EXHIBIT 10.1
 
FIRST LOAN MODIFICATION AGREEMENT
 
This First Loan Modification Agreement (this “Loan Modification Agreement”) is
entered into as of April , 2011, by and between SILICON VALLEY BANK, a
California corporation with a loan production office located at 275 Grove
Street, Suite 2-200, Newton, Massachusetts 02466 (“Bank”), and GLOWPOINT, INC.,
a Delaware corporation, and GP COMMUNICATIONS, LLC, a Delaware limited liability
company, each with offices located at 430 Mountain Avenue, Suite 301, Murray
Hill, New Jersey 07974 (individually and collectively, jointly and severally,
the “Borrower”).
 
1. DESCRIPTION OF EXISTING INDEBTEDNESS AND OBLIGATIONS. Among other
indebtedness and obligations which may be owing by Borrower to Bank, Borrower is
indebted to Bank pursuant to a loan arrangement dated as of June 16, 2010,
evidenced by, among other documents, a certain Loan and Security Agreement dated
as of June 16, 2010, between Borrower and Bank (as amended, the “Loan
Agreement”).  Capitalized terms used but not otherwise defined herein shall have
the same meaning as in the Loan Agreement.
 
2. DESCRIPTION OF COLLATERAL.  Repayment of the Obligations is secured by the
Collateral as described in the Loan Agreement and in certain Intellectual
Property Security Agreements executed by Borrower in favor of Bank each dated as
of June 16, 2010 (singly and collectively, the “IP Agreement”, and together with
any other collateral security granted to Bank, the “Security Documents”).
 
Hereinafter, the Security Documents, together with all other documents
evidencing or securing the Obligations shall be referred to as the “Existing
Loan Documents”.
 
3.  DESCRIPTION OF CHANGE IN TERMS.
 
A.  
Modifications to Loan Agreement.

 
 
1  
The Loan Agreement shall be amended by deleting the following text appearing as
Section 6.9(b) thereof:

 
 
“(b)           EBITDA.  Borrower, on a consolidated basis, shall maintain,
measured as of the end of each fiscal month, on a trailing three month basis
ending as of the date of measurement during the following periods, EBITDA of at
least (a loss not greater than) the following:
 
Trailing Three Month Period Ending
 
Minimum EBITDA (max loss)
 
May 31, 2010 through October 31, 2010
  $ (650,000 )
November 30, 2010 through February 28, 2011
  $ (400,000 )
March 31, 2011 through June 30, 2011
  $ 250,000  
July 31, 2011 through September 30, 2011
  $ 500,000  
October 31, 2011, and as of the last day of each fiscal month thereafter
  $ 1,000,000”  

 
 
 

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and inserting in lieu thereof the following:
 
“(b)           EBITDA.  Borrower, on a consolidated basis, shall maintain,
measured as of the end of each fiscal month, on a trailing three month basis
ending as of the date of measurement during the following periods, EBITDA of at
least (a loss not greater than) the following:
 
Trailing Three Month Period Ending
 
Minimum EBITDA (max loss)
 
May 31, 2010 through October 31, 2010
  $ (650,000 )
November 30, 2010 through February 28, 2011
  $ (400,000 )
March 31, 2011
  $ 250,000  
April 30, 2011through November 30, 2011
  $ 1.00  
December 31, 2011, and as of the last day of each fiscal month thereafter
  $ 250,000”  

 
2  
The Loan Agreement shall be amended by deleting the following text from Section
7.7 thereof:

 
“7.7           Distributions; Investments.  (a) Pay any dividends or make any
distribution or payment or redeem, retire or purchase any capital stock; or (b)
directly or indirectly make any Investment (including, without limitation, any
additional Investment in any Subsidiary) other than Permitted Investments, or
permit any of its Subsidiaries to do so.”
 
and inserting in lieu thereof the following:
 
“7.7           Distributions; Investments.  (a) Pay any dividends or make any
distribution or payment or redeem, retire or purchase any capital stock;
providedthat Borrower may, pursuant to a mandatory redemption, redeem its Series
B preferred stock (or any series of capital stock into which such Series B
preferred stock is converted or exchanged, the “Preferred Stock”);
providedfurtherthat, that such mandatory redemption shall be limited to an
aggregate redemption payment of $10,000,000 (plus accrued and unpaid dividends,
if any, in an aggregate amount not to exceed $1,000,000) (collectively, the
“Redemption Payment”) and any such mandatory redemption payments may only be
made by Borrower in the event (x) Borrower raises and receives not less than an
additional $20,000,000 from the issuance of new equity securities of  Borrower
after the date of the First Loan Modification Effective Date (the “Equity
Raise”); (y) after giving effect to any such mandatory redemption, Borrower
shall have remaining net proceeds from such issuance of new equity securities of
not less than $5,000,000 (the “Net Proceeds”); and (z) there shall be no Default
or Event of Default at the time of, and after giving effect to, the mandatory
redemption, or (b) directly or indirectly make any Investment (including,
without limitation, any additional Investment in any Subsidiary) other than
Permitted Investments, or permit any of its Subsidiaries to do
so.  Notwithstanding the foregoing, if the Equity Raise is less than
$20,000,000, then Borrower may redeem shares of Preferred Stock so long as the
Redemption Payment is reduced proportionately and the Net Proceeds after giving
effect to such Redemption Payment are equal to or greater than $5,000,000.”

 
 

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3  
The Loan Agreement shall be amended by deleting the following text from Section
10 thereof:

 
 
 

  “If to Borrower: Glowpoint, Inc.
GP Communications, LLC
c/o Glowpoint, Inc.
225 Long Avenue
Hillside, New Jersey 07205
Attn:  General Counsel
Fax:  (973) 556-1272
Email:  drobinson@glowpoint.com

 

  with a copy to: Gibbons P.C.
One Gateway Center
Newark, New Jersey 07012
Attn:  Frank Cannone, Esquire
Fax: (973) 639-8340

 

  If to Bank: Silicon Valley Bank
One Newton Executive Park, Suite 200
2221 Washington Street, Newton, MA 02462
Attn: Mr. Jay Tracy
Fax:  (617) 969-4395
Email: jtracy@svb.com

 

  with a copy to:     Riemer & Braunstein LLP
Three Center Plaza
Boston, Massachusetts 02108
Attn:  Charles W. Stavros, Esquire
Fax: (617) 880-3456
Email: cstavros@riemerlaw.com”

 
and inserting in lieu thereof the following:
 

  “If to Borrower: 
Glowpoint, Inc.
GP Communications, LLC
c/o Glowpoint, Inc.
430 Mountain Ave., Suite 301
Murray Hill, New Jersey 07974
Attn:  General Counsel
Fax:  (973) 556-1272
Email:  mhubner@glowpoint.com

 

 
 

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  If to Bank:
Silicon Valley Bank
275 Grove Street, Suite 2-200
Newton, MA 02466
Attn: Mr. Jay Tracy
Fax:  (617) 969-4395
Email: jtracy@svb.com

 

  with a copy to:
Riemer & Braunstein LLP
Three Center Plaza
Boston, Massachusetts 02108
Attn:  Charles W. Stavros, Esquire
Fax: (617) 880-3456
Email: cstavros@riemerlaw.com”

                                         
 
4  
The Compliance Certificate appearing as Exhibit B to the Loan Agreement is
hereby replaced with the Compliance Certificate attached as Exhibit A hereto.

 
4. FEES.  Borrower shall pay to Bank a modification fee equal to Two Thousand
Five Hundred Dollars ($2,500.00), which fee shall be due on the date hereof and
shall be deemed fully earned as of the date hereof.  Borrower shall also
reimburse Bank for all legal fees and expenses incurred in connection with this
amendment to the Existing Loan Documents.
 
5. RATIFICATION OF IP AGREEMENT.  Borrower hereby ratifies, confirms and
reaffirms, all and singular, the terms and conditions of the IP Agreement, and
acknowledges, confirms and agrees that said IP Agreement contains an accurate
and complete listing of all Intellectual Property Collateral as defined in such
IP Agreement, and such IP Agreement remains in full force and effect, other than
the addition of U.S. Patent No. 7,916,717 issued on March 29, 2011.
 
6. ADDITIONAL COVENANTS: RATIFICATION OF PERFECTION CERTIFICATE.  Borrower is
not a party to, nor is bound by, any license or other agreement with respect to
which Borrower is the licensee (a) that prohibits or otherwise restricts
Borrower from granting a security interest in Borrower’s interest in such
license or agreement or any other property, or (b) for which a default under or
termination of could interfere with the Bank’s right to sell any
Collateral.  Borrower shall provide written notice to Bank within ten (10) days
of entering or becoming bound by any such license or agreement (other than
over-the-counter software that is commercially available to the
public).  Borrower shall take such steps as Bank requests to obtain the consent
of, or waiver by, any person whose consent or waiver is necessary for (x) all
such licenses or contract rights to be deemed “Collateral” and for Bank to have
a security interest in it that might otherwise be restricted or prohibited by
law or by the terms of any such license or agreement (such consent or
authorization may include a licensor’s agreement to a contingent assignment of
the license to Bank if Bank determines that is necessary in its good faith
judgment), whether now existing or entered into in the future, and (y) Bank to
have the ability in the event of a liquidation of any Collateral to dispose of
such Collateral in accordance with Bank’s rights and remedies under the Loan
Agreement and the other Loan Documents.  Borrower hereby ratifies, confirms and
reaffirms, all and singular, the terms and disclosures contained in a certain
Perfection Certificate, dated as of June 16, 2010, and acknowledges, confirms
and agrees the disclosures and information above Borrower provided to Bank in
such Perfection Certificate remains true and correct in all material respects as
of the date hereof.
 
7. AUTHORIZATION TO FILE.  Borrower hereby authorizes Bank to file UCC financing
statements without notice to Borrower, with all appropriate jurisdictions, as
Bank deems appropriate, in order to further perfect or protect Bank’s interest
in the Collateral, including a notice that any disposition of the Collateral, by
either the Borrower or any other Person, shall be deemed to violate the rights
of the Bank under the Code.
 
 
 

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8. CONSISTENT CHANGES.  The Existing Loan Documents are hereby amended wherever
necessary to reflect the changes described above.
 
9. RATIFICATION OF LOAN DOCUMENTS.  Borrower hereby ratifies, confirms, and
reaffirms all terms and conditions of the Loan Agreement, each other Loan
Document and all security or other collateral granted to the Bank, and confirms
that the indebtedness secured thereby includes, without limitation, the
Obligations.
 
10. NO DEFENSES OF BORROWER.  Borrower hereby acknowledges and agrees that
Borrower has no offsets, defenses, claims, or counterclaims against Bank with
respect to the Obligations, or otherwise, and that if Borrower now has, or ever
did have, any offsets, defenses, claims, or counterclaims against Bank, whether
known or unknown, at law or in equity, all of them are hereby expressly WAIVED
and Borrower hereby RELEASES Bank from any liability thereunder.
 
11. CONTINUING VALIDITY.  Borrower understands and agrees that in modifying the
existing Obligations, Bank is relying upon Borrower’s representations,
warranties, and agreements, as set forth in the Existing Loan Documents.  Except
as expressly modified pursuant to this Loan Modification Agreement, the terms of
the Existing Loan Documents remain unchanged and in full force and
effect.  Bank’s agreement to modifications to the existing Obligations pursuant
to this  Loan Modification Agreement in no way shall obligate Bank to make any
future modifications to the Obligations.  Nothing in this Loan Modification
Agreement shall constitute a satisfaction of the Obligations.  It is the
intention of Bank and Borrower to retain as liable parties all makers of
Existing Loan Documents, unless the party is expressly released by Bank in
writing.  No maker will be released by virtue of this Loan Modification
Agreement.
 
12. RIGHT OF SET-OFF.  In consideration of Bank’s agreement to enter into this
Loan Modification Agreement, Borrower hereby reaffirms and hereby grants to
Bank, a lien, security interest and right of set off as security for all
Obligations to Bank, whether now existing or hereafter arising upon and against
all deposits, credits, collateral and property, now or hereafter in the
possession, custody, safekeeping or control of Bank or any entity under the
control of Silicon Valley Bank  (including a Bank subsidiary) or in transit to
any of them.  At any time after the occurrence and during the continuance of an
Event of Default, without demand or notice, Bank may set off the same or any
part thereof and apply the same to any liability or obligation of Borrower even
though unmatured and regardless of the adequacy of any other collateral securing
the loan.  ANY AND ALL RIGHTS TO REQUIRE BANK TO EXERCISE ITS RIGHTS OR REMEDIES
WITH RESPECT TO ANY OTHER COLLATERAL WHICH SECURES THE OBLIGATIONS, PRIOR TO
EXERCISING ITS RIGHT OF SETOFF WITH RESPECT TO SUCH DEPOSITS, CREDITS OR OTHER
PROPERTY OF BORROWER, ARE HEREBY KNOWINGLY, VOLUNTARILY AND IRREVOCABLY WAIVED.
 
13. CONFIDENTIALITY.  Section 12.11 of the Loan Agreement is hereby incorporated
by reference in its entirety.
 
14. JURISDICTION/VENUE.  Section 11 of the Loan Agreement is hereby incorporated
by reference in its entirety.
 
15. COUNTERSIGNATURE.  This Loan Modification Agreement shall become effective
only when it shall have been executed by Borrower and Bank.
 
[The remainder of this page is intentionally left blank]

 
 

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IN WITNESS WHEREOF, the parties hereto have caused this Loan Modification
Agreement to be executed as of the date first above written
 

BORROWER:
 
GLOWPOINT, INC.
 
By_________________________________________
 
Name:______________________________________
 
Title:_______________________________________
 
GP COMMUNICATIONS, LLC
 
By_________________________________________
 
Name:______________________________________
 
Title:_______________________________________
 
BANK:
 
SILICON VALLEY BANK
 
By_________________________________________
 
Name:______________________________________
 
Title:_______________________________________
 
 
First Loan Modification Effective Date:  April __, 2011
 

 
 

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Exhibit A to First Loan Modification Agreement
 
EXHIBIT B

COMPLIANCE CERTIFICATE

TO:           SILICON VALLEY
BANK                                                                                                                Date:
FROM:    GLOWPOINT, INC. and GP COMMUNICATIONS, LLC

 
The undersigned authorized officer of Glowpoint, Inc. and GP Communications, LLC
(individually and collectively, jointly and severally, the “Borrower”) certifies
that under the terms and conditions of the Loan and Security Agreement between
Borrower and Bank (the “Agreement”), (1) Borrower is in complete compliance for
the period ending _______________ with all required covenants except as noted
below, (2) there are no Events of Default, (3) all representations and
warranties in the Agreement are true and correct in all material respects on
this date except as noted below; provided, however, that such materiality
qualifier shall not be applicable to any representations and warranties that
already are qualified or modified by materiality in the text thereof; and
provided, further that those representations and warranties expressly referring
to a specific date shall be true, accurate and complete in all material respects
as of such date, (4) Borrower, and each of its Subsidiaries, has timely filed
all required tax returns and reports, and Borrower has timely paid all foreign,
federal, state and local taxes, assessments, deposits and contributions owed by
Borrower except as otherwise permitted pursuant to the terms of Section 5.9 of
the Agreement, and (5) no Liens have been levied or claims made against Borrower
or any of its Subsidiaries, if any, relating to unpaid employee payroll or
benefits of which Borrower has not previously provided written notification to
Bank.  Attached are the required documents supporting the certification.  The
undersigned certifies that these are prepared in accordance with GAAP
consistently applied from one period to the next except as explained in an
accompanying letter or footnotes.  The undersigned acknowledges that no
borrowings may be requested at any time or date of determination that Borrower
is not in compliance with any of the terms of the Agreement, and that compliance
is determined not just at the date this certificate is delivered.  Capitalized
terms used but not otherwise defined herein shall have the meanings given them
in the Agreement.

 
 

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Please indicate compliance status by circling Yes/No under “Complies” column.
 
Reporting Covenant
Required
Complies
     
Monthly financial statements with
Compliance Certificate
Monthly within 30 days
Yes   No
Annual financial statement (CPA Audited) + CC
FYE within120 days
Yes   No
10-Q, 10-K and 8-K
Within 5 days after filing with SEC
Yes   No
A/R & A/P Agings, Deferred Revenue
Reports and bank statements
Monthly within 15 days
Yes   No
Transaction Reports
Bi-weekly and with each request for a Credit Extension (Monthly within 15
days when no outstanding Credit Extensions
Yes   No
Projections
Within 30 days of FYE and as amended
Yes   No
 
 
The following Intellectual Property was registered after the Effective Date (if
no registrations, state “None”)
____________________________________________________________________________
 

Financial Covenant
Required
Actual
Complies
       
Maintain as indicated:
     
Liquidity (at all times)
$750,000
$_____
Yes   No
EBITDA (monthly, on a trailing three month basis)*
$_____
$_____
Yes   No

* See Section 6.9(b) of the Loan Agreement

 
 

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The following financial covenant analyses and information set forth in Schedule
1 attached hereto are true and accurate as of the date of this Certificate.

The following are the exceptions with respect to the certification above:  (If
no exceptions exist, state “No exceptions to note.”)
 

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Glowpoint, Inc.
 
GP Communications, LLC
 
 
By:                                                       
 
Name:                                                       
 
Title:                                                       
 
BANK USE ONLY
 
Received by: _____________________
                       authorized signer
 
Date:               _________________________
 
Verified:       ________________________
                      authorized signer
 
Date:             _________________________
 
Compliance Status:     Yes     No

 

 
 

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Schedule 1 to Compliance Certificate

Financial Covenants of Borrower

Dated:                      ____________________

 
I.           Liquidity (Section 6.9(a))
 
Required:                      $750,000, at all times.

Actual:

A.
Aggregate value of Borrower’s unrestricted cash at Bank
$
B.
Availability Amount
$
C.
LIQUIDITY (line A plus line B)
$

 
Is line C equal to or greater $750,000?

No, not in compliance                              Yes, in compliance

 
 

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II.           EBITDA (Section 6.9(b))
 
Required:                      Borrower, on a consolidated basis, shall
maintain, measured as of the end of each fiscal month, on a trailing three month
basis ending as of the date of measurement during the following periods, EBITDA
of at least (a loss not greater than) the following:
 
Trailing Three Month Period Ending
 
Minimum EBITDA (max loss)
 
May 31, 2010 through October 31, 2010
  $ (650,000 )
November 30, 2010 through February 28, 2011
  $ (400,000 )
March 31, 2011
  $ 250,000  
April 30, 2011through November 30, 2011
  $ 1.00  
December 31, 2011, and as of the last day of each fiscal month thereafter
  $ 250,000”  

Actual: all amounts measured on a trailing three month basis ending as of the
date of measurement:

A.
Net Income
$
B.
To the extent included/deducted in the determination of Net Income
   
1.           Interest Expense
$
 
2.           Depreciation expense
$
 
3.           Amortization expense
$
 
4.           Provisions for income taxes
$
 
5.           The sum of lines 1 through 4
$
C.
EBITDA (line A plus line B.5)
 

 
Is line C equal to or greater than $[                ]?

  No, not in compliance                             Yes, in compliance