Glowpoint, Inc. Earnings Conference Call - -------------------------------------------------------------------------------- in March, or a 4.5%, 1.6% and 0.9% respective monthly disconnect rate. The trend is in the right direction and the April numbers are very much in line with March. The 54 disconnects in January are a direct result of our cleanup from the fourth quarter and also include a large number of location closures by one of our larger customers, Wire One. For example, 55% of our overall disconnects were the result of downsizing, i.e., customers still on Glowpoint but reducing the number of their Glowpoint locations. Over 50% of these were shutting down of locations by Wire One and scaling back multiple sites within a single Wire One facility. In summary, Wire One went from 48 billable subscriber locations down to 25. The other 38, or 44%, were lost customers and, again, the details here are important. Over 50% of these disconnects were due to issues identified from our fourth and first quarter efforts and disconnected during the last quarter, including locations that were event-based and not part of the new definition of billable subscribers, locations that Glowpoint took down because of risk associated with future bad debt, etcetera. We will continue to minimize the risk of disconnects but we'll also need to be realistic about the ongoing cleanup of our base. And it is important to note that we are replacing legacy locations with higher margin profitable billable subscriber locations that are committed to annual contracts versus our old product. Over the first quarter, Glowpoint received 105 new orders for service. The Q4 to Q1 trend reflects a typical seasonality of the video business. The trend also reflects implementing the product and operational changes both internally and externally, as well as training and activating our new distribution channels. It is interesting that Wire One, our traditional distribution partner, accounted for 64% of new orders, reflecting a diversification of our sales base with over 36% coming from new players selling Glowpoint. Change is never easy or particularly fast, but we are confident that we are making the right decision and are building the right foundation from which to create momentum in the market for Glowpoint. In fact, we announced today the receipt of an order for 50 billable subscriber locations, our largest single customer order to date. These billable subscriber locations will be on the All You Can See unlimited video subscription plans and committed to a three-year term. That means we expect to drive approximately $1 million in revenue from this first order from a new turnkey solution provider. And we have the potential to increase the total number of Glowpoint enabled sites for this customer beyond the initial 50 before the end of this year. That's good business for Glowpoint, our partner and the customer. This order and others are coming from the effort and sales cycle begun in the first quarter. We will continue to focus on activating our new distribution channels and we've been looking to implement new distribution models over the second quarter so that we not only diversify the number of dealers, but also change the economic paradigm so that those partners we do work with are able to shorten the sales cycle and increase their ability to penetrate the market. Topline growth needs to also translate into bottomline improvement, and as Chris discussed we did have significant improvement in our gross margin from the previous quarter going from 5.4% in Q4 2003 to 15% this quarter, a threefold increase. Chris discussed the details behind this improvement, which focused on making and implementing the right decisions for the business. As he explained, we still expect to manage 35% gross margin target by the end of 2004 for our core subscription business. Although this is a Q1 call, I would also like to spend a few minutes talking about the announcement last week that Glowpoint and Tandberg have joined forces in a strategic alliance. This event truly was a milestone for the company and is a concrete example of how industry leaders need to be working together in order to drive the adoption and the success of video in today's market. Brent Kelly and Andrew Davis of Wainhouse Research both agreed on the recent bulletin that the alliance is a win/win for Glowpoint and Tandberg. There are four key win/win elements to the alliance. First, Glowpoint has acquired the customer base and certain assets of Network Systems, formerly known as NuVision, a wholly owned subsidiary of Tandberg. NuVision customers are primarily ISDN-based video conference and bridging users. This transfer of customer ownership is important to Glowpoint and its shareholders for a number of reasons. The hundreds of NuVision customers are an immediate revenue and positive margin stream to Glowpoint through their ISDN and bridging usage. This will have impact on the top and bottom line for the second quarter and beyond as Chris just described. These hundreds of customers are now part of the Glowpoint family and can be transitioned to Glowpoint IP-based video subscription plan, but have immediate access to the company's bridging and webcasting services. Again, an opportunity to drive both subscription and non-subscription revenue for the company. We will be working closely with Tandberg in a very coordinated transition plan from their operations to Glowpoint and in the transition from legacy ISDN to IP video use. The second alliance point is that Glowpoint will introduce the first commercially available Tandberg branded end-to-end IP video solution, implementing our award winning network, the Tandberg video system gateways, entities and software. This branded solution can be sold by Tandberg's distribution channels. We will be working closely with Tandberg again to identify those channels - ----------------- --------------------- ------------ -------------------- --- CCBN StreetEvents streetevents@ccbn.com 617.603.7900 www.streetevents.com 5 - ----------------- --------------------- ------------ -------------------- --- (C) 2004 CCBN.com, Inc. Republished with permission. No part of this publication may be reproduced or transmitted in any form or by any means without the prior written consent of CCBN.com, Inc. FINAL TRANSCRIPT - -------------------------------------------------------------------------------- GLOW - Q1 2004 Glowpoint, Inc. Earnings Conference Call - -------------------------------------------------------------------------------- not currently partnered with Glowpoint who would be interested in becoming new sales partners for our company. Tandberg will also be using this branded experience in their corporate use of IP video communications which will now be purchased exclusively through Glowpoint, and that is the third key element of the alliance. Tandberg's corporate use of IP video communications and other telecommunications services previously purchased through network systems will now be provided exclusively by Glowpoint in a multi-year agreement. That's a great vote of confidence and recognition of the Glowpoint network. As an example, Tandberg will have Glowpoint demonstration capabilities in seven of the key demo locations, five in the U.S. and two in Canada, so that they, customers and prospects can see and use the Tandberg-branded IP video solution on the Glowpoint network. In fact, I made a Glowpoint-to-Glowpoint video call just this morning from my office in New Jersey to Tandberg's office in Dallas. Integration is happening. Finally, the Glowpoint Certified Program was recognized as a Tandberg external testing partner for their hardware and software solutions. Mike Brandofino will talk on this later. And just a few more comments on the Tandberg/Glowpoint alliance. First, the alliance with Tandberg was a natural progression for the two companies, as they have been working closely for a number of years. It recognizes that the companies share a future vision for the future of IP video, and a commitment to the overall video communications market to bring together the resources and cooperation that will make the promise of video as a critical communications tool a reality. Second, the acquisition did not impact the cash position of the company, and is immediately bottom line accretive for Glowpoint. Glowpoint took on the revenue commitments between network systems or NuVision in AT&T, MCI and Sprint. We are integrating these commitments into our contractual relationships with these carriers and confident that we can meet or exceed these commitments based on our current customer base and growth trajectory. And finally like Tandberg, Glowpoint will continue to work with and partner with industry leaders across the video communications market. We have strong relationships with Polycom, Radvision, Sony, Cisco and others. For example, this past weekend, Polycom and Glowpoint worked together to deliver flawless, broadcast quality video for the NFL draft. This was the second year in a row that Glowpoint and Polycom were selected to provide the equipment and network service for live on-air video communications between the team sites, ESPN headquarters and Madison Square Garden where the draft took place. For those on the call who'd like additional information on the alliance and the NuVision integration, we have set up a welcome site for NuVision customers and for Glowpoint investors at Glowpoint.com/Tandberg. So where does all of this leave us for the second quarter and beyond? As I mentioned earlier, the last two quarters were foundation building for Glowpoint as an independent company, focused solely on video communications services. The future is one of ensuring scale in our operations, our distribution partners, and our customer base. We will be focused on continuing training and activation of our distribution channels. We will leverage the talent and fresh ideas of our new leaders, the VP of Brand and Product Marketing, Stuart Gold, VP of Operations, Joe Laezza, and VP of Sales Planning, Michelle Trainor, who joined Glowpoint at the end of the first quarter. This will include proactive lead generation from our customer base as well as new prospects, identification and recruitment of new distribution partners, identification and implementation of new sales models, a continued focus on operational efficiencies and an increase of Glowpoint visibility in the marketplace and in key vertical segments. The entire organization will be laser focused on first, ensuring a seamless transition for the NuVision customer base, welcoming them to the Glowpoint family, and leveraging the opportunity to create higher margin and longer term subscription-based IP video revenue; and, two, making certain that the strategic alliance of Tandberg goes from a solid agreement to solid results out in the marketplace. The Glowpoint team is confident in the future of the company and consider ourselves on track with the guidance they provided in the 2004 targets in terms of margins and break-evens. As we integrate the NuVision business and see additional trending in our sales partnerships, we will continue to update your visibility into our planned results. In summary, we enter the second quarter with increased margin, double digit revenue growth, higher average subscription revenue per billable location, a more diversified reseller base and recognition and credibility as an industry leader. With that, I will turn the call over to our Chief Technology Officer, Michael Brandofino. - -------------------------------------------------------------------------------- Michael Brandofino - Glowpoint, Inc. - Chief Technology Officer Thank you, David. Many of you who have followed Glowpoint from its launch over three years ago understand and appreciate the significance of the Tandberg alliance that Dave just talked about. Our ability to form a multi-faceted strategic alliance with an industry leader like Tandberg was as a result of the groundwork laid and the track record established by the Glowpoint team over the last few years. - ----------------- --------------------- ------------ -------------------- --- CCBN StreetEvents streetevents@ccbn.com 617.603.7900 www.streetevents.com 6 - ----------------- --------------------- ------------ -------------------- --- (C) 2004 CCBN.com, Inc. Republished with permission. No part of this publication may be reproduced or transmitted in any form or by any means without the prior written consent of CCBN.com, Inc. FINAL TRANSCRIPT - -------------------------------------------------------------------------------- GLOW - Q1 2004 Glowpoint, Inc. Earnings Conference Call - -------------------------------------------------------------------------------- IP-based video communications is being embraced by major manufacturers and Glowpoint is in the forefront of this new focus. As David mentioned, one key element of the Tandberg alliance is the acquisition of the NuVision ISDN customer base and with the assumption of the volume commitments from the AT&T, MCI and Sprint contracts. Over the past year I have discussed our proactive backbone migration strategy to carrier neutral facilities. I've also discussed our capabilities to diversify and partner with multiple carriers. Our network team has delivered on the strategy, affording us the flexibility to assume these commitments with minimal impact to our operations. It is clear to us that AT&T, MCI and Sprint see Glowpoint as a growing and credible partner with whom they plan to increase their IP traffic and revenue stream versus continuing to support a diminishing ISDN business. The Tandberg branded end-to-end IP video experience that is part of the alliance also reflects the flexibility embedded in the Glowpoint solution. While we use a best of breed strategy to deliver Glowpoint, including Polycom, Radvision, Cisco and Tandberg equipment in the core, we have built into the network the ability to shape unique routing paths for customer traffic, enabling a complete end-to-end solution on a particular platform. In this case we will be utilizing Tandberg gateways, MCUs and TMS to enable Tandberg and its customers to have a completely branded experience on the Glowpoint network. The last point David mentioned in his description of the alliance is Tandberg's selection of Glowpoint as an external testing partner. You have heard me on a number of occasions state that Glowpoint's Certified Program is one of the significant differentiating factors separating Glowpoint from mere bandwidth providers. The recognition of the Glowpoint certified program by Tandberg underscores the value that the Glowpoint team adds in our engineering and R&D partnerships with industry leaders who are creating the hardware and software solutions driving the adoption of IP-base video. Glowpoint Certification will continue to be a mark of excellence against which others will set their standards. I also wanted to touch on some first quarter highlights. The positive development during the first quarter was Glowpoint being designated a Cisco Power Network. As the only dedicated Cisco Powered Video Network, this is clear recognition that we have built a unique world-class carrier grade environment for video. The CPN program also has a number of sales and marketing opportunities that we will be leveraging in the coming quarters. Glowpoint also announced additional patent filings continuing the work from the fourth quarter of last year to secure the intellectual property developed in the company these past years. The first quarter soared to all-time highs in usage numbers as our customer base continues to grow. For example, two metrics that tie to additional revenue per location also improved, with IP bridge calls increasing 18% and gateway calls increasing 10% compared to the prior quarters. Services that drive additional revenue, like gateway and bridging, are very important because they help improve our revenue per location. To add to the list of revenue-producing services, in the first quarter we officially moved from beta to market launch of our webcasting service. Glowpoint webcasting was introduced to provide our customers an easy and spontaneous way for them to leverage further their Glowpoint connected endpoints. The application combines an easy to use interface with an encoding farm hosted in partnership with Conferserve. This allows our customers to create broadcast quality content right from their endpoints. That means that they can better leverage their investment in the hardware and in Glowpoint, turning each Glowpoint connection into a virtual broadcast studio. Content is then distributed in the form of live or on-demand streams to the native internet through one of our pairing points around the network. We have already received excellent reviews, including the International Accounting Standards Boards, the UK-based international accounting standards boards agency, that hold their monthly board meeting via Glowpoint webcasting. At the end of the day it is all about the customer experience. In a recent demo with a prospective customer, the VP of their IT department asked if a partner in this firm wanted to launch a meeting within 20 minutes which would connect four remote locations, how could Glowpoint make that happen? In a matter of a few minutes I showed the VP four different ways the partner could accomplish the simple request over Glowpoint, including our Bridging on Demand feature, our Dial "000" live operator functionality and our online Customer Point scheduling capabilities. That's simplicity and spontaneity. These integrated capabilities are unique to Glowpoint and as we move forward in 2004, our engineering efforts will be focused on additional ways to enhance our customers' experience, and make Glowpoint as easy as picking up the phone but with the power of face-to-face communications. Finally, I want to look into the future. You will undoubtedly be hearing more and more announcements in the coming quarters about new video endpoints, low-priced video units, software-based products and SIP versus H.323. This will all be good news for the penetration of video within businesses. Remember though that these developments and endpoint tech all have one thing in common. They must ride on a network. As most of us have experienced firsthand in the cellular world, the same phone works dramatically differently depending on the underlying service you use. Not all services are created equal. At the risk of sounding like a marketing guy and borrowing from an ad campaign from a few years back, we don't make the endpoints, we make the endpoints work better. Glowpoint is ready and able to work with our current partners, as well as new players to create alliances that will adapt - ----------------- --------------------- ------------ -------------------- --- CCBN StreetEvents streetevents@ccbn.com 617.603.7900 www.streetevents.com 7 - ----------------- --------------------- ------------ -------------------- --- (C) 2004 CCBN.com, Inc. Republished with permission. No part of this publication may be reproduced or transmitted in any form or by any means without the prior written consent of CCBN.com, Inc. FINAL TRANSCRIPT - -------------------------------------------------------------------------------- GLOW - Q1 2004 Glowpoint, Inc. Earnings Conference Call - -------------------------------------------------------------------------------- to a changing landscape with the video communications industry. Now back to David. - -------------------------------------------------------------------------------- David Trachtenberg - Glowpoint, Inc. - President and CEO Thanks, Mike. I want to thank everybody for their time today, in joining us on the call. Now we would like to open the line up for questions. We will have a hard stop at 6 P.M. Rachel, the moderator, will take over from here. QUESTION AND ANSWER - -------------------------------------------------------------------------------- Operator Ladies and gentlemen, if you do wish to ask a question at this time, please press star one on your touch-tone phone telephone. If your question has been answered or you do wish to withdraw your question, please press star followed by two. Questions will be taken in the order received, so please key star one to begin. Gentlemen, your first question comes from Nigel Gonzalez of Lee Brokerage. - -------------------------------------------------------------------------------- Nigel Gonzalez - Lee Brokerage - Analyst Good evening, guys. I just wanted to get some clarity on the Tandberg partnership that you announced a couple of weeks ago. Do you have exact numbers in terms of the migrating subscribers and what is the potential to -- or how open are these customers in terms of cost benefit analysis willing to migrate to the IP solution. - -------------------------------------------------------------------------------- David Trachtenberg - Glowpoint, Inc. - President and CEO This is David. A couple of things here. Number one, when we announced the deal just last week, our number one objective was a real seamless transition from the NuVision operations to Glowpoint. So our first objective over the next couple of months, working closely with Tandberg, is to make certain that it's business as usual for these customers, because the last thing we want to do is to upset the current customer base and make certain that they understand what -- the impact to them from a transition perspective and their billing and from their customer service, technical support and all of that. So that has to be flawless and we have already been engaging with Tandberg directly to make that happen. The next step is to educate these customers to make certain that they understand the benefits of being at Glowpoint, being part of the Glowpoint family and how they can transition seamlessly from ISDN to IP. So there will be a little bit of a longer term transition but we have already begun those conversations with a number of the larger customers and quite frankly we're already in conversations with all the customer base to let them understand the other types of services that they have access to immediately at Glowpoint. For example, our bridging services, as well as our webcasting services. So we don't need to transition them to our IP subscription plans immediately in order to reap a number of benefits. Number one, as Chris explained, the revenue that they are currently generating in ISDN is accretive. It's profitable revenue that impacts us immediately, post the close date, and by marketing and uploading them to our bridging services and our webcasting services, we can also drive additional profitable revenue. And we will be working - ----------------- --------------------- ------------ -------------------- --- CCBN StreetEvents streetevents@ccbn.com 617.603.7900 www.streetevents.com 8 - ----------------- --------------------- ------------ -------------------- --- (C) 2004 CCBN.com, Inc. Republished with permission. No part of this publication may be reproduced or transmitted in any form or by any means without the prior written consent of CCBN.com, Inc. FINAL TRANSCRIPT - -------------------------------------------------------------------------------- GLOW - Q1 2004 Glowpoint, Inc. Earnings Conference Call - -------------------------------------------------------------------------------- over the longer term to, again, educate them on the benefits of IP and obviously the ultimate objective to make sure they are on a higher margin committed subscription plan with Glowpoint and we'll work with one off for each of the customers and focus on the larger ones. - -------------------------------------------------------------------------------- Nigel Gonzalez - Lee Brokerage - Analyst Now getting back to the revenue number I think that Chris had had mentioned the $700,000 to $850,000 per quarter, is that based on current ISDN revenue? - -------------------------------------------------------------------------------- David Trachtenberg - Glowpoint, Inc. - President and CEO Yes, it is. - -------------------------------------------------------------------------------- Nigel Gonzalez - Lee Brokerage - Analyst Is this a number that will increase if these customers move over to IP at better margins? - -------------------------------------------------------------------------------- David Trachtenberg - Glowpoint, Inc. - President and CEO The -- the number -- well, it's very difficult to predict, depending on which plans they might -- might migrate to. As you know we have different price points, spanning from $499 to $1,099, and custom situations. So it's a little bit difficult to predict but I think generally, you would -- you could say that the revenue would increase. - -------------------------------------------------------------------------------- Nigel Gonzalez - Lee Brokerage - Analyst Okay. Thanks a lot. - -------------------------------------------------------------------------------- David Trachtenberg - Glowpoint, Inc. - President and CEO Yep. - -------------------------------------------------------------------------------- Operator Thank you. Your next question comes from Joe Halpern of Halpern Capital. Please proceed. - -------------------------------------------------------------------------------- Joe Halpern - Halpern Capital - Analyst Hi, guys. - -------------------------------------------------------------------------------- David Trachtenberg - Glowpoint, Inc. - President and CEO Hey, Joe. - -------------------------------------------------------------------------------- Joe Halpern - Halpern Capital - Analyst I just want to get a sense of how long the sales cycle is for these -- or, I guess, when they're really going to get up and running in terms of everyone except for the Wire One folks. - -------------------------------------------------------------------------------- David Trachtenberg - Glowpoint, Inc. - President and CEO Joe, that's a good question, and, again, as a mentioned in my remarks we spent a lot of the first quarter and actually, you know we launched our new plans on the 6th of January. And, as you know, the -- traditionally the first quarter is a relatively slow quarter in the video market and so it was good timing in the sense that we were able to take the time with our new -- not just with our new distribution channels but quite frankly with Wire One as well. Because not only were they new plans, but it was really a new way to do business with the company through our PartnerPoint portal. There was a lot more operational efficiencies that we put in and we had to retrain the organization in terms of how to even quote and place an order with the company. So, again, a lot of the time in the first quarter was activating the distribution channels. And then, to begin, their sales cycle and, again our sales cycle, is really embedded in their sales cycle on the hardware side. The majority of the distribution partnerships that we have today are being driven by equipment resellers like Wire One. So when you take a look at the sales cycle, it is going to -- the impact of the sales cycle for Glowpoint is really the sales cycle for an equipment dealer and so that really hasn't changed in terms of where we were, you know, last quarter versus this quarter. What is changing, however, is a couple of different things. Number one, a lot of the investment is beginning to pay off, like what we just announced today, in terms of the -- leveraging the new distribution channels that have come on board, and the sales cycle is -- the fact that the ordering is now beginning to take place in the second quarter. The other thing that you will be seeing is getting creative in terms of the types of partnerships that we're looking for, and trying to expand outside of a -- the core equipment reseller market so that we can actually speed up the sales cycle and potentially drive penetration deeper into the marketplace. And the new partner that actually placed the 50 location order has a very different business model than a traditional Glowpoint distributor and they are a -- a complete solutions provider. So we'll get into a little bit more detail when we officially launch the name and the partnership over the next couple of weeks. But, again, our objective is to speed up the sales cycle so that we're not beholden to the traditional equipment sales cycle because, quite frankly, Glowpoint does not always have to be married with an equipment sale because Glowpoint can work with the embedded equipment. If it's been sold in the last three to five years, it's already IP enabled - ----------------- --------------------- ------------ -------------------- --- CCBN StreetEvents streetevents@ccbn.com 617.603.7900 www.streetevents.com 9 - ----------------- --------------------- ------------ -------------------- --- (C) 2004 CCBN.com, Inc. Republished with permission. No part of this publication may be reproduced or transmitted in any form or by any means without the prior written consent of CCBN.com, Inc. FINAL TRANSCRIPT - -------------------------------------------------------------------------------- GLOW - Q1 2004 Glowpoint, Inc. Earnings Conference Call - -------------------------------------------------------------------------------- and so there can be a separate decision made on the Glowpoint service alone. - -------------------------------------------------------------------------------- Joe Halpern - Halpern Capital - Analyst So I would take the sales cycle -- what would you say the equipment sales cycle is now and what would you say the sped up time would be approximately. - -------------------------------------------------------------------------------- David Trachtenberg - Glowpoint, Inc. - President and CEO It is really difficult to put a number around it. I've got to tell you, every deal is a unique deal. - -------------------------------------------------------------------------------- Joe Halpern - Halpern Capital - Analyst Right. - -------------------------------------------------------------------------------- David Trachtenberg - Glowpoint, Inc. - President and CEO And even if it's a one site deal or a 50 site deal, it's amazing how similar the sales process is, but the actual decision making process is going to be dictated by who are you in front of? What level you are at within the organization, what kind of relationship your distribution partner has. But, quite frankly, it's not always up to Glowpoint because we are an indirect sales strategy. It's really up to our sales partners to close the deal. - -------------------------------------------------------------------------------- Joe Halpern - Halpern Capital - Analyst Okay. And then in terms of legacy locations, approximately what percent have been updated so far? - -------------------------------------------------------------------------------- David Trachtenberg - Glowpoint, Inc. - President and CEO As I think Chris mentioned in his comments, and, you know, we always choose our words very carefully, there's been very targeted upgrading against the legacy base and I think, as we talked about in the last call, our business model and our forecast in terms of when we are going to hit our break-even point assumes zero upgrading of our legacy base. So regardless of the level of profitability of all of our customers prior to introducing our new plans on January 6th, we assumed nobody was going to be upgraded. However, a couple things are going on. Number one, customers have come to us and said, you know, I want the new stuff! Which is always good news. And then we have proactively gone to a number of our larger customers or I would say more of the egregious customers in terms of what their profitability looks a - -- billable subscriber location, per billable subscriber location basis, and have worked with them to move them to the new plan. So number one, they get more benefits out of it in terms of the unlimited usage and all the other patent-pending features that we talked about, as well as the benefits for Glowpoint are obviously higher margin and annual subscription plans as well. So, again, it's been very targeted. We will continue that, but quite frankly, the focus of the company is getting new customers and new billable subscriber locations, versus going on -- going back and trying to upgrade any of the ones we already have on board. - -------------------------------------------------------------------------------- Joe Halpern - Halpern Capital - Analyst Thanks very much, Dave. - -------------------------------------------------------------------------------- David Trachtenberg - Glowpoint, Inc. - President and CEO My pleasure, Joe. - -------------------------------------------------------------------------------- Operator Your next question comes from Gary Habib of Whittaker Securities. - -------------------------------------------------------------------------------- Gary Habib - Whittaker Securities - Analyst Hi, thank you. It seems like this first quarter is a real first snapshot we get of the newly changed company with realigning costs and revenues and new product launch and that the variable gross margins now are in the mid-50s and did I hear you right that they could go to 60 to 65%? Is that a predictor of where we see gross margins going, like way into the future? - -------------------------------------------------------------------------------- David Trachtenberg - Glowpoint, Inc. - President and CEO We are -- -- we do have in our forecast sights the 60% level, and that -- that is a -- a measure -- an indicator that the overall gross margins are also going to be improving. We've given the guidance about targeting the 35% mark by the end of this year, but, you know, with the knowledge we have today about the competitive landscape and other factors, it should improve from that level, beyond that. You know, circumstances, you know, unchanged. - -------------------------------------------------------------------------------- Gary Habib - Whittaker Securities - Analyst Right. - -------------------------------------------------------------------------------- David Trachtenberg - Glowpoint, Inc. - President and CEO - ----------------- --------------------- ------------ -------------------- --- CCBN StreetEvents streetevents@ccbn.com 617.603.7900 www.streetevents.com 10 - ----------------- --------------------- ------------ -------------------- --- (C) 2004 CCBN.com, Inc. Republished with permission. No part of this publication may be reproduced or transmitted in any form or by any means without the prior written consent of CCBN.com, Inc. FINAL TRANSCRIPT - -------------------------------------------------------------------------------- GLOW - Q1 2004 Glowpoint, Inc. Earnings Conference Call - -------------------------------------------------------------------------------- So it is an indicator of where the overall gross margins should go. - -------------------------------------------------------------------------------- Gary Habib - Whittaker Securities - Analyst Right. Right. Okay. The other question I have is at what point will you need to build out the network capacity to handle your subscriber location growth? And how much would that capital expenditure be? - -------------------------------------------------------------------------------- David Trachtenberg - Glowpoint, Inc. - President and CEO Yeah, Gary, I will answer very briefly and then I will let Mike take the rest of the question, or the answer I should say. Right now the network is built up to support 4,000 billable subscriber locations, with very minimal investment. The way that Mike has constructed and architected the network is that even -- sort of that next level step up after that 4,000 mark can be very targeted. It's not a network wherein you have to quote-unquote upgrade it to support more subscribers, then it's an across the board upgrade of the network. Based on where the subscribers are located, and the calling patterns of those subscribers, we can pinpoint certain routes or certain [INAUDIBLE] with the investment. So it's actually quite minor in terms of what we will need to do. - -------------------------------------------------------------------------------- Gary Habib - Whittaker Securities - Analyst Right. - -------------------------------------------------------------------------------- David Trachtenberg - Glowpoint, Inc. - President and CEO On that capital investment, but Mike, add a little bit more color. - -------------------------------------------------------------------------------- Michael Brandofino - Glowpoint, Inc. - Chief Technology Officer Wow, David really listens to everything I say! Actually, what we have done is built the architecture so we can address certain segments of the network based on traffic and we monitor that traffic very closely. I will tell you that according to model, you know, we are tracking at peak times less than 20% across any segment of the network and we are at 1,200 subscriber locations. So we're tracking exactly where we're expected to be. Calling patterns and how people use the network will affect that but we already have the infrastructure in place to upgrade to let's see, OC3, so that would be the triple bandwidth and we already priced. The net cost of those circuits would be insignificant from an overall run rate because the cost of bandwidth has gone down significantly. So we could scale fairly easily, fairly targeted, in focused areas and not impact the monthly cost of supporting the backbone significantly. - -------------------------------------------------------------------------------- Gary Habib - Whittaker Securities - Analyst Right. Right. Okay. Good. Thank you very much. - -------------------------------------------------------------------------------- David Trachtenberg - Glowpoint, Inc. - President and CEO Thanks, Gary. - -------------------------------------------------------------------------------- Operator Your next question comes from Greg McArthur of Viewpoint 2000. - -------------------------------------------------------------------------------- Greg McArthur - Viewpoint 2000 - Analyst You guys get an A right across the board. You're doing terrific, right on the money. - -------------------------------------------------------------------------------- David Trachtenberg - Glowpoint, Inc. - President and CEO Thank you, Greg. - -------------------------------------------------------------------------------- Michael Brandofino - Glowpoint, Inc. - Chief Technology Officer Thanks, Greg. - -------------------------------------------------------------------------------- Greg McArthur - Viewpoint 2000 - Analyst And I have to tell you that Tandberg is a huge plus. You know it better than I do. Congratulations to all three of you. I've got two questions. One, Dave, which you know I'm going to ask, is content. Content, you know, running up the revenue stream on the circuits, is that something you are looking at, and thinking about? And also, Mike, on the obvious, on the ISDN, how big of a problem is it -- and I don't want you to get into the technicalities going from ISDN or IP or Glowpoint's network. It seems to me the cost structure, etcetera, etcetera, is kind of what I consider a lay-up as far as people doing it. So -- - -------------------------------------------------------------------------------- David Trachtenberg - Glowpoint, Inc. - President and CEO Let me make sure I understand your first question, Greg. In terms of increasing the average revenue per Glowpoint subscriber location, is that the question? - -------------------------------------------------------------------------------- Greg McArthur - Viewpoint 2000 - Analyst Well, I'm mostly interested in content. How you address the content issues that could drive additional revenues. - ----------------- --------------------- ------------ -------------------- --- CCBN StreetEvents streetevents@ccbn.com 617.603.7900 www.streetevents.com 11 - ----------------- --------------------- ------------ -------------------- --- (C) 2004 CCBN.com, Inc. Republished with permission. No part of this publication may be reproduced or transmitted in any form or by any means without the prior written consent of CCBN.com, Inc. FINAL TRANSCRIPT - -------------------------------------------------------------------------------- GLOW - Q1 2004 Glowpoint, Inc. Earnings Conference Call - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- David Trachtenberg - Glowpoint, Inc. - President and CEO I'm not sure -- I hate to be obtuse but I'm not certain -- - -------------------------------------------------------------------------------- Michael Brandofino - Glowpoint, Inc. - Chief Technology Officer Are you talking about are we driving applications, are there applications that are going to be user --. - -------------------------------------------------------------------------------- Greg McArthur - Viewpoint 2000 - Analyst Exactly. - -------------------------------------------------------------------------------- Michael Brandofino - Glowpoint, Inc. - Chief Technology Officer By content you are talking about training. - -------------------------------------------------------------------------------- Greg McArthur - Viewpoint 2000 - Analyst Right. Exactly. - -------------------------------------------------------------------------------- David Trachtenberg - Glowpoint, Inc. - President and CEO We're actually working with a number of different distribution channels, and content, quite frankly, is their play and is their entree into a number of different customers, and I will tell you, you -- the deal we just announced today is quote-unquote a content application deal. It is a training application. - -------------------------------------------------------------------------------- Greg McArthur - Viewpoint 2000 - Analyst Exactly. - -------------------------------------------------------------------------------- David Trachtenberg - Glowpoint, Inc. - President and CEO In the healthcare space. So we are obviously looking for people who have a reason to sell to prospects who have a reason to use. It does me no good to have somebody have a Tandberg, Qualcomm, whatever unit is in there, whether it's in their conference room or office, paying $499 a month and having it sit there because at the end of the day, they are going to wake up and after the year contract, they are saying why am I paying $499 if I'm not deriving benefit out of it. Now the good news is, Glowpoint, on average, use is two times the industry average. So we know we have people who want to use video and are using video. But we have to be on top of it to make sure that they understand how to take all the benefits so it becomes very easy and spontaneous. And I've got to tell you, my use of video, six months and a day ago, was zero. My use of video today, and Mike gets annoyed at me, because literally even though I'm down the hall from him, I'm calling him on his unit, I don't know how many times a day. The answer is, while Glowpoint is not specifically focused itself on the content applications, we are creating the tools for our customers to be able to do that, but we will be targeting partners who will be bringing the Glowpoint solution, married with their content or their application to make it a lay-up material, as you're talking about. And I think our work with Xemex as well as with other partners is doing just that. - -------------------------------------------------------------------------------- Greg McArthur - Viewpoint 2000 - Analyst Yeah. And that's what I was trying to get at. Normal usage and then your using the application for the customer and the customer is using it for training, etcetera, etcetera, and they use it more and you share in the revenue. - -------------------------------------------------------------------------------- David Trachtenberg - Glowpoint, Inc. - President and CEO Absolutely. - -------------------------------------------------------------------------------- Michael Brandofino - Glowpoint, Inc. - Chief Technology Officer Absolutely. - -------------------------------------------------------------------------------- Greg McArthur - Viewpoint 2000 - Analyst That's a win/win. - -------------------------------------------------------------------------------- David Trachtenberg - Glowpoint, Inc. - President and CEO Yes, and then switching ISDN to IP. Mike, why don't you take that. - -------------------------------------------------------------------------------- Michael Brandofino - Glowpoint, Inc. - Chief Technology Officer Sure. I think we've talked a number of times. ISDN to IP for endpoints that have been bought in the last three or four years is a no-brainer. There's no equipment upgrade required. Almost every device has IP capabilities. It's a cost of liability, scalability question that we go in and talk about. For -- if you specifically talk about the NuVision customers, one of the things that David mentioned and what we'll do with Tandberg is very focused and going into these customers with solutions that make it simple for them to upgrade. So if they have really old equipment and some of them have old picture telegear, they want to trade up and - ----------------- --------------------- ------------ -------------------- --- CCBN StreetEvents streetevents@ccbn.com 617.603.7900 www.streetevents.com 12 - ----------------- --------------------- ------------ -------------------- --- (C) 2004 CCBN.com, Inc. Republished with permission. No part of this publication may be reproduced or transmitted in any form or by any means without the prior written consent of CCBN.com, Inc. FINAL TRANSCRIPT - -------------------------------------------------------------------------------- GLOW - Q1 2004 Glowpoint, Inc. Earnings Conference Call - -------------------------------------------------------------------------------- Tandberg's going to work with us to create packages to make it easier for them to do that. - -------------------------------------------------------------------------------- Greg McArthur - Viewpoint 2000 - Analyst I briefly mentioned to Dave that, let's say you have 1,000 locations that have the old Polycom equipment, it seems to me that it's a natural for them to switch to IP. And why wouldn't they? That's the question I have. Why wouldn't the individual locations do it? What's the -- - -------------------------------------------------------------------------------- David Trachtenberg - Glowpoint, Inc. - President and CEO There doesn't seem to be, I mean, a real reason other than it's the devil they know. - -------------------------------------------------------------------------------- Greg McArthur - Viewpoint 2000 - Analyst Right, exactly. That is at answer right there. I will let you guys go. You are doing terrific. - -------------------------------------------------------------------------------- David Trachtenberg - Glowpoint, Inc. - President and CEO Thank you, Greg. - -------------------------------------------------------------------------------- Greg McArthur - Viewpoint 2000 - Analyst And you are going to have a good year. A big year. So good job! - -------------------------------------------------------------------------------- Operator Thank you. Your final question comes from Frank Costa of Wachovia Securities. - -------------------------------------------------------------------------------- Frank Costa - Wachovia Securities - Analyst How are you doing, guys. I have a couple of questions for you. Number one, I'll touch base on the resellers for a little bit. Mike, have you seen, now that we've done some training on the resellers, are you starting to see a change in the number of request for proposals out there? And is that significant? Basically are the resellers, now that they are up to speed on training, are you starting to see more activity out of the resellers across the boards? - -------------------------------------------------------------------------------- Michael Brandofino - Glowpoint, Inc. - Chief Technology Officer Yes, I will take that quickly, Frank. We actually have a lot more visibility in terms of the deals that are out in the marketplace, given the new operations that we put in place, specifically with PartnerPoint. So when one of our resellers wants to get a quote from us, so they can actually present something to their prospect, they have to do that directly through PartnerPoint and so we have a real good understanding of what's open and out there. Now, whether that turns into an actual order or not, is a separate question, but we see a lot more activity now from, obviously a lot more than the Wire One channel, in terms of the number of requests for information. Whereas before, the company was a little bit flying blind in terms of what was out there because things really didn't come in until the order was there. So in terms of being able to understand what the pipeline looks like and then to be able to put our resources against some of the more -- the larger deals that are out there, some of the more strategic deals we have a lot more flexibility to do that. So, yes, we are seeing an increase in the number of requests for quotes, as well as for turning quotes into -- you know, there's a few qualification quotes and then taking an official quote. There are a number of different steps that we are able to track along the sales process, but it does take time for a distribution channel to get up to speed, to begin their sales cycle and then to start the Glowpoint sales cycle on top of that. - -------------------------------------------------------------------------------- Frank Costa - Wachovia Securities - Analyst So over time we'll start to be able to draw some averages from that and get better visibility going forward. - -------------------------------------------------------------------------------- Michael Brandofino - Glowpoint, Inc. - Chief Technology Officer Absolutely. - -------------------------------------------------------------------------------- Frank Costa - Wachovia Securities - Analyst Next question I have for you, this is kind of more of a question for Chris Zigmont. When Wire One sold over to Gores and went over to Gores, there were a number of options that I guess were granted a nine-month extension or a nine-month stay on those options. Do we know about how many options are out there for the Gores employees? Because I guess those will be coming up in either the beginning of June or end of June. How many of those options are really out there that went to Gores? - -------------------------------------------------------------------------------- Chris Zigmont - Glowpoint, Inc. - CFO Hi, Frank. It's Chris. The date -- the target date is June 19th, I think. Which is the last day they would have to exercise. I believe when we did our proxy last summer to get approval for the deal, there was a figure in there that was a little shy of $1 million in total. There's been some activity in terms of exercises since then. I don't have that figure off the top of my head, but one thing I do remember was several hundred thousand of that close to one - ----------------- --------------------- ------------ -------------------- --- CCBN StreetEvents streetevents@ccbn.com 617.603.7900 www.streetevents.com 13 - ----------------- --------------------- ------------ -------------------- --- (C) 2004 CCBN.com, Inc. Republished with permission. No part of this publication may be reproduced or transmitted in any form or by any means without the prior written consent of CCBN.com, Inc. FINAL TRANSCRIPT - -------------------------------------------------------------------------------- GLOW - Q1 2004 Glowpoint, Inc. Earnings Conference Call - -------------------------------------------------------------------------------- million figure were at price points in excess of where the stock is today. - -------------------------------------------------------------------------------- Frank Costa - Wachovia Securities - Analyst Okay. I'm just trying to get some feel on the supply because it seems like there's been a lot of supply. I'm sure a lot of it is coming from the deal. I'm trying to get a feel for supply going forward. Last question I had in terms of-- - -------------------------------------------------------------------------------- Operator Pardon me, ladies and gentlemen, that's all the time we do have -- - -------------------------------------------------------------------------------- David Trachtenberg - Glowpoint, Inc. - President and CEO Rachel, why don't we finish up this one call? - -------------------------------------------------------------------------------- Operator Okay. Give me one moment. - -------------------------------------------------------------------------------- David Trachtenberg - Glowpoint, Inc. - President and CEO I didn't mean to cut you off, Frank. Are you still there? - -------------------------------------------------------------------------------- Operator I have to reopen his line in just one moment. - -------------------------------------------------------------------------------- Frank Costa - Wachovia Securities - Analyst $1.354, can you give me some clarity -- - -------------------------------------------------------------------------------- Chris Zigmont - Glowpoint, Inc. - CFO Frank, you were cut off temporarily, can you start that question again. - -------------------------------------------------------------------------------- David Trachtenberg - Glowpoint, Inc. - President and CEO Just the third one. When we said hard stop, she really took us seriously. - -------------------------------------------------------------------------------- Frank Costa - Wachovia Securities - Analyst The amortization and the discount on subordinated debentures, the $3.165 million and the loss on extinguishment of debt the $1.354 million, just give me some clarity on what both of those were. - -------------------------------------------------------------------------------- Chris Zigmont - Glowpoint, Inc. - CFO The first figure is basically the unamortized discount balance from the 12/31 balance sheet. Which if you look at our balance sheet, it was $3.149 million, $3.150 million, we had a few additional cost of exchange, and that figure had to be amortized in Q1, when the exchange took place. - -------------------------------------------------------------------------------- Frank Costa - Wachovia Securities - Analyst Okay. So that was being amortized quarterly, if I'm correct, right. - -------------------------------------------------------------------------------- Chris Zigmont - Glowpoint, Inc. - CFO Yes, it was being amortized over the life of the original subordinated debentures which had a maturity date linked to the line of credit we used to have. So we were amortizing that to the tune of about a half a million dollars a quarter. Now that doesn't -- will not happen going forward. - -------------------------------------------------------------------------------- Frank Costa - Wachovia Securities - Analyst Okay. Then the loss on the extinguishment, is that the amount that we had had already amortized? - -------------------------------------------------------------------------------- Chris Zigmont - Glowpoint, Inc. - CFO No. That's a separate figure, which in -- in the accounting rules that exist today, when we simultaneously issued some restricted common stock and reduced the price of the warrants associated with the debentures, that implies or imputes a non-cash charge that you calculate and you take to the P&L when the exchange is done. So that's what that figure represents. It is not cash, and it's a representation of the value of the stock that was issued and the warrant price change. - -------------------------------------------------------------------------------- Frank Costa - Wachovia Securities - Analyst Okay. So most of it is just the bond converting to equity? - -------------------------------------------------------------------------------- Chris Zigmont - Glowpoint, Inc. - CFO Exactly. It's all -- that's what it's all about, and it's all non-cash. - -------------------------------------------------------------------------------- Frank Costa - Wachovia Securities - Analyst Okay. Great. Thank you so much. - ----------------- --------------------- ------------ -------------------- --- CCBN StreetEvents streetevents@ccbn.com 617.603.7900 www.streetevents.com 14 - ----------------- --------------------- ------------ -------------------- --- (C) 2004 CCBN.com, Inc. Republished with permission. No part of this publication may be reproduced or transmitted in any form or by any means without the prior written consent of CCBN.com, Inc. FINAL TRANSCRIPT - -------------------------------------------------------------------------------- GLOW - Q1 2004 Glowpoint, Inc. Earnings Conference Call - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Chris Zigmont - Glowpoint, Inc. - CFO Yes. - -------------------------------------------------------------------------------- Frank Costa - Wachovia Securities - Analyst And, David, once again, just, you know, thanks for keeping good on your word. You put out some bold statements the first time you spoke and it looks like you're holding real true to those. Good job, guys. - -------------------------------------------------------------------------------- David Trachtenberg - Glowpoint, Inc. - President and CEO Thanks, Frank. Okay, Rachel that's it. Thank you. - -------------------------------------------------------------------------------- Operator Ladies and gentlemen, thank you for your participation in today's conference. This does conclude your presentation and you may now disconnect. - ------------------------------------------------------- DISCLAIMER CCBN reserves the right to make changes to documents, content, or other information on this web site without obligation to notify any person of such changes. In the conference calls upon which Event Transcripts are based, companies may make projections or other forward-looking statements regarding a variety of items. Such forward-looking statements are based upon current expectations and involve risks and uncertainties. Actual results may differ materially from those stated in any forward-looking statement based on a number of important factors and risks, which are more specifically identified in the companies' most recent SEC filings. Although the companies may indicate and believe that the assumptions underlying the forward-looking statements are reasonable, any of the assumptions could prove inaccurate or incorrect and, therefore, there can be no assurance that the results contemplated in the forward-looking statements will be realized. THE INFORMATION CONTAINED IN EVENT TRANSCRIPTS IS A TEXTUAL REPRESENTATION OF THE APPLICABLE COMPANY'S CONFERENCE CALL AND WHILE EFFORTS ARE MADE TO PROVIDE AN ACCURATE TRANSCRIPTION, THERE MAY BE MATERIAL ERRORS, OMISSIONS, OR INACCURACIES IN THE REPORTING OF THE SUBSTANCE OF THE CONFERENCE CALLS. IN NO WAY DOES CCBN OR THE APPLICABLE COMPANY ASSUME ANY RESPONSIBILITY FOR ANY INVESTMENT OR OTHER DECISIONS MADE BASED UPON THE INFORMATION PROVIDED ON THIS WEB SITE OR IN ANY EVENT TRANSCRIPT. USERS ARE ADVISED TO REVIEW THE APPLICABLE COMPANY'S CONFERENCE CALL ITSELF AND THE APPLICABLE COMPANY'S SEC FILINGS BEFORE MAKING ANY INVESTMENT OR OTHER DECISIONS. (C)2004, CCBN, Inc. All Rights Reserved. - ------------------------------------------------------- - ----------------- --------------------- ------------ -------------------- --- CCBN StreetEvents streetevents@ccbn.com 617.603.7900 www.streetevents.com 15 - ----------------- --------------------- ------------ -------------------- --- (C) 2004 CCBN.com, Inc. Republished with permission. No part of this publication may be reproduced or transmitted in any form or by any means without the prior written consent of CCBN.com, Inc. -----END PRIVACY-ENHANCED MESSAGE-----