Exhibit 10.1

 

TECHTARGET, INC.

WESTERN ALLIANCE BANK, AN ARIZONA CORPORATION

LOAN AND SECURITY AGREEMENT

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This LOAN AND SECURITY AGREEMENT is entered into as of December 24, 2018, by and
between WESTERN ALLIANCE BANK, an Arizona corporation (“Bank”) and TECHTARGET,
INC., a Delaware corporation (“Borrower”).

RECITALS

Borrower wishes to obtain credit from Bank, and Bank desires to extend credit to
Borrower. This Agreement sets forth the terms on which Bank will advance credit
to Borrower, and Borrower will repay the amounts owing to Bank.

AGREEMENT

The parties agree as follows:

 

  1.

DEFINITIONS AND CONSTRUCTION.

1.1    Definitions. As used in this Agreement, the following terms shall have
the following definitions:

“Accounts” means all presently existing and hereafter arising accounts, contract
rights, payment intangibles, and all other forms of obligations owing to
Borrower arising out of the sale or lease of goods (including, without
limitation, the licensing of software and other technology) or the rendering of
services by Borrower, whether or not earned by performance, and any and all
credit insurance, guaranties, and other security therefor, as well as all
merchandise returned to or reclaimed by Borrower and Borrower’s Books relating
to any of the foregoing.

“Affiliate” means, with respect to any Person, any Person that owns or controls
directly or indirectly such Person, any Person that controls or is controlled by
or is under common control with such Person, and each of such Person’s senior
executive officers, directors, and partners.

“Bank Expenses” means all: reasonable costs or expenses (including reasonable
attorneys’ fees and expenses) incurred in connection with the preparation,
negotiation, administration, and enforcement of the Loan Documents; reasonable
Collateral audit fees; and Bank’s reasonable attorneys’ fees and expenses
incurred in amending, enforcing or defending the Loan Documents (including fees
and expenses of appeal), incurred before, during and after an Insolvency
Proceeding, whether or not suit is brought.

“Borrower’s Books” means all of Borrower’s books and records including: ledgers;
records concerning Borrower’s assets or liabilities, the Collateral, business
operations or financial condition; and all computer programs, or tape files, and
the equipment, containing such information.

“Business Day” means any day that is not a Saturday, Sunday, or other day on
which banks in the State of California are authorized or required to close.

“Change in Control” shall mean a transaction in which any “person” or “group”
(within the meaning of Section 13(d) and 14(d)(2) of the Securities Exchange Act
of 1934) becomes the “beneficial owner” (as defined in Rule 13d-3 under the
Securities Exchange Act of 1934), directly or indirectly, of a sufficient number
of shares of all classes of stock then outstanding of Borrower ordinarily
entitled to vote in the election of directors, empowering such “person” or
“group” to elect a majority of the Board of Directors of Borrower, who did not
have such power before such transaction.

“Closing Date” means the date of this Agreement.

“Code” means the California Uniform Commercial Code, as amended from time to
time.

“Collateral” means the property described on Exhibit A attached hereto.

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“Contingent Obligation” means, as applied to any Person, any direct or indirect
liability, contingent or otherwise, of that Person with respect to (i) any
indebtedness, lease, dividend, letter of credit or other obligation of another;
(ii) any obligations with respect to undrawn letters of credit, corporate credit
cards, or merchant services issued or provided for the account of that Person;
and (iii) all obligations arising under any agreement or arrangement designed to
protect such Person against fluctuation in interest rates, currency exchange
rates or commodity prices; provided, however, that the term “Contingent
Obligation” shall not include endorsements for collection or deposit in the
ordinary course of business. The amount of any Contingent Obligation shall be
deemed to be an amount equal to the stated or determined amount of the primary
obligation in respect of which such Contingent Obligation is made or, if not
stated or determinable, the maximum reasonably anticipated liability in respect
thereof as determined by Bank in good faith; provided, however, that such amount
shall not in any event exceed the maximum amount of the obligations under the
guarantee or other support arrangement.

“Copyrights” means any and all copyright rights, copyright applications,
copyright registrations and like protections in each work or authorship and
derivative work thereof.

“Credit Card Services” are any products, credit services and/or financial
accommodations relating to credit cards and/or other cash management services
previously, now, or hereafter provided to Borrower or any of its Subsidiaries by
Bank or any Bank Affiliate.

“Credit Card Services Agreements” are any agreements, instruments or documents
relating to Credit Card Services.

“Credit Extension” means the Term Loan, or any other extension of credit by Bank
for the benefit of Borrower hereunder.

“Daily Balance” means the amount of the Obligations owed at the end of a given
day.

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

“EBITDA” means, for any period of determination, (a) Net Income, plus
(b) Interest Expense, plus (c) to the extent deducted in the calculation of Net
Income, depreciation expense, amortization expense and non-cash stock-based
compensation, plus (d) income tax expense, plus (e) additional one-time addbacks
approved by Bank in writing in its sole discretion, less (f) capital
expenditures in excess of projected annual capital expenditures.

“Equipment” means all present and future machinery, equipment, tenant
improvements, furniture, fixtures, vehicles, tools, parts and attachments in
which Borrower has any interest.

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended,
and the regulations thereunder.

“Event of Default” has the meaning assigned in Article 8.

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

“GAAP” means generally accepted accounting principles as in effect from time to
time.

“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.

“Indebtedness” means (a) all indebtedness for borrowed money or the deferred
purchase price of property or services, including without limitation
reimbursement and other obligations with respect to surety bonds and letters of
credit, (b) all obligations evidenced by notes, bonds, debentures or similar
instruments, (c) all capital lease obligations (excluding obligations relating
to ASC 842) and (d) all Contingent Obligations.

 

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“Insolvency Proceeding” means any proceeding commenced by or against any person
or entity under any provision of the United States Bankruptcy Code, as amended,
or under any other bankruptcy or insolvency law, including assignments for the
benefit of creditors, formal or informal moratoria, compositions, extension
generally with its creditors, or proceedings seeking reorganization,
arrangement, or other relief.

“Intellectual Property Collateral” means all of Borrower’s right, title, and
interest in and to the following: Copyrights, Trademarks and Patents; all trade
secrets, all design rights, claims for damages by way of past, present and
future infringement of any of the rights included above, all licenses or other
rights to use any of the Copyrights, Patents or Trademarks, and all license fees
and royalties arising from such use to the extent permitted by such license or
rights; all amendments, renewals and extensions of any of the Copyrights,
Trademarks or Patents; and all proceeds and products of the foregoing, including
without limitation all payments under insurance or any indemnity or warranty
payable in respect of any of the foregoing.

“Interest Expense” means for any fiscal period, interest expense (whether cash
or non-cash) determined in accordance with GAAP for the relevant period ending
on such date, including, in any event, interest expense with respect to any
Credit Extension and other Indebtedness of Borrower and its Subsidiaries,
including, without limitation or duplication, all commissions, discounts, or
related amortization and other fees and charges with respect to letters of
credit and bankers’ acceptance financing and the net costs associated with
interest rate swap, cap, and similar arrangements, and the interest portion of
any deferred payment obligation (including leases of all types).

“Inventory” means all inventory in which Borrower has or acquires any interest,
including work in process and finished products intended for sale or lease or to
be furnished under a contract of service, of every kind and description now or
at any time hereafter owned by or in the custody or possession, actual or
constructive, of Borrower, including such inventory as is temporarily out of its
custody or possession or in transit and including any returns upon any accounts
or other proceeds, including insurance proceeds, resulting from the sale or
disposition of any of the foregoing and any documents of title representing any
of the above, and Borrower’s Books relating to any of the foregoing.

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

“Leverage Ratio” means, at any time of determination, the ratio of (a) the
Obligations to (b) Borrower’s trailing twelve-month EBITDA.

“LIBOR Rate” means, as of any date of determination, the greater of (a) the one
(1) month U.S. LIBOR rate reported in The Wall Street Journal as of such date or
(b) two percent (2.00%).

“Lien” means any mortgage, lien, deed of trust, charge, pledge, security
interest or other encumbrance.

“Loan Documents” means, collectively, this Agreement, any Credit Card Services
Agreements, any subordination agreements, any pledge or security agreements, any
notes or guaranties executed by Borrower or any other Person, and any other
agreement, instrument or document entered into in connection with this
Agreement, all as amended, restated, supplemented or otherwise modified or
extended from time to time.

“Material Adverse Effect” means a material adverse effect on (i) the business
operations, condition (financial or otherwise) or prospects of Borrower and its
Subsidiaries taken as a whole or (ii) the ability of Borrower to repay the
Obligations or otherwise perform its obligations under the Loan Documents or
(iii) the value or priority of Bank’s security interests in the Collateral.

“Negotiable Collateral” means all letters of credit of which Borrower is a
beneficiary, notes, drafts, instruments, securities, documents of title, and
chattel paper, and Borrower’s Books relating to any of the foregoing.

 

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“Net Income” means, as calculated on a consolidated basis for Borrower and its
Subsidiaries for any period as at any date of determination, the net profit (or
loss), after provision for taxes, of Borrower and its Subsidiaries for such
period taken as a single accounting period

“Obligations” means all debt, principal, interest, Bank Expenses and other
amounts owed to Bank by Borrower pursuant to this Agreement, any Credit Card
Services Agreement, or any other agreement, whether absolute or contingent, due
or to become due, now existing or hereafter arising, including any interest that
accrues after the commencement of an Insolvency Proceeding and including any
debt, liability, or obligation owing from Borrower to others that Bank may have
obtained by assignment or otherwise.

“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 Date” means the tenth (10th) calendar day of (a) the third month of
each calendar quarter, with respect to principal and (b) each month, with
respect to interest.

“Perfection Certificate” has the meaning assigned in Section 3.1.

“Periodic Payments” means all installments or similar recurring payments that
Borrower may now or hereafter become obligated to pay to Bank pursuant to the
terms and provisions of any instrument, or agreement now or hereafter in
existence between Borrower and Bank.

“Permitted Indebtedness” means:

(a) Indebtedness of Borrower in favor of Bank arising under this Agreement or
any other Loan Document;

(b) Indebtedness existing on the Closing Date and disclosed in the Schedule;

(c) Indebtedness secured by a lien described in clause (c) of the defined term
“Permitted Liens,” provided (i) such Indebtedness does not exceed the lesser of
the cost or fair market value of the equipment financed with such Indebtedness
and (ii) such Indebtedness does not exceed Seven Hundred Fifty Thousand Dollars
($750,000) in the aggregate at any given time (excluding Indebtedness permitted
under clause (e) below), which limit shall include any Indebtedness existing as
of the Closing Date;

(d) Subordinated Debt;

(e) Indebtedness incurred under Borrower’s unsecured American Express corporate
credit card program that does not exceed Five Hundred Thousand Dollars
($500,000) in the aggregate principal amount;

(f) Indebtedness owing by a Subsidiary to a Borrower that constitutes Permitted
Investments under clause (c) of such defined term;

(g) obligations arising out of interest rate, foreign currency, and commodity
hedging agreements entered into with financial institutions as permitted in
Section 6.7 in connection with bona fide hedging activities in the ordinary
course of business and not for speculative purposes;

(h) endorsement of items for deposit or collection of commercial paper received
in the ordinary course of business;

(i) Indebtedness owed to any Person providing workers’ compensation, health,
disability or other employee benefits (including contractual and statutory
benefits) or property, casualty, liability or credit insurance, pursuant to
reimbursement or indemnification obligations to such Person, in each case
incurred in the ordinary course of business;

 

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(j) Indebtedness in respect of bids, trade contracts (other than for debt for
borrowed money), leases (other than capital lease obligations), statutory
obligations, surety, stay, customs and appeal bonds, performance, performance
and completion and return of money bonds, government contracts and similar
obligations, in each case, provided in the ordinary course of business;

(k) Indebtedness in respect of netting services, overdraft protection and
similar arrangements, in each case, in connection with cash management and
deposit accounts permitted in Section 6.7; and

(l) Indebtedness representing reasonable and customary deferred compensation to
directors, officers, and employees incurred in the ordinary course of business.

“Permitted Investment” means:

(a) Investments existing on the Closing Date disclosed in the Schedule;

(b) (i) marketable direct obligations issued or unconditionally guaranteed by
the United States of America or any agency or any State thereof maturing within
one (1) year from the date of acquisition thereof, (ii) commercial paper
maturing no more than one (1) year from the date of creation thereof and
currently having rating of at least A-2 or P-2 from either Standard & Poor’s
Corporation or Moody’s Investors Service, (iii) certificates of deposit maturing
no more than one (1) year from the date of investment therein issued by Bank and
(iv) Bank’s money market accounts;

(c) Any intercompany services agreement or Investments of Borrower in any
Subsidiary in an aggregate amount not to exceed Five Hundred Thousand Dollars
($500,000) outstanding at any time;

(d) Repurchases of common stock of Borrower under the terms of customary
board-approved stock repurchase agreements to the extent permitted under
Section 7.6;

(e) Investments not to exceed Two Hundred Fifty Thousand Dollars ($250,000) in
the aggregate in any fiscal year consisting of travel advances and employee
relocation loans and other employee loans and advances in the ordinary course of
business;

(f) Deposit and securities accounts maintained with banks and other financial
institutions disclosed in the Schedule or to the extent expressly permitted
under Section 6.7; and

(g) Investments consisting of notes receivable of, or prepaid royalties and
other credit extensions, to customers and suppliers who are not Affiliates, in
the ordinary course of business, provided that this subparagraph (g) shall not
apply to Investments of Borrower in any Subsidiary.

“Permitted Liens” means the following:

(a) Any Liens existing on the Closing Date and disclosed in the Schedule or
arising under this Agreement or the other Loan Documents;

(b) Liens for taxes, fees, assessments or other governmental charges or levies,
either not delinquent or being contested in good faith by appropriate
proceedings, provided the same have no priority over any of Bank’s security
interests;

(c) Liens (i) upon or in any equipment which was not financed by Bank acquired
or held by Borrower or any of its Subsidiaries to secure the purchase price of
such equipment or indebtedness incurred solely for the purpose of financing the
acquisition of such equipment, or (ii) existing on such equipment at the time of
its acquisition, provided that the Lien is confined solely to the property so
acquired and improvements thereon, and the proceeds of such equipment;

 

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(d) Liens incurred in connection with the extension, renewal or refinancing of
the indebtedness secured by Liens of the type described in clauses (a) through
(c) above, provided that any extension, renewal or replacement Lien shall be
limited to the property encumbered by the existing Lien and the principal amount
of the indebtedness being extended, renewed or refinanced does not increase;

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

(f) Liens consisting of non-exclusive licenses for the use of intellectual
property including Patents, Trademarks or Copyrights of Borrower or its
Subsidiaries in the ordinary course of business; and

(g) Liens arising from judgments, decrees or attachments in circumstances not
constituting an Event of Default under Sections 8.4 or 8.7.

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

“Responsible Officer” means each of the Chief Executive Officer, the Chief
Operating Officer, the Chief Financial Officer and the Controller of Borrower.

“Schedule” means the schedule of exceptions attached hereto and approved by
Bank, if any.

“Subordinated Debt” means any debt incurred by Borrower that is subordinated to
the debt owing by Borrower to Bank on terms acceptable to Bank (and identified
as being such by Borrower and Bank).

“Subsidiary” means any corporation, company or partnership in which (i) any
general partnership interest or (ii) more than fifty percent (50%) of the stock
or other units of ownership which by the terms thereof has the ordinary voting
power to elect the Board of Directors, managers or trustees of the entity, at
the time as of which any determination is being made, is owned by Borrower,
either directly or through an Affiliate.

“Tangible Net Worth” means at any date as of which the amount thereof shall be
determined, the sum of the capital stock and additional paid-in capital plus
retained earnings (or minus accumulated deficit) of Borrower and its
Subsidiaries minus intangible assets, plus Subordinated Debt, on a consolidated
basis determined in accordance with GAAP.

“Term Loan Amount” means Twenty-Five Million Dollars ($25,000,000).

“Term Loan Maturity Date” means December 10, 2023.

“Total Liabilities” means at any date as of which the amount thereof shall be
determined, all obligations that should, in accordance with GAAP be classified
as liabilities on the consolidated balance sheet of Borrower, including in any
event all Indebtedness.

“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.

1.2    Accounting Terms. All accounting terms not specifically defined herein
shall be construed in accordance with GAAP and all calculations made hereunder
shall be made in accordance with GAAP. When used herein, the terms “financial
statements” shall include the notes and schedules thereto.

 

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  2.

LOAN AND TERMS OF PAYMENT.

2.1    Credit Extensions.

Borrower promises to pay to the order of Bank, in lawful money of the United
States of America, the aggregate unpaid principal amount of all Credit
Extensions made by Bank to Borrower hereunder. Borrower shall also pay interest
on the unpaid principal amount of such Credit Extensions at rates in accordance
with the terms hereof.

2.2    Term Loan.

(a) Availability. Subject to and upon the terms and conditions of this
Agreement, Bank shall make one (1) term loan (the “Term Loan”) to Borrower on or
about the Closing Date in an amount equal to the Term Loan Amount.

(b) Repayment. Commencing on the first Payment Date occurring after the Closing
Date, and continuing on each Payment Date thereafter, Borrower shall make
consecutive quarterly payments of principal, and monthly payments of applicable
interest, in arrears, as calculated by Bank (which calculations shall be deemed
correct absent manifest error) based upon the following schedule:

 

YEAR

  

PAYMENT DATE

  

PRINCIPAL PAYMENT AMOUNT

1    March 10, 2019    $312,500    June 10, 2019    $312,500    September 10,
2019    $312,500    December 10, 2019    $312,500 2    March 10, 2020   
$312,500    June 10, 2020    $312,500    September 10, 2020    $312,500   
December 10, 2020    $312,500 3    March 10, 2021    $468,750    June 10, 2021
   $468,750    September 10, 2021    $468,750    December 10, 2021    $468,750 4
   March 10, 2022    $625,000    June 10, 2022    $625,000    September 10, 2022
   $625,000    December 10, 2022    $625,000 5    March 10, 2023    $625,000   
June 10, 2023    $625,000    September 10, 2023    $625,000    Term Loan
Maturity Date    All remaining unpaid principal

All unpaid principal and accrued and unpaid interest with respect to the Term
Loan is due and payable in full on the Term Loan Maturity Date. The Term Loan
may only be prepaid in accordance with Sections 2.2(c) and 2.2(d).

(c) Mandatory Prepayments. If the Term Loan is accelerated following the
occurrence of an Event of Default, Borrower shall immediately pay to Bank an
amount equal to the sum of: (i) the outstanding principal of the Term Loan plus
accrued and unpaid interest thereon through the prepayment date, plus (ii) all
other Obligations that are due and payable, including Bank Expenses and interest
at the Default Rate with respect to any past due amounts.

(d) Permitted Prepayment of Term Loan. Borrower shall have the option to prepay
the Term Loan in full provided Borrower (i) provides written notice to Bank of
its election to prepay the Term Loan at least ten (10) days prior to such
prepayment, and (ii) pays to Bank on the date of such prepayment an

 

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amount equal to the sum of (A) the outstanding principal of the Term Loan, plus
accrued and unpaid interest thereon through the prepayment date, plus (B) all
other Obligations that are due and payable, including Bank Expenses and interest
at the Default Rate with respect to any past due amounts.

2.3    Interest Rates, Payments, and Calculations.

(a) Interest Rate. Except as set forth in Section 2.3(b), the Term Loan shall
bear interest, on the outstanding Daily Balance thereof, at a floating per annum
rate equal to one and three-eighths percent (1.375%) above the LIBOR Rate.

(b) Late Fee; Default Rate. If any payment is not made within ten (10) days
after the date such payment is due, Borrower shall pay Bank a late fee equal to
the lesser of (i) five percent (5%) of the amount of such unpaid amount or
(ii) the maximum amount permitted to be charged under applicable law, not in any
case to be less than Twenty-Five Dollars ($25). All Obligations shall bear
interest, from and after the occurrence and during the continuance of an Event
of Default, at a rate (the “Default Rate”) equal to five (5) percentage points
above the interest rate applicable immediately prior to the occurrence of the
Event of Default.

(c) Payments. Interest hereunder shall be due and payable in accordance with
Section 2.2(b) hereof. Bank shall, at its option, charge such interest, all Bank
Expenses, and all Periodic Payments against any of Borrower’s deposit accounts.
Any interest not paid when due shall be compounded by becoming a part of the
Obligations, and such interest shall thereafter accrue interest at the rate then
applicable hereunder. All payments shall be free and clear of any taxes,
withholdings, duties, impositions or other charges, to the end that Bank will
receive the entire amount of any Obligations payable hereunder, regardless of
source of payment. All payments may be auto-debited from Borrower’s account with
Bank.

(d) Computation. In the event the LIBOR Rate is changed from time to time
hereafter, the applicable rate of interest hereunder shall be increased or
decreased, effective monthly on the tenth (10th) day of each month, by an amount
equal to such change in the LIBOR Rate as in effect on the immediately preceding
Business Day. All interest chargeable under the Loan Documents shall be computed
on the basis of a three hundred sixty (360) day year for the actual number of
days elapsed.

2.4    Crediting Payments. Prior to the occurrence of an Event of Default, Bank
shall credit a wire transfer of funds, check or other item of payment to such
deposit account or Obligation as Borrower specifies. After the occurrence of an
Event of Default, the receipt by Bank of any wire transfer of funds, check, or
other item of payment shall be immediately applied to conditionally reduce
Obligations, but shall not be considered a payment on account unless such
payment is of immediately available federal funds or unless and until such check
or other item of payment is honored when presented for payment. Notwithstanding
anything to the contrary contained herein, any wire transfer or payment received
by Bank after 12:00 noon Pacific time shall be deemed to have been received by
Bank as of the opening of business on the immediately following Business Day.
Whenever any payment to Bank under the Loan Documents would otherwise be due
(except by reason of acceleration) on a date that is not a Business Day, such
payment shall instead be due on the next Business Day, and additional fees or
interest, as the case may be, shall accrue and be payable for the period of such
extension.

2.5    Fees. Borrower shall pay to Bank the following:

(a) Facility Fee. On the Closing Date, a Facility Fee equal to Twenty-Five
Thousand Dollars ($25,000), which shall be nonrefundable; and

(b) Bank Expenses. On the Closing Date, all Bank Expenses incurred through the
Closing Date, including reasonable attorneys’ fees and expenses and, after the
Closing Date, all Bank Expenses, including reasonable attorneys’ fees and
expenses, as and when they are incurred by Bank.

2.6    Term. This Agreement shall become effective on the Closing Date and,
subject to Section 13.7, shall continue in full force and effect for so long as
any Obligations remain outstanding or Bank has any obligation to make Credit
Extensions under this Agreement. Notwithstanding the foregoing, Bank shall have
the

 

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right to terminate its obligation to make Credit Extensions under this Agreement
immediately and without notice upon the occurrence and during the continuance of
an Event of Default. Notwithstanding termination, Bank’s Lien on the Collateral
shall remain in effect for so long as any Obligations are outstanding.

 

  3.

CONDITIONS OF LOANS.

3.1    Conditions Precedent to Initial Credit Extension. The obligation of Bank
to make the initial Credit Extension is subject to the condition precedent that
Bank shall have received, in form and substance satisfactory to Bank, the
following:

(a) this Agreement;

(b) a certificate of the Secretary of Borrower with respect to incumbency and
resolutions authorizing the execution and delivery of this Agreement;

(c) UCC National Form Financing Statement;

(d) a completed perfection certificate of Borrower (the “Perfection
Certificate”);

(e) an intellectual property security agreement;

(f) good standing certificate from the Borrower’s state of incorporation;

(g) certificate of insurance;

(h) payment of the fees and Bank Expenses then due specified in Section 2.5
hereof;

(i) current financial statements of Borrower;

(j) a duly executed legal opinion of counsel to Borrower dated as of the Closing
Date; and

(k) such other documents, and completion of such other matters, as Bank may
reasonably deem necessary or appropriate.

3.2    Conditions Precedent to all Credit Extensions. The obligation of Bank to
make each Credit Extension, including the initial Credit Extension, is further
subject to the following condition: the representations and warranties contained
in Section 5 shall be true and correct in all material respects on and as of the
effective date of the Credit Extension as though made at and as of each such
date, and no Event of Default shall have occurred and be continuing, or would
exist after giving effect to such Credit Extension. The making of each Credit
Extension shall be deemed to be a representation and warranty by Borrower on the
date of such Credit Extension as to the accuracy of the facts referred to in
this Section 3.2.

3.3    Post-Closing Deliverables. Borrower agrees to use its best efforts to
obtain and deliver to Bank, within thirty (30) days following the Closing Date,
a landlord agreement in form and substance reasonably satisfactory to Bank with
respect to each of Borrower’s leased locations in the United States.

 

  4.

CREATION OF SECURITY INTEREST.

4.1    Grant of Security Interest. Borrower grants and pledges to Bank a
continuing security interest in all presently existing and hereafter acquired or
arising Collateral in order to secure prompt repayment of any and all
Obligations and in order to secure prompt performance by Borrower of each of its
covenants and duties under the Loan Documents. Except as set forth in the
Schedule, such security interest constitutes a valid, first priority security
interest in the presently existing Collateral, and will constitute a valid,
first priority security interest in Collateral acquired after the date hereof.
Notwithstanding the foregoing, (i) the security interest granted herein

 

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shall not apply to the stock of any Foreign Subsidiary to the extent the pledge
of such capital stock of such Subsidiary as Collateral would, in the reasonable
judgment of the Borrower, result in a material adverse tax consequence to the
Borrower and (ii) no Foreign Subsidiary shall be required to guaranty the
Obligations if the guaranteeing by such Subsidiary of the Obligations would, in
the reasonable judgment of the Borrower, result in a material adverse tax
consequence to the Borrower.

4.2    Delivery of Additional Documentation Required. Borrower shall from time
to time execute and deliver to Bank, at the request of Bank, all Negotiable
Collateral, all financing statements and other documents that Bank may
reasonably request, in form satisfactory to Bank, to perfect and continue the
perfection of Bank’s security interests in the Collateral and in order to fully
consummate all of the transactions contemplated under the Loan Documents.
Borrower from time to time may deposit with Bank specific time deposit accounts
to secure specific Obligations. Borrower authorizes Bank to hold such balances
in pledge and to decline to honor any drafts thereon or any request by Borrower
or any other Person to pay or otherwise transfer any part of such balances for
so long as the Obligations are outstanding.

4.3    Right to Inspect. Bank (through any of its officers, employees, or
agents) shall have the right, upon reasonable prior notice, from time to time
during Borrower’s usual business hours but no more than once a year (unless an
Event of Default has occurred and is continuing), to inspect Borrower’s Books
and to make copies thereof and to check, test, and appraise the Collateral in
order to verify Borrower’s financial condition or the amount, condition of, or
any other matter relating to, the Collateral.

 

  5.

REPRESENTATIONS AND WARRANTIES.

Borrower represents and warrants as follows:

5.1    Due Organization and Qualification. Borrower and each Subsidiary is a
corporation duly existing and in good standing under the laws of its
jurisdiction of incorporation and qualified and licensed to do business in any
jurisdiction in which the conduct of its business or its ownership of property
requires that it be so qualified.

5.2    Due Authorization; No Conflict. The execution, delivery, and performance
of the Loan Documents are within Borrower’s powers, have been duly authorized,
and are not in conflict with nor constitute a breach of any provision contained
in Borrower’s Certificate of Incorporation or Bylaws, nor will they constitute
an event of default under any material agreement to which Borrower is a party or
by which Borrower is bound, nor will they contravene, conflict with or violate
any applicable order, writ, judgment, injunction, decree, determination or award
of any Governmental Authority by which Borrower or any of Borrower’s property or
assets may be bound or affected. Borrower is not in default under any agreement
to which it is a party or by which it is bound which default could reasonably be
expected to have a Material Adverse Effect.

5.3    No Prior Encumbrances. Borrower has good and marketable title to its
property, free and clear of Liens, except for Permitted Liens.

5.4    Bona Fide Accounts. The Accounts are bona fide existing obligations. The
property and services giving rise to such Accounts has been delivered or
rendered to the account debtor or to the account debtor’s agent for immediate
and unconditional acceptance by the account debtor. Borrower has not received
notice of any actual or imminent Insolvency Proceeding of any account debtor.

5.5    Merchantable Inventory. To the extent Borrower has Inventory, all such
Inventory is in all material respects of good and marketable quality, free from
all material defects, except for Inventory for which adequate reserves have been
made.

5.6    Intellectual Property Collateral. Borrower is the sole owner of the
Intellectual Property Collateral, except for non-exclusive licenses granted by
Borrower to its customers in the ordinary course of business. Each of the
Patents is valid and enforceable, and no part of the Intellectual Property
Collateral has been judged invalid or unenforceable, in whole or in part, and no
claim has been made that any part of the Intellectual

 

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Property Collateral violates the rights of any third party. Except as set forth
in the Schedule, Borrower’s rights as a licensee of intellectual property do not
give rise to more than five percent (5%) of its gross revenue in any given
month, including without limitation revenue derived from the sale, licensing,
rendering or disposition of any product or service. Except as set forth in the
Schedule, Borrower is not a party to, or bound by, any agreement (i) that
restricts the grant by Borrower of a security interest in Borrower’s rights
under such agreement or any other property or (ii) for which a default under or
termination of could interfere with Bank’s right to sell any Collateral.
Borrower shall provide written notice to Bank within ten (10) days of Borrower
or any of its Subsidiaries entering into or becoming bound by any material
license or agreement with respect to which Borrower or any Subsidiary is the
licensee (other than over-the-counter software that is commercially available to
the public). Except as disclosed on the Schedule, Borrower is not a party to,
nor is bound by, any inbound license or other agreement, the failure, breach, or
termination of which could reasonably be expected to cause a Material Adverse
Effect, or that prohibits or otherwise restricts Borrower from granting a
security interest in Borrower’s interest in such license or agreement or any
other property.

5.7    Name; Location of Chief Executive Office. Except as disclosed in the
Schedule, Borrower has not done business under any name other than that
specified on the signature page hereof. The chief executive office of Borrower
is located at the address indicated in Section 10 hereof. All Borrower’s
Inventory (if any) and Equipment is located only at the location set forth in
Section 10 hereof or as disclosed in writing to Bank.

5.8    Litigation. Except as set forth in the Schedule, there are no actions or
proceedings pending by or against Borrower or any Subsidiary before any court or
administrative agency in which an adverse decision could have a Material Adverse
Effect, or a material adverse effect on Borrower’s interest or Bank’s security
interest in the Collateral.

5.9    No Material Adverse Change in Financial Statements. All consolidated and
consolidating financial statements related to Borrower and any Subsidiary that
Bank has received from Borrower fairly present in all material respects
Borrower’s financial condition as of the date thereof and Borrower’s
consolidated and consolidating results of operations for the period then ended.
There has not been a material adverse change in the consolidated or the
consolidating financial condition of Borrower since the date of the most recent
of such financial statements submitted to Bank.

5.10    Solvency, Payment of Debts. Borrower is solvent and able to pay its
debts (including trade debts) as they mature.

5.11    Regulatory Compliance. Borrower and each Subsidiary have met the minimum
funding requirements of ERISA with respect to any employee benefit plans subject
to ERISA, and no event has occurred resulting from Borrower’s failure to comply
with ERISA that could result in Borrower’s incurring any material liability.
Borrower is not an “investment company” or a company “controlled” by an
“investment company” within the meaning of the Investment Company Act of 1940.
Borrower is not engaged principally, or as one of the important activities, in
the business of extending credit for the purpose of purchasing or carrying
margin stock (within the meaning of Regulations T and U of the Board of
Governors of the Federal Reserve System). Borrower has complied with all the
provisions of the Federal Fair Labor Standards Act. Borrower has not violated
any statutes, laws, ordinances or rules applicable to it, violation of which
could have a Material Adverse Effect.

5.12    Environmental Condition. Except as disclosed in the Schedule, none of
Borrower’s or any Subsidiary’s properties or assets has ever been used by
Borrower or any Subsidiary or, to the best of Borrower’s knowledge, by previous
owners or operators, in the disposal of, or to produce, store, handle, treat,
release, or transport, any hazardous waste or hazardous substance other than in
accordance with applicable law; to the best of Borrower’s knowledge, none of
Borrower’s properties or assets has ever been designated or identified in any
manner pursuant to any environmental protection statute as a hazardous waste or
hazardous substance disposal site, or a candidate for closure pursuant to any
environmental protection statute; no lien arising under any environmental
protection statute has attached to any revenues or to any real or personal
property owned by Borrower or any Subsidiary; and neither Borrower nor any
Subsidiary has received a summons, citation, notice, or directive from the
Environmental Protection Agency or any other federal, state or other
governmental agency concerning any action or omission by Borrower or any
Subsidiary resulting in the releasing, or otherwise disposing of hazardous waste
or hazardous substances into the environment.

 

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5.13    Taxes. Borrower and each Subsidiary have filed or caused to be filed all
tax returns required to be filed, and have paid, or have made adequate provision
for the payment of, all taxes reflected therein.

5.14    Subsidiaries. Borrower does not own any stock, partnership interest or
other equity securities of any Person, except for Permitted Investments.

5.15    Government Consents. Borrower and each Subsidiary have obtained all
material consents, approvals and authorizations of, made all declarations or
filings with, and given all notices to, all Governmental Authorities that are
necessary for the continued operation of Borrower’s business as currently
conducted.

5.16    Accounts. None of Borrower’s nor any Subsidiary’s property is maintained
or invested with a Person other than Bank except as otherwise provided in this
Agreement or agreed to by the Parties in writing.

5.17    Full Disclosure. No representation, warranty or other statement made by
Borrower in any certificate or written statement furnished to Bank contains any
untrue statement of a material fact or omits to state a material fact necessary
in order to make the statements contained in such certificates or statements not
misleading.

 

  6.

AFFIRMATIVE COVENANTS.

Borrower shall do all of the following:

6.1    Good Standing. Borrower shall maintain its and each of its Subsidiaries’
corporate existence and good standing in its jurisdiction of incorporation and
maintain qualification in each jurisdiction in which it is required under
applicable law in which the failure to so qualify could reasonably be expected
to have a Material Adverse Effect. Borrower shall maintain, and shall cause each
of its Subsidiaries to maintain, in force all licenses, approvals and
agreements, the loss of which could have a Material Adverse Effect.

6.2    Government Compliance. Borrower shall meet, and shall cause each
Subsidiary to meet, the minimum funding requirements of ERISA with respect to
any employee benefit plans subject to ERISA. Borrower shall comply, and shall
cause each Subsidiary to comply, with all statutes, laws, ordinances and
government rules and regulations to which it is subject, noncompliance with
which could have a Material Adverse Effect.

6.3    Financial Statements, Reports, Certificates. Borrower shall deliver the
following to Bank: (a) as soon as available, but in any event within forty-five
(45) days after the end of each calendar quarter, a company prepared
consolidated balance sheet, income statement, and cash flow statement covering
Borrower’s consolidated operations during such period, prepared in accordance
with GAAP, consistently applied, in a form acceptable to Bank and certified by a
Responsible Officer; (b) as soon as available, but in any event within ninety
(90) days after the end of Borrower’s fiscal year, audited consolidated
financial statements of Borrower prepared in accordance with GAAP, consistently
applied, together with an unqualified opinion on such financial statements of an
independent registered public accounting firm reasonably acceptable to Bank;
(c) copies of all statements, reports and notices sent or made available
generally by Borrower to its security holders or to any holders of Subordinated
Debt and, if applicable, all reports on Forms 10-K and 10-Q filed with the
Securities and Exchange Commission; (d) promptly upon receipt of notice thereof,
a report of any legal actions pending or threatened against Borrower or any
Subsidiary that could result in damages or costs to Borrower or any Subsidiary
of Five Hundred Thousand Dollars ($500,000) or more; (e) within thirty (30) days
after earlier of the end of Borrower’s fiscal year or approval by Borrower’s
Board of Directors, a board-approved annual operating budget; and (f) such
budgets, sales projections, operating plans or other financial information as
Bank may reasonably request from time to time.

Within forty-five (45) days after the last day of each calendar quarter,
Borrower shall deliver to Bank aged listings of accounts receivable and accounts
payable.

 

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Borrower shall deliver to Bank with the quarterly financial statements a
Compliance Certificate signed by a Responsible Officer in substantially the form
of Exhibit B hereto.

Bank shall have a right from time to time hereafter to audit Borrower’s Accounts
and appraise Collateral at Borrower’s expense, provided that such audits will be
conducted no more often than every twelve (12) months unless an Event of Default
has occurred and is continuing.

6.4    Inventory; Returns. Borrower shall keep all Inventory (if any) in good
and marketable condition, free from all material defects except for Inventory
for which adequate reserves have been made. Returns and allowances, if any, as
between Borrower and its account debtors shall be on the same basis and in
accordance with the usual customary practices of Borrower, as they exist at the
time of the execution and delivery of this Agreement. Borrower shall promptly
notify Bank of all returns and recoveries and of all disputes and claims, where
the return, recovery, dispute or claim involves more than Five Hundred Thousand
Dollars ($500,000).

6.5    Taxes. Borrower shall make, and shall cause each Subsidiary to make, due
and timely payment or deposit of all material federal, state, and local taxes,
assessments, or contributions required of it by law, and will execute and
deliver to Bank, on demand, appropriate certificates attesting to the payment or
deposit thereof; and Borrower will make, and will cause each Subsidiary to make,
timely payment or deposit of all material tax payments and withholding taxes
required of it by applicable laws, including, but not limited to, those laws
concerning F.I.C.A., F.U.T.A., state disability, and local, state, and federal
income taxes, and will, upon request, furnish Bank with proof satisfactory to
Bank indicating that Borrower or a Subsidiary has made such payments or
deposits; provided that Borrower or a Subsidiary need not make any payment if
the amount or validity of such payment is contested in good faith by appropriate
proceedings and is reserved against (to the extent required by GAAP) by
Borrower.

6.6    Insurance.

(a) Borrower, at its expense, shall keep the Collateral insured against loss or
damage by fire, theft, explosion, sprinklers, and all other hazards and risks,
and in such amounts, as ordinarily insured against by other owners in similar
businesses conducted in the locations where Borrower’s business is conducted on
the date hereof. Borrower shall also maintain insurance relating to Borrower’s
business, ownership and use of the Collateral in amounts and of a type that are
customary to businesses similar to Borrower’s.

(b) All such policies of insurance shall be in such form, with such financially
sound and reputable companies, and in such amounts as are usually insured
against in the same general area by companies engaged in the same or a similar
business. All such policies of property insurance shall contain a lender’s loss
payable endorsement, in a form reasonably satisfactory to Bank, showing Bank as
a lender loss payee thereof, and all liability insurance policies shall show
Bank as an additional insured and shall specify that the insurer must give at
least thirty (30) days’ notice to Bank before canceling its policy for any
reason. Upon Bank’s request, Borrower shall deliver to Bank certified copies of
such policies of insurance and evidence of the payments of all premiums
therefor. All proceeds payable under any such policy shall, at the option of
Bank, be payable to Bank to be applied on account of the Obligations.
Notwithstanding the foregoing, (a) so long as no Event of Default has occurred
and is continuing, Borrower shall have the option of applying the proceeds of
any casualty policy for all covered losses, toward the replacement or repair of
destroyed or damaged property; provided that any such replaced or repaired
property (i) shall be of equal or like value as the replaced or repaired
Collateral and (ii) shall be deemed Collateral in which Bank has been granted a
first priority security interest, and (b) after the occurrence and during the
continuance of an Event of Default, all proceeds payable under such casualty
policy shall, at the option of Bank, be payable to Bank on account of the
Obligations

6.7    Accounts.

(a) Borrower shall (i) maintain and shall cause each of its Subsidiaries to
maintain all depository, operating, and investment accounts with Bank and
(ii) endeavor to utilize and shall cause each of its Subsidiaries to endeavor to
utilize Bank’s International Banking Division for any international banking
services required by Borrower, including, but not limited to, foreign currency
wires, hedges, swaps, foreign exchange contracts, and letters of credit;
provided that to the extent that Bank is unable to provide domestic treasury
management or

 

13

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depository services needed by Borrower or is required to use investment accounts
with third parties for purposes of, among other things, stock repurchase
programs, then Borrower shall be permitted to maintain such treasury management
, depository services and/or investment accounts outside of Bank; provided
further that any such accounts shall be made subject to blocked account control
agreements, where applicable, in favor of Bank, in form and substance reasonably
satisfactory to Bank, within forty-five (45) days following the Closing Date.
Notwithstanding the foregoing, Borrower shall be permitted to maintain deposit
accounts with financial institutions outside the United States so long as the
aggregate balances held in such accounts does not exceed One Million Five
Hundred Thousand Dollars ($1,500,000) at any time.

(b) In addition to and without limiting the restrictions in (a), Borrower shall
provide Bank five (5) days prior written notice before establishing any deposit,
operating or investment account at or with any bank or financial institution
other than Bank. For each such domestic account that Borrower at any time
maintains, Borrower shall cause the applicable bank or financial institution
(other than Bank) at or with which any such account is maintained to execute and
deliver a control agreement or other appropriate instrument with respect to such
account to perfect Bank’s Lien in such account in accordance with the terms
hereunder, and such control agreement may not be terminated without the prior
written consent of Bank.

6.8    Maximum Leverage Ratio. Borrower shall maintain a Leverage Ratio of not
more than 2.00 to 1.00, measured quarterly.

6.9    Intellectual Property Rights.

(a) Borrower shall promptly give Bank written notice of any applications or
registrations of intellectual property rights material to Borrower’s business
filed by Borrower with the United States Patent and Trademark Office, including
the date of such filing and the registration or application numbers, if any.
Borrower shall (i) give Bank not less than 30 days prior written notice of the
filing of any applications or registrations with the United States Copyright
Office, including the title of such intellectual property rights to be
registered, as such title will appear on such applications or registrations, and
the date such applications or registrations will be filed, and (ii) prior to the
filing of any such applications or registrations, shall execute such documents
as Bank may reasonably request for Bank to maintain its perfection in such
intellectual property rights to be registered by Borrower, and upon the request
of Bank, shall file such documents simultaneously with the filing of any such
applications or registrations. Upon filing any such applications or
registrations with the United States Copyright Office, Borrower shall promptly
provide Bank with (x) a copy of such applications or registrations, without the
exhibits, if any, thereto, (y) evidence of the filing of any documents requested
by Bank to be filed for Bank to maintain the perfection and priority of its
security interest in such intellectual property rights, and (z) the date of such
filing.

(b) Bank may audit Borrower’s Intellectual Property Collateral to confirm
compliance with this Section, provided such audit may not occur more often than
once per year, unless an Event of Default has occurred and is continuing. Bank
shall have the right, but not the obligation, to take, at Borrower’s sole
expense, any actions that Borrower is required under this Section to take but
which Borrower fails to take, after 15 days’ written notice to Borrower.
Borrower shall reimburse and indemnify Bank for all reasonable costs and
reasonable expenses incurred in the reasonable exercise of its rights under this
Section.

6.10    Creation/Acquisition of Subsidiaries. In the event any Borrower or any
Subsidiary of any Borrower creates or acquires any Subsidiary, Borrower or such
Subsidiary shall promptly notify Bank of such creation or acquisition, and
Borrower or such Subsidiary shall take all actions reasonably requested by Bank
to achieve any of the following with respect to such “New Subsidiary” (defined
as a Subsidiary formed after the date hereof during the term of this Agreement):
(i) if such New Subsidiary is a Domestic Subsidiary, to cause such New
Subsidiary to become either a co-Borrower hereunder or a secured guarantor with
respect to the Obligations; and (ii) to grant and pledge to Bank a perfected
security interest in all of the stock, units or other evidence of ownership held
by Borrower or its Subsidiaries of any such New Subsidiary; provided that in the
case of any Foreign Subsidiary, such pledge shall not be required to include any
stock, units or other evidence of ownership in excess of 65% of the
then-presently existing and thereafter arising issued and outstanding shares of
capital stock, units or other evidence of ownership which entitle the holder
thereof to vote for directors or any other matter.

 

14

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6.11    Further Assurances. At any time and from time to time Borrower shall
execute and deliver such further instruments and take such further action as may
reasonably be requested by Bank to effect the purposes of this Agreement.

 

  7.

NEGATIVE COVENANTS.

Borrower will not do any of the following:

7.1    Dispositions. Convey, sell, lease, transfer or otherwise dispose of
(collectively, a “Transfer”), or permit any of its Subsidiaries to Transfer, all
or any part of its business or property, other than: (i) Transfers of Inventory
in the ordinary course of business; (ii) Transfers of non-exclusive licenses and
similar arrangements for the use of the property of Borrower or its Subsidiaries
in the ordinary course of business; (iii) Transfers of worn-out or obsolete
Equipment which was not financed by Bank; or (iv) Transfers of any cash or any
other property to its Subsidiaries (inclusive of all Permitted Investments under
clause (c) of such defined term) so long as no Event of Default shall have
occurred and be continuing immediately before and after giving effect thereto,
to fund the ordinary course operating activities of such Subsidiary consistent
with past practice.

7.2    Change in Business, Change in Control or Executive Office. Engage in any
business, or permit any of its Subsidiaries to engage in any business, other
than the businesses currently engaged in by Borrower and any business
substantially similar or related thereto (or incidental thereto); or cease to
conduct business in the manner conducted by Borrower as of the Closing Date; or
suffer or permit a Change in Control unless all Obligations are paid in full out
of the proceeds of the initial closing of such action and such payment is listed
as a condition to the consummation of such action; or without thirty (30) days
prior written notification to Bank, relocate its chief executive office or state
of incorporation or change its legal name; or without Bank’s prior written
consent, change the date on which its fiscal year ends.

7.3    Mergers or Acquisitions. If Bank is requested to maintain its commitment
to the post- transaction entity, (i) Merge or consolidate, or permit any of its
Subsidiaries to merge or consolidate, with or into any other business
organization, (ii) acquire, or permit any of its Subsidiaries to acquire, all or
substantially all of the capital stock or property of another Person, in either
case except where (a) the consideration paid in connection with such
transactions (including assumption of liabilities) does not in the aggregate
exceed One Million Dollars ($1,000,000) during any fiscal year, (b) no Event of
Default has occurred, is continuing or would exist after giving effect to such
transactions, (c) such transactions do not result in a Change in Control, and
(d) Borrower is the surviving entity; provided however, (x) no such restriction
or written notice to the Bank will be required for any action restricted by this
Section 7.3 if all Obligations are paid in full out of the proceeds of the
initial closing of such action and such payment is listed as a condition to the
consummation of such action. Notwithstanding anything to the contrary contained
in this Section, any Subsidiary that is not a borrower hereunder may merge or
consolidate into any other Subsidiary that is not a borrower hereunder.

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

7.5    Encumbrances. Create, incur, assume or suffer to exist any Lien with
respect to any of its property (including without limitation, its Intellectual
Property Collateral), or assign or otherwise 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, or agree with any Person other than Bank not to
grant a security interest in, or otherwise encumber, any of its property
(including without limitation, its Intellectual Property Collateral), or permit
any Subsidiary to do so.

7.6    Distributions. Pay any dividends or make any other distribution or
payment on account of or in redemption, retirement or purchase of any capital
stock, or permit any of its Subsidiaries to do so, except that Borrower may
repurchase its common stock subject to any repurchase program authorized by its
Board of Directors as long as (i) an Event of Default does not exist prior to
such repurchase or would not exist after giving effect to such repurchase and
(ii) Borrower has total unrestricted cash at Bank of at least Ten Million
Dollars ($10,000,000) before and after giving effect to such repurchase.

 

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7.7    Investments. Directly or indirectly acquire or own, or make any
Investment in or to any Person, or permit any of its Subsidiaries so to do,
other than Permitted Investments; or maintain or invest any of its property with
a Person other than Bank or permit any of its Subsidiaries to do so unless such
Person has entered into an account control agreement with Bank in form and
substance satisfactory to Bank; or suffer or permit any Subsidiary to be a party
to, or be bound by, an agreement that restricts such Subsidiary from paying
dividends or otherwise distributing property to Borrower.

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.

7.9    Subordinated Debt. Make any payment in respect of any Subordinated Debt,
or permit any of its Subsidiaries to make any such payment, except in compliance
with the terms of such Subordinated Debt, or amend any provision contained in
any documentation relating to the Subordinated Debt without Bank’s prior written
consent.

7.10    Inventory and Equipment. Store the Inventory (if any) or the Equipment
with a bailee, warehouseman, or other third party unless the third party has
been notified of Bank’s security interest and Bank (a) has received an
acknowledgment from the third party that it is holding or will hold the
Inventory (if any) or Equipment for Bank’s benefit or (b) is in pledge
possession of the warehouse receipt, where negotiable, covering such Inventory
or Equipment. Store or maintain any Equipment or Inventory at a location other
than the location set forth in Section 10 of this Agreement or other locations
disclosed by Borrower to Bank in writing.

7.11    Compliance. Become an “investment company” or be controlled by an
“investment company,” within the meaning of the Investment Company Act of 1940,
or become principally engaged in, or undertake as one of its important
activities, the business of extending credit for the purpose of purchasing or
carrying margin stock, or use the proceeds of any Credit Extension for such
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 law or
regulation, which violation could have a Material Adverse Effect, or a material
adverse effect on the Collateral or the priority of Bank’s Lien on the
Collateral, or permit any of its Subsidiaries to do any of the foregoing.

7.12    Capital Expenditures. Make or contract to make, without Bank’s prior
written consent, capital expenditures, including leasehold improvements, in any
fiscal year in excess of the amount set forth in Borrower’s board-approved plan,
which plan must be reasonably acceptable to Bank.

 

  8.

EVENTS OF DEFAULT.

Any one or more of the following events shall constitute an Event of Default by
Borrower under this Agreement:

8.1    Payment Default. If Borrower fails to pay, when due, any of the
Obligations;

8.2    Covenant Default.

(a) If Borrower fails to perform any obligation under Article 6 or violates any
of the covenants contained in Article 7 of this Agreement; or

(b) If Borrower fails or neglects to perform or observe any other material term,
provision, condition, covenant contained in this Agreement, in any of the Loan
Documents, or in any other present or future agreement between Borrower and Bank
and as to any default under such other term, provision, condition or covenant
that can be cured, has failed to cure such default within ten days after
Borrower receives notice thereof or any officer of Borrower becomes aware
thereof; provided, however, that if the default cannot by its nature be cured
within the ten day period or cannot after diligent attempts by Borrower be cured
within such ten day period, and

 

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such default is likely to be cured within a reasonable time, then Borrower shall
have an additional reasonable period (which shall not in any case exceed 30
days) to attempt to cure such default, and within such reasonable time period
the failure to have cured such default shall not be deemed an Event of Default
but no Credit Extensions will be made.

8.3    Material Adverse Effect. If there occurs any circumstance or
circumstances that could have a Material Adverse Effect;

8.4    Attachment. If any portion of Borrower’s assets is attached, seized,
subjected to a writ or distress warrant, or is levied upon, or comes into the
possession of any trustee, receiver or person acting in a similar capacity and
such attachment, seizure, writ or distress warrant or levy has not been removed,
discharged or rescinded within ten (10) days, or if Borrower is enjoined,
restrained, or in any way prevented by court order from continuing to conduct
all or any material part of its business affairs, or if a judgment or other
claim becomes a lien or encumbrance upon any material portion of Borrower’s
assets, or if a notice of lien, levy, or assessment is filed of record with
respect to any of Borrower’s assets by the United States Government, or any
department, agency, or instrumentality thereof, or by any state, county,
municipal, or governmental agency, and the same is not paid within ten (10) days
after Borrower receives notice thereof, provided that none of the foregoing
shall constitute an Event of Default where such action or event is stayed or an
adequate bond has been posted pending a good faith contest by Borrower (provided
that no Credit Extensions will be required to be made during such cure period);

8.5    Insolvency. If Borrower becomes insolvent, or if an Insolvency Proceeding
is commenced by Borrower, or if an Insolvency Proceeding is commenced against
Borrower and is not dismissed or stayed within thirty (30) days (provided that
no Credit Extensions will be made prior to the dismissal of such Insolvency
Proceeding);

8.6    Other Agreements. If there is a default or other failure to perform in
any agreement to which Borrower is a party or by which it is bound resulting in
a right by a third party or parties, whether or not exercised, to accelerate the
maturity of any Indebtedness in an amount in excess of Five Hundred Thousand
Dollars ($500,000) or which could have a Material Adverse Effect;

8.7    Judgments. If a final, non-appealable judgment or judgments for the
payment of money in an amount, individually or in the aggregate, shall be
rendered against Borrower and more than Five Hundred Thousand Dollars ($500,000)
of such judgment or judgments shall not be covered by Borrower’s insurance, and
shall remain unsatisfied and unstayed for a period of twenty (20) days (provided
that no Credit Extensions will be made prior to the satisfaction or stay of such
judgment); or

8.8    Misrepresentations. If any material misrepresentation or material
misstatement exists now or hereafter in any warranty or representation set forth
herein or in any certificate delivered to Bank by any Responsible Officer
pursuant to this Agreement or to induce Bank to enter into this Agreement or any
other Loan Document.

 

  9.

BANK’S RIGHTS AND REMEDIES.

9.1    Rights and Remedies. Upon the occurrence and during the continuance of an
Event of Default, Bank may, at its election, without notice of its election and
without demand, do any one or more of the following, all of which are authorized
by Borrower:

(a) Declare all Obligations, whether evidenced by this Agreement, by any of the
other Loan Documents, or otherwise, immediately due and payable (provided that
upon the occurrence of an Event of Default described in Section 8.5, all
Obligations shall become immediately due and payable without any action by
Bank);

(b) Cease advancing money or extending credit to or for the benefit of Borrower
under this Agreement or under any other agreement between Borrower and Bank;

 

17

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(c) Settle or adjust disputes and claims directly with account debtors for
amounts, upon terms and in whatever order that Bank reasonably considers
advisable;

(d) Make such payments and do such acts as Bank considers necessary or
reasonable to protect its security interest in the Collateral. Borrower agrees
to assemble the Collateral if Bank so requires, and to make the Collateral
available to Bank as Bank may designate. Borrower authorizes Bank to enter the
premises where the Collateral is located, to take and maintain possession of the
Collateral, or any part of it, and to pay, purchase, contest, or compromise any
encumbrance, charge, or lien which in Bank’s determination appears to be prior
or superior to its security interest and to pay all expenses incurred in
connection therewith. With respect to any of Borrower’s owned premises, Borrower
hereby grants Bank a license to enter into possession of such premises and to
occupy the same, without charge, in order to exercise any of Bank’s rights or
remedies provided herein, at law, in equity, or otherwise;

(e) Set off and apply to the Obligations any and all (i) balances and deposits
of Borrower held by Bank, or (ii) indebtedness at any time owing to or for the
credit or the account of Borrower held by Bank;

(f) Ship, reclaim, recover, store, finish, maintain, repair, prepare for sale,
advertise for sale, and sell (in the manner provided for herein) the Collateral.
Bank is hereby granted a license or other right, solely pursuant to the
provisions of this Section 9.1, to use, without charge, Borrower’s labels,
patents, copyrights, rights of use of any name, trade secrets, trade names,
trademarks, service marks, and advertising matter, or any property of a similar
nature, 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 9.1, Borrower’s rights under all
licenses and all franchise agreements shall inure to Bank’s benefit;

(g) Dispose of the Collateral by way of one or more contracts or transactions,
for cash or on terms, in such manner and at such places (including Borrower’s
premises) as Bank determines is commercially reasonable, and apply any proceeds
to the Obligations in whatever manner or order Bank deems appropriate;

(h) Bank may credit bid and purchase at any public sale; and

(i) Any deficiency that exists after disposition of the Collateral as provided
above will be paid immediately by Borrower.

9.2    Power of Attorney. Effective only upon the occurrence and during the
continuance of an Event of Default, Borrower hereby irrevocably appoints Bank
(and any of Bank’s designated officers, or employees) as Borrower’s true and
lawful attorney to: (a) send requests for verification of Accounts or notify
account debtors of Bank’s security interest in the Accounts; (b) endorse
Borrower’s name on any checks or other forms of payment or security that may
come into Bank’s possession; (c) sign Borrower’s name on any invoice or bill of
lading relating to any Account, drafts against account debtors, schedules and
assignments of Accounts, verifications of Accounts, and notices to account
debtors; (d) dispose of any Collateral; (e) make, settle, and adjust all claims
under and decisions with respect to Borrower’s policies of insurance; (f) settle
and adjust disputes and claims respecting the accounts directly with account
debtors, for amounts and upon terms which Bank determines to be reasonable; and
(g) to file, in its sole discretion, one or more financing or continuation
statements and amendments thereto, relative to any of the Collateral. The
appointment of Bank as Borrower’s attorney in fact, and each and every one of
Bank’s rights and powers, being coupled with an interest, is irrevocable until
all of the Obligations have been fully repaid and performed and Bank’s
obligation to provide Credit Extensions hereunder is terminated.

9.3    Accounts Collection. At any time after the occurrence of an Event of
Default, Bank may notify any Person owing funds to Borrower of Bank’s security
interest in such funds and verify the amount of such Account. Borrower shall
collect all amounts owing to Borrower for Bank, receive in trust all payments as
Bank’s trustee, and immediately deliver such payments to Bank in their original
form as received from the account debtor, with proper endorsements for deposit.

 

18

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9.4    Bank Expenses. If Borrower fails to pay any amounts or furnish any
required proof of payment due to third persons or entities, as required under
the terms of this Agreement, then Bank may do any or all of the following after
reasonable notice to Borrower: (a) make payment of the same or any part thereof;
(b) set up such reserves under a loan facility in Section 2.1 as Bank deems
necessary to protect Bank from the exposure created by such failure; or
(c) obtain and maintain insurance policies of the type discussed in Section 6.6
of this Agreement, and take any action with respect to such policies as Bank
deems prudent. Any amounts so paid or deposited by Bank shall constitute Bank
Expenses, shall be immediately due and payable, and shall bear interest at the
then applicable rate hereinabove provided, and shall be secured by the
Collateral. Any payments made by Bank shall not constitute an agreement by Bank
to make similar payments in the future or a waiver by Bank of any Event of
Default under this Agreement.

9.5    Bank’s Liability for Collateral. So long as Bank complies with reasonable
banking practices, Bank shall not in any way or manner be liable or responsible
for: (a) the safekeeping of the Collateral; (b) any loss or damage thereto
occurring or arising in any manner or fashion from any cause; (c) any diminution
in the value thereof; or (d) any act or default of any carrier, warehouseman,
bailee, forwarding agency, or other person whomsoever. All risk of loss, damage
or destruction of the Collateral shall be borne by Borrower.

9.6    Remedies Cumulative. Bank’s rights and remedies under this Agreement, the
Loan Documents, and all other agreements shall be cumulative. Bank shall have
all other rights and remedies not inconsistent herewith as provided under the
Code, by law, or in equity. No exercise by Bank of one right or remedy shall be
deemed an election, and no waiver by Bank of any Event of Default on Borrower’s
part shall be deemed a continuing waiver. No delay by Bank shall constitute a
waiver, election, or acquiescence by it. No waiver by Bank shall be effective
unless made in a written document signed on behalf of Bank and then shall be
effective only in the specific instance and for the specific purpose for which
it was given.

9.7    Demand; Protest. Borrower waives demand, protest, notice of protest,
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 at
any time held by Bank on which Borrower may in any way be liable.

 

  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.

 

19

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If to Borrower:

TechTarget, Inc.

  275 Grove Street

  Newton, MA 02466

  Attn: Daniel T. Noreck, Chief Financial Officer

  EMAIL: dnoreck@techtarget.com

 

If to Bank:

Western Alliance Bank

  28 State Street, Suite 2301

  Boston, MA 02109

  Attn: Benjamin Kirtland

  FAX: (        )                                 

  EMAIL: ben.kirtland@bridgebank.com

The parties hereto may change the address at which they are to receive notices
hereunder, by notice in writing in the foregoing manner given to the other.

 

  11.

CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER.

This Agreement shall be governed by, and construed in accordance with, the
internal laws of the State of California, without regard to principles of
conflicts of law. Each of Borrower and Bank hereby submits to the exclusive
jurisdiction of the state and Federal courts located in the County of Santa
Clara, State of California. BORROWER AND BANK EACH HEREBY WAIVE THEIR RESPECTIVE
RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT
OF ANY OF THE LOAN DOCUMENTS OR ANY OF THE TRANSACTIONS CONTEMPLATED THEREIN,
INCLUDING CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER
COMMON LAW OR STATUTORY CLAIMS. EACH PARTY RECOGNIZES AND AGREES THAT THE
FOREGOING WAIVER CONSTITUTES A MATERIAL INDUCEMENT FOR IT TO ENTER INTO THIS
AGREEMENT. EACH PARTY REPRESENTS AND WARRANTS THAT IT HAS REVIEWED THIS WAIVER
WITH ITS LEGAL COUNSEL AND THAT IT KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY
TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL.

 

  12.

JUDICIAL REFERENCE PROVISION.

12.1    In the event the Jury Trial Waiver set forth above is not enforceable,
the parties elect to proceed under this Judicial Reference Provision.

12.2    With the exception of the items specified in Section 12.3, below, any
controversy, dispute or claim (each, a “Claim”) between the parties arising out
of or relating to this Agreement or any other document, instrument or agreement
between the undersigned parties (collectively in this Section, the “Loan
Documents”), will be resolved by a reference proceeding in California in
accordance with the provisions of Sections 638 et seq. of the California Code of
Civil Procedure (“CCP”), or their successor sections, which shall constitute the
exclusive remedy for the resolution of any Claim, including whether the Claim is
subject to the reference proceeding. Except as otherwise provided in the Loan
Documents, venue for the reference proceeding will be in the state or federal
court in the county or district where the real property involved in the action,
if any, is located or in the state or federal court in the county or district
where venue is otherwise appropriate under applicable law (the “Court”).

12.3    The matters that shall not be subject to a reference are the following:
(i) nonjudicial foreclosure of any security interests in real or personal
property, (ii) exercise of self-help remedies (including, without limitation,
set-off), (iii) appointment of a receiver and (iv) temporary, provisional or
ancillary remedies (including, without limitation, writs of attachment, writs of
possession, temporary restraining orders or preliminary injunctions). This
reference provision does not limit the right of any party to exercise or oppose
any of the rights and remedies described in clauses (i) and (ii) or to seek or
oppose from a court of competent jurisdiction any of the items described in
clauses (iii) and (iv). The exercise of, or opposition to, any of those items
does not waive the right of any party to a reference pursuant to this reference
provision as provided herein.

 

20

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12.4    The referee shall be a retired judge or justice selected by mutual
written agreement of the parties. If the parties do not agree within ten
(10) days of a written request to do so by any party, then, upon request of any
party, the referee shall be selected by the Presiding Judge of the Court (or his
or her representative). A request for appointment of a referee may be heard on
an ex parte or expedited basis, and the parties agree that irreparable harm
would result if ex parte relief is not granted. Pursuant to CCP § 170.6, each
party shall have one peremptory challenge to the referee selected by the
Presiding Judge of the Court (or his or her representative).

12.5    The parties agree that time is of the essence in conducting the
reference proceedings. Accordingly, the referee shall be requested, subject to
change in the time periods specified herein for good cause shown, to (i) set the
matter for a status and trial-setting conference within fifteen (15) days after
the date of selection of the referee, (ii) if practicable, try all issues of law
or fact within one hundred twenty (120) days after the date of the conference
and (iii) report a statement of decision within twenty (20) days after the
matter has been submitted for decision.

12.6    The referee will have power to expand or limit the amount and duration
of discovery. The referee may set or extend discovery deadlines or cutoffs for
good cause, including a party’s failure to provide requested discovery for any
reason whatsoever. Unless otherwise ordered based upon good cause shown, no
party shall be entitled to “priority” in conducting discovery, depositions may
be taken by either party upon seven (7) days written notice, and all other
discovery shall be responded to within fifteen (15) days after service. All
disputes relating to discovery which cannot be resolved by the parties shall be
submitted to the referee whose decision shall be final and binding.

12.7    Except as expressly set forth herein, the referee shall determine the
manner in which the reference proceeding is conducted including the time and
place of hearings, the order of presentation of evidence, and all other
questions that arise with respect to the course of the reference proceeding. All
proceedings and hearings conducted before the referee, except for trial, shall
be conducted without a court reporter, except that when any party so requests, a
court reporter will be used at any hearing conducted before the referee, and the
referee will be provided a courtesy copy of the transcript. The party making
such a request shall have the obligation to arrange for and pay the court
reporter. Subject to the referee’s power to award costs to the prevailing party,
the parties will equally share the cost of the referee and the court reporter at
trial.

12.8    The referee shall be required to determine all issues in accordance with
existing case law and the statutory laws of the State of California. The rules
of evidence applicable to proceedings at law in the State of California will be
applicable to the reference proceeding. The referee shall be empowered to enter
equitable as well as legal relief, enter equitable orders that will be binding
on the parties and rule on any motion which would be authorized in a court
proceeding, including without limitation motions for summary judgment or summary
adjudication. The referee shall issue a decision at the close of the reference
proceeding which disposes of all claims of the parties that are the subject of
the reference. Pursuant to CCP § 644, such decision shall be entered by the
Court as a judgment or an order in the same manner as if the action had been
tried by the Court and any such decision will be final, binding and conclusive.
The parties reserve the right to appeal from the final judgment or order or from
any appealable decision or order entered by the referee. The parties reserve the
right to findings of fact, conclusions of laws, a written statement of decision,
and the right to move for a new trial or a different judgment, which new trial,
if granted, is also to be a reference proceeding under this provision.

12.9    If the enabling legislation which provides for appointment of a referee
is repealed (and no successor statute is enacted), any dispute between the
parties that would otherwise be determined by reference procedure will be
resolved and determined by arbitration. The arbitration will be conducted by a
retired judge or justice, in accordance with the California Arbitration Act
§1280 through §1294.2 of the CCP as amended from time to time. The limitations
with respect to discovery set forth above shall apply to any such arbitration
proceeding.

12.10    THE PARTIES RECOGNIZE AND AGREE THAT ALL CONTROVERSIES, DISPUTES AND
CLAIMS RESOLVED UNDER THIS REFERENCE PROVISION WILL BE DECIDED BY A REFEREE AND
NOT BY A JURY. AFTER CONSULTING (OR HAVING HAD THE OPPORTUNITY TO CONSULT) WITH
COUNSEL OF ITS, HIS OR HER OWN CHOICE, EACH PARTY KNOWINGLY AND VOLUNTARILY, AND
FOR THE MUTUAL BENEFIT OF ALL PARTIES, AGREES THAT THIS REFERENCE PROVISION WILL
APPLY TO ANY CONTROVERSY, DISPUTE OR CLAIM BETWEEN OR AMONG THEM ARISING OUT OF
OR IN ANY WAY RELATED TO, THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS.

 

21

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  13.

GENERAL PROVISIONS.

13.1    Successors and Assigns. This Agreement shall bind and inure to the
benefit of the respective successors and permitted assigns of each of the
parties; provided, however, that neither this Agreement nor any rights hereunder
may be assigned by Borrower without Bank’s prior written consent, which consent
may be granted or withheld in Bank’s sole discretion. Bank shall have the right
without the consent of or notice to Borrower to sell, transfer, negotiate, or
grant participation in all or any part of, or any interest in, Bank’s
obligations, rights and benefits hereunder.

13.2    Indemnification. Borrower shall defend, indemnify and hold harmless Bank
and its officers, employees, and agents against: (a) all obligations, demands,
claims, and liabilities claimed or asserted by any other party in connection
with the transactions contemplated by this Agreement; and (b) all losses or Bank
Expenses in any way suffered, incurred, or paid by Bank as a result of or in any
way arising out of, following, or consequential to transactions between Bank and
Borrower whether under this Agreement, or otherwise (including without
limitation reasonable attorneys’ fees and expenses), except for losses caused by
Bank’s gross negligence or willful misconduct.

13.3    Time of Essence. Time is of the essence for the performance of all
obligations set forth in this Agreement.

13.4    Severability of Provisions. Each provision of this Agreement shall be
severable from every other provision of this Agreement for the purpose of
determining the legal enforceability of any specific provision.

13.5    Amendments in Writing, Integration. Neither this Agreement nor the Loan
Documents can be amended or terminated orally. All prior agreements,
understandings, representations, warranties, and negotiations between the
parties hereto with respect to the subject matter of this Agreement and the Loan
Documents, if any, are merged into this Agreement and the Loan Documents.

13.6    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, shall be deemed to be an original, and all of
which, when taken together, shall constitute but one and the same Agreement.

13.7    Survival. All covenants, representations and warranties made in this
Agreement shall continue in full force and effect so long as any Obligations
remain outstanding or Bank has any obligation to make Credit Extensions to
Borrower. The obligations of Borrower to indemnify Bank with respect to the
expenses, damages, losses, costs and liabilities described in Section 13.2 shall
survive until all applicable statute of limitations periods with respect to
actions that may be brought against Bank have run.

13.8    Confidentiality. In handling any confidential information Bank and all
employees and agents of Bank, including but not limited to accountants, shall
exercise the same degree of care that it exercises with respect to its own
proprietary information of the same types to maintain the confidentiality of any
non-public information thereby received or received pursuant to this Agreement
except that disclosure of such information may be made (i) to the subsidiaries
or affiliates of Bank in connection with their present or prospective business
relations with Borrower, (ii) to prospective transferees or purchasers of any
interest in the Loans, (iii) as required by law, regulations, rule or order,
subpoena, judicial order or similar order, (iv) as may be required in connection
with the examination, audit or similar investigation of Bank and (v) as Bank may
determine in connection with the enforcement of any remedies hereunder.
Confidential information hereunder shall not include information that either:
(a) is in the public domain or in the knowledge or possession of Bank when
disclosed to Bank, or becomes part of the public domain after disclosure to Bank
through no fault of Bank; or (b) is disclosed to Bank by a third party, provided
Bank does not have actual knowledge that such third party is prohibited from
disclosing such information.

 

22

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13.9    Patriot Act Notice. Bank notifies Borrower that, pursuant to the
requirements of the USA Patriot Act, Title III of Pub. L. 107-56 (signed into
law on October 26, 2001) (the “ Patriot Act “), it is required to obtain, verify
and record information that identifies Borrower, which information includes
names and addresses and other information that will allow Bank to identify
Borrower in accordance with the Patriot Act.

 

  14.

NOTICE OF FINAL AGREEMENT.

BY SIGNING THIS DOCUMENT EACH PARTY REPRESENTS AND AGREES THAT: (A) THIS WRITTEN
AGREEMENT REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES, (B) THERE ARE NO
UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES, AND (C) THIS WRITTEN AGREEMENT
MAY NOT BE CONTRADICTED BY EVIDENCE OF ANY PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT
ORAL AGREEMENTS OR UNDERSTANDINGS OF THE PARTIES.

 

23

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

 

TECHTARGET, INC. By:   /s/ Daniel T. Noreck Name:   Daniel T. Noreck Title:  
Chief Financial Officer WESTERN ALLIANCE BANK, AN ARIZONA CORPORATION By:   /s/
Ben Kirtland Name:   Ben Kirtland Title:   Vice President

--------------------------------------------------------------------------------

EXHIBIT A

 

DEBTOR:

TECHTARGET, INC.

 

SECURED PARTY:

WESTERN ALLIANCE BANK, an Arizona corporation

 

COLLATERAL DESCRIPTION ATTACHMENT TO LOAN AND SECURITY AGREEMENT

All personal property of Borrower (herein referred to as “Borrower” or “Debtor”)
whether presently existing or hereafter created or acquired, and wherever
located, including, but not limited to:

(a) all accounts (including health-care-insurance receivables), chattel paper
(including tangible and electronic chattel paper), deposit accounts, documents
(including negotiable documents), equipment (including all accessions and
additions thereto), general intangibles (including payment intangibles and
software), goods (including fixtures), instruments (including promissory notes),
inventory (including all goods held for sale or lease or to be furnished under a
contract of service, and including returns and repossessions), investment
property (including securities and securities entitlements), letter of credit
rights, money, and all of Debtor’s books and records with respect to any of the
foregoing, and the computers and equipment containing said books and records;

(b) any and all cash proceeds and/or noncash proceeds of any of the foregoing,
including, without limitation, insurance proceeds, and all supporting
obligations and the security therefor or for any right to payment. All terms
above have the meanings given to them in the California Uniform Commercial Code,
as amended or supplemented from time to time.

Notwithstanding the foregoing, the Collateral does not include more than 65% 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.

 

2

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EXHIBIT B

COMPLIANCE CERTIFICATE

 

TO:

WESTERN ALLIANCE BANK, an Arizona corporation

FROM:

TECHTARGET, INC., a Delaware corporation

The undersigned authorized officer of Tech Target, Inc. hereby certifies that in
accordance with the terms and conditions of the Loan and Security Agreement
between Borrower and Bank (the “Agreement”), (i) Borrower is in complete
compliance for the period ending                                  with all
required covenants except as noted below and (ii) all representations and
warranties of Borrower stated in the Agreement are true and correct as of the
date hereof. Attached herewith are the required documents supporting the above
certification. The Officer further certifies that these are prepared in
accordance with Generally Accepted Accounting Principles (GAAP) and are
consistently applied from one period to the next except as explained in an
accompanying letter or footnotes.

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

 

Reporting Covenant

  

Required

       

Complies

10K    FYE within 90 days    Yes    No 10Q and Compliance Certificate   
Quarterly, within 45 days of quarter-end    Yes    No Annual operating budget,
sales projections and operating plans approved by board of directors   

Annually no later than 30 days after the earlier

of FYE or board approval

   Yes    No A/R & A/P Agings    Quarterly, within 45 days of quarter-end    Yes
   No

Financial Covenant

  

Required

  

Actual

  

Complies

Maximum Leverage Ratio   

No more than

2.00:1.00

  

        :1.00

   Yes    No

Comments Regarding Exceptions: See Attached.

Sincerely,

 

 

 

SIGNATURE  

 

TITLE  

 

DATE

 

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SCHEDULE OF EXCEPTIONS

Permitted Indebtedness (Section 1.1)

 

Depositor

  

Amount of Cash Security Deposit

  

Name of Holder of Security Deposit

TechTarget, Inc.    $495,000    Hines Global REIT TechTarget, Inc.    $65,050   
MIREF 250 Montgomery TechTarget, Inc.    187,330 GBP    Brook Street des Roches

Permitted Investments (Section 1.1)

TechTarget Securities Corporation, a Massachusetts corporation

TechTarget Limited, a company formed under the laws of the United Kingdom

TechTarget (HK) Limited, a company formed under the laws of Hong Kong

TechTarget (Australia) Pty Ltd., a company formed under the laws of Australia

TechTarget (Singapore) PTE. Ltd., a company formed under the laws of Singapore

SAS E-Magine Medias, a company formed under the laws of France

TechTarget Germany GmbH, a company formed under the laws of Germany

Permitted Liens (Section 1.1)

 

Depositor

  

Amount of Cash Security Deposit

  

Name of Holder of Security Deposit

TechTarget, Inc.    $495,000    Hines Global REIT TechTarget, Inc.    $65,050   
MIREF 250 Montgomery TechTarget, Inc.    187,330 GBP    Brook Street des Roches

Inbound Licenses (Section 5.6)

None.

Prior Names (Section 5.7)

TechTarget.com, Inc.

Litigation (Section 5.8)

None.

 

4