Item 1.01 Entry into a Material Definitive Agreement.
Amendment to Merger Agreement
As previously reported, on September 12, 2019, Glowpoint, Inc., a Delaware corporation (“Glowpoint”), entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Glowpoint Merger Sub II, Inc., a Delaware corporation and a direct wholly-owned subsidiary of Glowpoint (the “Merger Sub”), and Oblong Industries, Inc., a Delaware corporation (“Oblong” and, together with Glowpoint and the Merger Sub, the “Parties”). On October 1, 2019, prior to the Closing of the Merger (as each term is defined below), the Parties entered into an Amendment to the Merger Agreement (the “Amendment”). Pursuant to the Amendment, in order to reflect the commercial agreement of the Parties, the Parties agreed to amend the Merger Agreement to provide that:
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Glowpoint’s board of directors will consist of five members after completion of the Merger, of which four members will be appointed by the members of Glowpoint’s board existing prior to closing and one member will be appointed by the members of Oblong’s board existing prior to closing;
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(i) at the Effective Time (as defined in the Merger Agreement), Glowpoint will assume all then-outstanding options to purchase shares of Oblong’s common stock (“Oblong Options”) held by previously terminated employees of Oblong, which Oblong Options will be deemed to constitute options to acquire shares of Glowpoint’s Common Stock, par value $0.0001 per share (“Common Stock”); and (ii) any Oblong Options held by current employees of Oblong will be cancelled in exchange for restricted shares of Glowpoint’s 6.0% Series D Convertible Preferred Stock, par value $0.0001 per share (“Merger Preferred Stock”); and
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the shares of Merger Preferred Stock issued by Glowpoint in the Merger will each initially be convertible into ten (10) shares of Glowpoint’s Common Stock and that the number of shares of Merger Preferred Stock to be issued in the Merger will be reduced accordingly.
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The above description of the Amendment and the transactions contemplated thereby is only a summary and does not purport to be complete and is qualified in its entirety by reference to the full text of the Amendment, a copy of which is filed as Exhibit 2.2 to this Current Report on Form 8-K and incorporated herein by reference.
Stock Purchase Agreement
On October 1, 2019, Glowpoint entered into a Series E Preferred Stock Purchase Agreement (the “Purchase Agreement”) with the accredited investors party thereto, who, prior to the Closing of the Merger, were stockholders of Oblong (the “Purchasers”), relating to the offer and sale by Glowpoint in a private placement (the “Offering”) of up to 131,579 shares of its 6.0% Series E Convertible Preferred Stock, par value $0.0001 per share (the “Financing Preferred Stock”), at a price of $28.50 per share. At an initial closing on October 1, 2019, Glowpoint sold, and the Purchasers purchased, 88,070 shares of Financing Preferred Stock for gross proceeds of approximately $2.5 million. Glowpoint did not pay any commissions or discounts in connection with the Offering, and expects to use the net proceeds from the initial closing for general corporate purposes, which may include product development, sales and marketing, and/or general administrative expenses.
The Offering is exempt from the registration requirements of the Securities Act of 1933, as amended (the “Securities Act”), pursuant to the exemption for transactions by an issuer not involving any public offering under Section 4(a)(2) of the Securities Act and Rule 506 of Regulation D promulgated thereunder, and pursuant to reliance on similar exemptions under applicable state laws. As a result, the securities sold in the Offering were not registered under the Securities Act or any state securities laws and may not be offered or sold in the United States absent registration with the Securities and Exchange Commission (the “SEC”) or an applicable exemption from the registration requirements. Each of the Purchasers represented that it is an accredited investor within the meaning of Rule 501 of Regulation D, and is acquiring securities in the Offering for investment only and not with a view toward, or for resale in connection with, the public sale or distribution thereof. The shares of Financing Preferred Stock sold in the Offering were offered without any general solicitation by Glowpoint or its representatives. Neither this Current Report on Form
8-K, nor the exhibits attached hereto, is an offer to sell or the solicitation of an offer to buy the securities described herein.
The above description of the Purchase Agreement and the transactions contemplated thereby is only a summary and does not purport to be complete and is qualified in its entirety by reference to the full text of the Purchase Agreement, a copy of which is filed as Exhibit 10.1 to this Current Report on Form 8-K and incorporated herein by reference.
Registration Rights Agreement
In connection with the Purchase Agreement, Glowpoint and the Purchasers executed a Registration Rights Agreement, dated October 1, 2019 (the “Rights Agreement”). Pursuant to the Rights Agreement, among other things, Glowpoint has provided the Purchasers with certain rights to require Glowpoint to file and maintain the effectiveness of a registration statement with respect to the re-sale of shares of Glowpoint Common Stock underlying the shares of Merger Preferred Stock issued in the Merger (as defined below) and Financing Preferred Stock sold in the Offering and, in each case, held by the Purchasers.
The above description of the Rights Agreement and the transactions contemplated thereby is only a summary and does not purport to be complete and is qualified in its entirety by reference to the full text of the Rights Agreement, a copy of which is filed as Exhibit 10.2 to this Current Report on Form 8-K and incorporated herein by reference.
SVB Loan Agreement and Warrant
On October 1, 2019, in connection with the Closing of the Merger on such date, Glowpoint and Oblong, as borrowers, and Silicon Valley Bank (“SVB”), as lender, executed a Second Amended and Restated Loan and Security Agreement (the “Loan Agreement”), which amended and restated, in its entirety, the Amended and Restated Loan and Security Agreement by and between Oblong and SVB. The Loan Agreement provides for a term loan facility of approximately $5.2 million (the “Loan”), all of which is currently outstanding. The Loan Agreement provides that interest-only payments will be due through March 31, 2020, after which equal monthly principal and interest payments will be made to fully repay the loan by September 1, 2021. The Loan accrues interest at a rate equal to the Prime Rate (as defined in the Loan Agreement) plus 200 basis points (for a total of 7.00% as of October 1, 2019).
The obligations under the Loan Agreement are secured by substantially all of the assets of Glowpoint and its subsidiaries, including accounts receivable, intellectual property, equipment and other personal property. The Loan Agreement contains certain restrictions and covenants, which, among other things, subject to certain exceptions, restrict Glowpoint’s ability to dispose of any portion of its business or property, engage in certain material changes to its business, enter into a merger, incur additional debt or make guarantees, make distributions or create liens or other encumbrances, or enter into related party transactions outside of the ordinary course of business. The Loan Agreement also contains customary events of default, including failure to pay any principal or interest when due, failure to perform or observe covenants, breaches of representations and warranties, certain cross defaults, certain bankruptcy related events, monetary judgments defaults and Glowpoint’s de-listing from the NYSE American without a listing of its Common Stock on another nationally recognized stock exchange. Upon the occurrence of an event of default, the outstanding obligations may be accelerated and become immediately due and payable.
In connection with its execution of the Loan Agreement, Glowpoint also issued a warrant to SVB that entitles SVB to subscribe to 72,394 shares of Glowpoint’s Common Stock at an exercise price of $0.01 per share (the “SVB Warrant”). The SVB Warrant has a ten (10) year term.
The offering and sale of the SVB Warrant is exempt from the registration requirements of the Securities Act pursuant to the exemption for transactions by an issuer not involving any public offering under Section 4(a)(2) of the Securities Act and Rule 506 of Regulation D promulgated thereunder, and pursuant to reliance on similar exemptions under applicable state laws. As a result, the SVB Warrant was not registered under the Securities Act or any state securities laws and may not be offered or sold in the United States absent registration with the SEC or an applicable exemption from the registration requirements. SVB represented in the SVB Warrant that it is an accredited investor within the meaning of Rule 501 of Regulation D, and is acquiring the SVB Warrant for investment only and not with
a view toward, or for resale in connection with, the public sale or distribution thereof. The SVB Warrant was offered without any general solicitation by Glowpoint or its representatives. Neither this Current Report on Form 8-K, nor the exhibits attached hereto, is an offer to sell or the solicitation of an offer to buy the securities described herein.
The above description of the Loan Agreement and SVB Warrant and, in each case, the transactions contemplated thereby, is only a summary and does not purport to be complete and is qualified in its entirety by reference to the full text of the Loan Agreement and SVB Warrant, respectively, copies of which are filed as Exhibits 10.3 and 4.1, respectively, to this Current Report on Form 8-K and incorporated herein by reference.