EXHIBIT 10.1

LOAN AND SECURITY AGREEMENT

This LOAN AND SECURITY AGREEMENT (this “Agreement”) dated as of June 29, 2012
(the “Effective Date”) among (a) SILICON VALLEY BANK, a California corporation
with a loan production office located at 230 West Monroe, Suite 720, Chicago,
Illinois 60606 (“Bank”), and (b) (i) MATTERSIGHT CORPORATION, a Delaware
corporation (“Mattersight Corporation”), (ii) MATTERSIGHT EUROPE HOLDING
CORPORATION, a Delaware corporation (“Mattersight Europe”), and
(iii) MATTERSIGHT INTERNATIONAL HOLDING, INC., an Illinois corporation,
(“Mattersight International”; and together with Mattersight Corporation and
Mattersight Europe, jointly and severally, individually and collectively,
“Borrower”), provides the terms on which Bank shall lend to Borrower and
Borrower shall repay Bank. The parties agree as follows:

 

  1 ACCOUNTING AND OTHER TERMS

Accounting terms not defined in this Agreement shall be construed following
GAAP. Calculations and determinations must be made following GAAP. Capitalized
terms not otherwise defined in this Agreement shall have the meanings set forth
in Section 13. All other terms contained in this Agreement, unless otherwise
indicated, shall have the meaning provided by the Code to the extent such terms
are defined therein.

 

  2 LOAN AND TERMS OF PAYMENT

2.1 Promise to Pay. Borrower hereby unconditionally promises to pay Bank the
outstanding principal amount of all Credit Extensions and accrued and unpaid
interest thereon as and when due in accordance with this Agreement.

2.1.1 Revolving Advances.

(a) Availability. Subject to the terms and conditions of this Agreement, Bank
shall make Advances not exceeding the Availability Amount. Amounts borrowed
under the Revolving Line may be repaid and, prior to the Revolving Line Maturity
Date, reborrowed, subject to the applicable terms and conditions precedent
herein.

(b) Termination; Repayment. The Revolving Line terminates on the Revolving Line
Maturity Date, when the principal amount of all Advances, the unpaid interest
thereon, and all other Obligations relating to the Revolving Line shall be
immediately due and payable.

2.2 Overadvances. If, at any time during the Transition Period, the aggregate
outstanding principal amount of any Advances exceeds the lesser of either the
Revolving Line or the Borrowing Base, Borrower shall immediately pay to Bank in
cash such excess.

2.3 Payment of Interest on the Credit Extensions.

(a) Interest Rate. Subject to Section 2.3(b), the principal amount outstanding
under the Revolving Line shall accrue interest at a floating per annum rate
equal to three quarters of one percentage points (0.75%) above the Prime Rate,
which interest shall be payable monthly in accordance with Section 2.3(f) below.

(b) Default Rate. Immediately upon the occurrence and during the continuance of
an Event of Default, unless otherwise elected by Bank, Obligations shall bear
interest at a rate per annum which is five percentage points (5.0%) above the
rate that is otherwise applicable thereto (the “Default Rate”) unless Bank
otherwise elects from time to time in its sole discretion to impose a smaller
increase. Fees and expenses which are required to be paid by Borrower pursuant
to the Loan Documents (including, without limitation, Bank Expenses) but are not
paid when due shall bear interest until paid at a rate equal to the highest rate
applicable to the Obligations. Payment or acceptance of the increased interest
rate provided in this Section 2.3(b) is not a permitted alternative to timely
payment and shall not constitute a waiver of any Event of Default or otherwise
prejudice or limit any rights or remedies of Bank.

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(c) Adjustment to Interest Rate. Changes to the interest rate of any Credit
Extension based on changes to the Prime Rate shall be effective on the effective
date of any change to the Prime Rate and to the extent of any such change.

(d) Computation; 360-Day Year. In computing interest, the date of the making of
any Credit Extension shall be included and the date of payment shall be
excluded; provided, however, that if any Credit Extension is repaid on the same
day on which it is made, such day shall be included in computing interest on
such Credit Extension. Interest shall be computed on the basis of a 360-day year
for the actual number of days elapsed.

(e) Debit of Accounts. Bank may debit any of Borrower’s deposit accounts,
including the Designated Deposit Account, for principal and interest payments
or, after notice to Borrower, any other amounts Borrower owes Bank when due.
These debits shall not constitute a set-off.

(f) Interest Payment Date. Unless otherwise provided, interest is payable
monthly in arrears on the first calendar day of each month.

2.4 Fees. Borrower shall pay to Bank:

(a) Commitment Fee. A fully earned, non-refundable commitment fee of Ten
Thousand Dollars ($10,000.00), on the Effective Date;

(b) Unused Revolving Line Facility Fee. A fee (the “Unused Revolving Line
Facility Fee”), payable quarterly, in arrears, on a calendar year basis, in an
amount equal to one eighth of one percent (0.125%) per annum of the average
unused portion of the Revolving Line. The unused portion of the Revolving Line,
for purposes of this calculation, shall equal the difference between (x) the
Revolving Line amount (as it may be reduced from time to time) and (y) the
average for the period of the daily closing balance of the Revolving Line
outstanding. Borrower shall not be entitled to any credit, rebate or repayment
of any Unused Revolving Line Facility Fee previously earned by Bank pursuant to
this Section notwithstanding any termination of the Agreement or the suspension
or termination of Bank’s obligation to make loans and advances hereunder; and

(c) Bank Expenses. All Bank Expenses (including reasonable attorneys’ fees and
expenses for documentation and negotiation of this Agreement) incurred through
and after the Effective Date, when due.

2.5 Payments. All payments (including prepayments) to be made by Borrower under
any Loan Document shall be made in immediately available funds in Dollars,
without setoff or counterclaim, before 1:00 p.m. Central time on the date when
due. Payments of principal and/or interest received after 1:00 p.m. Central time
are considered received at the opening of business on the next Business Day.
When a payment is due on a day that is not a Business Day, the payment shall be
due the next Business Day, and additional fees or interest, as applicable, shall
continue to accrue until paid.

 

  3 CONDITIONS OF LOANS

3.1 Conditions Precedent to Initial Credit Extension. Bank’s obligation to make
the initial Credit Extension is subject to the condition precedent that Bank
shall have received, in form and substance satisfactory to Bank, such documents,
and completion of such other matters, as Bank may reasonably deem necessary or
appropriate, including, without limitation:

(a) duly executed original signatures to the Loan Documents;

(b) duly executed original signatures to the Control Agreement(s);

(c) Each Borrower’s Operating Documents and a long-form good standing
certificate (where available) of each Borrower certified by the Secretary of
State for such Borrower’s jurisdiction of incorporation as of a date no earlier
than thirty (30) days prior to the Effective Date;

(d) Secretary’s Certificate with completed Borrowing Resolutions for each
Borrower;

 

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(e) certificates of foreign qualification/good standing of each Borrower, for
all other states in which such Borrower is qualified to do business, certified
by the applicable Secretary of State as of a date no earlier than thirty
(30) days prior to the Effective Date;

(f) certified copies, dated as of a recent date, of financing statement
searches, as Bank shall request, accompanied by written evidence (including any
UCC termination statements) that the Liens indicated in any such financing
statements either constitute Permitted Liens or have been or, in connection with
the initial Credit Extension, will be terminated or released;

(g) a legal opinion of Borrower’s counsel dated as of the Effective Date
together with the duly executed original signature thereto;

(h) subject to Section 6.14, evidence satisfactory to Bank that the insurance
policies required by Section 6.5 hereof are in full force and effect, together
with appropriate evidence showing lender loss payable and/or additional insured
clauses in favor of Bank; and

(i) payment of the fees and Bank Expenses then due as specified in Section 2.4
hereof.

3.2 Conditions Precedent to all Credit Extensions. Bank’s obligations to make
each Credit Extension, including the initial Credit Extension, is subject to the
following conditions precedent:

(a) timely receipt of an executed Payment/Advance Form;

(b) the representations and warranties in this Agreement shall be true,
accurate, and complete in all material respects on the date of the
Payment/Advance Form and on the Funding Date of each Credit Extension; 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, and no
Event of Default shall have occurred and be continuing or result from the Credit
Extension. Each Credit Extension is Borrower’s representation and warranty on
that date that the representations and warranties in this Agreement remain true,
accurate, and complete in all material respects; 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; and

(c) in Bank’s reasonable discretion, there has not been any material impairment
in the general affairs, management, results of operation, financial condition or
the prospect of repayment of the Obligations, or any material adverse deviation
by Borrower from the most recent business plan of Borrower presented to and
accepted by Bank.

3.3 Covenant to Deliver. Borrower agrees to deliver to Bank each item required
to be delivered to Bank under this Agreement as a condition precedent to any
Credit Extension. Borrower expressly agrees that a Credit Extension made prior
to the receipt by Bank of any such item shall not constitute a waiver by Bank of
Borrower’s obligation to deliver such item, and the making of any Credit
Extension in the absence of a required item shall be in Bank’s sole discretion.

3.4 Procedures for Borrowing. Subject to the prior satisfaction of all other
applicable conditions to the making of an Advance set forth in this Agreement,
to obtain an Advance, Borrower shall notify Bank (which notice shall be
irrevocable) by electronic mail, facsimile, or telephone by 1:00 p.m. Central
time on the Funding Date of the Advance. Together with any such electronic or
facsimile notification, Borrower shall deliver to Bank by electronic mail or
facsimile a completed Payment/Advance Form executed by a Responsible Officer or
his or her designee. Bank may rely on any telephone notice given by a person
whom Bank believes is a Responsible Officer or designee. Bank shall credit
Advances to the Designated Deposit Account. Bank may make Advances under this
Agreement based on instructions from a Responsible Officer or his or her
designee or without instructions if the Advances are necessary to meet
Obligations which have become due.

 

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  4 CREATION OF SECURITY INTEREST

4.1 Grant of Security Interest. Borrower hereby grants Bank, to secure the
payment and performance in full of all of the Obligations, a continuing security
interest in, and pledges to Bank, the Collateral, wherever located, whether now
owned or hereafter acquired or arising, and all proceeds and products thereof.

Borrower acknowledges that it previously has entered, and/or may in the future
enter, into Bank Services Agreements with Bank. Regardless of the terms of any
Bank Services Agreement, Borrower agrees that any amounts Borrower owes Bank
thereunder shall be deemed to be Obligations hereunder and that it is the intent
of Borrower and Bank to have all such Obligations secured by the first priority
perfected security interest in the Collateral granted herein (subject only to
Permitted Liens (which may only have superior priority to Bank’s Lien as
expressly permitted herein)).

If this Agreement is terminated, Bank’s Lien in the Collateral shall continue
until the Obligations (other than inchoate indemnity obligations) are satisfied
in full, and at such time, Bank shall, at Borrower’s sole cost and expense,
terminate its security interest in the Collateral and all rights therein shall
revert to Borrower. In the event (a) all Obligations (other than inchoate
indemnity obligations), except for Bank Services, are satisfied in full, and
(b) this Agreement is terminated, Bank shall terminate the security interest
granted herein upon Borrower providing cash collateral acceptable to Bank in its
good faith business judgment for Bank Services, if any. In the event such Bank
Services consist of outstanding Letters of Credit, Borrower shall provide to
Bank cash collateral in an amount equal to (i) one hundred two percent
(102.0%) of the face amount of all such Letters of Credit denominated in
Dollars, and (ii) one hundred seven percent (107.0%) of the Dollar Equivalent of
the face amount of all such Letters of Credit denominated in a Foreign Currency,
plus all interest, fees, and costs due or to become due in connection therewith
(as estimated by Bank in its good faith business judgment), to secure all of the
Obligations relating to such Letters of Credit.

4.2 Priority of Security Interest. Borrower represents, warrants, and covenants
that the security interest granted herein is and shall at all times continue to
be a first priority perfected security interest in the Collateral (subject only
to Permitted Liens (which may only have superior priority to Bank’s Lien as
expressly permitted herein)). If Borrower shall acquire a commercial tort claim,
Borrower shall promptly notify Bank in a writing signed by Borrower of the
general details thereof and grant to Bank in such writing a security interest
therein and in the proceeds thereof, all upon the terms of this Agreement, with
such writing to be in form and substance reasonably satisfactory to Bank.

4.3 Authorization to File Financing Statements. Borrower hereby authorizes Bank
to file financing statements, without notice to Borrower, with all appropriate
jurisdictions to perfect or protect Bank’s interest or rights hereunder,
including a notice that any disposition of the Collateral, by either Borrower or
any other Person, shall be deemed to violate the rights of Bank under the Code.

 

  5 REPRESENTATIONS AND WARRANTIES

Borrower represents and warrants as follows:

5.1 Due Organization, Authorization; Power and Authority. Borrower and each of
its Subsidiaries are duly existing and in good standing, as Registered
Organizations in their respective jurisdictions of formation and are qualified
and licensed to do business and are in good standing in each other jurisdiction
in which the conduct of their respective businesses or ownership of property
requires that they be qualified, except where the failure to do so would not
reasonably be expected to have a material adverse effect on Borrower’s business.
In connection with this Agreement, each Borrower has delivered to Bank a
completed certificate signed by Borrower, entitled “Perfection Certificate” (the
“Perfection Certificate”). Borrower represents and warrants to Bank that
(a) Borrower’s exact legal name is that indicated on the Perfection Certificate
and on the signature page hereof; (b) Borrower is an organization of the type
and is organized in the jurisdiction set forth in the Perfection Certificate;
(c) the Perfection Certificate accurately sets forth Borrower’s organizational
identification number or accurately states that Borrower has none; (d) the
Perfection Certificate accurately sets forth Borrower’s place of business, or,
if more than one, its chief executive office as well as Borrower’s mailing
address (if different than its chief executive office); (e) Borrower (and each
of its predecessors) has not, in the past five (5) years, changed its
jurisdiction of formation, organizational structure or type, or any
organizational number assigned by its jurisdiction; and (f) all other
information set forth on the Perfection Certificate pertaining to Borrower and
each of its Subsidiaries is accurate and complete in all material respects (it
being understood and agreed that Borrower may from time to time update certain
information in the Perfection Certificate after the Effective Date to the extent
permitted by one or more specific provisions in this Agreement). If Borrower is
not now a Registered Organization but later becomes one, Borrower shall promptly
notify Bank of such occurrence and provide Bank with Borrower’s organizational
identification number.

 

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The execution, delivery and performance by Borrower of the Loan Documents to
which it is a party have been duly authorized, and do not (i) conflict with any
of Borrower’s organizational documents, (ii) contravene, conflict with,
constitute a default under or violate any material Requirement of Law,
(iii) contravene, conflict or violate any material requirement of any applicable
order, writ, judgment, injunction, decree, determination or award of any
Governmental Authority by which Borrower or any of its Subsidiaries or any of
their property or assets may be bound or affected in any material respect,
(iv) require any action by, filing, registration, or qualification with, or
Governmental Approval from, any Governmental Authority (except such Governmental
Approvals which have already been obtained and are in full force and effect and
the filing of financing statements necessary to perfect the security interest
granted in favor of Bank hereunder), or (v) constitute an event of default under
any material agreement by which Borrower is bound. Borrower is not in default
under any agreement to which it is a party or by which it is bound in which the
default would reasonably be expected to have a material adverse effect on
Borrower’s business.

5.2 Collateral. Borrower has good title to, has rights in, and the power to
transfer each item of the Collateral upon which it purports to grant a Lien
hereunder, free and clear of any and all Liens except Permitted Liens. Borrower
has no deposit accounts other than the deposit accounts with Bank, the deposit
accounts, if any, described in the Perfection Certificate delivered to Bank in
connection herewith, or of which Borrower has given Bank notice and taken such
actions as are necessary to give Bank a perfected security interest therein.

The Collateral is not in the possession of any third party bailee (such as a
warehouse) except as otherwise provided in the Perfection Certificate. None of
the components of the Collateral with an aggregate value of One Hundred Thousand
Dollars ($100,000.00) or more (in the aggregate for all Collateral at such
location) shall be maintained at locations other than as provided in the
Perfection Certificate or as permitted pursuant to Section 7.2.

Borrower is the sole owner of the Intellectual Property material to the
operation of its business that it owns or purports to own except for
(a) non-exclusive licenses granted to its customers in the ordinary course of
business, (b) over-the-counter software that is commercially available to the
public, and (c) material Intellectual Property licensed to Borrower and noted on
the Perfection Certificate. Each Patent which it owns or purports to own and
which is material to Borrower’s business is valid and enforceable, and no part
of the Intellectual Property which Borrower owns or purports to own and which is
material to Borrower’s business has been judged invalid or unenforceable, in
whole or in part. To the best of Borrower’s knowledge, no claim has been made
that any part of the Intellectual Property violates the rights of any third
party except to the extent such claim would not reasonably be expected to have a
material adverse effect on Borrower’s business.

Except as noted on the Perfection Certificate, Borrower is not a party to, nor
is it bound by, any Restricted License.

5.3 Litigation. There are no actions or proceedings pending or, to the knowledge
of the Responsible Officers, threatened in writing by or against Borrower or any
of its Subsidiaries that would reasonably be expected to result in damages or
costs to Borrower or any of its Subsidiaries of, individually or in the
aggregate, One Hundred Thousand Dollars ($100,000.00) or more (not covered by
independent third-party insurance as to which liability has been accepted by
such insurance carrier).

5.4 Financial Statements; Financial Condition. All consolidating financial
statements for Borrower and any of its Subsidiaries delivered to Bank fairly
present in all material respects Borrower’s consolidating financial condition
and Borrower’s consolidating results of operations. There has not been any
material deterioration in Borrower’s consolidating financial condition since the
date of the most recent financial statements submitted to Bank.

5.5 Solvency. The fair salable value of Borrower’s assets (including goodwill
minus disposition costs) exceeds the fair value of its liabilities; Borrower is
not left with unreasonably small capital after the transactions in this
Agreement; and Borrower is able to pay its debts (including trade debts) as they
mature.

 

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5.6 Regulatory Compliance. Borrower is not an “investment company” or a company
“controlled” by an “investment company” under the Investment Company Act of
1940, as amended. Borrower is not engaged as one of its important activities in
extending credit for margin stock (under Regulations X, T and U of the Federal
Reserve Board of Governors). Borrower has complied in all material respects with
the Federal Fair Labor Standards Act. Neither Borrower nor any of its
Subsidiaries is a “holding company” or an “affiliate” of a “holding company” or
a “subsidiary company” of a “holding company” as each term is defined and used
in the Public Utility Holding Company Act of 2005. Borrower has not violated any
laws, ordinances or rules, the violation of which would reasonably be expected
to have a material adverse effect on its business. None of Borrower’s or any of
its Subsidiaries’ properties or assets has been used by Borrower or any
Subsidiary or, to the best of Borrower’s knowledge, by previous Persons, in
disposing, producing, storing, treating, or transporting any hazardous substance
other than legally. Borrower and each of its Subsidiaries have obtained all
consents, approvals and authorizations of, made all declarations or filings
with, and given all notices to, all Governmental Authorities that are necessary
to continue their respective businesses as currently conducted, except where the
failure to obtain such consents, approvals and authorizations would not
reasonably be expected to have a material adverse effect on Borrower’s business.

5.7 Subsidiaries; Investments. Borrower does not own any stock, partnership
interest or other equity securities except for Permitted Investments.

5.8 Tax Returns and Payments; Pension Contributions. Subject to Section 6.14(e)
hereof, Borrower has timely filed all required tax returns and reports, except
for returns and reports for taxes, assessments, deposits and contributions in an
aggregate amount not exceeding Twenty-Five Thousand Dollars ($25,000.00), and
Borrower has timely paid all foreign, federal, state and local taxes,
assessments, deposits and contributions owed by Borrower, except for taxes,
assessments, deposits and contributions in an aggregate amount not exceeding
Twenty-Five Thousand Dollars ($25,000.00). Borrower may defer payment of any
contested taxes, provided that Borrower (a) in good faith contests its
obligation to pay the taxes by appropriate proceedings promptly and diligently
instituted and conducted, (b) notifies Bank in writing of the commencement of,
and any material development in, the proceedings, (c) posts bonds or takes any
other steps required to prevent the governmental authority levying such
contested taxes from obtaining a Lien upon any of the Collateral that is other
than a Permitted Lien. Borrower is unaware of any claims or adjustments proposed
for any of Borrower’s prior tax years which would reasonably be expected to
result in additional taxes becoming due and payable by Borrower. Borrower
(x) has paid all amounts necessary to fund all present pension, profit sharing
and deferred compensation plans in accordance with their terms, and (y) has not
withdrawn from participation in, and has not permitted partial or complete
termination of, or permitted the occurrence of any other event with respect to,
any such plan which would reasonably be expected to result in any liability of
Borrower, including any liability to the Pension Benefit Guaranty Corporation or
its successors or any other governmental agency, except where Borrower’s failure
to do so would not reasonably be expected to have a material adverse effect on
Borrower’s business.

5.9 Use of Proceeds. Borrower shall use the proceeds of the Credit Extensions as
working capital and to fund its general business requirements and not for
personal, family, household or agricultural purposes.

5.10 Full Disclosure. No written representation, warranty or other statement of
Borrower in any certificate or written statement given to Bank, as of the date
such representation, warranty, or other statement was made, taken together with
all such written certificates and written statements given to Bank, contains any
untrue statement of a material fact or omits to state a material fact necessary
to make the statements contained in the certificates or statements not
misleading (it being recognized by Bank that the projections and forecasts
provided by Borrower in good faith and based upon reasonable assumptions are not
viewed as facts or as a representation or warranty as to future performance and
that actual results during the period or periods covered by such projections and
forecasts may differ from the projected or forecasted results).

5.12 Definition of “Knowledge.” For purposes of the Loan Documents, whenever a
representation or warranty is made to Borrower’s knowledge or awareness, to the
“best of” Borrower’s knowledge, or with a similar qualification, knowledge or
awareness means the actual knowledge, after reasonable investigation, of the
Responsible Officers.

 

  6 AFFIRMATIVE COVENANTS

Borrower shall do all of the following:

6.1 Government Compliance. Maintain its and all its Subsidiaries’ legal
existence and good standing in their respective jurisdictions of formation and
maintain qualification in each jurisdiction in which the failure to so qualify
would reasonably be expected to have a material adverse effect on Borrower’s
business or operations. Borrower shall comply, and have each Subsidiary comply,
with all laws, ordinances and regulations to which it is subject, noncompliance
with which could have a material adverse effect on Borrower’s business.

 

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6.2 Financial Statements, Reports, Certificates. Deliver to Bank:

(a) Borrowing Base Reports. Within thirty (30) days after the last day of each
month, (i) aged listings of accounts receivable and accounts payable (by invoice
date) and (ii) a Deferred Revenue report;

(b) Monthly Financial Statements. As soon as available, but no later than thirty
(30) days after the last day of each month, a company prepared consolidating
balance sheet and income statement covering Borrower’s consolidating operations
for such month certified by a Responsible Officer and in a form acceptable to
Bank (the “Monthly Financial Statements”);

(c) Monthly Compliance Certificate. Within thirty (30) days after the last day
of each month and together with the Monthly Financial Statements, a duly
completed Compliance Certificate signed by a Responsible Officer, certifying
that as of the end of such month, Borrower was in full compliance with all of
the terms and conditions of this Agreement, and setting forth calculations
showing compliance with the financial covenants set forth in this Agreement and
such other information as Bank shall reasonably request;

(d) Annual Audited Financial Statements. As soon as available, but no later than
one hundred fifty (150) days after the last day of Borrower’s fiscal year,
audited consolidating financial statements prepared under GAAP, consistently
applied, together with an unqualified opinion on the financial statements from
an independent certified public accounting firm acceptable to Bank in its
reasonable discretion;

(e) Other Statements. Within five (5) days of delivery, copies of all
statements, reports and notices made available to Borrower’s security holders or
to any holders of Subordinated Debt;

(f) SEC Filings. Within five (5) days of filing, copies of all periodic and
other reports, proxy statements and other materials filed by Borrower with the
SEC, any Governmental Authority succeeding to any or all of the functions of the
SEC or with any national securities exchange, or distributed to its
shareholders, as the case may be. Documents required to be delivered pursuant to
the terms hereof (to the extent any such documents are included in materials
otherwise filed with the SEC) may be delivered electronically and if so
delivered, shall be deemed to have been delivered on the date on which Borrower
posts such documents, or provides a link thereto, on Borrower’s website on the
Internet at Borrower’s website address;

(g) Legal Action Notice. A prompt report of any legal actions pending or
threatened in writing against Borrower or any of its Subsidiaries that would not
reasonably be expected to result in damages or costs to Borrower or any of its
Subsidiaries of, individually or in the aggregate, One Hundred Thousand Dollars
($100,000.00) or more (not covered by independent third-party insurance as to
which liability has been accepted by such insurance carrier);

(h) Board-Approved Projections. As soon as available, but no later than the last
day of each fiscal year of Borrower, and contemporaneously with any updates or
changes thereto, (i) annual operating budgets (including, without limitation,
income statements, balance sheets and cash flow statements) for the immediately
following fiscal year of Borrower, and (ii) annual financial projections for the
immediately following fiscal year of Borrower as approved by the Board, together
with any related business forecasts used in the preparation of such annual
financial projections, all prepared in a form reasonably satisfactory to Bank;
and

(i) Other Financial Information. Budgets, sales projections, operating plans and
other financial information reasonably requested by Bank.

6.3 [Reserved].

6.4 Taxes; Pensions. Timely file, and require each of its Subsidiaries to timely
file, all required tax returns and reports, except as otherwise permitted
pursuant to the terms of Section 5.8, and timely pay, and require each of its
Subsidiaries to timely pay, all foreign, federal, state and local taxes,
assessments, deposits and contributions owed by Borrower and each of its
Subsidiaries, except for deferred payment of any taxes contested or otherwise
permitted pursuant to the terms of Section 5.8 hereof, and shall deliver to
Bank, on reasonable demand, appropriate certificates attesting to such payments,
and pay all amounts necessary to fund all present pension, profit sharing and
deferred compensation plans in accordance with their terms, except where
Borrower’s failure to do so would not reasonably be expected to have a material
adverse effect on Borrower’s business.

 

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6.5 Insurance. Keep its business and the Collateral insured for risks and in
amounts standard for companies in Borrower’s industry and location and as Bank
may reasonably request. Insurance policies shall be in a form, with companies,
and in amounts that are reasonably satisfactory to Bank. Subject to Section 6.14
hereof, all property policies shall have a lender’s loss payable endorsement
showing Bank as lender loss payee and waive subrogation against Bank and shall
provide that the insurer must endeavor to give Bank at least twenty (20) days’
notice before canceling, amending, or declining to renew its policy (provided
such notice period shall be ten (10) days if such policy is cancelled or not
renewed due to non-payment of premium). Subject to Section 6.14 hereof, all
liability policies shall show, or have endorsements showing, Bank as an
additional insured, and all such policies (or the loss payable and additional
insured endorsements) shall provide that the insurer shall endeavor to give Bank
at least twenty (20) days’ notice before canceling, amending, or declining to
renew its policy (provided such notice period shall be ten (10) days if such
policy is cancelled or not renewed due to non-payment of premium). At Bank’s
reasonable request, Borrower shall deliver certified copies of policies and
evidence of all premium payments. Proceeds payable under any policy shall, at
Bank’s option, be payable to Bank on account of the Obligations. If Borrower
fails to obtain insurance as required under this Section 6.5 or to pay any
amount or furnish any required proof of payment to third persons and Bank, Bank
may make all or part of such payment or obtain such insurance policies required
in this Section 6.5, and take any action under the policies Bank deems prudent.

6.6 Operating Accounts.

(a) Immediately upon the expiration of the Transition Period, maintain all of
Borrower’s and all of its Subsidiaries’ and its parent’s (if any) primary
operating, depository and securities accounts with Bank and Bank’s Affiliates,
which accounts at Bank and Bank’s Affiliates maintained in the name of Borrower
shall represent at least eighty-five percent (85.0%) of the dollar value of
Borrower’s, its Subsidiaries’ and its parent’s (if any) accounts at all
financial institutions.

(b) Provide Bank at least five (5) days prior written notice before establishing
any Collateral Account at or with any bank or financial institution other than
Bank or Bank’s Affiliates. Immediately upon the expiration of the Transition
Period, for each Collateral Account that Borrower at any time maintains,
Borrower shall cause the applicable bank or financial institution (other than
Bank) at or with which any Collateral Account is maintained to execute and
deliver a Control Agreement or other appropriate instrument with respect to such
Collateral Account to perfect Bank’s Lien in such Collateral Account in
accordance with the terms hereunder which Control Agreement may not be
terminated without the prior written consent of Bank. The provisions of the
previous sentence shall not apply to deposit accounts exclusively used for
payroll, payroll taxes and other employee wage and benefit payments to or for
the benefit of Borrower’s employees and identified to Bank by Borrower as such.

6.7 Adjusted Quick Ratio. Maintain at all times, to be tested as of the last day
of each month and calculated on a consolidated basis for Borrower and its
Subsidiaries, an Adjusted Quick Ratio of equal to or greater than 1.50 to 1.0.

6.8 Protection of Intellectual Property Rights.

(a)(i) Use commercially reasonable efforts to protect, defend and maintain the
validity and enforceability of its Intellectual Property; (ii) promptly advise
Bank in writing of material infringements of its Intellectual Property that is
material to Borrower’s business; and (iii) not allow any Intellectual Property
material to Borrower’s business to be abandoned, forfeited or dedicated to the
public without Bank’s written consent.

Provide written notice to Bank within thirty (30) days of entering or becoming
bound by any Restricted License (other than over-the-counter software that is
commercially available to the public and excluding renewals of any Restricted
License disclosed in the Perfection Certificate). Borrower shall, at Bank’s
reasonable request, use commercially reasonable efforts to obtain the consent
of, or waiver by, any person whose consent or waiver is necessary for (i) any
Restricted License 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 Restricted License, whether now existing or entered into in
the future, and (ii) 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 this Agreement and the other Loan Documents.

 

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6.9 Litigation Cooperation. From the date hereof and continuing through the
termination of this Agreement, make available to Bank, without expense to Bank,
Borrower and its officers, employees and agents and Borrower’s books and
records, to the extent that Bank may deem them reasonably necessary to prosecute
or defend any third-party suit or proceeding instituted by or against Bank with
respect to any Collateral or relating to Borrower.

6.10 Access to Collateral; Books and Records. Allow Bank, or its agents, at
reasonable times, on three (3) Business Days’ notice (provided no notice is
required if an Event of Default has occurred and is continuing), to inspect the
Collateral and audit and copy Borrower’s Books (provided that Borrower shall not
be required to make available to Bank under this Section 6.10 information that
is subject to attorney-client privilege or other information that Borrower is
not permitted by statute, regulation or court order to disclose). Such
inspections or audits shall be conducted no more often than once every twelve
(12) months unless an Event of Default has occurred and is continuing. Borrower
acknowledges and agrees that the first such audit shall occur on or prior to the
date that is ninety (90) days after the Effective Date. The foregoing
inspections and audits shall be at Borrower’s expense, and the charge therefor
shall be Eight Hundred Fifty Dollars ($850.00) per person per day (or such
higher amount as shall represent Bank’s then-current standard charge for the
same), plus reasonable out-of-pocket expenses. In the event Borrower and Bank
schedule an audit more than ten (10) days in advance, and Borrower cancels or
seeks to reschedule the audit with less than ten (10) days written notice to
Bank, then (without limiting any of Bank’s rights or remedies), Borrower shall
pay Bank a fee of One Thousand Dollars ($1,000.00) plus any out-of-pocket
expenses incurred by Bank to compensate Bank for the anticipated costs and
expenses of the cancellation or rescheduling.

6.11 Existing Subsidiaries. Notwithstanding and without limiting the affirmative
covenant contained in Section 6.12 and the negative covenants contained in
Sections 7.3 and 7.7 hereof, if at any time either Mattersight Canada,
individually, or the Other Subsidiaries, collectively, maintain gross assets in
an aggregate amount greater than Five Hundred Thousand Dollars ($500,000.00),
Borrower shall (a) cause Mattersight Canada or each of the Other Subsidiaries,
as applicable, to provide to Bank a joinder to the Loan Agreement to cause
Mattersight Canada or each of the Other Subsidiaries, as applicable, to become a
co-borrower hereunder, together with such appropriate financing statements
and/or Control Agreements, all in form and substance satisfactory to Bank
(including being sufficient to grant Bank a first priority Lien (subject only to
Permitted Liens (which may only have superior priority to Bank’s Lien as
expressly permitted herein)) in and to the assets of Mattersight Canada or each
of the Other Subsidiaries, as applicable), (b) provide to Bank appropriate
certificates and powers and financing statements, pledging all of the direct or
beneficial ownership interest in Mattersight Canada or each of the Other
Subsidiaries, as applicable, in form and substance satisfactory to Bank, and
(c) provide to Bank all other documentation in form and substance satisfactory
to Bank, including one or more opinions of counsel satisfactory to Bank, which
in its opinion is appropriate with respect to the execution and delivery of the
applicable documentation referred to above. Any document, agreement, or
instrument executed or issued pursuant to this Section 6.11 shall be a Loan
Document.

6.12 Formation or Acquisition of Subsidiaries. Notwithstanding and without
limiting the affirmative covenant contained in Section 6.11 and the negative
covenants contained in Sections 7.3 and 7.7 hereof, at the time that Borrower
forms any direct or indirect Subsidiary or acquires any direct or indirect
Subsidiary after the Effective Date, Borrower shall, unless otherwise directed
by Bank in writing, (a) cause such new Subsidiary to provide to Bank a joinder
to the Loan Agreement to cause such Subsidiary to become a co-borrower
hereunder, together with such appropriate financing statements and/or Control
Agreements, all in form and substance satisfactory to Bank (including being
sufficient to grant Bank a first priority Lien (subject only to Permitted Liens
(which may only have superior priority to Bank’s Lien as expressly permitted
herein)) in and to the assets of such newly formed or acquired Subsidiary),
(b) provide to Bank appropriate certificates and powers and financing
statements, pledging all of the direct or beneficial ownership interest in such
new Subsidiary, in form and substance satisfactory to Bank, and (c) provide to
Bank all other documentation in form and substance satisfactory to Bank,
including one or more opinions of counsel satisfactory to Bank, which in its
opinion is appropriate with respect to the execution and delivery of the
applicable documentation referred to above. Any document, agreement, or
instrument executed or issued pursuant to this Section 6.12 shall be a Loan
Document.

6.13 Further Assurances. Execute any further instruments and take further action
as Bank reasonably requests to perfect or continue Bank’s Lien in the Collateral
or to effect the purposes of this Agreement.

 

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6.14 Post-Closing Conditions.

(a) Borrower shall use commercially reasonable efforts to deliver to Bank, on or
prior to the date that is thirty (30) days after the Effective Date, in form and
substance acceptable to Bank in its sole discretion, a landlord’s consent in
favor of Bank for each leased location of Borrower by the respective landlord
thereof, together with the duly executed original signatures thereto;

(b) Borrower shall use commercially reasonable efforts to deliver to Bank, on or
prior to the date that is thirty (30) days after the Effective Date, in form and
substance acceptable to Bank in its sole discretion, a bailee’s consent in favor
of Bank for each location at which Borrower has delivered Collateral by the
respective bailee thereof, together with the duly executed original signatures
thereto;

(c) Borrower shall deliver to Bank, on or prior to the date that is thirty
(30) days after the Effective Date, in form and substance acceptable to Bank in
its sole discretion, endorsements to Borrower’s liability insurance policies
reflecting (i) that Bank has been listed as an additional insured, and (ii) that
Bank will be given at least twenty (20) days’ prior written notice by the
insurance company of any cancellation, non-renewal or amendment of the policy
(provided that such notice period for cancellation or non-renewal due to
non-payment of premium shall be ten (10) days);

(d) Borrower shall deliver to Bank, on or prior to the date that is thirty
(30) days after the Effective Date, in form and substance acceptable to Bank in
its sole discretion, endorsements to Borrower’s casualty insurance policies
reflecting (i) that Bank has been listed as lender’s loss payee, (ii) that Bank
will be given at least twenty (20) days’ prior written notice by the insurance
company of any cancellation, non-renewal or amendment of the policy (provided
that such notice period for cancellation or non-renewal due to non-payment of
premium shall be ten (10) days), and (iii) that subrogation is waived against
Bank;

(e) Borrower shall deliver to Bank, on or prior to the date that is thirty
(30) days after the Effective Date, in form and substance acceptable to Bank in
its sole discretion, evidence of the termination of that certain Notice of
Federal Tax Lien numbered 0646733, filed with the Secretary of State for
Illinois on June 15, 2012; and

(f) Borrower shall use commercially reasonable efforts to deliver to Bank, on or
prior to the date that is thirty (30) days after the Effective Date, in form and
substance acceptable to Bank in its sole discretion, a certificate reflecting
that Borrower is qualified to do business and in good standing in the State of
New Jersey.

 

  7 NEGATIVE COVENANTS

Borrower shall not do any of the following without Bank’s prior written consent:

7.1 Dispositions. Convey, sell, lease, transfer, assign, or otherwise dispose of
(collectively, “Transfer”), or permit any of its Subsidiaries to Transfer, all
or any part of its business or property, except for Transfers (a) [reserved];
(b) of worn-out or obsolete Equipment or Equipment that is no longer used,
useful or useable in connection with Borrower’s business; (c) in connection with
Permitted Liens and Permitted Investments; (d) of non-exclusive licenses and
non-exclusive sublicenses for the use of the property of Borrower or its
Subsidiaries in the ordinary course of business; (e) of Cash Equivalents for
cash or other Cash Equivalents of equal or greater value; (f) other Transfers in
an aggregate amount not to exceed Ten Thousand Dollars ($10,000.00) in any
fiscal year of Borrower; and (g) in connection with any scheduled termination of
a capital lease permitted hereunder.

7.2 Changes in Business, Management, Ownership, or Business Locations.
(a) Engage in or permit any of its Subsidiaries to engage in any business other
than the businesses currently engaged in by Borrower and such Subsidiary, as
applicable, or reasonably related thereto; (b) liquidate or dissolve; or
(c) (i) cause or permit its President and Chief Executive Officer, who is, as of
the Effective Date, Kelly D. Conway, to cease to hold such positions (other than
by death or disability of such Person), unless both (A) at least ten (10) days’
prior written notice shall have been given to Bank, and (B) a replacement for
such Person shall be made within sixty (60) days following such Person’s
departure from Borrower that is acceptable to the Board; or (ii) enter into any
transaction or series of related transactions in which the stockholders of
Borrower who were not stockholders immediately prior to the first such
transaction own more than forty-nine percent (49.0%) of the voting stock of
Borrower immediately after giving effect to such transaction or related series
of such transactions (other than by the sale of Borrower’s equity securities in
a public offering or to venture capital investors so long as Borrower identifies
to Bank the venture capital investors prior to the closing of the transaction
and provides to Bank a description of the material terms of the transaction).
Notwithstanding the foregoing, Borrower may liquidate or dissolve an Other
Subsidiary as long as any assets of such Other Subsidiary are transferred to
Borrower.

 

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Borrower shall not, without at least thirty (30) days prior written notice to
Bank: (1) add any new offices or business locations, including warehouses
(unless such new offices or business locations contain less than One Hundred
Thousand Dollars ($100,000.00) in Borrower’s assets or property) or deliver any
portion of the Collateral valued, individually or in the aggregate, in excess of
One Hundred Thousand Dollars ($100,000.00) to a bailee at a location other than
to a bailee and at a location already disclosed in the Perfection Certificate,
(2) change its jurisdiction of organization, (3) change its organizational
structure or type, (4) change its legal name, or (5) change any organizational
number (if any) assigned by its jurisdiction of organization. If Borrower
intends to deliver any portion of the Collateral valued, individually or in the
aggregate, in excess of One Hundred Thousand Dollars ($100,000.00) to a bailee,
and Bank and such bailee are not already parties to a bailee agreement governing
both the Collateral and the location to which Borrower intends to deliver the
Collateral, then Borrower will first receive the written consent of Bank, and
such bailee shall execute and deliver a bailee agreement in form and substance
satisfactory to Bank in its sole discretion.

7.3 Mergers or Acquisitions. Merge or consolidate, or permit any of its
Subsidiaries to merge or consolidate, with any other Person, or acquire, or
permit any of its Subsidiaries to acquire, all or substantially all of the
capital stock or property of another Person. A Subsidiary may merge or
consolidate into another Subsidiary or into Borrower.

7.4 Indebtedness. Create, incur, assume, or be liable for any Indebtedness, or
permit any Subsidiary to do so, other than Permitted Indebtedness.

7.5 Encumbrance. Create, incur, allow, or suffer any Lien on any of its
property, or assign or convey any right to receive income, including the sale of
any Accounts, or permit any of its Subsidiaries to do so, except for Permitted
Liens, permit any Collateral not to be subject to the first priority security
interest granted herein, or enter into any agreement, document, instrument or
other arrangement (except with or in favor of Bank) with any Person which
directly or indirectly prohibits or has the effect of prohibiting Borrower or
any Subsidiary from assigning, mortgaging, pledging, granting a security
interest in or upon, or encumbering any of Borrower’s or any Subsidiary’s
Intellectual Property, except for Permitted Liens or as otherwise permitted in
Section 7.1 hereof.

7.6 Maintenance of Collateral Accounts. Maintain any Collateral Account except
pursuant to the terms of Section 6.6(b) hereof.

7.7 Distributions; Investments. (a) Except for Permitted Investments, pay any
dividends or make any distribution or payment or redeem, retire or purchase any
capital stock, provided that (i) Borrower or any Subsidiary may convert any of
its convertible securities into other securities pursuant to the terms of such
convertible securities or otherwise in exchange thereof, (ii) Borrower may pay
dividends solely in common stock, (iii) any Subsidiary may pay to Borrower (or a
Borrower may pay to another Borrower) cash dividends on the stock of such
Subsidiary or such Borrower paid and declared solely for the purpose of funding
payments by such Borrower in respect of taxes owing by such Borrower in respect
of another Borrower or a Subsidiary, and (iv) Mattersight Corporation may, in an
aggregate combined amount for (A) and (B) not to exceed Seven Hundred Fifty
Thousand Dollars ($750,000.00) in any calendar year: (A) pay cash dividends,
semi-annually in arrears, with respect to the shares of Series B stock issued by
Mattersight Corporation, and (B) from time to time redeem shares of Series B
stock issued by Mattersight Corporation (provided that, for the avoidance of
doubt, the holders of Series B stock issued by Mattersight Corporation may
convert such stock into common stock of Mattersight Corporation from time to
time); or (b) directly or indirectly make any Investment other than Permitted
Investments, or permit any of its Subsidiaries to do so.

7.8 Transactions with Affiliates. Directly or indirectly enter into or permit to
exist any material transaction with any Affiliate of Borrower, except for
transactions that are in the ordinary course of Borrower’s business, upon fair
and reasonable terms that are no less favorable to Borrower than would be
obtained in an arm’s length transaction with a non-affiliated Person and loans
owing from Subsidiaries that are not a Borrower to Borrower or another
Subsidiary that constitute Permitted Subsidiary Investments or Other Permitted
Investments.

7.9 Subordinated Debt. (a) Make or permit any payment on any Subordinated Debt,
except under the terms of the subordination, intercreditor, or other similar
agreement to which such Subordinated Debt is subject, or (b) amend any provision
in any document relating to the Subordinated Debt which would increase the
amount thereof or adversely affect the subordination thereof to Obligations owed
to Bank.

 

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7.10 Compliance. Become an “investment company” or a company controlled by an
“investment company”, under the Investment Company Act of 1940, as amended, or
undertake as one of its important activities extending credit to purchase or
carry margin stock (as defined in Regulation U of the Board of Governors of the
Federal Reserve System), or use the proceeds of any Credit Extension for that
purpose; fail to meet the minimum funding requirements of ERISA, permit a
Reportable Event or Prohibited Transaction, as defined in ERISA, to occur; fail
to comply with the Federal Fair Labor Standards Act or violate any other law or
regulation, if the violation would reasonably be expected to have a material
adverse effect on Borrower’s business, or permit any of its Subsidiaries to do
so; withdraw or permit any Subsidiary to withdraw from participation in, permit
partial or complete termination of, or permit the occurrence of any other event
with respect to, any present pension, profit sharing and deferred compensation
plan which would reasonably be expected to result in liabilities of Borrower,
including any liability to the Pension Benefit Guaranty Corporation or its
successors or any other governmental agency, in an aggregate amount exceeding
One Hundred Thousand Dollars ($100,000.00).

 

  8 EVENTS OF DEFAULT

Any one of the following shall constitute an event of default (an “Event of
Default”) under this Agreement:

8.1 Payment Default. Borrower fails to (a) make any payment of principal or
interest on any Credit Extension on its due date, or (b) pay any other
Obligations within three (3) Business Days after such Obligations are due and
payable (which three (3) Business Day cure period shall not apply to payments
due on the Revolving Line Maturity Date). During the cure period, the failure to
make or pay any payment specified under clause (a) or (b) hereunder is not an
Event of Default (but no Credit Extension will be made during the cure period);

8.2 Covenant Default.

(a) Borrower fails or neglects to perform any obligation in Sections 6.2, 6.4,
6.5, 6.6, 6.7, 6.8(b), 6.10, 6.11, 6.12 or 6.14, or violates any covenant in
Section 7; or

(b) Borrower fails or neglects to perform, keep, or observe any other term,
provision, condition, covenant or agreement contained in this Agreement or any
Loan Documents, and as to any default (other than those specified in this
Section 8) under such other term, provision, condition, covenant or agreement
that can be cured, has failed to cure the default within ten (10) days after the
occurrence thereof; provided, however, that if the default cannot by its nature
be cured within the ten (10) day period or cannot after diligent attempts by
Borrower be cured within such ten (10) day period, and such default is likely to
be cured within a reasonable time, then Borrower shall have an additional period
(which shall not in any case exceed thirty (30) days) to attempt to cure such
default, and within such reasonable time period the failure to cure the default
shall not be deemed an Event of Default (but no Credit Extensions shall be made
during such cure period). Cure periods provided under this section shall not
apply, among other things, to financial covenants or any other covenants set
forth in clause (a) above;

8.3 Material Adverse Change. A Material Adverse Change occurs;

8.4 Attachment; Levy; Restraint on Business.

(a) (i) The service of process seeking to attach, by trustee or similar process,
any funds of Borrower or of any entity under the control of Borrower (including
a Subsidiary) on deposit or otherwise maintained with Bank or any Bank
Affiliate, or (ii) a notice of lien or levy is filed against any of Borrower’s
assets by any government agency, and the same under subclauses (i) and
(ii) hereof are not, within ten (10) days after the occurrence thereof,
discharged or stayed (whether through the posting of a bond or otherwise);
provided, however, no Credit Extensions shall be made during any ten (10) day
cure period; or

(b) (i) any material portion of Borrower’s assets is attached, seized, levied
on, or comes into possession of a trustee or receiver, or (ii) any court order
enjoins, restrains, or prevents Borrower from conducting any material part of
its business;

 

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8.5 Insolvency. (a) Borrower is unable to pay its debts (including trade debts)
as they become due or otherwise becomes insolvent; (b) Borrower begins an
Insolvency Proceeding; or (c) an Insolvency Proceeding is begun against Borrower
and not dismissed or stayed within forty-five (45) days (but no Credit
Extensions shall be made while of any of the conditions described in clause
(a) exist and/or until any Insolvency Proceeding is dismissed);

8.6 Other Agreements. There is, under any agreement to which Borrower is a party
with a third party or parties, (a) any default resulting in a right by such
third party or parties, whether or not exercised, to accelerate the maturity of
any Indebtedness in an amount individually or in the aggregate in excess of
Fifty Thousand Dollars ($50,000.00); or (b) any default by Borrower, the result
of which could have a material adverse effect on Borrower’s business;

8.7 Judgments. One or more final judgments, orders, or decrees for the payment
of money in an amount, individually or in the aggregate, of at least Fifty
Thousand Dollars ($50,000.00) (not covered by independent third-party insurance
as to which liability has been accepted by such insurance carrier) shall be
rendered against Borrower and the same are not, within thirty (30) days after
the entry thereof, discharged or execution thereof stayed or bonded pending
appeal, or such judgments are not discharged prior to the expiration of any such
stay (provided that no Credit Extensions will be made prior to the discharge,
stay, or bonding of such judgment, order, or decree);

8.8 Misrepresentations. Borrower or any Person acting for Borrower makes any
representation, warranty, or other statement now or later in this Agreement, any
Loan Document or in any writing delivered to Bank or to induce Bank to enter
this Agreement or any Loan Document, and such representation, warranty, or other
statement is incorrect in any material respect when made; or

8.9 Subordinated Debt. Any document, instrument, or agreement evidencing any
Subordinated Debt shall for any reason be revoked or invalidated or otherwise
cease to be in full force and effect, any Person shall be in breach thereof or
contest in any manner the validity or enforceability thereof or deny that it has
any further liability or obligation thereunder, or the Obligations shall for any
reason be subordinated or shall not have the priority contemplated by this
Agreement.

 

  9 BANK’S RIGHTS AND REMEDIES

9.1 Rights and Remedies. While an Event of Default occurs and continues Bank
may, without notice or demand, do any or all of the following:

(a) declare all Obligations immediately due and payable (but if an Event of
Default described in Section 8.5 occurs all Obligations are immediately due and
payable without any action by Bank);

(b) stop advancing money or extending credit for Borrower’s benefit under this
Agreement or under any other agreement between Borrower and Bank;

(c) for any Letters of Credit, demand that Borrower (i) deposit cash with Bank
in an amount equal to the sum of (A) one hundred two percent (102.0%) of the
face amount of all such Letters of Credit denominated in Dollars, and (B) one
hundred seven percent (107.0%) of the Dollar Equivalent of the face amount of
all such Letters of Credit denominated in a Foreign Currency, for all such
Letters of Credit remaining undrawn (plus all interest, fees, and costs due or
to become due in connection therewith (as estimated by Bank in its good faith
business judgment)), to secure all of the Obligations relating to such Letters
of Credit, as collateral security for the repayment of any future drawings under
such Letters of Credit, and Borrower shall forthwith deposit and pay such
amounts, and (ii) pay in advance all letter of credit fees scheduled to be paid
or payable over the remaining term of any Letters of Credit;

(d) terminate any FX Forward Contracts;

(e) settle or adjust disputes and claims directly with Account Debtors for
amounts on terms and in any order that Bank considers advisable, notify any
Person owing Borrower money of Bank’s security interest in such funds, and
verify the amount of such account;

 

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(f) make any payments and do any acts it considers necessary or reasonable to
protect the Collateral and/or its security interest in the Collateral. Borrower
shall assemble the Collateral if Bank requests and make it available as Bank
designates. Bank may enter premises where the Collateral is located, take and
maintain possession of any part of the Collateral, and pay, purchase, contest,
or compromise any Lien which appears to be prior or superior to its security
interest and pay all expenses incurred. Borrower grants Bank a license to enter
and occupy any of its premises, without charge, to exercise any of Bank’s rights
or remedies;

(g) apply to the Obligations any (i) balances and deposits of Borrower it holds,
or (ii) any amount held by Bank owing to or for the credit or the account of
Borrower;

(h) ship, reclaim, recover, store, finish, maintain, repair, prepare for sale,
advertise for sale, and sell the Collateral. Bank is hereby granted a
non-exclusive, royalty-free license or other right to use, without charge,
Borrower’s labels, Patents, Copyrights, mask works, rights of use of any name,
trade secrets, trade names, Trademarks, and advertising matter, or any similar
property as it pertains to the Collateral, in completing production of,
advertising for sale, and selling any Collateral and, in connection with Bank’s
exercise of its rights under this Section, Borrower’s rights under all licenses
and all franchise agreements inure to Bank’s benefit;

(i) place a “hold” on any account maintained with Bank and/or deliver a notice
of exclusive control, any entitlement order, or other directions or instructions
pursuant to any Control Agreement or similar agreements providing control of any
Collateral;

(j) demand and receive possession of Borrower’s Books; and

(k) exercise all rights and remedies available to Bank under the Loan Documents
or at law or equity, including all remedies provided under the Code (including
disposal of the Collateral pursuant to the terms thereof).

9.2 Power of Attorney. Borrower hereby irrevocably appoints Bank as its lawful
attorney-in-fact, exercisable upon the occurrence and during the continuance of
an Event of Default, to: (a) endorse Borrower’s name on any checks or other
forms of payment or security; (b) sign Borrower’s name on any invoice or bill of
lading for any Account or drafts against Account Debtors; (c) settle and adjust
disputes and claims about the Accounts directly with Account Debtors, for
amounts and on terms Bank determines reasonable; (d) make, settle, and adjust
all claims under Borrower’s insurance policies; (e) pay, contest or settle any
Lien, charge, encumbrance, security interest, and adverse claim in or to the
Collateral, or any judgment based thereon, or otherwise take any action to
terminate or discharge the same; and (f) transfer the Collateral into the name
of Bank or a third party as the Code permits. Borrower hereby appoints Bank as
its lawful attorney-in-fact to sign Borrower’s name on any documents necessary
to perfect or continue the perfection of Bank’s security interest in the
Collateral regardless of whether an Event of Default has occurred until all
Obligations have been satisfied in full and Bank is under no further obligation
to make Credit Extensions hereunder. Bank’s foregoing appointment as Borrower’s
attorney-in-fact, and all of Bank’s rights and powers, coupled with an interest,
are irrevocable until all Obligations have been fully repaid and performed and
Bank’s obligation to provide Credit Extensions terminates.

9.3 Protective Payments. If Borrower fails to obtain the insurance called for by
Section 6.5 or fails to pay any premium thereon or fails to pay any other amount
which Borrower is obligated to pay under this Agreement or any other Loan
Document, Bank may obtain such insurance or make such payment, and all amounts
so paid by Bank are Bank Expenses and immediately due and payable, bearing
interest at the then highest rate applicable to the Obligations, and secured by
the Collateral. Bank will make reasonable efforts to provide Borrower with
notice of Bank obtaining such insurance at the time it is obtained or within a
reasonable time thereafter. No payments by Bank are deemed an agreement to make
similar payments in the future or Bank’s waiver of any Event of Default.

9.4 Application of Payments and Proceeds Upon Default. If an Event of Default
has occurred and is continuing, Bank may apply any funds in its possession,
whether from Borrower account balances, payments, proceeds realized as the
result of any collection of Accounts or other disposition of the Collateral, or
otherwise, to the Obligations in such order as Bank shall determine in its sole
discretion. Any surplus shall be paid to Borrower or other Persons legally
entitled thereto; Borrower shall remain liable to Bank for any deficiency. If
Bank, in its good faith business judgment, directly or indirectly enters into a
deferred payment or other credit transaction with any purchaser at any sale of
Collateral, Bank shall have the option, exercisable at any time, of either
reducing the Obligations by the principal amount of the purchase price or
deferring the reduction of the Obligations until the actual receipt by Bank of
cash therefor.

 

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9.5 Bank’s Liability for Collateral. So long as Bank complies with reasonable
banking practices regarding the safekeeping of the Collateral in the possession
or under the control of Bank, Bank shall not be liable or responsible for:
(a) the safekeeping of the Collateral; (b) any loss or damage to the Collateral;
(c) any diminution in the value of the Collateral; or (d) any act or default of
any carrier, warehouseman, bailee, or other Person. Borrower bears all risk of
loss, damage or destruction of the Collateral.

9.6 No Waiver; Remedies Cumulative. Bank’s failure, at any time or times, to
require strict performance by Borrower of any provision of this Agreement or any
other Loan Document shall not waive, affect, or diminish any right of Bank
thereafter to demand strict performance and compliance herewith or therewith. No
waiver hereunder shall be effective unless signed by the party granting the
waiver and then is only effective for the specific instance and purpose for
which it is given. Bank’s rights and remedies under this Agreement and the other
Loan Documents are cumulative. Bank has all rights and remedies provided under
the Code, by law, or in equity. Bank’s exercise of one right or remedy is not an
election and shall not preclude Bank from exercising any other remedy under this
Agreement or other remedy available at law or in equity, and Bank’s waiver of
any Event of Default is not a continuing waiver. Bank’s delay in exercising any
remedy is not a waiver, election, or acquiescence.

9.7 Demand Waiver. Borrower waives demand, notice of default or dishonor, notice
of payment and nonpayment, notice of any default, nonpayment at maturity,
release, compromise, settlement, extension, or renewal of accounts, documents,
instruments, chattel paper, and guarantees held by Bank on which Borrower is
liable.

9.8 Borrower Liability. Each Borrower may, acting singly, request Credit
Extensions hereunder. Each Borrower hereby appoints each other Borrower as agent
for such Borrower for all purposes hereunder, including with respect to
requesting Credit Extensions hereunder. Each Borrower hereunder shall be jointly
and severally obligated to repay all Credit Extensions made hereunder,
regardless of which Borrower actually receives said Credit Extensions, as if
each Borrower hereunder directly received all Credit Extensions. Each Borrower
waives (a) any suretyship defenses available to it under the Code or any other
applicable law, and (b) any right to require Bank to: (i) proceed against any
Borrower or any other person; (ii) proceed against or exhaust any security; or
(iii) pursue any other remedy. Bank may exercise or not exercise any right or
remedy it has against any Borrower or any security it holds (including the right
to foreclose by judicial or non-judicial sale) without affecting any Borrower’s
liability. Notwithstanding any other provision of this Agreement or other
related document, each Borrower irrevocably waives all rights that it may have
at law or in equity (including, without limitation, any law subrogating Borrower
to the rights of Bank under this Agreement) to seek contribution,
indemnification or any other form of reimbursement from any other Borrower, or
any other Person now or hereafter primarily or secondarily liable for any of the
Obligations, for any payment made by Borrower with respect to the Obligations in
connection with this Agreement or otherwise and all rights that it might have to
benefit from, or to participate in, any security for the Obligations as a result
of any payment made by Borrower with respect to the Obligations in connection
with this Agreement or otherwise. Any agreement providing for indemnification,
reimbursement or any other arrangement prohibited under this Section shall be
null and void. If any payment is made to a Borrower in contravention of this
Section, such Borrower shall hold such payment in trust for Bank and such
payment shall be promptly delivered to Bank for application to the Obligations,
whether matured or unmatured.

 

  10 NOTICES

All notices, consents, requests, approvals, demands, or other communication by
any party to this Agreement or any other Loan Document must be in writing and
shall be deemed to have been validly served, given, or delivered: (a) upon the
earlier of actual receipt and three (3) Business Days after deposit in the U.S.
mail, first class, registered or certified mail return receipt requested, with
proper postage prepaid; (b) upon transmission, when sent by electronic mail or
facsimile transmission; (c) one (1) Business Day after deposit with a reputable
overnight courier with all charges prepaid; or (d) when delivered, if
hand-delivered by messenger, all of which shall be addressed to the party to be
notified and sent to the address, facsimile number, or email address indicated
below. Bank or Borrower may change its mailing or electronic mail address or
facsimile number by giving the other party written notice thereof in accordance
with the terms of this Section 10.

 

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If to Borrower:   

Mattersight Corporation

Mattersight Europe Holding Corporation

Mattersight International Holding, Inc.

200 South Wacker Drive

Suite 820

Chicago, Illinois 60606

Attn: Kelly D. Conway

Fax: (775) 252-9987

Email: kelly.conway@mattersight.com

                                             with a copy (which shall not
constitute notice) to:

 

  

Winston & Strawn LLP

35 W. Wacker Drive

Chicago, Illinois 60601

Attn: Steven J. Gavin, Esq.

Fax: (312) 558-5700

Email: sgavin@winston.com

 

                                     If to Bank:

  

Silicon Valley Bank

230 West Monroe Street

Chicago, Illinois 60606

Attn: Mr. Dennis Grunt

Fax: (312) 704-1523

Email: dgrunt@svb.com

                                             with a copy (which shall not
constitute notice) to:

 

  

Riemer & Braunstein LLP

Three Center Plaza

Boston, Massachusetts 02108

Attn: David A. Ephraim, Esquire

Fax: (617) 880-3456

Email: dephraim@riemerlaw.com

 

  11 CHOICE OF LAW, VENUE AND JURY TRIAL WAIVER

Illinois law governs the Loan Documents without regard to principles of
conflicts of law. Borrower and Bank each submit to the exclusive jurisdiction of
the State and Federal courts in Chicago, Illinois; provided, however, that
nothing in this Agreement shall be deemed to operate to preclude Bank from
bringing suit or taking other legal action in any other jurisdiction to realize
on the Collateral or any other security for the Obligations, or to enforce a
judgment or other court order in favor of Bank. Borrower expressly submits and
consents in advance to such jurisdiction in any action or suit commenced in any
such court, and Borrower hereby waives any objection that it may have based upon
lack of personal jurisdiction, improper venue, or forum non conveniens and
hereby consents to the granting of such legal or equitable relief as is deemed
appropriate by such court. Borrower and Bank hereby waive personal service of
the summons, complaints, and other process issued in such action or suit and
agree that service of such summons, complaints, and other process may be made by
registered or certified mail addressed to Borrower or Bank at the applicable
address set forth in Section 10 of this Agreement and that service so made shall
be deemed completed upon the earlier to occur of Borrower’s or Bank’s actual
receipt thereof or three (3) days after deposit in the U.S. mails, proper
postage prepaid.

BORROWER AND BANK EACH WAIVE THEIR RIGHT TO A JURY TRIAL OF ANY CLAIM OR CAUSE
OF ACTION ARISING OUT OF OR BASED UPON THIS AGREEMENT, THE LOAN DOCUMENTS OR ANY
CONTEMPLATED TRANSACTION, INCLUDING CONTRACT, TORT, BREACH OF DUTY AND ALL OTHER
CLAIMS. THIS WAIVER IS A MATERIAL INDUCEMENT FOR BOTH PARTIES TO ENTER INTO THIS
AGREEMENT. EACH PARTY HAS REVIEWED THIS WAIVER WITH ITS COUNSEL.

 

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  12 GENERAL PROVISIONS

12.1 Successors and Assigns. This Agreement binds and is for the benefit of the
successors and permitted assigns of each party. Borrower may not assign this
Agreement or any rights or obligations under it without Bank’s prior written
consent (which may be granted or withheld in Bank’s discretion). Bank has the
right, without the consent of or notice to Borrower, to sell, transfer, assign,
negotiate, or grant participation in all or any part of, or any interest in,
Bank’s obligations, rights, and benefits under this Agreement and the other Loan
Documents.

12.2 Indemnification. Borrower agrees to indemnify, defend and hold Bank and its
directors, officers, employees, agents, attorneys, or any other Person
affiliated with or representing Bank (each, an “Indemnified Person”) harmless
against: (a) all obligations, demands, claims, and liabilities (collectively,
“Claims”) claimed or asserted by any other party in connection with the
transactions contemplated by the Loan Documents; and (b) all losses or expenses
(including Bank Expenses) in any way suffered, incurred, or paid by such
Indemnified Person as a result of, following from, consequential to, or arising
from transactions between Bank and Borrower contemplated by the Loan Documents
(including reasonable attorneys’ fees and expenses), except for Claims and/or
losses directly caused by such Indemnified Person’s gross negligence or willful
misconduct.

12.3 Time of Essence. Time is of the essence for the performance of all
Obligations in this Agreement.

12.4 Severability of Provisions. Each provision of this Agreement is severable
from every other provision in determining the enforceability of any provision.

12.5 Correction of Loan Documents. Bank may correct patent errors and fill in
any blanks in the Loan Documents consistent with the agreement of the parties.

12.6 Amendments in Writing; Waiver; Integration. No purported amendment or
modification of any Loan Document, or waiver, discharge or termination of any
obligation under any Loan Document, shall be enforceable or admissible unless,
and only to the extent, expressly set forth in a writing signed by the party
against which enforcement or admission is sought. Without limiting the
generality of the foregoing, no oral promise or statement, nor any action,
inaction, delay, failure to require performance or course of conduct shall
operate as, or evidence, an amendment, supplement or waiver or have any other
effect on any Loan Document. Any waiver granted shall be limited to the specific
circumstance expressly described in it, and shall not apply to any subsequent or
other circumstance, whether similar or dissimilar, or give rise to, or evidence,
any obligation or commitment to grant any further waiver. The Loan Documents
represent the entire agreement about this subject matter and supersede prior
negotiations or agreements. All prior agreements, understandings,
representations, warranties, and negotiations between the parties about the
subject matter of the Loan Documents merge into the Loan Documents.

12.7 Counterparts. This Agreement may be executed in any number of counterparts
and by different parties on separate counterparts, each of which, when executed
and delivered, is an original, and all taken together, constitute one Agreement.

12.8 Survival. All covenants, representations and warranties made in this
Agreement continue in full force until this Agreement has terminated pursuant to
its terms and all Obligations (other than inchoate indemnity obligations and any
other obligations which, by their terms, are to survive the termination of this
Agreement) have been paid in full and satisfied. Without limiting the foregoing,
except as otherwise provided in Section 4.1, the grant of security interest by
Borrower in Section 4.1 shall survive until the termination of all Bank Services
Agreements. The obligation of Borrower in Section 12.2 to indemnify Bank shall
survive until the statute of limitations with respect to such claim or cause of
action shall have run.

12.9 Confidentiality. In handling any confidential information, Bank shall
exercise the same degree of care that it exercises for its own proprietary
information, but disclosure of information may be made: (a) to Bank’s
Subsidiaries or Affiliates (such Subsidiaries and Affiliates, together with
Bank, collectively, “Bank Entities”); (b) to prospective transferees or
purchasers of any interest in the Credit Extensions (provided, however, Bank
shall use its best efforts to obtain any prospective transferee’s or purchaser’s
agreement to the terms of this provision); (c) as required by law, regulation,
subpoena, or other order; (d) to Bank’s regulators or as otherwise required in
connection with Bank’s examination or audit; (e) as Bank considers appropriate
in exercising remedies under the Loan Documents; and (f) to third-party service
providers of Bank so long as such service providers have executed a

 

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confidentiality agreement with Bank with terms no less restrictive than those
contained herein. Confidential information does not include information that is
either: (i) in the public domain or in Bank’s possession when disclosed to Bank,
or becomes part of the public domain after disclosure to Bank; or (ii) disclosed
to Bank by a third party if Bank does not know that the third party is
prohibited from disclosing the information.

Bank Entities may use the confidential information for reporting purposes and
the development and distribution of databases and market analyses so long as
such confidential information is aggregated and anonymized prior to distribution
unless otherwise expressly permitted by Borrower. The provisions of the
immediately preceding sentence shall survive the termination of this Agreement.

12.10 Right of Set Off. Borrower 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 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 Obligations. 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.

12.11 Electronic Execution of Documents. The words “execution,” “signed,”
“signature” and words of like import in any Loan Document shall be deemed to
include electronic signatures or the keeping of records in electronic form, each
of which shall be of the same legal effect, validity and enforceability as a
manually executed signature or the use of a paper-based recordkeeping systems,
as the case may be, to the extent and as provided for in any applicable law,
including, without limitation, any state law based on the Uniform Electronic
Transactions Act.

12.12 Captions. The headings used in this Agreement are for convenience only and
shall not affect the interpretation of this Agreement.

12.13 Construction of Agreement. The parties mutually acknowledge that they and
their attorneys have participated in the preparation and negotiation of this
Agreement. In cases of uncertainty this Agreement shall be construed without
regard to which of the parties caused the uncertainty to exist.

12.14 Relationship. The relationship of the parties to this Agreement is
determined solely by the provisions of this Agreement. The parties do not intend
to create any agency, partnership, joint venture, trust, fiduciary or other
relationship with duties or incidents different from those of parties to an
arm’s-length contract.

12.15 Third Parties. Nothing in this Agreement, whether express or implied, is
intended to: (a) confer any benefits, rights or remedies under or by reason of
this Agreement on any persons other than the express parties to it and their
respective permitted successors and assigns; (b) relieve or discharge the
obligation or liability of any person not an express party to this Agreement; or
(c) give any person not an express party to this Agreement any right of
subrogation or action against any party to this Agreement.

 

  13 DEFINITIONS

13.1 Definitions. As used in the Loan Documents, the word “shall” is mandatory,
the word “may” is permissive, the word “or” is not exclusive, the words
“includes” and “including” are not limiting, the singular includes the plural,
and numbers denoting amounts that are set off in brackets are negative. As used
in this Agreement, the following capitalized terms have the following meanings:

“Account” is any “account” as defined in the Code with such additions to such
term as may hereafter be made, and includes, without limitation, all accounts
receivable and other sums owing to Borrower.

“Account Debtor” is any “account debtor” as defined in the Code with such
additions to such term as may hereafter be made.

 

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“Adjusted Quick Ratio” is the ratio of (a) Quick Assets to (b) Current
Liabilities minus the current portion of Deferred Revenue.

“Advance” or “Advances” means an advance (or advances) under the Revolving Line.

“Affiliate” is, with respect to any Person, each other Person that owns or
controls directly or indirectly the Person, any Person that controls or is
controlled by or is under common control with the Person, and each of that
Person’s senior executive officers, directors, partners and, for any Person that
is a limited liability company, that Person’s managers and members.

“Agreement” is defined in the preamble hereof.

“Availability Amount” is (a) (i) during the Transition Period, the lesser of
(A) the Revolving Line, and (B) the Borrowing Base, and (ii) upon the expiration
of the Transition Period, the Revolving Line, minus (b) the outstanding
principal balance of any Advances.

“Bank” is defined in the preamble hereof.

“Bank Entities” is defined in Section 12.9.

“Bank Expenses” are all documented audit fees and expenses and all out-of-pocket
costs, and expenses (including reasonable, documented attorneys’ fees and
expenses) for preparing, amending, negotiating, administering, defending and
enforcing the Loan Documents (including, without limitation, those incurred in
connection with appeals or Insolvency Proceedings) or otherwise incurred with
respect to Borrower.

“Bank Services” are any products, credit services, and/or financial
accommodations previously, now, or hereafter provided to Borrower or any of its
Subsidiaries by Bank or any Bank Affiliate, including, without limitation, any
letters of credit, cash management services (including, without limitation,
merchant services, direct deposit of payroll, business credit cards, and check
cashing services), interest rate swap arrangements, and foreign exchange
services as any such products or services may be identified in Bank’s various
agreements related thereto (each, a “Bank Services Agreement”).

“Bank Services Agreement” is defined in the definition entitled “Bank Services”
appearing alphabetically in Section 13.1.

“Board” is Borrower’s board of directors.

“Borrower” is defined in the preamble hereof.

“Borrower’s Books” are all Borrower’s books and records including ledgers,
federal and state tax returns, records regarding Borrower’s assets or
liabilities, the Collateral, business operations or financial condition, and all
computer programs or storage or any equipment containing such information.

“Borrowing Base” is the aggregate unrestricted and unencumbered cash of Borrower
maintained at Bank or Bank’s Affiliates.

“Borrowing Resolutions” are, with respect to any Person, those resolutions
adopted by such Person’s Board of Directors and delivered by such Person to Bank
approving the Loan Documents to which such Person is a party and the
transactions contemplated thereby.

“Business Day” is any day that is not a Saturday, Sunday or a day on which Bank
is closed.

“Cash Equivalents” means (a) marketable direct obligations issued or
unconditionally guaranteed by the United States or any agency or any State
thereof having maturities of not more than one (1) year from the date of
acquisition; (b) commercial paper maturing no more than one (1) year after its
creation and having the highest rating from either Standard & Poor’s Ratings
Group or Moody’s Investors Service, Inc.; and (c) Bank’s certificates of deposit
issued maturing no more than one (1) year after issue.

 

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“Claims” is defined in Section 12.2.

“Code” is the Uniform Commercial Code, as the same may, from time to time, be
enacted and in effect in the State of Illinois; provided, that, to the extent
that the Code is used to define any term herein or in any Loan Document and such
term is defined differently in different Articles or Divisions of the Code, the
definition of such term contained in Article or Division 9 shall govern;
provided further, that in the event that, by reason of mandatory provisions of
law, any or all of the attachment, perfection, or priority of, or remedies with
respect to, Bank’s Lien on any Collateral is governed by the Uniform Commercial
Code in effect in a jurisdiction other than the State of Illinois, the term
“Code” shall mean the Uniform Commercial Code as enacted and in effect in such
other jurisdiction solely for purposes of the provisions thereof relating to
such attachment, perfection, priority, or remedies and for purposes of
definitions relating to such provisions.

“Collateral” is any and all properties, rights and assets of Borrower described
on Exhibit A.

“Collateral Account” is any Deposit Account, Securities Account, or Commodity
Account.

“Commodity Account” is any “commodity account” as defined in the Code with such
additions to such term as may hereafter be made.

“Compliance Certificate” is that certain certificate in the form attached hereto
as Exhibit C.

“Contingent Obligation” is, for any Person, any direct or indirect liability,
contingent or not, of that Person for (a) any indebtedness, lease, dividend,
letter of credit or other obligation of another such as an obligation, in each
case, directly or indirectly guaranteed, endorsed, co-made, discounted or sold
with recourse by that Person, or for which that Person is directly or indirectly
liable; (b) any obligations for undrawn letters of credit for the account of
that Person; and (c) all obligations from any interest rate, currency or
commodity swap agreement, interest rate cap or collar agreement, or other
agreement or arrangement designated to protect a Person against fluctuation in
interest rates, currency exchange rates or commodity prices; but “Contingent
Obligation” does not include endorsements in the ordinary course of business.
The amount of a Contingent Obligation is the stated or determined amount of the
primary obligation for which the Contingent Obligation is made or, if not
determinable, the maximum reasonably anticipated liability for it determined by
the Person in good faith; but the amount may not exceed the maximum of the
obligations under any guarantee or other support arrangement.

“Control Agreement” is any control agreement entered into among the depository
institution at which Borrower maintains a Deposit Account or the securities
intermediary or commodity intermediary at which Borrower maintains a Securities
Account or a Commodity Account, Borrower, and Bank pursuant to which Bank
obtains control (within the meaning of the Code) over such Deposit Account,
Securities Account, or Commodity Account.

“Copyrights” are any and all copyright rights, copyright applications, copyright
registrations and like protections in each work or authorship and derivative
work thereof, whether published or unpublished and whether or not the same also
constitutes a trade secret.

“Credit Extension” is any Advance or any other extension of credit by Bank for
Borrower’s benefit under this Agreement.

“Current Liabilities” are all obligations and liabilities of Borrower to Bank,
plus, without duplication, the aggregate amount of Borrower’s Total Liabilities
that mature within one (1) year.

“Default Rate” is defined in Section 2.3(b).

“Deferred Revenue” is all amounts received or invoiced in advance of performance
under contracts and not yet recognized as revenue.

“Deposit Account” is any “deposit account” as defined in the Code with such
additions to such term as may hereafter be made.

“Designated Deposit Account” is Borrower’s deposit account, account number
                , maintained with Bank.

 

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“Dollars,” “dollars” or use of the sign “$” means only lawful money of the
United States and not any other currency, regardless of whether that currency
uses the “$” sign to denote its currency or may be readily converted into lawful
money of the United States.

“Dollar Equivalent” is, at any time, (a) with respect to any amount denominated
in Dollars, such amount, and (b) with respect to any amount denominated in a
Foreign Currency, the equivalent amount therefor in Dollars as determined by
Bank at such time on the basis of the then-prevailing rate of exchange in San
Francisco, California, for sales of the Foreign Currency for transfer to the
country issuing such Foreign Currency.

“Domestic Subsidiary” means a Subsidiary organized under the laws of the United
States or any state or territory thereof or the District of Columbia.

“Effective Date” is defined in the preamble hereof.

“Equipment” is all “equipment” as defined in the Code with such additions to
such term as may hereafter be made, and includes without limitation all
machinery, fixtures, goods, vehicles (including motor vehicles and trailers),
and any interest in any of the foregoing.

“ERISA” is the Employee Retirement Income Security Act of 1974, and its
regulations.

“Event of Default” is defined in Section 8.

“Exchange Act” is the Securities Exchange Act of 1934, as amended.

“Foreign Currency” means lawful money of a country other than the United States.

“Foreign Subsidiary” means any Subsidiary which is not a Domestic Subsidiary.

“Funding Date” is any date on which a Credit Extension is made to or for the
account of Borrower which shall be a Business Day.

“FX Forward Contract” is any foreign exchange contract by and between Borrower
and Bank under which Borrower commits to purchase from or sell to Bank a
specific amount of Foreign Currency on a specified date.

“GAAP” is generally accepted accounting principles set forth in the opinions and
pronouncements of the Accounting Principles Board of the American Institute of
Certified Public Accountants and statements and pronouncements of the Financial
Accounting Standards Board or in such other statements by such other Person as
may be approved by a significant segment of the accounting profession, which are
applicable to the circumstances as of the date of determination.

“General Intangibles” is all “general intangibles” as defined in the Code in
effect on the date hereof with such additions to such term as may hereafter be
made, and includes without limitation, all Intellectual Property, claims, income
and other tax refunds, security and other deposits, payment intangibles,
contract rights, options to purchase or sell real or personal property, rights
in all litigation presently or hereafter pending (whether in contract, tort or
otherwise), insurance policies (including without limitation key man, property
damage, and business interruption insurance), payments of insurance and rights
to payment of any kind.

“Governmental Approval” is any consent, authorization, approval, order, license,
franchise, permit, certificate, accreditation, registration, filing or notice,
of, issued by, from or to, or other act by or in respect of, any Governmental
Authority.

“Governmental Authority” is any nation or government, any state or other
political subdivision thereof, any agency, authority, instrumentality,
regulatory body, court, central bank or other entity exercising executive,
legislative, judicial, taxing, regulatory or administrative functions of or
pertaining to government, any securities exchange and any self-regulatory
organization.

 

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“Indebtedness” is (a) indebtedness for borrowed money or the deferred price of
property or services, such as reimbursement and other obligations for surety
bonds and letters of credit, (b) obligations evidenced by notes, bonds,
debentures or similar instruments, (c) capital lease obligations, and
(d) Contingent Obligations.

“Indemnified Person” is defined in Section 12.2.

“Insolvency Proceeding” is any proceeding by or against any Person under the
United States Bankruptcy Code, or any other bankruptcy or insolvency law,
including assignments for the benefit of creditors, compositions, extensions
generally with its creditors, or proceedings seeking reorganization,
arrangement, or other relief.

“Intellectual Property” means all of Borrower’s right, title, and interest in
and to the following:

(a) its Copyrights, Trademarks and Patents;

(b) any and all trade secrets and trade secret rights, including, without
limitation, any rights to unpatented inventions, know-how, operating manuals;

(c) any and all source code;

(d) any and all design rights which may be available to a Borrower;

(e) any and all claims for damages by way of past, present and future
infringement of any of the foregoing, with the right, but not the obligation, to
sue for and collect such damages for said use or infringement of the
Intellectual Property rights identified above; and

(f) all amendments, renewals and extensions of any of the Copyrights, Trademarks
or Patents.

“Inventory” is all “inventory” as defined in the Code in effect on the date
hereof with such additions to such term as may hereafter be made, and includes
without limitation all merchandise, raw materials, parts, supplies, packing and
shipping materials, work in process and finished products, including without
limitation such inventory as is temporarily out of Borrower’s custody or
possession or in transit and including any returned goods and any documents of
title representing any of the above.

“Investment” is any beneficial ownership interest in any Person (including
stock, partnership interest or other securities), and any loan, advance or
capital contribution to any Person.

“Letter of Credit” is a standby or commercial letter of credit issued by Bank
upon request of Borrower based upon an application, guarantee, indemnity or
similar agreement.

“Lien” is a claim, mortgage, deed of trust, levy, charge, pledge, security
interest or other encumbrance of any kind, whether voluntarily incurred or
arising by operation of law or otherwise against any property.

“Loan Documents” are, collectively, this Agreement, the Perfection Certificate,
any Bank Services Agreement, any subordination agreement, any notes or
guaranties executed by Borrower, and any other present or future agreement
between Borrower and/or for the benefit of Bank, all as amended, restated, or
otherwise modified.

“Material Adverse Change” is (a) a material impairment in the perfection or
priority of Bank’s Lien in the Collateral or in the value of such Collateral;
(b) a material adverse change in the business, operations, or condition
(financial or otherwise) of Borrower; (c) a material impairment of the prospect
of repayment of any portion of the Obligations; or (d) Bank determines, based
upon information available to it and in its reasonable judgment, that there is a
reasonable likelihood that Borrower shall fail to comply with one or more of the
financial covenants in Section 6 during the next succeeding financial reporting
period.

“Mattersight Canada” is MATTERSIGHT (CANADA) CORPORATION, a company organized
under the laws of Canada.

“Mattersight Corporation” is defined in the preamble hereof.

“Mattersight Europe” is defined in the preamble hereof.

 

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“Mattersight International” is defined in the preamble hereof.

“Monthly Financial Statements” is defined in Section 6.2(a).

“Obligations” are Borrower’s obligations to pay when due any debts, principal,
interest, Bank Expenses and other amounts Borrower owes Bank now or later,
whether under this Agreement, the other Loan Documents, or otherwise, including,
without limitation, any interest accruing after Insolvency Proceedings begin and
debts, liabilities, or obligations of Borrower assigned to Bank, and the
performance of Borrower’s duties under the Loan Documents.

“Operating Documents” are, for any Person, such Person’s formation documents, as
certified with the Secretary of State of such Person’s state of formation on a
date that is no earlier than thirty (30) days prior to the Effective Date, and,
(a) if such Person is a corporation, its bylaws in current form, (b) if such
Person is a limited liability company, its limited liability company agreement
(or similar agreement), and (c) if such Person is a partnership, its partnership
agreement (or similar agreement), each of the foregoing with all current
amendments or modifications thereto.

“Other Permitted Investments” is defined in subsection (e) of the definition
entitled “Permitted Investments” appearing alphabetically in this Section 13.1.

“Other Subsidiaries” are each of the Subsidiaries of each Borrower except
(a) Mattersight Canada, and (b) any Subsidiary of any Borrower that is itself a
Borrower.

“Patents” means all patents, patent applications and like protections including
without limitation improvements, divisions, continuations, renewals, reissues,
extensions and continuations-in-part of the same.

“Payment/Advance Form” is that certain form attached hereto as Exhibit B.

“Perfection Certificate” is defined in Section 5.1.

“Permitted Indebtedness” is:

(a) Borrower’s Indebtedness to Bank under this Agreement and the other Loan
Documents;

(b) Indebtedness existing on the Effective Date and shown on the Perfection
Certificate;

(c) Subordinated Debt;

(d) unsecured Indebtedness to trade creditors incurred in the ordinary course of
business;

(e) Indebtedness incurred as a result of endorsing negotiable instruments
received in the ordinary course of business;

(f) intercompany Indebtedness of a Subsidiary that is not a Borrower hereunder
to a Borrower or another Subsidiary constituting Other Permitted Investments
hereunder;

(g) Indebtedness secured by Liens permitted under clauses (a) and (c) of the
definition of “Permitted Liens” hereunder; and

(h) extensions, refinancings, modifications, amendments and restatements of any
items of Permitted Indebtedness (a) through (f) above, provided that the
principal amount thereof is not increased or the terms thereof are not modified
to impose more burdensome terms upon Borrower or its Subsidiary, as the case may
be.

“Permitted Investments” are:

(a) Investments (including, without limitation, Subsidiaries) existing on the
Effective Date and shown on the Perfection Certificate;

(b) Investments consisting of Cash Equivalents;

 

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(c) Investments by Borrower in Subsidiaries not to exceed Three Hundred
Seventy-Five Thousand Dollars ($375,000.00) in the aggregate in any fiscal year
(collectively, “Permitted Subsidiary Investments”);

(d) Investments consisting of (i) travel advances and employee relocation loans
and other employee loans and advances in the ordinary course of business, and
(ii) loans to employees, officers or directors relating to the purchase of
equity securities of Borrower or its Subsidiaries pursuant to employee stock
purchase plans or agreements approved by Borrower’s Board of Directors; and

(e) other Investments in an aggregate amount not to exceed Two Hundred Fifty
Thousand Dollars ($250,000.00) in any fiscal year or Five Hundred Thousand
Dollars ($500,000.00) during the term of this Agreement (collectively, “Other
Permitted Investments”).

“Permitted Liens” are:

(a) Liens existing on the Effective Date and shown on the Perfection Certificate
or arising under this Agreement and the other Loan Documents;

(b) Liens for taxes, fees, assessments or other government charges or levies,
either (i) not due and payable or (ii) being contested in good faith and for
which Borrower maintains adequate reserves on its Books, provided that no notice
of any such Lien has been filed or recorded under the Internal Revenue Code of
1986, as amended, and the Treasury Regulations adopted thereunder;

(c) purchase money Liens or capital leases (i) on Equipment acquired or held by
Borrower incurred for financing the acquisition or capital lease of such
Equipment securing no more than Six Million Dollars ($6,000,000.00) in the
aggregate amount outstanding, or (ii) existing on Equipment when acquired, if
the Lien is confined to the property and improvements and the proceeds of the
Equipment; and

(d) Liens of carriers, warehousemen, mechanics, materialmen, suppliers, or other
Persons that are possessory in nature arising in the ordinary course of business
so long as such Liens attach only to Inventory, securing liabilities in the
aggregate amount not to exceed One Hundred Thousand Dollars ($100,000.00), and
which are not delinquent or remain payable without penalty or which are being
contested in good faith and by appropriate proceedings which proceedings have
the effect of preventing the forfeiture or sale of the property subject thereto;

(e) Liens to secure payment of workers’ compensation, employment insurance,
old-age pensions, social security and other like obligations incurred in the
ordinary course of business (other than Liens imposed by ERISA);

(f) Liens in favor of other financial institutions arising in connection with
Borrower’s deposit and/or securities accounts held at such institutions,
provided that Bank has a perfected security interest in the amounts held in such
deposit and/or securities accounts;

(g) on and prior to the date that is thirty (30) days after the Effective Date,
the Federal Tax Lien numbered 0646733, filed with the Secretary of State for
Illinois on June 15, 2012; and

(h) Liens incurred in the extension, renewal or refinancing of the indebtedness
secured by Liens described in (a) through (d), but any extension, renewal or
replacement Lien must be limited to the property encumbered by the existing Lien
and the principal amount of the indebtedness may not increase,

“Permitted Subsidiary Investments” is defined in subsection (c) of the
definition entitled “Permitted Investments” appearing alphabetically in this
Section 13.1.

“Person” is any individual, sole proprietorship, partnership, limited liability
company, joint venture, company, trust, unincorporated organization,
association, corporation, institution, public benefit corporation, firm, joint
stock company, estate, entity or government agency.

“Prime Rate” means the rate of interest published in the “Money Rates” section
of The Wall Street Journal, Eastern Edition as the “United States Prime Rate,”
even if such rate is not the lowest or best rate available. In the event that
The Wall Street Journal, Eastern Edition is not published or such rate does not
appear in The Wall Street Journal, Eastern Edition, the Prime Rate shall be
determined by Bank until such time as the Prime Rate becomes available in
accordance with past practices.

 

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“Quick Assets” is, on any date, Borrower’s consolidated, unrestricted and
unencumbered cash maintained with Bank or Bank’s Affiliates, plus net billed
accounts receivable determined according to GAAP.

“Registered Organization” is any “registered organization” as defined in the
Code with such additions to such term as may hereafter be made.

“Requirement of Law” is as to any Person, the organizational or governing
documents of such Person, and any law (statutory or common), treaty, rule or
regulation or determination of an arbitrator or a court or other Governmental
Authority, in each case applicable to or binding upon such Person or any of its
property or to which such Person or any of its property is subject.

“Responsible Officer” is any of the Chief Executive Officer, President, Chief
Financial Officer and Controller of Borrower.

“Restricted License” is any material 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.

“Revolving Line” is an Advance or Advances in an aggregate amount equal to Ten
Million Dollars ($10,000,000.00).

“Revolving Line Maturity Date” is June 29, 2014.

“SEC” shall mean the Securities and Exchange Commission, any successor thereto,
and any analogous Governmental Authority.

“Secretary’s Certificate” is, with respect to any Person, a certificate executed
by such Person’s Secretary on behalf of such Person certifying that (a) such
Person has the authority to execute, deliver, and perform its obligations under
each of the Loan Documents to which it is a party, (b) that attached as Exhibit
A to such certificate is a true, correct, and complete copy of the Borrowing
Resolutions then in full force and effect authorizing and ratifying the
execution, delivery, and performance by such Person of the Loan Documents to
which it is a party, (c) the name(s) of the Person(s) authorized to execute the
Loan Documents on behalf of such Person, together with a sample of the true
signature(s) of such Person(s), and (d) that Bank may conclusively rely on such
certificate unless and until such Person shall have delivered to Bank a further
certificate canceling or amending such prior certificate.

“Securities Account” is any “securities account” as defined in the Code with
such additions to such term as may hereafter be made.

“Subordinated Debt” is indebtedness incurred by Borrower subordinated to all of
Borrower’s now or hereafter indebtedness to Bank (pursuant to a subordination,
intercreditor, or other similar agreement in form and substance satisfactory to
Bank entered into between Bank and the other creditor), on terms acceptable to
Bank.

“Subsidiary” is, as to any Person, a corporation, partnership, limited liability
company or other entity of which shares of stock or other ownership interests
having ordinary voting power (other than stock or such other ownership interests
having such power only by reason of the happening of a contingency) to elect a
majority of the board of directors or other managers of such corporation,
partnership or other entity are at the time owned, or the management of which is
otherwise controlled, directly or indirectly through one or more intermediaries,
or both, by such Person. Unless the context otherwise requires, each reference
to a Subsidiary herein shall be a reference to a Subsidiary of Borrower.

“Total Liabilities” is on any day, obligations that should, under GAAP, be
classified as liabilities on Borrower’s consolidated balance sheet, including
all Indebtedness.

 

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“Trademarks” means any trademark and servicemark rights, whether registered or
not, applications to register and registrations of the same and like
protections, and the entire goodwill of the business of Borrower connected with
and symbolized by such trademarks.

“Transfer” is defined in Section 7.1.

“Transition Period” is the period of time commencing on the Effective Date and
expiring upon the date that is sixty (60) days after the Effective Date.

“Unused Revolving Line Facility Fee” is defined in Section 2.4(b).

[Signature Page Follows]

 

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
as of the Effective Date.

BORROWER:

 

MATTERSIGHT CORPORATION By:   /s/ Kelly D. Conway Name:   Kelly D. Conway Title:
  President & CEO MATTERSIGHT EUROPE HOLDING CORPORATION By:   /s/ Kelly D.
Conway Name:   Kelly D. Conway Title:   President MATTERSIGHT INTERNATIONAL
HOLDING, INC. By:   /s/ Kelly D. Conway Name:   Kelly D. Conway Title:  
President BANK: SILICON VALLEY BANK By:   /s/ Dennis P. Grunt Name:   Dennis P.
Grunt Title:   Relationship Manager

 

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EXHIBIT A – COLLATERAL DESCRIPTION

The Collateral consists of all of Borrower’s right, title and interest in and to
the following personal property:

All goods, Accounts (including health-care receivables), Equipment, Inventory,
contract rights or rights to payment of money, leases, license agreements,
franchise agreements, General Intangibles (except as provided below), commercial
tort claims, documents, instruments (including any promissory notes), chattel
paper (whether tangible or electronic), cash, deposit accounts, certificates of
deposit, fixtures, letters of credit rights (whether or not the letter of credit
is evidenced by a writing), securities, and all other investment property,
supporting obligations, and financial assets, whether now owned or hereafter
acquired, wherever located; and

all Borrower’s Books relating to the foregoing, and any and all claims, rights
and interests in any of the above and all substitutions for, additions,
attachments, accessories, accessions and improvements to and replacements,
products, proceeds and insurance proceeds of any or all of the foregoing.

Notwithstanding the foregoing, the Collateral does not include: (a) any
Intellectual Property; provided, however, the Collateral shall include all
Accounts and all proceeds of Intellectual Property. If a judicial authority
(including a U.S. Bankruptcy Court) would hold that a security interest in the
underlying Intellectual Property is necessary to have a security interest in
such Accounts and such property that are proceeds of Intellectual Property, then
the Collateral shall automatically, and effective as of the Effective Date,
include the Intellectual Property to the extent necessary to permit perfection
of Bank’s security interest in such Accounts and such other property of Borrower
that are proceeds of the Intellectual Property, or (b) more than sixty-five
percent (65.0%) of the presently existing and hereafter arising issued and
outstanding shares of capital stock owned by Borrower of any Foreign Subsidiary
which shares entitle the holder thereof to vote for directors or any other
matter.

Pursuant to the terms of a certain negative pledge arrangement with Bank,
Borrower has agreed not to encumber any of its Intellectual Property without
Bank’s prior written consent.

 

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EXHIBIT B – LOAN PAYMENT/ADVANCE REQUEST FORM

DEADLINE FOR SAME DAY PROCESSING IS NOON EASTERN TIME

 

Fax To:    Date:            

 

 LOAN PAYMENT:

MATTERSIGHT CORPORATION

MATTERSIGHT EUROPE HOLDING CORPORATION

MATTERSIGHT INTERNATIONAL HOLDING, INC.

 

From Account #                                         
                               To Account
#                                         
                                                        (Deposit Account #)   
(Loan Account #)         Principal $    and/or Interest $ Authorized Signature:
               Phone Number:

Print Name/Title:

 

     

 

LOAN ADVANCE:

 

Complete Outgoing Wire Request section below if all or a portion of the funds
from this loan advance are for an outgoing wire.

From Account #                                                               To
Account #                                         
                                               (Loan Account #)    (Deposit
Account #) Amount of Advance $       All Borrower’s representations and
warranties in the Loan and Security Agreement are true, correct and complete in
all material respects on the date of the request for an advance; 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: Authorized
Signature:    Phone Number:

Print Name/Title:

 

     

 

OUTGOING WIRE REQUEST:

Complete only if all or a portion of funds from the loan advance above is to be
wired.

Deadline for same day processing is noon, Eastern Time

 

Beneficiary Name:           Amount of Wire: $          Beneficiary Bank:      
   Account Number:         

City and State:

                  Beneficiary Bank Transit (ABA) #:      
Beneficiary Bank Code (Swift, Sort, Chip, etc.):                          (For
International Wire Only)    Intermediary Bank:          Transit (ABA) #:      
  

For Further Credit to:     Special Instruction:   

By signing below, I (we) acknowledge and agree that my (our) funds transfer
request shall be processed in accordance with and subject to the terms and
conditions set forth in the agreements(s) covering funds transfer service(s),
which agreements(s) were previously received and executed by me (us).

Authorized Signature:         2nd Signature (if required):     Print Name/Title:
          Print Name/Title:        Telephone #:             Telephone #:       
                       

 

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EXHIBIT C

COMPLIANCE CERTIFICATE

 

TO:    SILICON VALLEY BANK    Date:

FROM: MATTERSIGHT CORPORATION, MATTERSIGHT EUROPE HOLDING CORPORATION, AND
MATTERSIGHT INTERNATIONAL HOLDING, INC. (jointly and severally, individually and
collectively, “Borrower”)

The undersigned authorized officer of Borrower certifies that under the terms
and conditions of the Loan and Security Agreement among 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, except as otherwise permitted pursuant to
the terms of Section 5.8 of the Agreement, 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 5.8 of the Agreement; and (5) no Liens have been levied or claims made
against Borrower or any of its Subsidiaries 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 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.

Please indicate compliance status by circling Yes/No under “Complies” column.

 

Reporting Covenant

   Required    Complies  

Monthly consolidating financial statements with

Compliance Certificate

   Monthly within 30 days      Yes No   

Annual consolidating financial statement (CPA Audited)

   FYE within 150 days      Yes No   

10-Q, 10-K and 8-K

   Within 5 days after
filing with SEC      Yes No   

A/R, A/P Agings, and Deferred Revenue reports

   Monthly within 30 days      Yes No   

Board-approved Projections

   Annually prior to FYE      Yes No   

 

Financial Covenant

   Required      Actual      Complies  

Minimum Adjusted Quick Ratio (at all times, to be tested

monthly)

     1.5:1.0                     :1.0         Yes No   

The following financial covenant analysis 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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MATTERSIGHT CORPORATION    BANK USE ONLY    Received by:
                                         
                                                          By:
                                         
                                                                                
                                            AUTHORIZED SIGNER Name:    Date:
Title:   

 

Verified:                                                                 
                                         

                                         AUTHORIZED SIGNER

MATTERSIGHT EUROPE HOLDING

CORPORATION

      Date: By:                                          
                                                                                
   Compliance Status:         Yes     No Name:    Title:    MATTERSIGHT
INTERNATIONAL HOLDING, INC.    By:                                          
                                                                                
   Name:    Title:   

 

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Schedule 1 to Compliance Certificate

Financial Covenants of Borrower

In the event of a conflict between this Schedule and the Loan Agreement, the
terms of the Loan Agreement shall govern.

Dated:                

 

I. Adjusted Quick Ratio (Section 6.7)

Required:         1.50:1.00

Actual:

 

A.    Aggregate value of Borrower’s consolidated unrestricted and unencumbered
cash maintained with Bank and Bank’s Affiliates      $    B.    Aggregate value
of net billed accounts receivable      $    C.    Quick Assets (the sum of lines
A and B)      $    D.    Aggregate value of all Obligations of Borrower to Bank
     $    E.    Aggregate value of liabilities that should, under GAAP, be
classified as liabilities on Borrower’s consolidated balance sheet, including
all Indebtedness, and not otherwise reflected in line D above that matures
within one (1) year      $    F.    Current Liabilities (the sum of lines D and
E)      $    G.   

Aggregate value of current portion of all amounts received or invoiced by
Borrower in advance

of performance under contracts and not yet recognized as revenue

     $    H.    Line F minus G      $    I.    Adjusted Quick Ratio (line C
divided by line H      $   

Is line I equal to or greater than 1.50:1:00?

 

                    No, not in compliance                    Yes, in
compliance            

 

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