Document:

glow2014-ex10.26

Exhibit 10.26
FIRST AMENDMENT TO LOAN AGREEMENT
THIS FIRST AMENDMENT TO LOAN AGREEMENT, dated as of February 27, 2015 (this “Amendment”), by and among GLOWPOINT, INC., a Delaware corporation (the “Company”), and each of the Company’s Subsidiaries (each, a “Borrower” and collectively, “Borrowers”), Main Street Capital Corporation, a Maryland corporation (“MSCC”, and together with its successors and assigns, individually and collectively, “Lender”), and MSCC, as administrative agent and collateral agent for itself and Lender (in such capacity, “Agent”) and with respect to that certain Loan Agreement, dated as of October 17, 2013 (as amended, restated, amended and restated, supplemented or otherwise modified prior to the date hereof, the “Loan Agreement”), by and among the Company and each of the other Borrowers, Lender and Agent.  
W I T N E S S E T H:
WHEREAS, Agent, Lender and Borrowers desire to amend the Loan Agreement as provided herein upon the terms and conditions set forth herein; and
WHEREAS, Lender has agreed to amend the Loan Agreement subject to the terms and conditions set forth herein. 
NOW, THEREFORE, for and in consideration of the mutual covenants and agreements herein contained and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged and confessed, Borrowers, Agent and Lender hereby agree as follows:
1.Definitions.  Unless otherwise defined herein, terms defined in the Loan Agreement, as amended by this Amendment, shall have their defined meanings when used herein.
2.    Amendments to Loan Agreement. Subject to the terms hereof and upon satisfaction of the conditions set forth in Section 4 hereof, effective as of the First Amendment Effective Date (defined below):
(a)    Amended Definitions.  Section 1.1 of the Loan Agreement shall be and hereby is amended to amend and restate each of the following definitions in their entirety to read as follows:
Debt Service means, when determined, without duplication, the sum of (a) the principal amount of all Funded Debt scheduled to be paid during the forward 12-month period (other than the current portion of the SRS Note due in the 12 months prior to the maturity date thereof), plus (b) the Unscheduled SRS Note Payments, plus (c) Interest Expense paid during the most recently completed 12‐month period (excluding interest paid on the SRS Note on or prior to March 1, 2015).
EBITDA  means, without duplication, for any period, Borrowers’ Net Income for such period plus, in each case, to the extent deducted in the calculation of Net Income:

(a)    GAAP depreciation, amortization (including deferred financing costs amortization expense), Interest Expense and income taxes, minus
(b)    interest income, plus
(c)    any non-cash compensation charges pursuant to equity incentive plans approved by the Board of Directors, plus
(d)    any non-cash charges (or minus non-cash income) as approved by Lender in writing (including, without limitation, asset impairment charges taken during (x) the fiscal year ending December 31, 2013 in an aggregate amount not to exceed $1,250,000, (y)  the fiscal year ending December 31, 2014 in an aggregate amount not to exceed $2,500,000 (of which at least $1,500,000 is related to intangible assets recorded in connection with the acquisition of  Affinity VideoNet, Inc.) and (z) any fiscal year ending thereafter, in an aggregate amount not to exceed $500,000, in each case, unless otherwise approved by Lender); plus
(e)    non-recurring charges related to severance costs incurred during (x) the fiscal year ended December 31, 2012 in an aggregate amount not to exceed $50,000, (y) the fiscal year ending December 31, 2013 in an aggregate amount not to exceed $1,250,000, and (z) any fiscal year ending thereafter, in an aggregate amount not to exceed $500,000, in each case, unless otherwise approved by Lender; plus
(f)    non-recurring charges related to acquisition costs incurred during the fiscal year ended December 31, 2012 and the fiscal year ending December 31, 2013, in an aggregate amount not to exceed $450,000, unless otherwise approved by Lender.
EBITDA for any period shall (i) exclude “EBITDA” on a pro forma basis for such period of each Person (or business unit, division or group of such Person) which is sold, transferred or otherwise disposed of by a Borrower during such period, (ii) exclude any Key Man Life Insurance proceeds and (iii) not include “EBITDA” on a pro forma basis for such period of each Person (or business unit, division or group of such Person) acquired by a Borrower during such period.
Fixed Charge Coverage Ratio means, when determined, the ratio of (a) for the most recently completed 12-month period, EBITDA plus the net cash proceeds of any NJ NOL Disposition received during such period plus the net cash proceeds of Junior Capital Raises received during such period, solely to the extent such net cash proceeds were not used to repay or prepay the Principal Debt minus Capital Expenditures and cash Taxes and any Cash Distributions and any payments for the redemption of Equity Securities or for the prepayment of any Subordinated Debt to (b) Debt Service.
Funded Debt to EBITDA Ratio means, when determined, the ratio of (a) the result of (i) Borrowers’ Funded Debt less (ii) Borrowers’ unrestricted cash on hand as of such date 

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of determination, less (iii) Borrowers’ restricted cash pledged to support letters of credit, to the extent such letters of credit and corresponding liens are permitted hereunder, less (iv) so long as no cash payment of principal in excess of $200,000 has been required to be paid on the Debt outstanding under the SRS Note during the most recently completed 12-month period and no payment of cash interest has been required to be paid on the Debt outstanding under the SRS Note in each of the four months in the most recently completed four month period, the principal amount outstanding under the SRS Note as of such date, to (b) the sum of (i) Borrowers’ EBITDA for the most recently completed 12-month period, (ii) the net cash proceeds of any NJ NOL Disposition received during such period and (iii) the net cash proceeds of Junior Capital Raises received during such period, solely to the extent such net cash proceeds were not used to repay or prepay the Principal Debt; provided, however, that for the purposes of this definition, (A) as of the last day of the first fiscal quarter ending after the consummation of the acquisition by a Borrower of any Person (or business unit, division, or group of any Person), Funded Debt shall be deemed to include only one-quarter (1/4) of the Acquisition Debt related to such acquisition, (B) as of the last day of the second fiscal quarter ending after the consummation of the acquisition by a Borrower of any Person (or business unit, division, or group of any Person), Funded Debt shall be deemed to include only one-half (1/2) of the Acquisition Debt related to such acquisition, (C) as of the last day of the third fiscal quarter ending after the consummation of the acquisition by a Borrower of any Person (or business unit, division, or group of any Person), Funded Debt shall be deemed to include only three-quarters (3/4) of the Acquisition Debt related to such acquisition and (D) as of the last day of the fourth fiscal quarter ending after the consummation of the acquisition by a Borrower of any Person (or business unit, division, or group of any Person), Funded Debt shall include all of the Acquisition Debt related to such acquisition.
SRS Note means that certain unsecured, subordinated Third Amended and Restated Nonnegotiable Promissory Note dated February 27, 2015, made by the Company and payable to SRS in the principal amount of $1,784,692.48, and all renewals, increases, modifications, amendments, supplements, restatements and replacements of, or substitutions for, that promissory note to the extent permitted by this Agreement.
(b)    New Definitions.  Section 1.1 of the Loan Agreement shall be and hereby is amended to insert the following new definitions in correct alphabetical order:
Acquisition Debt means the aggregate principal amount of Funded Debt incurred or assumed in connection with the acquisition by a Borrower of any Person (or business unit, division or group of any Person), in each case, as of the date of such acquisition.
Junior Capital Raise means (a) the issuance of any Equity Securities to the extent permitted under this Agreement which (i) are on terms satisfactory to Lender, (ii) do not require cash payment of any dividend or distribution or any redemption prior to the payment in full of the Obligation, and (iii) the proceeds of which are not used to fund acquisitions or repay any Debt (other than the Principal Debt) and (b) the incurrence of unsecured Subordinated Debt, to the extent constituting Permitted Debt, which (i) is contractually 

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subordinated to the Obligation on terms satisfactory to Lender, (ii) does not require any cash payment of principal, interest or any other fees or expenses, in each case prior to the date that is six (6) months after the later of the Term Loan Maturity Date or the Revolving Loan Maturity Date, and (iii) the proceeds of which are not used to fund acquisitions or repay any Debt (other than the Principal Debt).
NJ NOL Disposition means the disposition of any net operating loss of any Borrower or any Subsidiary for New Jersey tax purposes pursuant to the New Jersey Technology Business Tax Certificate Transfer Program.
SRS means Shareholder Representative Services, LLC, a Colorado limited liability company.
Unscheduled SRS Note Payments means, when determined, without duplication, the sum of (a) the product of (x) the amount of all principal payments in respect of the SRS Note payable pursuant to Section 1(c)(i) thereof paid during the most recently completed 3-month period and (y) four (4) and (b) the product of (x) the greater of (i) the amount of any principal payment in respect of the SRS Note pursuant to Section 1(c)(ii) thereof payable during the forthcoming 6-month period and (ii) the amount of any principal payment in respect of the SRS Note pursuant to Section 1(c)(ii) thereof paid during the most recently completed 6-month period and (y) two (2).
(c)    Mandatory Prepayments.  Section 2.4(c) of the Loan Agreement shall be and hereby is amended and restated to read in its entirety as follows:
(c)    At Agent’s election, the following amounts may either be applied to the Obligation in accordance with Section 3.3 or retained by the applicable Borrower:
(i)    all Net Proceeds from the disposition of any asset whether or not permitted by Section 9.9 (other than dispositions permitted under Section 9.9(a), (b), (c) or (g));
(ii)    fifty percent (50%) of all Net Proceeds from any disposition permitted under Section 9.9(g); and 
(iii)    all Insurance Proceeds (other than business interruption Insurance Proceeds) and Eminent Domain Proceeds that relate to any Borrower’s assets and that Lender is entitled to receive under Section 8.12 (other than Insurance Proceeds used to restore or replace assets of any Borrower as permitted under Section 8.12(c)).
(d)    Asset Dispositions.  Section 9.9 of the Loan Agreement shall be and hereby is amended and restated to read in its entirety as follows:
9.9    Sale of Assets.  No Borrower may sell, assign, lease, transfer, or otherwise dispose of any of its assets, other than (a) sales of inventory in the ordinary course of business, 

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(b) the sale, discount, or transfer of its delinquent accounts receivable in the ordinary course of business for purposes of collection, (c) dispositions of assets from one Borrower to another, (d) occasional dispositions of immaterial assets for consideration not less than fair market value, and dispositions of assets that are worn-out, surplus or obsolete, (e) non-exclusive licenses and similar arrangements for the use of intellectual property in the ordinary course of business and licenses that could not result in a legal transfer of title of the licensed property but that may be exclusive in respects other than territory and that may be exclusive as to territory only as to discrete geographical areas outside of the United States in the ordinary course of business; provided that such licenses or other arrangements are in exchange for consideration not less than fair market value, (f) to the extent permitted by Section 9.6, and (g) any NJ NOL Disposition for cash proceeds of not less than 80% of the tax benefit represented by such net operating loss.  All dispositions by a Borrower of its assets, whether or not permitted by this Section 9.9, are subject to Section 2.4.  All Net Proceeds shall be cash Net Proceeds unless approved by Lender in advance.  The non-cash portion of all Net Proceeds shall be pledged to Agent as Borrower Collateral concurrently with the applicable disposition.
(e)    Issuance and Ownership of Equity Securities.  Section 9.15 of the Loan Agreement shall be and hereby is amended and restated to read in its entirety as follows:
9.15    Issuance and Ownership of Equity Securities.  No Borrower may (a) issue any Equity Securities, or (b) buy, sell, pledge, transfer or otherwise dispose of any Equity Securities of any other Borrower, except to Lender or as otherwise expressly permitted under the Loan Documents; provided that the Company may (i) sell or buy Equity Securities of other Borrowers to or from any Borrower and (ii) so long as no Default or Potential Default exists or would, after giving pro forma effect thereto, result from any such issuance, issue Equity Securities of the Company (A) in an aggregate amount not in excess of $20,000,000 pursuant to an effective shelf registration statement of the Company, or (B) under the Company’s 2014 Equity Incentive Plan or any successor or supplemental equity incentive plan approved by the Company’s stockholders.
(f)    Capital Expenditures.  Section 9.17 of the Loan Agreement shall be and hereby is amended and restated to read in its entirety as follows:
9.17    Capital Expenditures.  No Borrower shall make or incur any Capital Expenditures if, after giving effect thereto, the aggregate amount of all Capital Expenditures made by Borrowers would exceed (a)  $2,250,000 in each of the fiscal years ending December 31, 2014, 2015 and 2016, and (c) $1,500,000 in any fiscal year ending thereafter.  
(g)    Financial Covenants.  Section 10 of the Loan Agreement shall be and hereby is amended and restated to read in its entirety as follows:
Section 10    Financial Covenants.

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Each Borrower, on behalf of itself and its Subsidiaries, covenants jointly and severally that, except with the prior written consent of Agent and Lender, for so long as all or any portion of the Loans or any other Obligation remains outstanding:
10.1    Fixed Charge Coverage Ratio.  The Fixed Charge Coverage Ratio may not at any time be less than the ratio set out below for the applicable period:
(i) Closing Date through December 31, 2014        1.5 to 1.00
(ii) January 1, 2015 through June 30, 2015        1.25 to 1.00
(iii) July 1, 2015 through December 31, 2015    0.85 to 1.00
(iv) January 1, 2016 through March 31, 2016    1.00 to 1.00
(v) April 1, 2016 through June 30, 2016        1.25 to 1.00
(vi) July 1, 2016 through December 31, 2016    1.50 to 1.00
(vii) Thereafter             3.50 to 1.00
10.2    Funded Debt to EBITDA Ratio.  The Funded Debt to EBITDA Ratio may not at any time exceed the ratio set out below for the applicable period:
(i) Closing Date through September 30, 2014    3.75 to 1.00
(ii) October 1, 2014 through December 31, 2014    3.50 to 1.00
(iii) January 1, 2015 through June 30,2015        3.25 to 1.00
(iv) July 1, 2015 through March 31, 2016        3.75 to 1.00
(v) April 1, 2016 through September 30, 2016    3.50 to 1.00
(vi) October 1, 2016 through December 31, 2016    3.00 to 1.00
(vii) Thereafter            2.00 to 1.00
Each of the covenants in this Section 10 shall be tested on a quarterly basis as of the last day of each fiscal quarter of Borrowers.
3.    Representations and Warranties.  In order to induce Agent and Lender to enter into this Amendment, Borrowers hereby (a) represent and warrant that (i) the representations and warranties of Borrowers contained in the Loan Agreement (as amended by this Amendment) and the other Loan Documents (as amended by this Amendment) are true and correct in all material respects on and as of the date hereof, except to the extent such representations and warranties speak to a specific date, in which case such representations and warranties were true and correct in all respects as of such specific date, and (ii) no Default or Potential Default, has occurred and is 

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continuing; (b) ratify and reaffirm their respective obligations under, and acknowledge, renew and extend their continued liability under the Loan Agreement and each other Loan Document to which they are party; (c) grant (or regrant) a security interest in the Collateral to Agent, for the ratable benefit of Agent and Lender, and ratify and reaffirm all of the Liens in favor of Agent, for the ratable benefit of Agent and Lender, securing the payment and performance of the Obligation; and (d) acknowledge and agree that the Loan Agreement and each of the other Loan Documents are hereby ratified and confirmed in all respects and shall remain in full force and effect.
4.    Conditions to Effectiveness.  This Amendment shall be effective on the date when each of the following conditions shall have occurred (the “First Amendment Effective Date”):
(a)    Agent and Lender shall have executed this Amendment and shall have received counterparts hereof, duly executed and delivered by each Borrower;
(i)    Agent shall have received each fully executed, true, correct and complete copy of the executed SRS Note (as defined in the Loan Agreement as amended by this Amendment) in Proper Form;
(b)    Each of the following has been completed, satisfied, or is true and correct as of such date:
(i)    all of the representations and warranties of Borrowers in the Loan Documents (as amended by this Amendment) are true and correct in all material respects (except to the extent that the representations and warranties speak to a specific date, in which case they are true and correct in all respects as of such specific date);
(ii)    no Material Adverse Event exists;
(iii)    no Litigation exists that, if decided against any of Borrowers, could reasonably be expected to result in a material claim against any Borrower or otherwise to result in a Material Adverse Event; and
(iv)    no Default or Potential Default exists.
(c)    Agent shall have received such other instruments and documents incidental and appropriate to the transaction provided for herein as Agent or its counsel may reasonably request, and all such documents shall be in form and substance satisfactory to Agent; and
(d)    Borrowers shall have paid all reasonable fees and expenses of Agent’s counsel, Norton Rose Fulbright US LLP, in connection with the preparation and negotiation of this Amendment which are owing to date.
5.    Reference to Loan Agreement.  Upon the effectiveness of this Amendment, each reference in the Loan Agreement to “this Agreement,” “hereunder,” or words of like or similar import shall mean and be a reference to the Loan Agreement, as modified and amended by this Amendment.  

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6.    Governing Law and Jurisdiction.  THIS AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF TEXAS.
7.    Expenses.  Borrowers agree to pay and reimburse Agent and each Lender for all reasonable costs, fees and expenses incurred in connection with the negotiation, preparation, delivery and execution of this Amendment, including, without limitation, the reasonable fees and disbursements of Agent’s and each Lender’s counsel.
8.    Headings.  Section headings in this Amendment are included herein for convenience of reference only and shall not constitute a part of this Amendment for any other purpose.
9.    Counterparts.  This Amendment may be executed by the parties hereto in any number of separate counterparts (including by facsimile or other electronic transmission) and all of such counterparts taken together shall be deemed to constitute one and the same instrument.
10.    Successors and Assigns.  All of the terms and provisions of this Amendment shall bind and inure to the benefit of the parties hereto and their respective successors and assigns. 
11.    Continuing Effect.  Except as expressly amended hereby, the Loan Agreement, as amended by this Amendment, shall continue to be and shall remain in full force and effect in accordance with its terms.  This Amendment shall not constitute an amendment or waiver of any provision of the Loan Agreement not expressly referred to herein and shall not be construed as an amendment, waiver or consent to any action on the part of any Borrower that would require an amendment, waiver or consent of Agent except as expressly stated herein.  Any reference to the “Loan Agreement” in the Loan Documents or any related documents shall be deemed to be a reference to the Loan Agreement as amended by this Amendment.  This Amendment constitutes a Loan Document.
12.    COUNSEL.  IN EXECUTING THIS AMENDMENT, EACH BORROWER HEREBY WARRANTS AND REPRESENTS IT IS NOT RELYING ON ANY STATEMENT OR REPRESENTATION OTHER THAN THOSE IN THIS AMENDMENT AND IS RELYING UPON ITS OWN JUDGMENT AND ADVICE OF ITS ATTORNEYS. BORROWERS HEREBY ACKNOWLEDGE AND AGREE THAT THEY HAVE BEEN ADVISED BY AGENT AND LENDER TO SEEK THE ADVICE OF AN ATTORNEY AND AN ACCOUNTANT IN CONNECTION WITH THE TRANSACTIONS CONTAINED HEREIN AND THAT SUCH BORROWER HAS HAD THE OPPORTUNITY TO SEEK THE ADVICE OF AN ATTORNEY AND ACCOUNTANT OF SUCH BORROWER’S CHOICE IN CONNECTION WITH THIS AMENDMENT. EACH BORROWER ACKNOWLEDGES THAT NORTON ROSE FULBRIGHT US LLP IS NOT SUCH BORROWER’S COUNSEL WITH RESPECT TO THIS AMENDMENT OR ANY OTHER LOAN DOCUMENT.
13.    NO ORAL AGREEMENTS.  THIS AMENDMENT AND THE OTHER LOAN DOCUMENTS EMBODY THE ENTIRE AGREEMENT OF THE PARTIES AND SUPERSEDE ALL PRIOR AGREEMENTS AND UNDERSTANDINGS RELATING TO THE SUBJECT MATTER THEREOF AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, 

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CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES.  THERE ARE NO UNWRITTEN ORAL AGREEMENTS AMONG THE PARTIES.
14.    General Waiver and Release.  IN ADDITION, TO INDUCE AGENT AND LENDER TO AGREE TO THE TERMS OF THIS AMENDMENT, BORROWERS (BY THEIR EXECUTION BELOW) REPRESENT AND WARRANT THAT AS OF THE DATE OF THEIR EXECUTION OF THIS AMENDMENT THERE ARE NO CLAIMS OR OFFSETS AGAINST OR DEFENSES OR COUNTERCLAIMS TO THEIR RESPECTIVE OBLIGATIONS UNDER THE LOAN AGREEMENT, THIS AMENDMENT OR THE OTHER LOAN DOCUMENTS.  NOTWITHSTANDING THE FOREGOING, IN THE EVENT THERE EXIST ANY SUCH CLAIMS OR OFFSETS AGAINST OR DEFENSES OR COUNTERCLAIMS, BORROWERS (BY THEIR EXECUTION BELOW) HEREBY:
FOREVER GENERALLY WAIVE ANY AND ALL CLAIMS, OFFSETS, DEFENSES AND/OR COUNTERCLAIMS, WHETHER KNOWN OR UNKNOWN, ARISING ON OR PRIOR TO THE DATE OF THEIR EXECUTION OF THIS AGREEMENT; AND
FOREVER RELEASE, ACQUIT AND DISCHARGE AGENT AND LENDER AND THEIR RELATED PARTIES FROM ANY AND ALL OBLIGATIONS, INDEBTEDNESS, LIABILITIES, CLAIMS, RIGHTS, CAUSES OF ACTION OR DEMANDS WHATSOEVER, WHETHER KNOWN OR UNKNOWN, SUSPECTED OR UNSUSPECTED, IN LAW OR EQUITY, WHICH ANY BORROWER EVER HAD, NOW HAS, CLAIMS TO HAVE OR MAY HAVE AGAINST ANY RELEASED PARTY ARISING ON OR PRIOR TO THE DATE HEREOF AND FROM OR IN CONNECTION WITH THE LOAN AGREEMENT, THIS AMENDMENT AND THE OTHER LOAN DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED THEREBY AND HEREIN.

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IN WITNESS WHEREOF, the parties have caused this Amendment to be executed and delivered by their respective duly authorized officers as of the day and year first above written.
	
		
	 
	BRROWERS:

	 
	 

	 
	GLOWPOINT, INC.

	 
	a Delaware corporation

	 
	 

	 
	 

	 
	By: /s/ David Clark

	 
	Name: David Clark

	 
	Title: Chief Financial Officer, Treasurer and Secretary

	 
	 

	 
	 

	 
	GP COMMUNICATIONS, LLC.

	 
	a Delaware limited liability company

	 
	 

	 
	By: Glowpoint, Inc., its managing member

	 
	 

	 
	 

	 
	By: /s/ David Clark

	 
	Name: David Clark

	 
	Title: Chief Financial Officer, Treasurer and Secretary

[SIGNATURE PAGE TO FIRST AMENDMENT]

	
		
	 
	AGENT:

	 
	 

	 
	MAIN STREET CAPITAL CORPORATION

	 
	A Maryland corporation as Agent

	 
	 

	 
	 

	 
	By: /s/ Dwayne L. Hyzak

	 
	Name: Dwayne L. Hyzak

	 
	Title: Senior Managing Director

[SIGNATURE PAGE TO FIRST AMENDMENT]

	
		
	 
	LENDER:

	 
	 

	 
	MAIN STREET CAPITAL CORPORATION

	 
	A Maryland corporation as Agent

	 
	 

	 
	 

	 
	By: /s/ Dwayne L. Hyzak

	 
	Name: Dwayne L. Hyzak

	 
	Title: Senior Managing Director

[SIGNATURE PAGE TO FIRST AMENDMENT]glow2014-ex10.27

Exhibit 10.27

THIS NOTE HAS BEEN ISSUED WITHOUT REGISTRATION OR QUALIFICATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND APPLICABLE STATE SECURITIES LAWS AND MAY NOT BE SOLD, TRANSFERRED, OR OTHERWISE DISPOSED OF WITHOUT (A) SUCH REGISTRATION AND QUALIFICATION, OR (B) AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE MAKER IN FORM AND SUBSTANCE THAT SUCH SALE, TRANSFER, OR DISPOSITION MAY LAWFULLY BE MADE WITHOUT REGISTRATION OR QUALIFICATION. THIS NOTE IS SUBJECT TO THE TERMS OF A SUBORDINATION AGREEMENT, DATED AS OF OCTOBER 17, 2013 (AS IN EFFECT FROM TIME TO TIME, THE “SUBORDINATION AGREEMENT”), BY AND AMONG MAKER (AS DEFINED BELOW), PAYEE (AS DEFINED BELOW), SENIOR LENDER (AS DEFINED IN THE SUBORDINATION AGREEMENT) AND MAIN STREET CAPITAL CORPORATION, AS AGENT, WHICH AGREEMENT IS INCORPORATED HEREIN BY REFERENCE. THIS NOTE AND THE RIGHTS AND OBLIGATIONS EVIDENCED HEREBY ARE SUBORDINATED TO THE SENIOR DEBT (AS DEFINED IN THE SUBORDINATION AGREEMENT) IN THE MANNER AND TO THE EXTENT SET FORTH IN THE SUBORDINATION AGREEMENT. EACH HOLDER OF THIS NOTE, BY ITS ACCEPTANCE HEREOF, ACKNOWLEDGES THAT THE PRINCIPAL OF AND INTEREST ON THE INDEBTEDNESS CREATED OR EVIDENCED BY THIS NOTE SHALL NOT BECOME DUE OR PAYABLE EXCEPT TO THE EXTENT PERMITTED BY THE SUBORDINATION AND OTHER PROVISIONS SET FORTH HEREIN AND IRREVOCABLY AGREES TO BE BOUND BY THE SUBORDINATION AND OTHER PROVISIONS SET FORTH IN THE SUBORDINATION AGREEMENT.

THIRD AMENDED AND RESTATED NONNEGOTIABLE PROMISSORY NOTE

	
		
	Initial Principal Amount: $1,784,692.48
	Dated as of February 27, 2015 

FOR VALUE RECEIVED, Glowpoint, Inc., a Delaware corporation (“Maker”), promises to pay to Shareholder Representative Services LLC, a Colorado limited liability company, solely in its capacity as Sellers’ Representative, for the benefit of the Stockholders (as defined in the Merger Agreement (as defined below)) (“Payee”), in lawful money of the United States of America, the principal sum of $1,784,692.48 (the “Principal Amount”) plus any Interest (as defined below) thereof, subject to reduction as provided in the Merger Agreement and in the manner provided below. The Principal Amount shall be deemed for all purposes, including with respect to calculation of Interest that accrues on such amount, to be equal to $1,784,692.48 as of December 31, 2014.

This Third Amended and Restated Nonnegotiable Promissory Note (this “Note”) has been executed and delivered pursuant to, and is subject to the terms and conditions of, an Agreement and Plan of Merger (the “Merger Agreement”) dated August 10, 2012, among Maker, GPAV Merger Sub, Inc., a Delaware corporation, Affinity VideoNet, Inc., a Delaware corporation (“Affinity”), and Payee. Capitalized terms used in this Note without definition have the respective meanings given to them in the Merger Agreement.

		
	1.
	INTEREST AND PAYMENTS

		
	(a)
	The unpaid Principal Amount will accrue interest at an annual rate equal to (1) ten percent (10%) from January 1, 2015 through February 28, 2015, and (2) fifteen percent (15%), commencing March 1, 2015, compounding on a quarterly basis (the “Interest”). Interest on the outstanding principal amount will be computed on the basis of a year of 360 days and the actual number of days elapsed. Interest on the unpaid balance of this Note for the period from January 1, 2015 to February 28, 2015 shall be due and payable on March 1, 2015. Interest on the unpaid balance of this Note for the period commencing March 1, 2015 shall accrue until such time as it is due and payable in arrears in accordance with the following schedule (any interest so accrued and not yet paid, the “Accrued Interest”):

		
	(i)
	Beginning on December 31, 2015 and continuing on the last day of each month thereafter, if (and only if) Maker has achieved a minimum EBITDA of at least $4,500,000 measured on a trailing twelve month basis as of the last day of such month, Maker shall pay interest in an amount equal to 1/6th of the amount of the Accrued Interest outstanding as of the last day of the applicable twelve-month period in which such minimum EBITDA was first achieved, plus for any consecutive succeeding month in which such minimum EBITDA was achieved, the accrued and unpaid interest in respect of the immediately preceding month. Each such interest payment shall be made within 45 days following the last day of the applicable measurement period (e.g., payment for EBITDA exceeding $4,500,000 for the twelve months ended December 31, 2015 is due February 14, 2016). For purposes of this Note, “EBITDA” shall have the meaning 

ascribed to such term in the Senior Loan Agreement (defined below).

		
	(ii)
	Any remaining interest accrued and not yet paid shall be due and payable in full on July 6, 2017 (the “Maturity Date”).

		
	(b)
	If any amounts required to be paid by Maker under this Note (including without limitation, principal or interest payable) remain unpaid after such amounts are due, then Maker shall pay interest on the aggregate, outstanding principal balance hereunder from the date Maker’s failure to make such payment until such past due amounts are paid in full, at a per annum rate equal to fifteen percent (15.0%) compounding on a quarterly basis. All computations of default interest shall be based on a year of 360 days and actual days elapsed.

		
	(c)
	The Principal Amount, subject to any reduction as provided in the Merger Agreement and Section 1(f) below, will be payable in accordance with the following schedule, with any remaining Principal Amount to be due and payable in full on the Maturity Date (subject to any deferrals contemplated by Section 1(f) below):

(i)Beginning on March 31, 2015 and continuing on the last day of each month thereafter, if (and only if) Maker has achieved a minimum EBITDA of at least $1,500,000, measured on a trailing three month basis as of the last day of such month, Maker shall make a principal payment under this Note in an amount equal to $50,000. Such principal payment shall be made within 45 days following the last day of the applicable measurement period (e.g., payment for EBITDA exceeding $1,500,000 for the three months ended March 31, 2015 is due May 15, 2015).

(ii)On each of June 30, 2015, December 31, 2015, June 30, 2016, December 31, 2016 and June 30, 2017, if (and only if) Maker has achieved a minimum EBITDA of at least $3,000,000 measured on a trailing six month basis as of each such date, Maker shall make an additional principal payment under this Note in an amount equal to 40% of the sum of Maker’s trailing six month EBITDA for such period less $3,000,000. Such principal payment shall be made within 45 days following the last day of the applicable measurement period (e.g., payment for EBITDA exceeding $3,000,000 for the six months ended June 30, 2015 is due August 14, 2015). The additional principal payments contemplated by this subsection (ii) shall be made only if Maker is in compliance, immediately prior to such payment and immediately after giving effect to such payment, with the financial covenants in the Senior Loan Agreement.

		
	(d)
	All payments on this Note will be made by wire transfer of immediately available funds to an account designated by Payee to Maker in writing, provided that Payee may change such account by providing not less than two Business Days written notice prior to any applicable payment date under Paragraph 1(a) and (c). If any payment on this Note becomes due on a day that is not a Business Day, such payment will be due on the next succeeding Business Day. Upon delivery of any payment on this Note to Payee, Maker shall have no further duty, liability or obligation with respect to delivery thereof to the Stockholders.

		
	(e)
	Maker may, without premium or penalty, at any time and from time to time, prepay all or any portion of the outstanding amounts under this Note.

		
	(f)
	Maker may reduce the Principal Amount, or withhold and set off against any portion of the Principal Amount, to the extent provided in, and in accordance with the terms and conditions, of the Merger Agreement including, without limitation, (i) by any Excess Closing Date Adjustment, (ii) by any adjustment pursuant to Section 7.15 of the Merger Agreement and (iii) by any adjustment pursuant to Article IX of the Merger Agreement. Any reduction of, or withholding or set off against, this Note pursuant to this Section 1(f), shall be applied against the payments of the Principal Amount (starting with the first payment on the six month anniversary of the Closing Date until such payment is reduced to $0 and, thereafter, against the next due payments in the same manner). In the event of any such reduction, withholding or set off (as provided by and permitted under the Merger Agreement), any and all Interest whether accrued or previously paid with respect to the applicable portion of the Principal Amount will automatically be cancelled and shall not be due or payable under this Note at any time (or, if previously paid, such subsequent payments under Section 1(h) shall be reduced, on a dollar for dollar basis, by the amount of such previously paid Interest). For the avoidance of doubt, such cancellation of Interest shall not be given effect for purposes of calculating the portion of the Principal Amount required to be reduced, withheld or set off to satisfy the obligations under the Merger Agreement.

		
	(g)
	Notwithstanding anything in this Note or the Merger Agreement to the contrary, in the event that Maker is prohibited from making any payments of principal or interest (the “Prohibited Payments”) pursuant to the terms of that certain Loan Agreement, dated as of the date hereof, by and among Maker and its subsidiaries, as borrowers, Main Street Capital 

Corporation, as agent and the lenders from time to time party thereto (as amended, revised, restated or modified, the “Senior Loan Agreement”), Maker’s obligation to make such Prohibited Payments shall be deferred until two (2) Business Days after such payments are permitted pursuant to the terms of the Senior Loan Agreement.

		
	(h)
	Upon the happening or occurrence of a Change in Control, Payee may, at Payee’s sole discretion, require Maker to prepay this Note, in whole or in part, upon ten (10) days prior written notice. For purposes of this Note, a “Change in Control” means the sale of all or substantially all of Maker’s and its subsidiaries’ assets, taken as a whole, or a merger, reorganization, consolidation, or sale of voting securities such that Maker’s equityholders as of the date hereof and their affiliates do not directly or indirectly hold a majority of the voting securities of Maker (or the surviving entity to any such merger or consolidation) immediately following the closing of such transaction; provided, however, that in no event shall a “Change of Control” be deemed to have occurred hereunder if a Change of Control (as defined in the Senior Loan Agreement) has not occurred under the Senior Loan Agreement.

		
	(i)
	While any obligation remains owing under this Note, Maker shall not, and shall cause its subsidiaries, not to make any distributions or pay any dividends to any person on account of any equity ownership interest in Maker or any subsidiary (other than (i) those payable solely in equity securities issued by Maker or such subsidiary, (ii) those from any subsidiary to Maker) and (iii) dividends to holders of Maker’s Series B-1 Convertible Preferred Stock (“Series B-1 Preferred”) and Series A-2 Convertible Preferred Stock (Series A- 2 Preferred”) on account of such Series B-1 Preferred or Series A-2 Preferred beginning on January 1, 2013, payable quarterly in arrears, in an aggregate amount not to exceed $160,000 in each quarter in accordance with the terms of the Certificate of Designations, Preferences and Rights of Series B-1 Convertible Preferred Stock of Glowpoint, Inc. and the Certificate of Designations, Preferences and Rights of Series A-2 Convertible Preferred Stock of Glowpoint, Inc., each as in effect on the date hereof, provided that Maker shall not make any such payment with respect to the Series B-1 Preferred or Series A-2 Preferred if, after giving effect to such payment, Maker’s cash balance would be less than 200% of the outstanding principal balance of this Note as of the date of such payment.

		
	(j)
	Upon the happening or occurrence of any Event of Default other than an Event of Default specified in clause (iii) of the definition of “Event of Default”, Payee may at its option declare immediately due and payable the entire unpaid Principal Amount of, and all accrued and unpaid Interest on, this Note, in which event the entire unpaid Principal Amount of, and all accrued and unpaid interest on, this Note shall become immediately due and payable. Upon the happening or occurrence of an Event of Default specified in clause (iii) of the definition of “Event of Default”, the entire unpaid Principal Amount of, and all accrued and unpaid Interest on, this Note shall automatically become immediately due and payable, without further notice or demand. Upon the happening or occurrence of any Event of default, Payee may also exercise, pursue, enforce, and/or realize upon any available right to remedy provided at law or in equity. The remedies provided for in this Note shall be cumulative and concurrent and may be pursued singularly, successively, or concurrently against Maker in the sole discretion of Payee.

For purposes of this Note, “Event of Default” shall mean the occurrence of any one or  more  of the following:

		
	(i)
	Subject to Section 1(g) above, Maker’s failure to pay all or any part of the Interest hereunder on the date due and payable and such failure continues for three (3) Business Days after such due date;

		
	(ii)
	Subject to Section 1(g) above, Maker’s failure to pay all or any part of the Principal Amount hereunder on the date due and payable and such failure continues for three (3) Business Days after such due date;

		
	(iii)
	Maker makes a payment with respect to the Series B-1 Preferred or Series A-2 Preferred in violation of this Note; or

		
	(iv)
	Maker or any other person obligated to pay any part of the indebtedness evidenced or governed by this Note: (1) commences any case, proceeding, or other action seeking reorganization, arrangement, adjustment, liquidation, dissolution, or composition of it or its debts under any debtor relief laws; or (2) in any involuntary case, proceeding, or other action commenced against it which seeks to have an order for relief entered against it, as debtor, or seeks reorganization, arrangement, adjustment, liquidation, dissolution, or composition of it or its debts under any law relating to bankruptcy, insolvency, reorganization, or relief of debtors, and (i) fails to obtain a dismissal of such case or proceeding or (ii) converts the case from one chapter of the Federal Bankruptcy Code to another chapter, or (iii) is the subject of an order for relief; or (3) applies or consents to have a trustee, receiver,  custodian, intervenor, liquidator, or other similar official appointed for or take possession of all or any part of its property or has any court take jurisdiction of its property which continues for a period of sixty (60) days.

Notwithstanding anything to the contrary herein, the remedies available under this Note are subject, in all respects, to the terms, conditions and limitations contemplated by the Senior Loan Agreement and related loan documents, including any intercreditor or subordination agreements entered into in connection therewith.

		
	2.
	MISCELLANEOUS

		
	(a)
	No Waiver. No delay or forbearance by act or omission on the part of Payee in the exercise of any power, option, right, or remedy under this Note, or in the collection of any money under this Note, shall operate as, or constitute, a waiver of Payee’s right to exercise any such power, right, option, or remedy or to collect any such money, nor render Payee liable for damages or to account for any such money not collected. No single or partial exercise of, or failure to exercise, any power, right, option, or remedy provided to Payee under this Note shall preclude any other or further exercise of any such power, right, option, or remedy or the exercise of any other power, right, option, or remedy provided under this Note or at law or in equity.

		
	(b)
	Acceptance of Late or Partial Payments. Payee may accept late or partial payment of any amount due under this Note; provided, however, that acceptance of one or more late or partial payments shall not constitute a waiver of any default nor of any of Payee’s rights to receive timely payment of any other payment. Acceptance of any payment, whether partial or otherwise, after the happening or occurrence of an Event of Default and the acceleration of the due date of this Note shall not constitute a reinstatement of the pre- acceleration payment schedule, nor shall it impair any of Payee’s rights or remedies under this Note.

		
	(c)
	Compliance with Usury Laws. All agreements between Maker and Payee are hereby expressly limited so that in no contingency or event shall the amount paid or agreed to be paid to the Payee for the use, forbearance, or detention of the money to be loaned under this Note, exceed the maximum amount permissible under the laws of Delaware. If, at the time of any interest payment, the payment amount due under this Note transcends the legal limit, the obligation shall be reduced to the legal limit. If the Payee should ever receive as interest an amount that exceeds the highest lawful rate, the amount that would be excessive as interest shall be applied to the reduction of the principal amount owing under this Note, and not to the payment of interest.

		
	(d)
	Waiver. Maker waives presentment for payment, notice of nonpayment, protest, demand, notice of protest, notice of intent to accelerate, notice of acceleration and dishonor, diligence in enforcement and indulgences of every kind and without further notice hereby agrees to renewals, extensions, exchanges or releases of collateral, indulgences or partial payments, either before or after maturity.

		
	(e)
	Assignments and Successors. This Note may not be assigned or transferred by Payee without the prior written consent of Maker. Any purported assignment or transfer without such prior written consent will be void. Subject to the foregoing, this Note will inure to the benefit of the permitted assigns of Payee.

		
	(f)
	Governing Law. This Note shall be governed by and construed in accordance with the laws of the State of Delaware applicable to contracts made and performed in such State.

		
	(g)
	Resolution of Conflicts; Arbitration. Any claim or dispute arising out of or related to this Note, or the interpretation, making, performance, breach or termination thereof, shall be finally settled by binding arbitration in the County of Denver, State of Colorado in accordance with the then current Commercial Arbitration Rules of the American Arbitration Association and judgment upon the award rendered may be entered in any court having jurisdiction thereof. The arbitrator(s) shall have the authority to grant any equitable and legal remedies that would be available in any judicial proceeding instituted to resolve a dispute.

(i)Selection of Arbitrators. Such arbitration shall be conducted by a single arbitrator chosen by mutual agreement of Maker and Payee. Alternatively, at the request of either party before the commencement of arbitration, the arbitration shall be conducted by three independent arbitrators, none of whom shall have any competitive interests with Maker or Payee. Maker and Payee shall each select one arbitrator. The two arbitrators so selected shall select a third arbitrator.

(ii)Discovery. The arbitrator or arbitrators, as the case may be, shall set a limited time period and establish procedures designed to reduce the cost and time for discovery while allowing the parties an opportunity, adequate in the sole judgment of the arbitrator or majority of the three arbitrators, as the case may be, to discover relevant information from the opposing parties about the subject matter of the dispute. The arbitrator, or a majority of the three arbitrators, as the case may be, shall rule upon motions to compel or limit discovery and shall have the authority to impose sanctions for discovery abuses, 

including attorneys’ fees and costs, to the same extent as a competent court of law or equity, should the arbitrators or a majority of the three arbitrators, as the case may be, determine that discovery was sought without substantial justification or that discovery was refused or objected to without substantial justification.

(iii)Decision. The decision of the arbitrator or a majority of the three arbitrators, as the case may be, as to the validity and amount of any claim in an officer’s certificate shall be final, binding, and conclusive upon the parties to this Note. Such decision shall be written and shall be supported by written findings of fact and conclusions which shall set forth the award, judgment, decree or order awarded by the arbitrator(s). Within thirty (30) days of a decision of the arbitrator(s) requiring payment by one party to another, such party shall make the payment to such other party.

(iv)Other Relief. The parties to the arbitration may apply to a court of competent jurisdiction for a temporary restraining order, preliminary injunction or other interim or conservatory relief, as necessary, without breach of this arbitration provision and without abridgement of the powers of the arbitrator(s).

(v)Costs and Expenses. The parties agree that each party shall pay its own costs and expenses (including counsel fees) of any such arbitration, and each party waives its right to seek an order compelling the other party to pay its portion of its costs and expenses (including counsel fees) for any arbitration.

(vi)Notices. Any notice required or permitted to be given under this Note shall be given in accordance with Section 11.6 of the Merger Agreement.

		
	(h)
	This Note amends and restates that certain replacement Second Amended and Restated Nonnegotiable Promissory Note in the original principal amount of $1,884,692.48 made by Maker payable to Payee dated February 24, 2014 and any amendments, modifications, replacements or substitutions thereto, in its entirety, but this Note does not constitute a novation thereof or of any obligations of Maker thereunder.

IN WITNESS WHEREOF, Maker has executed and delivered this Note as of the date first written above.

	
		
	 
	Glowpoint, Inc.

	 
	 

	 
	By: /s/ David Clark

	 
	Name: David Clark

	 
	Title: Chief Financial Officer, Treasurer and Secretary

Agreed and Accepted as of February 27, 2015: 

SHAREHOLDER REPRESENTATIVE SERVICES LLC,
solely in its capacity as Sellers’ Representative

By: /s/ W. Paul Koenig
Name: W. Paul Koenig
Title: Managing Director

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