Exhibit 10.1

EXECUTION VERSION

LOAN AND SECURITY AGREEMENT

THIS LOAN AND SECURITY AGREEMENT is made and dated as of August 1, 2016 and is
entered into by and between Mattersight Corporation, a Delaware corporation (the
“Borrower”), HERCULES CAPITAL, INC., a Maryland corporation, and the several
other banks and other financial institutions or entities from time to time
parties to this Agreement (collectively, referred to as “Lender”) and HERCULES
CAPITAL, INC., in its capacity as administrative agent and collateral agent for
itself and the Lender (in such capacity, the “Agent”).

RECITALS

A.Borrower has requested Lender to make available to Borrower a loan in an
aggregate principal amount of up to Thirty Million Dollars ($30,000,000) (the
“Term Loan”);

B.Lender is willing to make the Term Loan on the terms and conditions set forth
in this Agreement.

AGREEMENT

NOW, THEREFORE, Borrower, Agent and Lender agree as follows:

SECTION 1.  DEFINITIONS AND RULES OF CONSTRUCTION

1.1Unless otherwise defined herein, the following capitalized terms shall have
the following meanings:

“Account Control Agreement(s)” means any agreement entered into by and among the
Agent, Borrower and a third party Bank or other institution (including a
Securities Intermediary) in which Borrower maintains a Deposit Account or an
account holding Investment Property and which grants Agent a perfected first
priority security interest in the subject account or accounts.

“ACH Authorization” means the ACH Debit Authorization Agreement in substantially
the form of Exhibit H, which account numbers shall be redacted for security
purposes if and when filed publicly by the Borrower.

“ACV Bookings” means the annual contract value of new incremental bookings based
on the estimated subscription revenue and other revenue for a customer contract
executed in a given fiscal quarter, actual growth in the account beyond the
original booking, and any contractually committed future growth, in each case
measured in a manner consistent with the methodology used by Borrower in its
public filings as of the Closing Date or as otherwise agreed in writing by
Agent.

“Advance(s)” means a Term Loan Advance.

“Advance Date” means the funding date of any Advance.

 

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

 

“Advance Request” means a request for an Advance submitted by Borrower to Agent
in substantially the form of Exhibit A, which account numbers shall be redacted
for security purposes if and when filed publicly by the Borrower.

“Affiliate” means (a) any Person that directly or indirectly controls, is
controlled by, or is under common control with the Person in question, (b) any
Person directly or indirectly owning, controlling or holding with power to vote
ten percent (10%) or more of the outstanding voting securities of another
Person, (c) any Person ten percent (10%) or more of whose outstanding voting
securities are directly or indirectly owned, controlled or held by another
Person with power to vote such securities, or (d) any Person related by blood or
marriage to any Person described in subsection (a), (b) or (c) of this
paragraph.  As used in the definition of “Affiliate,” the term “control” means
the possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of a Person, whether through ownership
of voting securities, by contract or otherwise.

“Agent” has the meaning given to it in the preamble to this Agreement.

“Agreement” means this Loan and Security Agreement, as amended from time to
time.

“Amortization Date” means December 1, 2017; provided however, if the Interest
Only Extension Conditions are satisfied for fiscal quarter ending September 30,
2017, then March 1, 2018; provided further, if the Interest Only Extension
Conditions are satisfied for fiscal quarter ending December 31, 2017, then June
1, 2018.

“Assignee” has the meaning given to it in Section 11.13.

“Bank Line” has the meaning given to it in clause (viii) of the definition of
Permitted Indebtedness.

“Bank Line Intercreditor Agreement” has the meaning given to it in clause (viii)
of the definition of Permitted Indebtedness.

“Borrower Products” means all products, software, service offerings, technical
data or technology currently being designed, manufactured or sold by Borrower or
which Borrower intends to sell, license, or distribute in the future including
any products or service offerings under development, collectively, together with
all products, software, service offerings, technical data or technology that
have been sold, licensed or distributed by Borrower since its incorporation.

“Business Day” means any day other than Saturday, Sunday and any other day on
which banking institutions in the State of California are closed for business.

“Cash” means all cash, cash equivalents and liquid funds.

“Change in Control” means any reorganization, recapitalization, consolidation or
merger (or similar transaction or series of related transactions) of Borrower,
sale or exchange of outstanding shares (or similar transaction or series of
related transactions) of Borrower in which the holders of Borrower’s outstanding
shares immediately before consummation of such transaction or series of related
transactions do not, immediately after consummation of such

 

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

 

transaction or series of related transactions, retain shares representing more
than fifty percent (50%) of the voting power of the surviving entity of such
transaction or series of related transactions (or the parent of such surviving
entity if such surviving entity is wholly owned by such parent), in each case
without regard to whether Borrower is the surviving entity.  

“Claims” has the meaning given to it in Section 11.10.

“Closing Date” means the date of this Agreement.

“Closing Facility Charge” means Two Hundred Fifty Thousand Dollars ($250,000).

“Collateral” means the property described in Section 3.

“Confidential Information” has the meaning given to it in Section 11.12.

“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,
including any such obligation directly or indirectly guaranteed, endorsed,
co-made or discounted or sold with recourse by that Person, or in respect of
which that Person is otherwise directly or indirectly liable; (ii) any
obligations with respect to undrawn letters of credit, corporate credit cards or
merchant services issued for the account of that Person; and (iii) all
obligations arising under any interest rate, currency or commodity swap
agreement, interest rate cap agreement, interest rate collar agreement, or other
agreement or arrangement designated to protect a 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 such Person 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.

“Copyright License” means any written agreement granting any right to use any
Copyright or Copyright registration, now owned or hereafter acquired by Borrower
or in which Borrower now holds or hereafter acquires any interest.

“Copyrights” means all copyrights, whether registered or unregistered, held
pursuant to the laws of the United States of America, any State thereof, or of
any other country.

“Deposit Accounts” means any “deposit accounts,” as such term is defined in the
UCC, and includes any checking account, savings account, or certificate of
deposit.

“Dissolution Date” means February 1, 2018, as such date may be extended up to
twelve months by Agent in its sole discretion upon receipt of evidence
satisfactory to Agent that each Subsidiary that has not entered into a Joinder
Agreement has satisfied all intercompany liabilities (or converted such
liabilities to equity).

 

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

 

“Due Diligence Fee” means $45,000, which fee is due to Lender on or prior to the
Closing Date, and shall be deemed fully earned on such date regardless of the
early termination of this Agreement.

“EBITDA” means with respect to any fiscal period being measured an amount equal
to the sum of (a) consolidated net income of Borrower and its Subsidiaries for
such fiscal period, plus (b) in each case to the extent deducted in the
calculation of Borrower's consolidated net income and without duplication: (i)
depreciation and amortization for such period, plus (ii) income tax expense for
such period, plus (iii) consolidated total interest expense paid or accrued
during such period, all as determined in accordance with GAAP and as calculated
by Borrower in its public filings and statements as of the Closing Date or as
otherwise agreed in writing by Agent.  

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

“Event of Default” has the meaning given to it in Section 9.

“Facility Charge” means the Closing Facility Charge and, if applicable, the
Tranche III Facility Charge.

“Financial Statements” has the meaning given to it in Section 7.1.

“GAAP” means generally accepted accounting principles in the United States of
America, as in effect from time to time.

“Guaranty” means a Guaranty in a form reasonably acceptable to Agent.

“Indebtedness” means indebtedness of any kind, including (a) all indebtedness
for borrowed money or the deferred purchase price of property or services
(excluding trade credit entered into in the ordinary course of business due
within ninety (90) days), including 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, and (d) all Contingent Obligations.

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

“Intellectual Property” means all of Borrower’s Copyrights; Trademarks; Patents;
Licenses; trade secrets and inventions; mask works; Borrower’s applications
therefor and reissues, extensions, or renewals thereof; and Borrower’s goodwill
associated with any of the foregoing, together with Borrower’s rights to sue for
past, present and future infringement of Intellectual Property and the goodwill
associated therewith.

“Interest Only Extension Conditions” shall mean satisfaction of each of the
following events:  (a) no default or Event of Default shall have occurred and
(b) for the applicable fiscal quarter end (i.e., quarter ending September 30,
2017 or December 31, 2017, as applicable pursuant to the definition of
“Amortization Date”) Borrower shall have achieved at

 

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

 

least 80% of the revenues forecasted in the Projections, measured on a trailing
six month basis, as determined under GAAP and subject to verification by Agent
(including supporting documentation requested by Agent).

“Investment” means any beneficial ownership (including stock, partnership or
limited liability company interests) of or in any Person, or any loan, advance
or capital contribution to any Person or the acquisition of all, or
substantially all, of the assets of another Person.

“IP Security Agreement” means that certain Intellectual Property Security
Agreement executed and delivered by Borrower to Agent and dated as of the
Closing Date.

“Joinder Agreements” means for each Subsidiary, a completed and executed Joinder
Agreement in substantially the form attached hereto as Exhibit G.

“Lender” has the meaning given to it in the preamble to this Agreement.

“License” means any Copyright License, Patent License, Trademark License or
other license of rights or interests.

“Lien” means any mortgage, deed of trust, pledge, hypothecation, assignment for
security, security interest, encumbrance, levy, lien or charge of any kind,
whether voluntarily incurred or arising by operation of law or otherwise,
against any property, any conditional sale or other title retention agreement,
and any lease in the nature of a security interest.

“Loan” means the Advances made under this Agreement.

“Loan Documents” means this Agreement, the Notes (if any), the IP Security
Agreement, the ACH Authorization, the Account Control Agreements, the Joinder
Agreements, all UCC Financing Statements, the Warrant and any other
subordination agreement, the Bank Line Intercreditor Agreement, any other
intercreditor agreement, any Guaranty, and any other documents executed in
connection with the Secured Obligations or the transactions contemplated hereby,
as the same may from time to time be amended, modified, supplemented or
restated.

“Material Adverse Effect” means a material adverse effect upon: (i) the
business, operations, properties, assets or financial condition of Borrower and
its Subsidiaries taken as a whole; or (ii) the ability of Borrower to perform or
pay the Secured Obligations in accordance with the terms of the Loan Documents,
or the ability of Agent or Lender to enforce any of its rights or remedies with
respect to the Secured Obligations; or (iii) the Collateral or Agent’s Liens on
the Collateral or the priority of such Liens.

“Maximum Term Loan Amount” means Thirty Million and No/100 Dollars
($30,000,000).

“Maximum Rate” shall have the meaning assigned to such term in Section 2.3.

“Note(s)” means a Term Note.

“Patent License” means any written agreement granting any right with respect to
any invention on which a Patent is in existence or a Patent application is
pending, in which agreement Borrower now holds or hereafter acquires any
interest.

 

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

 

“Patents” means all letters patent of, or rights corresponding thereto, in the
United States of America or in any other country, all registrations and
recordings thereof, and all applications for letters patent of, or rights
corresponding thereto, in the United States of America or any other country.

“Permitted Indebtedness” means: (i) Indebtedness of Borrower in favor of Lender
or Agent arising under this Agreement or any other Loan Document; (ii)
Indebtedness existing on the Closing Date which is disclosed in Schedule 1A;
(iii) Indebtedness of up to $2,500,000 outstanding at any time secured by a Lien
described in clause (vii) of the defined term “Permitted Liens,” provided the
original principal amount of such Indebtedness does not exceed the cost of the
Equipment financed with such Indebtedness; (iv) Indebtedness to trade creditors
and employees incurred in the ordinary course of business, including
Indebtedness incurred in the ordinary course of business in connection with
taxes, wages, vacation accrual, 401K matching and withholding obligations, and
corporate credit cards; (v) Indebtedness that also constitutes a Permitted
Investment; (vi) Subordinated Indebtedness; (vii) reimbursement obligations in
connection with letters of credit that are secured by Cash and issued on behalf
of the Borrower or a Subsidiary thereof in an amount not to exceed $500,000 at
any time outstanding, (viii) following Borrower’s achievement of at least Sixty
Million Dollars ($60,000,000) of Subscription Revenues, measured on a trailing
twelve month basis at the end of any fiscal month of Borrower, Indebtedness of
up to Ten Million Dollars ($10,000,000) under an accounts receivable or similar
formula-based credit facility reasonably acceptable to Agent, provided by a
financial institution acceptable to Agent and subject to an intercreditor or
subordination agreement acceptable to Agent (the “Bank Line Intercreditor
Agreement”), in each case, subject to approval by Agent in its sole discretion
(the “Bank Line”), (ix) other Indebtedness in an amount not to exceed $250,000
at any time outstanding, (x) net intercompany Indebtedness of up to $100,000,
and (xi) extensions, refinancings and renewals of any items of Permitted
Indebtedness, provided that the principal amount is not increased or the terms
modified to impose materially more burdensome terms upon Borrower or its
Subsidiary, as the case may be, and provided further that any extensions,
refinancings and renewals of the Bank Line is subject to the terms of the Bank
Line Intercreditor Agreement.  

“Permitted Investment” means: (i) Investments existing on the Closing Date which
are disclosed in Schedule 1B; (ii) (a) marketable direct obligations issued or
unconditionally guaranteed by the United States of America or any agency or any
State thereof maturing within one year from the date of acquisition thereof, (b)
commercial paper maturing no more than one year from the date of creation
thereof and currently having a rating of at least A-2 or P-2 from either
Standard & Poor’s Corporation or Moody’s Investors Service, (c) certificates of
deposit issued by any bank with assets of at least $500,000,000 maturing no more
than one year from the date of investment therein, and (d) money market
accounts; (iii) repurchases of stock from former employees, directors, or
consultants of Borrower under the terms of applicable repurchase agreements at
the original issuance price of such securities in an aggregate amount not to
exceed $250,000 in any fiscal year, provided that no Event of Default has
occurred, is continuing or would exist after giving effect to the repurchases;
(iv) Investments accepted in connection with Permitted Transfers; (v)
Investments (including debt obligations) received in connection with the
bankruptcy or reorganization of customers or suppliers and in settlement of
delinquent obligations of, and other disputes with, customers or suppliers
arising in the ordinary course of Borrower’s business; (vi) 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 (vi) shall not apply to
Investments

 

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

 

of Borrower in any Subsidiary; (vii) Investments consisting of loans not
involving the net transfer on a substantially contemporaneous basis of cash
proceeds to employees, officers or directors relating to the purchase of capital
stock of Borrower pursuant to employee stock purchase plans or other similar
agreements approved by Borrower’s Board of Directors; (viii) Investments
consisting of travel advances in the ordinary course of business; (ix)
Investments in newly-formed Subsidiaries, provided that each such Subsidiary
enters into a Joinder Agreement promptly after its formation by Borrower and
execute such other documents as shall be reasonably requested by Agent; (x) (x)
joint ventures or strategic alliances in the ordinary course of Borrower’s
business consisting of the nonexclusive licensing of technology, the development
of technology or the providing of technical support, provided that any cash
Investments by Borrower do not exceed $250,000 in the aggregate in any fiscal
year; and (xi) additional Investments that do not exceed $250,000 in the
aggregate during the term of this Agreement.

“Permitted Liens” means any and all of the following: (i) Liens in favor of
Agent or Lender; (ii) Liens existing on the Closing Date which are disclosed in
Schedule 1C; (iii) Liens for taxes, fees, assessments or other governmental
charges or levies, either not delinquent or being contested in good faith by
appropriate proceedings; provided, that Borrower maintains adequate reserves
therefor in accordance with GAAP; (iv) Liens securing claims or demands of
materialmen, artisans, mechanics, carriers, warehousemen, landlords and other
like Persons arising in the ordinary course of Borrower’s business and imposed
without action of such parties; provided, that the payment thereof is not yet
required; (v) Liens arising from judgments, decrees or attachments in
circumstances which do not constitute an Event of Default hereunder; (vi) the
following deposits, to the extent made in the ordinary course of
business:  deposits under worker’s compensation, unemployment insurance, social
security and other similar laws, or to secure the performance of bids, tenders
or contracts (other than for the repayment of borrowed money) or to secure
indemnity, performance or other similar bonds for the performance of bids,
tenders or contracts (other than for the repayment of borrowed money) or to
secure statutory obligations (other than Liens arising under ERISA or
environmental Liens) or surety or appeal bonds, or to secure indemnity,
performance or other similar bonds; (vii) Liens on Equipment or software or
other intellectual property constituting purchase money Liens and Liens in
connection with capital leases securing Indebtedness permitted in clause (iii)
of “Permitted Indebtedness”;  (viii) Liens incurred in connection with
Subordinated Indebtedness; (ix) leasehold interests in leases or subleases and
licenses granted in the ordinary course of business and not interfering in any
material respect with the business of the licensor; (x) Liens in favor of
customs and revenue authorities arising as a matter of law to secure payment of
custom duties that are promptly paid on or before the date they become due; (xi)
Liens on insurance proceeds securing the payment of financed insurance premiums
that are promptly paid on or before the date they become due (provided that such
Liens extend only to such insurance proceeds and not to any other property or
assets); (xii) statutory and common law rights of set-off and other similar
rights as to deposits of cash and securities in favor of banks, other depository
institutions and brokerage firms; (xiii) easements, zoning restrictions,
rights-of-way and similar encumbrances on real property imposed by law or
arising in the ordinary course of business so long as they do not materially
impair the value or marketability of the related property; (xiv) (A) Liens on
Cash securing obligations permitted under clause (vii) of the definition of
Permitted Indebtedness and (B) security deposits in connection with real
property leases, the combination of (A) and (B) in an aggregate amount not to
exceed $250,000 at any time; (xv) Liens securing the Bank Line as permitted
under the Bank Line Intercreditor Agreement and (xvi) Liens incurred in
connection with the extension, renewal or refinancing of the Indebtedness
secured by Liens of the type described in clauses (i) through (xi) 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 (as may have been reduced by any payment thereon) does not
increase.

“Permitted Transfers” means (i) sales of Inventory in the ordinary course of
business, (ii) non-exclusive licenses and similar arrangements for the use of
Intellectual Property in the ordinary course of business and licenses that could
not result in a legal transfer of title of the licensed property but that may be
exclusive in respects other than territory and that may be exclusive as to
territory only as to discrete geographical areas outside of the United States of
America in the ordinary course of business, or (iii) dispositions of worn-out,
obsolete or surplus Equipment at fair market value in the ordinary course of
business, and (iv) other Transfers of assets having a fair market value of not
more than $250,000 in the aggregate in any fiscal year.

“Person” means any individual, sole proprietorship, partnership, joint venture,
trust, unincorporated organization, association, corporation, limited liability
company, institution, other entity or government.

“Prepayment Charge” shall have the meaning assigned to such term in Section 2.5.

“Projections” means the Borrower’s financial and business projections (i) for
fiscal year 2016 (covering fiscal years 2017-2018) in form and substance
acceptable to Agent and Lenders and attached hereto as Exhibit I and (ii) for
fiscal year 2017 and thereafter, such financial and business projections
satisfying the requirements of Section 7.1(h).

“Receivables” means (i) all of Borrower’s Accounts, Instruments, Documents,
Chattel Paper, Supporting Obligations, letters of credit, proceeds of any letter
of credit, and Letter of Credit Rights, and (ii) all customer lists, software,
and business records related thereto.

“Required Lenders” means, at any time, the holders of more than 50% of the sum
of the aggregate unpaid principal amount of the Term Loans then outstanding.

“SEC” means the Securities and Exchange Commission.

“Secured Obligations” means Borrower’s obligations under this Agreement and any
Loan Document (other than the Warrant), including any obligation to pay any
amount now owing or later arising.

“Subordinated Indebtedness” means Indebtedness subordinated to the Secured
Obligations in amounts and on terms and conditions satisfactory to Agent in its
sole discretion.

“Subscription Revenue” is revenue (under GAAP) derived solely from Borrower’s
“Behavioral Analytics” service offerings, including predictive behavioral
routing, performance management, quality assurance, predictive analytics, and
marketing managed services revenue derived from the performance of such services
on a continual basis, in each case as described and defined in Borrower’s public
disclosure with the SEC as of the Closing Date.

“Subsidiary” means an entity, whether corporate, partnership, limited liability
company, joint venture or otherwise, in which Borrower owns or controls 50% or
more of the outstanding voting securities, including each entity listed on
Schedule 1 hereto.

 

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

 

“Term Commitment” means as to any Lender, the obligation of such Lender, if any,
to make a Term Loan Advance to the Borrower in a principal amount not to exceed
the amount set forth under the heading “Term Commitment” opposite such Lender’s
name on Schedule 1.1.  

“Term Loan Advance” means any Term Loan funds advanced under this Agreement.

“Term Loan Cash Interest Rate” means for any day a per annum rate of interest
equal to the greater of either (i) 9.75% plus the prime rate as reported in The
Wall Street Journal minus 3.50%, and (ii) 9.75%.

“Term Loan PIK Interest Rate” means 2.15%.

“Term Loan Maturity Date” means February 1, 2020.

“Term Note” means a Promissory Note in substantially the form of Exhibit B.

“Trademark License” means any written agreement granting any right to use any
Trademark or Trademark registration, now owned or hereafter acquired by Borrower
or in which Borrower now holds or hereafter acquires any interest.

“Trademarks” means all trademarks (registered, common law or otherwise) and any
applications in connection therewith, including registrations, recordings and
applications in the United States Patent and Trademark Office or in any similar
office or agency of the United States of America, any State thereof or any other
country or any political subdivision thereof.

“Tranche II Milestone” means (a) no Event of Default shall have occurred and is
continuing; and (b) for the six month period ending June 30, 2017, Borrower
shall have (i) achieved at least 85% of ACV Bookings forecasted in the
Projections and (ii) achieved at least 85% of the revenues forecasted in the
Projections, measured on a trailing six month basis, as determined under GAAP,
and subject, in each case, to verification by Agent (including supporting
documentation requested by Agent).  

“Tranche III Milestone” means (a) no Event of Default shall have occurred and is
continuing, (b) Borrower shall have achieved the Tranche II Milestone; and (c)
Borrower shall have achieved certain performance milestones to be mutually
agreed upon after the Closing Date between Borrower and Lender, such performance
milestones being subject to approval by Lender’s investment committee in its
sole and unfettered discretion.

“Tranche III Facility Charge” means Fifty Thousand Dollars ($50,000).

“Tranche III Term Loan Advance” has the meaning given to it in Section 2.2(a).

“UCC” means the Uniform Commercial Code as the same is, from time to time, in
effect in the State of California; provided, that in the event that, by reason
of mandatory provisions of law, any or all of the attachment, perfection or
priority of, or remedies with respect to, Agent’s Lien on any Collateral is
governed by the Uniform Commercial Code as the same is, from time to time, in
effect in a jurisdiction other than the State of California, then the term “UCC”
shall mean the Uniform Commercial Code as in effect, from time to time, in such
other

 

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

 

jurisdiction solely for purposes of the provisions thereof relating to such
attachment, perfection, priority or remedies and for purposes of definitions
related to such provisions.  

“Unrestricted Cash” means Cash held by Borrower in account(s) located in the
United States of America subject to an Account Control Agreement in favor of
Agent.

“Unrestricted Cash Milestone” means (a) no Event of Default shall have occurred
and is continuing; and (b) Borrower shall have achieved two consecutive fiscal
quarters of EBITDA of $1,000,000 or more, subject to verification by Agent
(including supporting documentation requested by Agent).

“Warrant” means any warrant entered into in connection with the Loan, as may be
amended, restated or modified from time to time.

Unless otherwise specified, all references in this Agreement or any Annex or
Schedule hereto to a “Section,” “subsection,” “Exhibit,” “Annex,” or “Schedule”
shall refer to the corresponding Section, subsection, Exhibit, Annex, or
Schedule in or to this Agreement.  Unless otherwise specifically provided
herein, any accounting term used in this Agreement or the other Loan Documents
shall have the meaning customarily given such term in accordance with GAAP, and
all financial computations hereunder shall be computed in accordance with GAAP,
consistently applied. Unless otherwise defined herein or in the other Loan
Documents, terms that are used herein or in the other Loan Documents and defined
in the UCC shall have the meanings given to them in the UCC.

SECTION 2.  THE LOAN

2.1[Reserved].

2.2Term Loan.

(a)Advances.  Subject to the terms and conditions of this Agreement, Lender will
severally (and not jointly) make in an amount not to exceed its respective Term
Commitment, and Borrower agrees to draw, a Term Loan Advance of $22,500,000 on
the Closing Date.  Beginning on July 1, 2017, and continuing until September 15,
2017, and following achievement of the Tranche II Milestone, Borrower may
request additional Term Loan Advances in an aggregate amount up to $2,500,000,
and Lender shall make such Term Loan Advances to Borrower.  Beginning on
September 15, 2017 and continuing until September 15, 2018, and following
achievement of the Tranche III Milestone, Borrower may request additional Term
Loan Advances in an aggregate amount up to $5,000,000 (the “Tranche III Term
Loan Advances”).  In each case, Term Loan Advances must be in minimum increments
of $1,000,000.  The aggregate outstanding Term Loan Advances may be up to the
Maximum Term Loan Amount.

(b)Advance Request.  To obtain a Term Loan Advance, Borrower shall complete,
sign and deliver an Advance Request (at least three (3) Business Days before the
Advance Date other than the Closing Date, which shall be at least one (1)
Business Day) to Agent.  Lender shall fund the Term Loan Advance in the manner
requested by the Advance Request provided that each of the conditions precedent
to such Term Loan Advance is satisfied as of the requested Advance Date.

 

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

 

(c)Interest.   

(i)Term Loan Cash Interest Rate.  In addition to interest accrued pursuant to
the Term Loan PIK Interest Rate, the principal balance (including, for the
avoidance of doubt, any payment-in-kind interest added to principal pursuant to
Section 2.2(c)(ii)) of each Term Loan Advance shall bear interest thereon from
such Advance Date at the Term Loan Cash Interest Rate based on a year consisting
of 360 days, with interest computed daily based on the actual number of days
elapsed.  The Term Loan Cash Interest Rate will float and change on the day the
prime rate changes from time to time.

(ii)Term Loan PIK Interest Rate.  In addition to interest accrued pursuant to
the Term Loan Cash Interest Rate, the principal balance of each Term Loan
Advance shall bear interest thereon from such Advance Date at the Term Loan PIK
Interest Rate based on a year consisting of 360 days, with interest computed
daily based on the actual number of days elapsed, which amount shall be added to
the outstanding principal balance (which such addition shall be deemed a
principal amount of a Term Loan Advance) so as to increase the outstanding
principal balance of such Term Loan Advance on each payment date for such
Advance and which amount shall be payable when the principal amount of the
Advance is payable in accordance with Section 2.2(d).

(d)Payment.  Borrower will pay interest on each Term Loan Advance on the first
Business Day of each month, beginning the month after the Advance
Date.  Borrower shall repay the aggregate Term Loan principal balance that is
outstanding on the day immediately preceding the Amortization Date, in equal
monthly installments of principal and interest (mortgage style based on a thirty
(30) month amortization schedule) beginning on the Amortization Date and
continuing on the first Business Day of each month thereafter until the Secured
Obligations (other than inchoate indemnity obligations) are repaid.  The entire
Term Loan principal balance and all accrued but unpaid interest hereunder, shall
be due and payable on Term Loan Maturity Date (bullet payment).  Borrower shall
make all payments under this Agreement without setoff, recoupment or deduction
and regardless of any counterclaim or defense. Lender will initiate debit
entries to the Borrower’s account as authorized on the ACH Authorization (i) on
each payment date of all periodic obligations payable to Lender under each Term
Advance and (ii) out-of-pocket legal fees and costs incurred by Agent or Lender
in connection with Section 11.11 of this Agreement.

2.3Maximum Interest.  Notwithstanding any provision in this Agreement or any
other Loan Document, it is the parties’ intent not to contract for, charge or
receive interest at a rate that is greater than the maximum rate permissible by
law that a court of competent jurisdiction shall deem applicable hereto (which
under the laws of the State of California shall be deemed to be the laws
relating to permissible rates of interest on commercial loans) (the “Maximum
Rate”).  If a court of competent jurisdiction shall finally determine that
Borrower has actually paid to Lender an amount of interest in excess of the
amount that would have been payable if all of the Secured Obligations had at all
times borne interest at the Maximum Rate, then such excess interest actually
paid by Borrower shall be applied as follows:  first, to the payment of the
Secured Obligations consisting of the outstanding principal; second, after all
principal is repaid, to the payment of Lender’s

 

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

 

accrued interest, costs, expenses, professional fees and any other Secured
Obligations; and third, after all Secured Obligations are repaid, the excess (if
any) shall be refunded to Borrower.   

2.4Default Interest.  In the event any payment is not paid on the scheduled
payment date, an amount equal to five percent (5%) of the past due amount shall
be payable on demand. In addition, upon the occurrence and during the
continuation of an Event of Default hereunder, all Secured Obligations,
including principal, interest, compounded interest, and professional fees, shall
bear interest at a rate per annum equal to the rate set forth in Section 2.2(c)
plus five percent (5%) per annum.  In the event any interest is not paid when
due hereunder, delinquent interest shall be added to principal and shall bear
interest on interest, compounded at the rate set forth in Section 2.2(c) or
Section 2.4, as applicable.

2.5Prepayment.  At its option upon at least seven (7) Business Days prior notice
to Agent, Borrower may prepay all, but not less than all, of the outstanding
Advances by paying the entire principal balance, all accrued and unpaid interest
thereon, together with a prepayment charge equal to the following percentage of
the outstanding principal amount (including any accrued payment-in-kind interest
added as principal pursuant to the terms herein) being prepaid: if such Advance
amounts are prepaid in any of the first twelve (12) months following the
applicable Advance Date, 3.0%; after twelve (12) months but prior to twenty four
(24) months, 2.0%; and thereafter, 1.0% (each, a “Prepayment Charge”).  Borrower
agrees that the Prepayment Charge is a reasonable calculation of Lender’s lost
profits in view of the difficulties and impracticality of determining actual
damages resulting from an early repayment of the Advances.  Borrower shall
prepay the outstanding amount of all principal and accrued interest through the
prepayment date and the Prepayment Charge upon the occurrence of a Change in
Control. Notwithstanding the foregoing, Agent and Lender agree to waive the
Prepayment Charge if Agent and Lender (in its sole and absolute discretion)
agree in writing to refinance the Advances prior to the Maturity Date.

2.6[Reserved]

2.7Notes.  If so requested by Lender by written notice to Borrower, then
Borrower shall execute and deliver to Lender (and/or, if applicable and if so
specified in such notice, to any Person who is an assignee of Lender pursuant to
Section 11.13) (promptly after the Borrower’s receipt of such notice) a Note or
Notes to evidence Lender’s Loans.

2.8Pro Rata Treatment.  Each payment (including prepayment) on account of any
fee and any reduction of the Term Loans shall be made pro rata according to the
Term Commitments of the relevant Lender.

SECTION 3.  SECURITY INTEREST

3.1As security for the prompt and complete payment when due (whether on the
payment dates or otherwise) of all the Secured Obligations, Borrower grants to
Agent a security interest in all of Borrower’s right, title, and interest in and
to the following personal property whether now owned or hereafter acquired
(collectively, the “Collateral”):  (a) Receivables; (b) Equipment; (c) Fixtures;
(d) General Intangibles (including Intellectual Property); (e) Inventory; (f)
Investment Property; (g) Deposit Accounts; (h) Cash; (i) Goods;

 

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

 

and all other tangible and intangible personal property of Borrower whether now
or hereafter owned or existing, leased, consigned by or to, or acquired by,
Borrower and wherever located, and any of Borrower’s property in the possession
or under the control of Agent; and, to the extent not otherwise included, all
Proceeds of each of the foregoing and all accessions to, substitutions and
replacements for, and rents, profits and products of each of the foregoing. 

3.2Notwithstanding the broad grant of the security interest set forth in
Section 3.1, above, the Collateral shall not include (a) any “intent to use”
trademarks at all times prior to the first use thereof, whether by the actual
use thereof in commerce, the recording of a statement of use with the United
States Patent and Trademark Office or otherwise, and (b) nonassignable licenses
or contracts, which by their terms require the consent of the licensor thereof
or another party (but only to the extent such prohibition on transfer is
enforceable under applicable law, including, without limitation, Sections 9406,
9407 and 9408 of the UCC).

3.3The lien and security interest created hereunder shall promptly be
released:  (i) with respect to all Collateral upon the payment in full of all
Secured Obligations, (ii) with respect to Collateral that is sold or to be sold
as part of or in connection with any sale permitted under this Agreement to a
Person that is not Borrower, or (iii) if approved, authorized or ratified in
writing in accordance with this Agreement.  Upon such release Agent shall, upon
the request and at the sole cost and expense of Borrower, assign, transfer and
deliver to Borrower, against receipt and without recourse to or warranty by
Agent, such of the Collateral or any part thereof to be released as may be in
possession of Agent and as shall not have been sold or otherwise applied
pursuant to the terms hereof and proper documents and instruments (including UCC
3 termination financing statements or releases) acknowledging the release of
such Collateral.

SECTION 4.  CONDITIONS PRECEDENT TO LOAN

The obligations of Lender to make the Loan hereunder are subject to the
satisfaction by Borrower of the following conditions:

4.1Initial Advance.  On or prior to the Closing Date, Borrower shall have
delivered to Agent the following:

(a)executed copies of the Loan Documents (other than the Warrant, which shall be
an original), Account Control Agreements, a legal opinion of Borrower’s counsel,
and all other documents and instruments reasonably required by Agent to
effectuate the transactions contemplated hereby or to create and perfect the
Liens of Agent with respect to all Collateral, in all cases in form and
substance reasonably acceptable to Agent;

(b)certified copy of resolutions of Borrower’s board of directors evidencing
approval of (i) the Loan and other transactions evidenced by the Loan Documents;
and (ii) the Warrant and transactions evidenced thereby;

(c)a certified copy of the Certificate of Incorporation and the Bylaws, each as
amended through the Closing Date, of Borrower;

 

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

 

(d)a certificate of good standing for Borrower from its state of incorporation
and similar certificates from all other jurisdictions in which it does business
and where the failure to be qualified would have a Material Adverse Effect; 

(e)payment of the Due Diligence Fee and Facility Charge (to the extent not
already paid) and reimbursement of Agent’s and Lender’s current expenses
reimbursable pursuant to this Agreement, which amounts may be deducted from the
initial Advance;

(f)duly executed payoff letter from Silicon Valley Bank, in form and substance
reasonably acceptable to Agent; and

(g)such other documents as Agent may reasonably request.

4.2All Advances.  On each Advance Date:

(a)Agent shall have received (i) an Advance Request for the relevant Advance as
required by Section 2.2(b), as applicable, each duly executed by Borrower’s
Chief Executive Officer or Chief Financial Officer, and (ii) any other documents
Agent may reasonably request.

(b)The representations and warranties set forth in this Agreement shall be true
and correct in all material respects on and as of the Advance Date with the same
effect as though made on and as of such date, except to the extent such
representations and warranties expressly relate to an earlier date.

(c)Borrower shall be in compliance with all the terms and provisions set forth
herein and in each other Loan Document on its part to be observed or performed,
and at the time of and immediately after such Advance no Event of Default shall
have occurred and be continuing.

(d)Each Advance Request shall be deemed to constitute a representation and
warranty by Borrower on the relevant Advance Date as to the matters specified in
paragraphs (b) and (c) of this Section 4.2 and as to the matters set forth in
the Advance Request.

4.3No Default.  As of the Closing Date and each Advance Date, (i) no fact or
condition exists that would (or would, with the passage of time, the giving of
notice, or both) constitute an Event of Default and (ii) no event that has had
or could reasonably be expected to have a Material Adverse Effect has occurred
and is continuing.

4.4Tranche III Facility Charge.  Upon draw by Borrower of any Tranche III Term
Loan Advance, Borrower shall pay to Agent the Tranche III Facility Charge.

4.5Post-Closing Conditions.  

(a)Within thirty (30) days after the Closing Date, Borrower shall have delivered
to Agent copies of all insurance policy binders with respect to the insurance
policies required under Section 6.

(b)Within three (3) Business Days after the Closing Date, Borrower shall have
delivered to Agent an Account Control Agreement in form and substance

 

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

 

satisfactory to Agent with respect to Silicon Valley Bank account numbers
XXXX6737, XXXX0604 and XXXX5735.  

(c)By December 31, 2016, Borrower shall have delivered to Agent a landlord
waiver in form and substance reasonably acceptable to Agent, executed by
Borrower’s landlord at 3001 Bees Caves Road, Austin, Texas.

SECTION 5.  REPRESENTATIONS AND WARRANTIES OF BORROWER

Borrower represents and warrants that:

5.1Corporate Status.  Borrower is a corporation duly organized, legally existing
and in good standing under the laws of the State of Delaware, and is duly
qualified as a foreign corporation in all jurisdictions in which the nature of
its business or location of its properties require such qualifications and where
the failure to be qualified could reasonably be expected to have a Material
Adverse Effect.  Borrower’s present name, former names (if any), locations,
place of formation, tax identification number, organizational identification
number and other information are correctly set forth in Exhibit C, as may be
updated by Borrower in a written notice (including any Compliance Certificate)
provided to Agent after the Closing Date.

5.2Collateral.  Borrower owns the Collateral, free of all Liens, except for
Permitted Liens.  Borrower has the power and authority to grant to Agent a Lien
in the Collateral as security for the Secured Obligations.  

5.3Consents.  Borrower’s execution, delivery and performance of this Agreement
and all other Loan Documents, and Borrower’s execution of the Warrant, (i) have
been duly authorized by all necessary corporate action of Borrower, (ii) will
not result in the creation or imposition of any Lien upon the Collateral, other
than Permitted Liens and the Liens created by this Agreement and the other Loan
Documents, (iii) do not violate any provisions of Borrower’s Certificate or
Articles of Incorporation (as applicable), bylaws, or any, law, regulation,
order, injunction, judgment, decree or writ to which Borrower is subject and
(iv) except as described on Schedule 5.3, do not violate any contract or
agreement or require the consent or approval of any other Person which has not
already been obtained.  The individual or individuals executing the Loan
Documents and the Warrant are duly authorized to do so.

5.4Material Adverse Effect.  No event that has had or could reasonably be
expected to have a Material Adverse Effect has occurred and is continuing.
Borrower is not aware of any event likely to occur that is reasonably expected
to result in a Material Adverse Effect.

5.5Actions Before Governmental Authorities.  There are no actions, suits or
proceedings at law or in equity or by or before any governmental authority now
pending or, to the knowledge of Borrower, threatened against or affecting
Borrower or its property, that is reasonably expected to result in a Material
Adverse Effect.

5.6Laws.  Borrower is not in violation of any law, rule or regulation, or in
default with respect to any judgment, writ, injunction or decree of any
governmental

 

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

 

authority, where such violation or default is reasonably expected to result in a
Material Adverse Effect.  Borrower is not in default in any manner under any
provision of any agreement or instrument evidencing material Indebtedness, or
any other material agreement to which it is a party or by which it is
bound.  Borrower, its Affiliates and, to the knowledge of the Borrower and its
Affiliates, any agent or other party acting on behalf of Borrower or its
Affiliates are in compliance with all applicable anti-money laundering, economic
sanctions and anti-bribery laws and regulations, and none of the funds to be
provided under this Agreement will be used, directly or indirectly, for any
activities in violation of such laws and regulations. 

5.7Information Correct and Current.  No information, report, Advance Request,
financial statement, exhibit or schedule furnished, by or on behalf of Borrower
to Agent in connection with any Loan Document or included therein or delivered
pursuant thereto contained, or, when taken as a whole, contains or will contain
any material misstatement of fact or, when taken together with all other such
information or documents, omitted, omits or will omit to state any material fact
necessary to make the statements therein, in the light of the circumstances
under which they were, are or will be made, not materially misleading at the
time such statement was made or deemed made. Additionally, any and all financial
or business projections (including the Projections) provided by Borrower to
Agent, whether prior to or after the Closing Date, shall be (i) provided in good
faith and based on the most current data and information available to Borrower,
and (ii) the most current of such projections provided to Borrower’s Board of
Directors (it being understood that such projections are subject to significant
uncertainties and contingencies, many of which are beyond the control of
Borrower, that no assurance is given that any particular projections will be
realized, and that actual results may differ).

5.8Tax Matters.  Except as described on Schedule 5.8 and except those being
contested in good faith with adequate reserves under GAAP, (a) Borrower has
filed all material federal, state and local tax returns that it is required to
file, (b) Borrower has duly paid or fully reserved for all taxes or installments
thereof (including any interest or penalties) as and when due, which have or may
become due pursuant to such returns, and (c) Borrower has paid or fully reserved
for any tax assessment received by Borrower for the three (3) years preceding
the Closing Date, if any (including any taxes being contested in good faith and
by appropriate proceedings).

5.9Intellectual Property Claims.  Borrower is the sole owner of, or otherwise
has the right to use, the Intellectual Property material to Borrower’s
business.  Except as described on Schedule 5.9, (i) to Borrower’s knowledge,
each of the material Copyrights, Trademarks and Patents is valid and
enforceable, (ii) no material part of the Intellectual Property has been judged
invalid or unenforceable, in whole or in part, and (iii) no claim has been made
to Borrower that any material part of the Intellectual Property violates the
rights of any third party. Exhibit D is a true, correct and complete list of
each of Borrower’s Patents, registered Trademarks, registered Copyrights, and
material agreements under which Borrower licenses Intellectual Property from
third parties (other than shrink-wrap software licenses), together with
application or registration numbers, as applicable, owned by Borrower or any
Subsidiary, in each case as of the Closing Date. Borrower is not in material
breach of, nor has Borrower failed to perform any material obligations under,
any of the foregoing contracts, licenses or agreements and, to Borrower’s
knowledge, no third

 

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

 

party to any such contract, license or agreement is in material breach thereof
or has failed to perform any material obligations thereunder.   

5.10Intellectual Property.  Except as described on Schedule 5.10, Borrower has
all material rights with respect to Intellectual Property necessary or material
in the operation or conduct of Borrower’s business as currently conducted and
proposed to be conducted by Borrower.  Without limiting the generality of the
foregoing, and in the case of Licenses, except for restrictions that are
unenforceable under Division 9 of the UCC, Borrower has the right, to the extent
required to operate Borrower’s business, to freely transfer, license or assign
Intellectual Property necessary or material in the operation or conduct of
Borrower’s business as currently conducted and proposed to be conducted by
Borrower, without condition, restriction or payment of any kind (other than
license payments in the ordinary course of business) to any third party, and
Borrower owns or has the right to use, pursuant to valid licenses, all software
development tools, library functions, compilers and all other third-party
software and other items that are material to Borrower’s business and used in
the design, development, promotion, sale, license, manufacture, import, export,
use or distribution of Borrower Products except customary covenants in inbound
license agreements and equipment leases where Borrower is the licensee or
lessee.  

5.11Borrower Products.  Except as described on Schedule 5.11, no Intellectual
Property owned by Borrower or Borrower Product has been or is subject to any
actual or, to the knowledge of Borrower, threatened litigation, proceeding
(including any proceeding in the United States Patent and Trademark Office or
any corresponding foreign office or agency) or outstanding decree, order,
judgment, settlement agreement or stipulation that restricts in any manner
Borrower’s use, transfer or licensing thereof or that may affect the validity,
use or enforceability thereof. There is no decree, order, judgment, agreement,
stipulation, arbitral award or other provision entered into in connection with
any litigation or proceeding that obligates Borrower to grant licenses or
ownership interest in any future Intellectual Property related to the operation
or conduct of the business of Borrower or Borrower Products.  Borrower has not
received any written notice or claim, or, to the knowledge of Borrower, oral
notice or claim, challenging or questioning Borrower’s ownership in any
Intellectual Property (or written notice of any claim challenging or questioning
the ownership in any licensed Intellectual Property of the owner thereof) or
suggesting that any third party has any claim of legal or beneficial ownership
with respect thereto nor, to Borrower’s knowledge, is there a reasonable basis
for any such claim.  Neither Borrower’s use of its Intellectual Property nor the
production and sale of Borrower Products infringes the Intellectual Property or
other rights of others.

5.12Financial Accounts.  Exhibit E, as may be updated by the Borrower in a
written notice provided to Agent after the Closing Date, is a true, correct and
complete list of (a) all banks and other financial institutions at which
Borrower or any Subsidiary maintains Deposit Accounts and (b) all institutions
at which Borrower or any Subsidiary maintains an account holding Investment
Property, and such exhibit correctly identifies the name, address and telephone
number of each bank or other institution, the name in which the account is held,
a description of the purpose of the account, and the complete account number
therefor.

 

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

 

5.13Employee Loans.  Borrower has no outstanding loans to any employee, officer
or director of the Borrower nor has Borrower guaranteed the payment of any loan
made to an employee, officer or director of the Borrower by a third party. 

5.14Capitalization and Subsidiaries.  Borrower’s capitalization as of the
Closing Date is set forth on Schedule 5.14 annexed hereto.  Borrower does not
own any stock, partnership interest or other securities of any Person, except
for Permitted Investments.  Attached as Schedule 1, as may be updated by
Borrower in a written notice provided after the Closing Date, is a true, correct
and complete list of each Subsidiary.  Collectively, all Subsidiaries of
Borrower as of the Closing Date do not (a) hold any assets in excess of $75,000,
(b) have any liabilities (excluding, solely those intercompany liabilities under
GAAP existing on the Closing Date) in excess of $50,000 in the aggregate, and
(c) account for or generate any revenue.

SECTION 6.  INSURANCE; INDEMNIFICATION

6.1Coverage.  Borrower shall cause to be carried and maintained commercial
general liability insurance, on an occurrence form, against risks customarily
insured against in Borrower’s line of business.  Such risks shall include the
risks of bodily injury, including death, property damage, personal injury,
advertising injury, and contractual liability per the terms of the
indemnification agreement found in Section 6.3.  Borrower must maintain a
minimum of $2,000,000 of commercial general liability insurance for each
occurrence.  Borrower has and agrees to maintain a minimum of $2,000,000 of
directors’ and officers’ insurance for each occurrence and $5,000,000 in the
aggregate.  So long as there are any Secured Obligations outstanding, Borrower
shall also cause to be carried and maintained insurance upon the Collateral,
insuring against all risks of physical loss or damage howsoever caused, in an
amount not less than the full replacement cost of the Collateral, provided that
such insurance may be subject to standard exceptions and deductibles.  At the
time of renewal, Borrower shall deliver to Agent copies of each insurance policy
binder.

6.2Certificates.  Borrower shall deliver to Agent certificates of insurance that
evidence Borrower’s compliance with its insurance obligations in Section 6.1 and
the obligations contained in this Section 6.2.  Borrower’s insurance certificate
shall state Agent (shown as “Hercules Capital, Inc.”, as Agent”) is an
additional insured for commercial general liability, a loss payee for all risk
property damage insurance, subject to the insurer’s approval, and a loss payee
for property insurance and additional insured for liability insurance for any
future insurance that Borrower may acquire from such insurer.  Attached to the
certificates of insurance will be additional insured endorsements for liability
and lender’s loss payable endorsements for all risk property damage
insurance.  All certificates of insurance will provide for a minimum of thirty
(30) days’ advance written notice to Agent of cancellation (other than
cancellation for non-payment of premiums, for which ten (10) days’ advance
written notice shall be sufficient) or any other change adverse to Agent’s
interests.  Any failure of Agent to scrutinize such insurance certificates for
compliance is not a waiver of any of Agent’s rights, all of which are
reserved.  

6.3Indemnity.  Borrower agrees to indemnify and hold Agent, Lender and their
officers, directors, employees, agents, in-house attorneys, representatives and
shareholders (each, an “Indemnified Person”) harmless from and against any and
all claims, costs, expenses, damages and liabilities (including such claims,
costs, expenses,

 

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

 

damages and liabilities based on liability in tort, including strict liability
in tort), including reasonable attorneys’ fees and disbursements and other costs
of investigation or defense (including those incurred upon any appeal)
(collectively, “Liabilities”), that may be instituted or asserted against or
incurred by such Indemnified Person as the result of credit having been
extended, suspended or terminated under this Agreement and the other Loan
Documents or the administration of such credit, or in connection with or arising
out of the transactions contemplated hereunder and thereunder, or any actions or
failures to act in connection therewith, or arising out of the disposition or
utilization of the Collateral, excluding in all cases Liabilities to the extent
resulting solely from any Indemnified Person’s gross negligence or willful
misconduct. Borrower agrees to pay, and to save Agent and Lender harmless from,
any and all liabilities with respect to, or resulting from any delay in paying,
any and all excise, sales or other similar taxes (excluding taxes imposed on or
measured by the net income of Agent or Lender) that may be payable or determined
to be payable with respect to any of the Collateral or this Agreement.  In no
event shall any Indemnified Person be liable on any theory of liability for any
special, indirect, consequential or punitive damages (including any loss of
profits, business or anticipated savings). This Section 6.3 shall survive the
repayment of indebtedness under, and otherwise shall survive the expiration or
other termination of, the Loan Agreement. 

SECTION 7.  COVENANTS OF BORROWER

Borrower agrees as follows:

7.1Financial Reports.  Borrower shall furnish to Agent the financial statements
and reports listed hereinafter (the “Financial Statements”):

(a)as soon as practicable (and in any event within forty (40) days) after the
end of each month, unaudited interim and year-to-date financial statements as of
the end of such month (prepared on a consolidated), including balance sheet and
related statements of income and cash flows accompanied by a report detailing
any material contingencies (including the commencement of any material
litigation by or against Borrower) or any other occurrence that would reasonably
be expected to have a Material Adverse Effect, all certified by Borrower’s Chief
Executive Officer or Chief Financial Officer to the effect that they have been
prepared in accordance with GAAP, except (i) for the absence of footnotes, (ii)
that they are subject to normal year-end adjustments, and (iii) they do not
contain certain non-cash items that are customarily included in quarterly and
annual financial statements;

(b)as soon as practicable (and in any event within forty (40) days) after the
end of each calendar quarter, unaudited interim and year-to-date financial
statements as of the end of such calendar quarter (prepared on a consolidated
basis), including balance sheet and related statements of income and cash flows
accompanied by a report detailing any material contingencies (including the
commencement of any material litigation by or against Borrower) or any other
occurrence that would reasonably be expected to have a Material Adverse Effect,
certified by Borrower’s Chief Executive Officer or Chief Financial Officer to
the effect that they have been prepared in accordance with GAAP, except (i) for
the absence of footnotes, and (ii) that they are subject to normal year-end
adjustments; as well as the most recent capitalization table for Borrower,
including the weighted average exercise price of employee stock options;

 

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

 

(c)as soon as practicable (and in any event within ninety (90) days) after the
end of each fiscal year, unqualified audited financial statements as of the end
of such year (prepared on a consolidated and consolidating basis, if
applicable), including balance sheet and related statements of income and cash
flows, and setting forth in comparative form the corresponding figures for the
preceding fiscal year, certified by a firm of independent certified public
accountants selected by Borrower and reasonably acceptable to Agent, accompanied
by any management report from such accountants;  

(d)as soon as practicable (and in any event within forty (40) days) after the
end of each month, a Compliance Certificate in the form of Exhibit F;

(e)as soon as practicable (and in any event within forty (40) days) after the
end of each month, a report showing agings of accounts receivable and accounts
payable;

(f)promptly after the sending or filing thereof, as the case may be, copies of
any proxy statements, financial statements or reports that Borrower has made
available to its shareholders and copies of any regular, periodic and special
reports or registration statements that Borrower files with the Securities and
Exchange Commission or any governmental authority that may be substituted
therefor, or any national securities exchange;

(g)within forty-five (45) days following each meeting of the Board of Directors,
copies of all notices, consents and other materials that Borrower provides to
its directors in connection with meetings of the Board of Directors, and
concurrently with delivery to Borrower’s outside auditor firm, but in no event
less frequently than quarterly within forty-five (45) days after quarter end,
minutes of such meeting; provided that in all cases Borrower may exclude
confidential compensation information, any attorney-client privileged
information and any information that may raise a conflict of interest with
respect to Agent or the Lenders;

(h)(i) as soon as available, but no later than December 15 of each calendar year
after the Closing Date, financial and business projections covering January 1
through February 28 of the following calendar year prepared in good faith by
Borrower’s management and certified in writing by the Chief Executive Officer or
Chief Financial Officer of Borrower and in form and substance acceptable to
Agent in its sole discretion, and (ii) as soon as available, but no later than
February 28 of each calendar year after the Closing Date, financial and business
projections covering March 1 through December 31 of that calendar year approved
by Borrower’s Board of Directors and in form and substance acceptable to Agent
in its sole discretion;

(i)copies of insurance documents required in Section 6 (including copies of such
insurance policy binders) upon the inception and renewal of any such insurance
policy; and

(j)budgets, operating plans and other financial information reasonably requested
by Agent.

Without Lender’s consent, not to be unreasonably withheld, Borrower shall not
(a) make any change in its accounting policies or reporting practices, except as
required by GAAP or

 

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

 

(b) make any change in its fiscal years or fiscal quarters. The fiscal year of
Borrower shall end on December 31.

The executed Compliance Certificate may be sent via email to Agent at
legal@herculestech.com.  All Financial Statements required to be delivered
pursuant to clauses (a), (b) and (c) shall be sent via e-mail to
financialstatements@herculestech.com with a copy to legal@herculestech.com
provided, that if e-mail is not available or sending such Financial Statements
via e-mail is not possible, they shall be sent to Agent at:
legal@herculestech.com, attention Chief Credit Officer.

Notwithstanding the foregoing, documents required to be delivered pursuant to
the terms hereof (to the extent any such documents are included in materials
otherwise filed with the SEC) may be delivered electronically and if so
delivered, shall be deemed to have been delivered on the date on which Borrower
emails a link thereto to Agent; provided that Borrower shall directly provide
Agent all Financial Statements required to be delivered pursuant to Section
7.1(b) and (c) hereunder.

7.2Management Rights.  Borrower shall permit any representative that Agent or
Lender authorizes, including its attorneys and accountants, to inspect the
Collateral and examine and make copies and abstracts of the books of account and
records of Borrower at reasonable times and upon reasonable notice during normal
business hours; provided, however, that so long as no Event of Default has
occurred and is continuing, such examinations shall be limited to no more often
than twice per fiscal year.  In addition, any such representative shall have the
right to meet with management and officers of Borrower to discuss such books of
account and records.  In addition, Agent or Lender shall be entitled at
reasonable times and intervals to consult with and advise the management and
officers of Borrower concerning significant business issues affecting
Borrower.  Such consultations shall not unreasonably interfere with Borrower’s
business operations.  The parties intend that the rights granted Agent and
Lender shall constitute “management rights” within the meaning of 29 C.F.R.
Section 2510.3-101(d)(3)(ii), but that any advice, recommendations or
participation by Agent or Lender with respect to any business issues shall not
be deemed to give Agent or Lender, nor be deemed an exercise by Agent or Lender
of, control over Borrower’s management or policies.

7.3Further Assurances.  Borrower shall from time to time execute, deliver and
file, alone or with Agent, any financing statements, security agreements,
collateral assignments, notices, control agreements, or other documents to
perfect or give the highest priority to Agent’s Lien on the
Collateral.  Borrower shall from time to time procure any instruments or
documents as may be reasonably requested by Agent, and take all further action
that may be necessary, or that Agent may reasonably request, to perfect and
protect the Liens granted hereby and thereby.  In addition, and for such
purposes only, Borrower hereby authorizes Agent to execute and deliver on behalf
of Borrower and to file such financing statements (including an indication that
the financing statement covers “all assets or all personal property” of Borrower
in accordance with Section 9-504 of the UCC), collateral assignments, notices,
control agreements, security agreements and other documents without the
signature of Borrower either in Agent’s name or in the name of Agent as agent
and attorney-in-fact for Borrower.  Borrower shall protect and defend Borrower’s
title to the Collateral and Agent’s Lien thereon against all Persons claiming
any interest adverse to Borrower or Agent other than Permitted Liens.  

 

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

 

7.4Indebtedness.  Borrower shall not create, incur, assume, guarantee or be or
remain liable with respect to any Indebtedness, or permit any Subsidiary to do
so, other than Permitted Indebtedness, or prepay any Indebtedness or take any
actions which impose on Borrower an obligation to prepay any Indebtedness,
except for (a) the conversion of Indebtedness into equity securities and the
payment of cash in lieu of fractional shares in connection with such conversion,
(b) purchase money Indebtedness pursuant to its then applicable payment
schedule, (c) prepayment by any Subsidiary of (i) inter-company Indebtedness
owed by such Subsidiary to any Borrower, or (ii) if such Subsidiary is not a
Borrower, intercompany Indebtedness owed by such Subsidiary to another
Subsidiary that is not a Borrower, (d) to the extent permitted under the Bank
Line Intercreditor Agreement, prepayment of the Bank Line, and (e) as otherwise
permitted hereunder or approved in writing by Agent. 

7.5Collateral.  Borrower shall at all times keep the Collateral and all other
property and assets used in Borrower’s business or in which Borrower now or
hereafter holds any interest free and clear from any legal process or Liens
whatsoever (except for Permitted Liens), and shall give Agent prompt written
notice of any legal process affecting the Collateral, such other property and
assets, or any Liens thereon, provided however, that the Collateral and such
other property and assets may be subject to Permitted Liens except that there
shall be no Liens whatsoever on Intellectual Property.  Borrower shall not agree
with any Person other than Agent, Lender and Bank not to encumber its property,
other than customary anti-assignment provisions in purchase money security
interest transactions, licenses and leases, in each case customary in Borrower’s
industry. Borrower shall cause its Subsidiaries to protect and defend such
Subsidiary’s title to its assets from and against all Persons claiming any
interest adverse to such Subsidiary, and Borrower shall cause its Subsidiaries
at all times to keep such Subsidiary’s property and assets free and clear from
any legal process or Liens whatsoever (except for Permitted Liens, provided
however, that there shall be no Liens whatsoever on Intellectual Property), and
shall give Agent prompt written notice of any legal process affecting such
Subsidiary’s assets.

7.6Investments.  Borrower shall not 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.

7.7Distributions.  Borrower shall not, and shall not allow any Subsidiary to,
(a) repurchase or redeem any class of stock or other equity interest other than
pursuant to employee, director or consultant repurchase plans or other similar
agreements, provided, however, in each case the repurchase or redemption price
does not exceed the original consideration paid for such stock or equity
interest, or (b) declare or pay any cash dividend or make a cash distribution on
any class of stock or other equity interest, except that (i) a Subsidiary may
pay dividends or make distributions to Borrower and (ii) Borrower may pay
dividends approved by its board of directors with respect to its Series B stock,
subject to Lender’s prior written consent, or (c) lend money to any employees,
officers or directors or guarantee the payment of any such loans granted by a
third party in excess of $100,000 in the aggregate during the term of this
Agreement or (d) waive, release or forgive any Indebtedness owed by any
employees, officers or directors in excess of $100,000 in the aggregate during
the term of this Agreement.

 

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

 

7.8Transfers.  Except for Permitted Transfers, Borrower shall not, and shall not
allow any Subsidiary to, voluntarily or involuntarily transfer, sell, lease,
license, lend or in any other manner convey any equitable, beneficial or legal
interest in any material portion of its assets. 

7.9Mergers or Acquisitions.  Borrower shall not merge or consolidate, or permit
any of its Subsidiaries to merge or consolidate, with or into any other business
organization (other than mergers or consolidations of (a) a Subsidiary which is
not a Borrower into another Subsidiary or into Borrower or (b) a Borrower into
another Borrower), or acquire, or permit any of its Subsidiaries to acquire, all
or substantially all of the capital stock or property of another Person.

7.10Taxes.  Borrower and its Subsidiaries shall pay when due all material taxes,
fees or other charges of any nature whatsoever (together with any related
interest or penalties) now or hereafter imposed or assessed against Borrower,
Agent, Lender or the Collateral or upon Borrower’s ownership, possession, use,
operation or disposition thereof or upon Borrower’s rents, receipts or earnings
arising therefrom.  Borrower shall file on or before the due date therefor all
personal property tax returns in respect of the Collateral.  Notwithstanding the
foregoing, Borrower may contest, in good faith and by appropriate proceedings,
taxes for which Borrower maintains adequate reserves therefor in accordance with
GAAP.

7.11Corporate Changes.  Neither Borrower nor any Subsidiary shall change its
corporate name, legal form or jurisdiction of formation without twenty (20)
days’ prior written notice to Agent.  Neither Borrower nor any Subsidiary shall
suffer a Change in Control. Neither Borrower nor any Subsidiary shall relocate
its chief executive office or its principal place of business unless: (i) it has
provided prior written notice to Agent; and (ii) such relocation shall be within
the continental United States of America.  Neither Borrower nor any Subsidiary
shall relocate any item of Collateral (other than (x) sales of Inventory in the
ordinary course of business, (y) relocations of Equipment having an aggregate
value of up to $150,000 in any fiscal year, and (z) relocations of Collateral
from a location described on Exhibit C to another location described on Exhibit
C) unless (i) it has provided prompt written notice to Agent, (ii) such
relocation is within the continental United States of America and, (iii) if such
relocation is to a third party bailee, it has delivered a bailee agreement in
form and substance reasonably acceptable to Agent.

7.12Deposit Accounts.  Neither Borrower nor any Subsidiary shall maintain any
Deposit Accounts, or accounts holding Investment Property, except (a) with
respect to which Agent has an Account Control Agreement or (b) those Subsidiary
accounts listed in Exhibit J and subject to the dollar limits listed
therein.  Notwithstanding the foregoing, (x) Borrower may maintain the Deposit
Accounts with Bank of America set forth in Exhibit E without an Account Control
Agreement, provided (i) account number XXXX2850 (A) solely holds amounts held in
trust for transfer to the beneficiary of such funds, eLoyalty LLC (which, at any
time such account has a balance greater than zero, Borrower shall transfer to
eLoyalty LLC all funds in such account within five (5) Business Days) and (B)
contains no funds in which Borrower has any title or interest, (ii) account
number XXXX9473 shall not have a balance exceeding $25,000 at any time and (iii)
by December 31, 2016 Borrower shall close all such accounts or make them subject
to an Account Control Agreement in favor of Agent, (y) Borrower may maintain
account number

 

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

 

XXXX1655 with Silicon Valley Bank without an Account Control Agreement, provided
such account shall not have a balance exceeding the lower of (i) $5,038,753 (as
such amount may be increased by Agent in writing in its sole discretion) and
(ii) the amount of cash collateral required to support Borrower’s letter of
credit obligations with Silicon Valley Bank and (z) Borrower may maintain
account number XXXX2192 with Silicon Valley Bank without an Account Control
Agreement, provided such account is a true zero balance account with no
permanent balance. 

7.13Borrower shall notify Agent of each Subsidiary formed subsequent to the
Closing Date and, within fifteen (15) days of formation, shall cause any such
Subsidiary to execute and deliver to Agent a Joinder Agreement.  

7.14Permitted Subsidiaries. Borrower agrees (a) that, collectively, all
Subsidiaries that have not entered into a Joinder Agreement shall (A) not hold
any assets not held as of the Closing Date or incur any liabilities not incurred
as of the Closing Date and (B) not generate or account for any revenue and (b)
to dissolve each Subsidiary existing on the Closing Date that has not entered
into a Joinder Agreement by the Dissolution Date; provided that if any such
Subsidiary is not dissolved by the Dissolution Date (subject to any extensions
permitted in that definition), such Subsidiary shall execute a Joinder Agreement
and become a co-borrower hereunder.  

7.15Notification of Event of Default.  Borrower shall notify Agent immediately
of the occurrence of any Event of Default.

7.16[Reserved]

7.17Financial covenants.

(a)Subscription Revenues.  Borrower shall achieve at least 80% of the
Subscription Revenues forecasted in the Projections (and consistent in all
respects with the method for determining “Subscription Revenue” in the
Projections and in Borrower’s public disclosure with the SEC as of the Closing
Date), measured monthly on a trailing six month basis on the last day of each
month, as set forth in the Projections and subject to verification by Agent
(including supporting documentation requested by Agent).

(b)Minimum Cash.  At all times prior to achievement of the Unrestricted Cash
Milestone, Borrower shall maintain Unrestricted Cash in an amount greater than
or equal to Seven Million Five Hundred Thousand Dollars ($7,500,000) plus the
amount of Borrower’s accounts payable under GAAP in excess of $100,000 and not
paid after the 90th day following the invoice date for such accounts
payable.  From and after the date on which the Borrower achieves the
Unrestricted Cash Milestone, Borrower shall only be required to maintain
Unrestricted Cash greater than or equal to Six Million Dollars ($6,000,000) plus
the amount of Borrower’s accounts payable under GAAP in excess of $100,000 and
not paid after the 90th day following the invoice date for such accounts
payable.  

Borrower shall provide Agent evidence of compliance with the financial covenants
under this Section 7.17 in each Compliance Certificate and upon request in form
and substance reasonably acceptable to Agent and supporting documentation
reasonably requested by

 

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

 

Agent, including certification of such compliance by the Chief Executive Officer
or Chief Financial Officer of Borrower.

SECTION 8.  [RESERVED]

SECTION 9.  EVENTS OF DEFAULT

The occurrence of any one or more of the following events shall be an Event of
Default:

9.1Payments.  Borrower fails to pay any amount due under this Agreement or any
of the other Loan Documents on the due date; provided, however, that an Event of
Default shall not occur on account of a failure to pay due solely to an
administrative or operational error of Agent or Lender or Borrower’s bank if
Borrower had the funds to make the payment when due and makes the payment within
three (3) Business Days following Borrower’s knowledge of such failure to pay;
or

9.2Covenants.  Borrower breaches or defaults in the performance of any covenant
or Secured Obligation under this Agreement, or any of the other Loan Documents
or any other agreement among Borrower, Agent and Lender, and (a) with respect to
a default under any covenant under this Agreement (other than under Sections
4.5, 6, 7.4, 7.5, 7.6, 7.7, 7.8, 7.9, 7.14, 7.15 and 7.17), any other Loan
Document or any other agreement among Borrower, Agent and Lender, such default
continues for more than ten (10) days after the earlier of the date on which (i)
Agent or Lender has given notice of such default to Borrower and (ii) Borrower
has actual knowledge of such default or (b) with respect to a default under any
of Sections 4.5, 6, 7.4, 7.5, 7.6, 7.7, 7.8, 7.9, 7.14, 7.15 and 7.17 the
occurrence of such default; or

9.3Material Adverse Effect.  A circumstance has occurred that would reasonably
be expected to have a Material Adverse Effect; or

9.4Representations.  Any representation or warranty made by Borrower in any Loan
Document or in the Warrant shall have been false or misleading in any material
respect when made or when deemed made; or

9.5Insolvency.  Borrower (A) (i) shall make an assignment for the benefit of
creditors; or (ii) shall be unable to pay its debts as they become due, or be
unable to pay or perform under the Loan Documents, or shall become insolvent; or
(iii) shall file a voluntary petition in bankruptcy; or (iv) shall file any
petition, answer, or document seeking for itself any reorganization,
arrangement, composition, readjustment, liquidation, dissolution or similar
relief under any present or future statute, law or regulation pertinent to such
circumstances; or (v) shall seek or consent to or acquiesce in the appointment
of any trustee, receiver, or liquidator of Borrower or of all or any substantial
part (i.e., 33-1/3% or more) of the assets or property of Borrower; or
(vi) shall cease operations of its business as its business has normally been
conducted, or terminate substantially all of its employees; or (vii) Borrower or
its directors or majority shareholders shall take any action initiating any of
the foregoing actions described in clauses (i) through (vi); or (B) either
(i) thirty (30) days shall have expired after the commencement of an involuntary
action against Borrower seeking reorganization, arrangement, composition,
readjustment, liquidation, dissolution or similar relief under any present or
future statute, law or regulation, without such action being dismissed or all
orders or proceedings thereunder affecting the operations or the

 

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

 

business of Borrower being stayed; or (ii) a stay of any such order or
proceedings shall thereafter be set aside and the action setting it aside shall
not be timely appealed; or (iii) Borrower shall file any answer admitting or not
contesting the material allegations of a petition filed against Borrower in any
such proceedings; or (iv) the court in which such proceedings are pending shall
enter a decree or order granting the relief sought in any such proceedings; or
(v) thirty (30) days shall have expired after the appointment, without the
consent or acquiescence of Borrower, of any trustee, receiver or liquidator of
Borrower or of all or any substantial part of the properties of Borrower without
such appointment being vacated; or 

9.6Attachments; Judgments.  Any portion of Borrower’s assets is attached or
seized, or a levy is filed against any such assets, or a judgment or judgments
is/are entered for the payment of money (not covered by independent third party
insurance as to which liability has not been rejected by such insurance
carrier), individually or in the aggregate, of at least $250,000, and such
attachment, seizure, levy or judgment remains unsatisfied, unvacated or unstayed
for a period of twenty (20) days after the entry thereof, or Borrower is
enjoined or in any way prevented by court order from conducting any part of its
business; or  

9.7Other Obligations.  The occurrence of any default under any agreement or
obligation of Borrower involving any Indebtedness in excess of $250,000; or

9.8Stop Trade.  At any time, an SEC stop trade order or NASDAQ market trading
suspension of the common stock shall be in effect for five (5) consecutive days
or five (5) days during a period of ten (10) consecutive days, excluding in all
cases a suspension of all trading on a public market, provided that Borrower
shall not have been able to cure such trading suspension within thirty (30) days
of the notice thereof or list the common stock on another public market within
sixty (60) days of such notice.

SECTION 10.  REMEDIES

10.1General.  Upon and during the continuance of any one or more Events of
Default, (i) Agent may, and at the direction of the Required Lenders shall,
accelerate and demand payment of all or any part of the Secured Obligations
together with a Prepayment Charge and declare them to be immediately due and
payable (provided, that upon the occurrence of an Event of Default of the type
described in Section 9.5, all of the Secured Obligations shall automatically be
accelerated and made due and payable, in each case without any further notice or
act), (ii) Agent may, at its option, sign and file in Borrower’s name any and
all collateral assignments, notices, control agreements, security agreements and
other documents it deems necessary or appropriate to perfect or protect the
repayment of the Secured Obligations, and in furtherance thereof, Borrower
hereby grants Agent an irrevocable power of attorney coupled with an interest,
and (iii) Agent may notify any of Borrower’s account debtors to make payment
directly to Agent, compromise the amount of any such account on Borrower’s
behalf and endorse Agent’s name without recourse on any such payment for deposit
directly to Agent’s account.  Agent may, and at the direction of the Required
Lenders shall, exercise all rights and remedies with respect to the Collateral
under the Loan Documents or otherwise available to it under the UCC and other
applicable law, including the right to release, hold, sell, lease, liquidate,
collect, realize upon, or otherwise dispose of all or any part of the Collateral
and the right to occupy, utilize,

 

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

 

process and commingle the Collateral.  All Agent’s rights and remedies shall be
cumulative and not exclusive.   

10.2Collection; Foreclosure.  Upon the occurrence and during the continuance of
any Event of Default, Agent may, and at the direction of the Required Lenders
shall, at any time or from time to time, apply, collect, liquidate, sell in one
or more sales, lease or otherwise dispose of, any or all of the Collateral, in
its then condition or following any commercially reasonable preparation or
processing, in such order as Agent may elect.  Any such sale may be made either
at public or private sale at its place of business or elsewhere.  Borrower
agrees that any such public or private sale may occur upon ten (10) calendar
days’ prior written notice to Borrower.  Agent may require Borrower to assemble
the Collateral and make it available to Agent at a place designated by Agent
that is reasonably convenient to Agent and Borrower.  The proceeds of any sale,
disposition or other realization upon all or any part of the Collateral shall be
applied by Agent in the following order of priorities:

First, to Agent and Lender in an amount sufficient to pay in full Agent’s and
Lender’s reasonable costs and professionals’ and advisors’ fees and expenses as
described in Section 11.11;

Second, to Lender in an amount equal to the then unpaid amount of the Secured
Obligations (including principal, interest, and the Default Rate interest), in
such order and priority as Agent may choose in its sole discretion; and

Finally, after the full and final payment in Cash of all of the Secured
Obligations (other than inchoate obligations), to any creditor holding a junior
Lien on the Collateral, or to Borrower or its representatives or as a court of
competent jurisdiction may direct.

Agent shall be deemed to have acted reasonably in the custody, preservation and
disposition of any of the Collateral if it complies with the obligations of a
secured party under the UCC.

10.3No Waiver.  Agent shall be under no obligation to marshal any of the
Collateral for the benefit of Borrower or any other Person, and Borrower
expressly waives all rights, if any, to require Agent to marshal any
Collateral.  

10.4Cumulative Remedies.  The rights, powers and remedies of Agent hereunder
shall be in addition to all rights, powers and remedies given by statute or rule
of law and are cumulative.  The exercise of any one or more of the rights,
powers and remedies provided herein shall not be construed as a waiver of or
election of remedies with respect to any other rights, powers and remedies of
Agent.

SECTION 11.  MISCELLANEOUS

11.1Severability.  Whenever possible, each provision of this Agreement shall be
interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Agreement shall be prohibited by or invalid under
such law, such provision shall be ineffective only to the extent and duration of
such prohibition or invalidity, without invalidating the remainder of such
provision or the remaining provisions of this Agreement.

 

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

 

11.2Notice.  Except as otherwise provided herein, any notice, demand, request,
consent, approval, declaration, service of process or other communication
(including the delivery of Financial Statements) that is required, contemplated,
or permitted under the Loan Documents or with respect to the subject matter
hereof shall be in writing, and shall be deemed to have been validly served,
given, delivered, and received upon the earlier of: (i) the day of transmission
by electronic mail or hand delivery or delivery by an overnight express service
or overnight mail delivery service; or (ii) the third calendar day after deposit
in the United States of America mails, with proper first class postage prepaid,
in each case addressed to the party to be notified as follows: 

(a)If to Agent or Lender:

HERCULES CAPITAL, INC.
Legal Department
Attention:  Chief Legal Officer and Shant Sood
400 Hamilton Avenue, Suite 310
Palo Alto, CA  94301
email: legal@herculestech.com and ssood@herculestech.com
Telephone:  650-289-3060

(b)If to Borrower:

Mattersight Corporation

Attention:  General Counsel and Corporate Secretary, with copy to Chief
Financial Officer
200 West Madison Street, Suite 3100
Chicago, IL 60606
email:  chris.carsen@mattersight.com
Telephone:  312-343-4452

or to such other address as each party may designate for itself by like notice.

11.3Entire Agreement; Amendments.  

(a)This Agreement and the other Loan Documents constitute the entire agreement
and understanding of the parties hereto in respect of the subject matter hereof
and thereof, and supersede and replace in their entirety any prior proposals,
term sheets, non-disclosure or confidentiality agreements, letters, negotiations
or other documents or agreements, whether written or oral, with respect to the
subject matter hereof or thereof (including Agent’s revised proposal letter
dated June 28, 2016).  

(b)Neither this Agreement, any other Loan Document, nor any terms hereof or
thereof may be amended, supplemented or modified except in accordance with the
provisions of this Section 11.3(b).  The Required Lenders and Borrower party to
the relevant Loan Document may, or, with the written consent of the Required
Lenders, the Agent and the Borrower party to the relevant Loan Document may,
from time to time, (i) enter into written amendments, supplements or
modifications hereto and to the other Loan Documents for the purpose of adding
any provisions to this Agreement or the other Loan Documents or changing in any
manner the rights of the Lenders or of the Borrower

 

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

 

hereunder or thereunder or (ii) waive, on such terms and conditions as the
Required Lenders or the Agent, as the case may be, may specify in such
instrument, any of the requirements of this Agreement or the other Loan
Documents or any default or Event of Default and its consequences; provided,
however, that no such waiver and no such amendment, supplement or modification
shall (A) forgive the principal amount or extend the final scheduled date of
maturity of any Loan, extend the scheduled date of any amortization payment in
respect of any Term Loan or reduce the stated rate of any interest or fee
payable hereunder) or extend the scheduled date of any payment thereof, in each
case without the written consent of each Lender directly affected thereby;
(B) eliminate or reduce the voting rights of any Lender under this Section
11.3(b) without the written consent of such Lender; (C) reduce any percentage
specified in the definition of Required Lenders, consent to the assignment or
transfer by the Borrower of any of its rights and obligations under this
Agreement and the other Loan Documents, release all or substantially all of the
Collateral or release a Borrower from its obligations under the Loan Documents,
in each case without the written consent of all Lenders; or (D) amend, modify or
waive any provision of Section 11.17 without the written consent of the
Agent.  Any such waiver and any such amendment, supplement or modification shall
apply equally to each Lender and shall be binding upon Borrower, the Lender, the
Agent and all future holders of the Loans. 

11.4No Strict Construction.  The parties hereto have participated jointly in the
negotiation and drafting of this Agreement.  In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the parties hereto and no presumption or burden of
proof shall arise favoring or disfavoring any party by virtue of the authorship
of any provisions of this Agreement.

11.5No Waiver.  The powers conferred upon Agent and Lender by this Agreement are
solely to protect its rights hereunder and under the other Loan Documents and
its interest in the Collateral and shall not impose any duty upon Agent or
Lender to exercise any such powers.  No omission or delay by Agent or Lender at
any time to enforce any right or remedy reserved to it, or to require
performance of any of the terms, covenants or provisions hereof by Borrower at
any time designated, shall be a waiver of any such right or remedy to which
Agent or Lender is entitled, nor shall it in any way affect the right of Agent
or Lender to enforce such provisions thereafter.

11.6Survival.  All agreements, representations and warranties contained in this
Agreement and the other Loan Documents or in any document delivered pursuant
hereto or thereto shall be for the benefit of Agent and Lender and shall survive
the execution and delivery of this Agreement. Section 6.3 shall survive the
termination of this Agreement.

11.7Successors and Assigns.  The provisions of this Agreement and the other Loan
Documents shall inure to the benefit of and be binding on Borrower and its
permitted assigns (if any).  Borrower shall not assign its obligations under
this Agreement or any of the other Loan Documents without Agent’s express prior
written consent, and any such attempted assignment shall be void and of no
effect.  Agent and Lender may assign, transfer, or endorse its rights hereunder
and under the other Loan Documents without prior notice to Borrower, and all of
such rights shall inure to the benefit of Agent’s and Lender’s successors and
assigns; provided that as long as no Event of Default has occurred and is
continuing, neither Agent nor any Lender may assign, transfer or endorse its
rights

 

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

 

hereunder or under the Loan Documents to any party that is a direct competitor
of Borrower (as reasonably determined by Agent), it being acknowledged that in
all cases, any transfer to an Affiliate of any Lender or Agent shall be
allowed. 

11.8Governing Law.  This Agreement and the other Loan Documents have been
negotiated and delivered to Agent and Lender in the State of California, and
shall have been accepted by Agent and Lender in the State of
California.  Payment to Agent and Lender by Borrower of the Secured Obligations
is due in the State of California.  This Agreement and the other Loan Documents
shall be governed by, and construed and enforced in accordance with, the laws of
the State of California, excluding conflict of laws principles that would cause
the application of laws of any other jurisdiction.

11.9Consent to Jurisdiction and Venue.  All judicial proceedings (to the extent
that the reference requirement of Section 11.10 is not applicable) arising in or
under or related to this Agreement or any of the other Loan Documents may be
brought in any state or federal court located in the State of California.  By
execution and delivery of this Agreement, each party hereto generally and
unconditionally: (a) consents to nonexclusive personal jurisdiction in Santa
Clara County, State of California; (b) waives any objection as to jurisdiction
or venue in Santa Clara County, State of California; (c) agrees not to assert
any defense based on lack of jurisdiction or venue in the aforesaid courts; and
(d) irrevocably agrees to be bound by any judgment rendered thereby in
connection with this Agreement or the other Loan Documents.  Service of process
on any party hereto in any action arising out of or relating to this Agreement
shall be effective if given in accordance with the requirements for notice set
forth in Section 11.2, and shall be deemed effective and received as set forth
in Section 11.2.  Nothing herein shall affect the right to serve process in any
other manner permitted by law or shall limit the right of either party to bring
proceedings in the courts of any other jurisdiction.

11.10Mutual Waiver of Jury Trial / Judicial Reference.  

(a)Because disputes arising in connection with complex financial transactions
are most quickly and economically resolved by an experienced and expert Person
and the parties wish applicable state and federal laws to apply (rather than
arbitration rules), the parties desire that their disputes be resolved by a
judge applying such applicable laws.  EACH OF BORROWER, AGENT AND LENDER
SPECIFICALLY WAIVES ANY RIGHT IT MAY HAVE TO TRIAL BY JURY OF ANY CAUSE OF
ACTION, CLAIM, CROSS-CLAIM, COUNTERCLAIM, THIRD PARTY CLAIM OR ANY OTHER CLAIM
(COLLECTIVELY, “CLAIMS”) ASSERTED BY BORROWER AGAINST AGENT, LENDER OR THEIR
RESPECTIVE ASSIGNEE OR BY AGENT, LENDER OR THEIR RESPECTIVE ASSIGNEE AGAINST
BORROWER.  This waiver extends to all such Claims, including Claims that involve
Persons other than Agent, Borrower and Lender; Claims that arise out of or are
in any way connected to the relationship among Borrower, Agent and Lender; and
any Claims for damages, breach of contract, tort, specific performance, or any
equitable or legal relief of any kind, arising out of this Agreement, any other
Loan Document.  

(b)If the waiver of jury trial set forth in Section 11.10(a) is ineffective or
unenforceable, the parties agree that all Claims shall be resolved by reference
to a private judge sitting without a jury, pursuant to Code of Civil Procedure
Section 638, before a

 

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

 

mutually acceptable referee or, if the parties cannot agree, a referee selected
by the Presiding Judge of the Santa Clara County, California.  Such proceeding
shall be conducted in Santa Clara County, California, with California rules of
evidence and discovery applicable to such proceeding.     

(c)In the event Claims are to be resolved by judicial reference, either party
may seek from a court identified in Section 11.9, any prejudgment order, writ or
other relief and have such prejudgment order, writ or other relief enforced to
the fullest extent permitted by law notwithstanding that all Claims are
otherwise subject to resolution by judicial reference.

11.11Professional Fees.  Borrower promises to pay Agent’s and Lender’s fees and
expenses necessary to finalize the loan documentation, including but not limited
to reasonable attorneys’ fees, UCC searches, filing costs, and other
miscellaneous expenses. In addition, Borrower promises to pay any and all
reasonable attorneys’ and other professionals’ fees and expenses incurred by
Agent and Lender after the Closing Date in connection with or related
to:  (a) the Loan; (b) the administration, collection, or enforcement of the
Loan; (c) the amendment or modification of the Loan Documents; (d) any waiver,
consent, release, or termination under the Loan Documents; (e) the protection,
preservation, audit, field exam, sale, lease, liquidation, or disposition of
Collateral or the exercise of remedies with respect to the Collateral; (f) any
legal, litigation, administrative, arbitration, or out of court proceeding in
connection with or related to Borrower or the Collateral, and any appeal or
review thereof; and (g) any bankruptcy, restructuring, reorganization,
assignment for the benefit of creditors, workout, foreclosure, or other action
related to Borrower, the Collateral, the Loan Documents, including representing
Agent or Lender in any adversary proceeding or contested matter commenced or
continued by or on behalf of Borrower’s estate, and any appeal or review
thereof.

11.12Confidentiality.  Agent and Lender acknowledge that certain items of
Collateral and information provided to Agent and Lender by Borrower are
confidential and proprietary information of Borrower, if and to the extent such
information either (x) is marked as confidential by Borrower at the time of
disclosure, or (y) should reasonably be understood to be confidential (the
“Confidential Information”).  Accordingly, Agent and Lender agree that any
Confidential Information it may obtain in the course of acquiring,
administering, or perfecting  Agent’s security interest in the Collateral shall
not be disclosed to any other Person or entity in any manner whatsoever, in
whole or in part, without the prior written consent of Borrower, except that
Agent and Lender may disclose any such information:  (a) to its own directors,
officers, employees, accountants, counsel and other professional advisors and to
its Affiliates if Agent or Lender in their sole discretion determines that any
such party should have access to such information in connection with such
party’s responsibilities in connection with the Loan or this Agreement and,
provided that such recipient of such Confidential Information either (i) agrees
to be bound by the confidentiality provisions of this paragraph or (ii) is
otherwise subject to confidentiality restrictions that reasonably protect
against the disclosure of Confidential Information; (b) if such information is
generally available to the public; (c) if required or appropriate in any report,
statement or testimony submitted to any governmental authority having or
claiming to have jurisdiction over Agent or Lender; (d) if required or
appropriate in response to any summons or subpoena or in connection with any
litigation, to the extent permitted or deemed advisable by Agent’s or Lender’s
counsel;

 

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

 

(e) to comply with any legal requirement or law applicable to Agent or Lender;
(f) to the extent reasonably necessary in connection with the exercise of any
right or remedy under any Loan Document, including Agent’s sale, lease, or other
disposition of Collateral after default; (g) to any participant or assignee of
Agent or Lender or any prospective participant or assignee; provided, that such
participant or assignee or prospective participant or assignee agrees in writing
to be bound by this Section prior to disclosure; or (h) otherwise with the prior
consent of Borrower; provided, that any disclosure made in violation of this
Agreement shall not affect the obligations of Borrower or any of its Affiliates
or any guarantor under this Agreement or the other Loan Documents; provided in
the case of (d), that to the extent reasonably practical and legally
permissible, Lender provides reasonable notice thereof to Borrower to permit
Borrower to contest such response and/or obtain a protective order with respect
thereto. 

11.13Assignment of Rights.  Borrower acknowledges and understands that Agent or
Lender may, subject to Section 11.7, sell and assign all or part of its interest
hereunder and under the Loan Documents to any Person or entity (an
“Assignee”).  After such assignment the term “Agent” or “Lender” as used in the
Loan Documents shall mean and include such Assignee, and such Assignee shall be
vested with all rights, powers and remedies of Agent and Lender hereunder with
respect to the interest so assigned; but with respect to any such interest not
so transferred, Agent and Lender shall retain all rights, powers and remedies
hereby given.  No such assignment by Agent or Lender shall relieve Borrower of
any of its obligations hereunder.  Lender agrees that in the event of any
transfer by it of the Note(s)(if any), it will endorse thereon a notation as to
the portion of the principal of the Note(s), which shall have been paid at the
time of such transfer and as to the date to which interest shall have been last
paid thereon.

11.14Revival of Secured Obligations.  This Agreement and the Loan Documents
shall remain in full force and effect and continue to be effective if any
petition is filed by or against Borrower for liquidation or reorganization, if
Borrower becomes insolvent or makes an assignment for the benefit of creditors,
if a receiver or trustee is appointed for all or any significant part of
Borrower’s assets, or if any payment or transfer of Collateral is recovered from
Agent or Lender.  The Loan Documents and the Secured Obligations and Collateral
security shall continue to be effective, or shall be revived or reinstated, as
the case may be, if at any time payment and performance of the Secured
Obligations or any transfer of Collateral to Agent, or any part thereof is
rescinded, avoided or avoidable, reduced in amount, or must otherwise be
restored or returned by, or is recovered from, Agent, Lender or by any obligee
of the Secured Obligations, whether as a “voidable preference,” “fraudulent
conveyance,” or otherwise, all as though such payment, performance, or transfer
of Collateral had not been made.  In the event that any payment, or any part
thereof, is rescinded, reduced, avoided, avoidable, restored, returned, or
recovered, the Loan Documents and the Secured Obligations shall be deemed,
without any further action or documentation, to have been revived and reinstated
except to the extent of the full, final, and indefeasible payment to Agent or
Lender in Cash.

11.15Counterparts.  This Agreement and any amendments, waivers, consents or
supplements hereto may be executed in any number of counterparts, and by
different parties hereto in separate counterparts, each of which when so
delivered shall be deemed an original, but all of which counterparts shall
constitute but one and the same instrument.

 

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

 

11.16No Third Party Beneficiaries.  No provisions of the Loan Documents are
intended, nor will be interpreted, to provide or create any third-party
beneficiary rights or any other rights of any kind in any Person other than
Agent, Lender and Borrower unless specifically provided otherwise herein, and,
except as otherwise so provided, all provisions of the Loan Documents will be
personal and solely among Agent, the Lender and the Borrower.  

11.17Agency.  

(a)Lender hereby irrevocably appoints Hercules Capital, Inc. to act on its
behalf as the Agent hereunder and under the other Loan Documents and authorizes
the Agent to take such actions on its behalf and to exercise such powers as are
delegated to the Agent by the terms hereof or thereof, together with such
actions and powers as are reasonably incidental thereto.

(b)Lender  agrees to indemnify the Agent in its capacity as such (to the extent
not reimbursed by Borrower and without limiting the obligation of Borrower to do
so), according to its respective Term Commitment percentages (based upon the
total outstanding Term Loan Commitments) in effect on the date on which
indemnification is sought under this Section 11.17, from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements of any kind whatsoever that may at any time be
imposed on, incurred by or asserted against the Agent in any way relating to or
arising out of, this Agreement, any of the other Loan Documents or any documents
contemplated by or referred to herein or therein or the transactions
contemplated hereby or thereby or any action taken or omitted by the Agent under
or in connection with any of the foregoing; The agreements in this Section shall
survive the payment of the Loans and all other amounts payable hereunder.

(c)Agent in Its Individual Capacity.  The Person serving as the Agent hereunder
shall have the same rights and powers in its capacity as a Lender as any other
Lender and may exercise the same as though it were not the Agent and the term
“Lender” shall, unless otherwise expressly indicated or unless the context
otherwise requires, include each such Person serving as Agent hereunder in its
individual capacity.

(d)Exculpatory Provisions.  The Agent shall have no duties or obligations except
those expressly set forth herein and in the other Loan Documents.  Without
limiting the generality of the foregoing, the Agent shall not:

 

(i)

be subject to any fiduciary or other implied duties, regardless of whether any
default or any Event of Default has occurred and is continuing;

 

(ii)

have any duty to take any discretionary action or exercise any discretionary
powers, except discretionary rights and powers expressly contemplated hereby or
by the other Loan Documents that the Agent is required to exercise as directed
in writing by the Lender, provided that the Agent shall not be required to take
any action that, in its opinion or the opinion of its counsel, may expose the
Agent to liability or that is contrary to any Loan Document or applicable law;
and

 

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

 

 

(iii)

except as expressly set forth herein and in the other Loan Documents, have any
duty to disclose, and the Agent shall not be liable for the failure to disclose,
any information relating to the Borrower or any of its Affiliates that is
communicated to or obtained by any Person serving as the Agent or any of its
Affiliates in any capacity. 

(e)The Agent shall not be liable for any action taken or not taken by it
(i) with the consent or at the request of the Lender or as the Agent shall
believe in good faith shall be necessary, under the circumstances or (ii) in the
absence of its own gross negligence or willful misconduct.

(f)The Agent shall not be responsible for or have any duty to ascertain or
inquire into (i) any statement, warranty or representation made in or in
connection with this Agreement or any other Loan Document, (ii) the contents of
any certificate, report or other document delivered hereunder or thereunder or
in connection herewith or therewith, (iii) the performance or observance of any
of the covenants, agreements or other terms or conditions set forth herein or
therein or the occurrence of any default or Event of Default, (iv) the validity,
enforceability, effectiveness or genuineness of this Agreement, any other Loan
Document or any other agreement, instrument or document or (v) the satisfaction
of any condition set forth in Section 4 or elsewhere herein, other than to
confirm receipt of items expressly required to be delivered to the Agent.

(g)Reliance by Agent.  Agent may rely, and shall be fully protected in acting,
or refraining to act, upon, any resolution, statement, certificate, instrument,
opinion, report, notice, request, consent, order, bond or other paper or
document that it has no reason to believe to be other than genuine and to have
been signed or presented by the proper party or parties or, in the case of
cables, telecopies and telexes, to have been sent by the proper party or
parties.  In the absence of its gross negligence or willful misconduct, Agent
may conclusively rely, as to the truth of the statements and the correctness of
the opinions expressed therein, upon any certificates or opinions furnished to
Agent and conforming to the requirements of the Loan Agreement or any of the
other Loan Documents.  Agent may consult with counsel, and any opinion or legal
advice of such counsel shall be full and complete authorization and protection
in respect of any action taken, not taken or suffered by Agent hereunder or
under any Loan Documents in accordance therewith.  Agent shall have the right at
any time to seek instructions concerning the administration of the Collateral
from any court of competent jurisdiction.  Agent shall not be under any
obligation to exercise any of the rights or powers granted to Agent by this
Agreement, the Loan Agreement and the other Loan Documents at the request or
direction of Lenders unless Agent shall have been provided by Lender with
adequate security and indemnity against the costs, expenses and liabilities that
may be incurred by it in compliance with such request or direction.

11.18Publicity.  None of the parties hereto nor any of its respective member
businesses and Affiliates shall, without the other parties’ prior written
consent (which shall not be unreasonably withheld or delayed), publicize or use
(a) the other party's name (including a brief description of the relationship
among the parties hereto), logo or hyperlink to such other parties’ web site,
separately or together, in written and oral presentations, advertising,
promotional and marketing materials, client lists, public relations materials or
on its web site (together, the " Publicity Materials"); (b) the names of

 

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

 

officers of such other parties in the Publicity Materials; and (c) such other
parties’ name, trademarks, service marks in any news or press release concerning
such party; provided however, notwithstanding anything to the contrary herein,
no such consent shall be required (i) to the extent necessary to comply with the
requests of any regulators, legal requirements or laws applicable to such party,
pursuant to any listing agreement with any national securities exchange (so long
as such party provides prior notice to the other party hereto to the extent
reasonably practicable) and (ii) to comply with Section 11.12.  

11.19Multiple Borrowers.

(a)Borrower’s Agent. Each of the Borrowers hereby irrevocably appoints
Mattersight Corporation as its agent, attorney-in-fact and legal representative
for all purposes, including requesting disbursement of the Term Loan and
receiving account statements and other notices and communications to Borrowers
(or any of them) from the Agent or any Lender. The Agent may rely, and shall be
fully protected in relying, on any request for the Term Loan, disbursement
instruction, report, information or any other notice or communication made or
given by Borrower, whether in its own name or on behalf of one or more of the
other Borrowers, and the Agent shall not have any obligation to make any inquiry
or request any confirmation from or on behalf of any other Borrower as to the
binding effect on it of any such request, instruction, report, information,
other notice or communication, nor shall the joint and several character of the
Borrowers’ obligations hereunder be affected thereby.

(b)Waivers.  Each Borrower hereby waives:  (i) any right to require the Agent to
institute suit against, or to exhaust its rights and remedies against, any other
Borrower or any other person, or to proceed against any property of any kind
which secures all or any part of the Secured Obligations, or to exercise any
right of offset or other right with respect to any reserves, credits or deposit
accounts held by or maintained with the Agent or any Indebtedness of the Agent
or any Lender to any other Borrower, or to exercise any other right or power, or
pursue any other remedy the Agent or any Lender may have; (ii) any defense
arising by reason of any disability or other defense of any other Borrower or
any guarantor or any endorser, co-maker or other person, or by reason of the
cessation from any cause whatsoever of any liability of any other Borrower or
any guarantor or any endorser, co-maker or other person, with respect to all or
any part of the Secured Obligations, or by reason of any act or omission of the
Agent or others which directly or indirectly results in the discharge or release
of any other Borrower or any guarantor or any other person or any Secured
Obligations or any security therefor, whether by operation of law or otherwise;
(iii) any defense arising by reason of any failure of the Agent to obtain,
perfect, maintain or keep in force any Lien on, any property of any Borrower or
any other person; (iv) any defense based upon or arising out of any bankruptcy,
insolvency, reorganization, arrangement, readjustment of debt, liquidation or
dissolution proceeding commenced by or against any other Borrower or any
guarantor or any endorser, co-maker or other person, including without
limitation any discharge of, or bar against collecting, any of the Secured
Obligations (including without limitation any interest thereon), in or as a
result of any such proceeding.  Until all of the Secured Obligations have been
paid, performed, and discharged in full, nothing shall discharge or satisfy the
liability of any Borrower hereunder except the full performance and payment of
all of the Secured Obligations.  If any claim is ever made upon the Agent for
repayment or recovery of any amount or amounts received by the Agent in payment
of or

 

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

 

on account of any of the Secured Obligations, because of any claim that any such
payment constituted a preferential transfer or fraudulent conveyance, or for any
other reason whatsoever, and the Agent repays all or part of said amount by
reason of any judgment, decree or order of any court or administrative body
having jurisdiction over the Agent or any of its property, or by reason of any
settlement or compromise of any such claim effected by the Agent with any such
claimant (including without limitation any other Borrower), then and in any such
event, each Borrower agrees that any such judgment, decree, order, settlement
and compromise shall be binding upon such Borrower, notwithstanding any
revocation or release of this Agreement or the cancellation of any note or other
instrument evidencing any of the Secured Obligations, or any release of any of
the Secured Obligations, and each Borrower shall be and remain liable to the
Agent and the Lenders under this Agreement for the amount so repaid or
recovered, to the same extent as if such amount had never originally been
received by the Agent or any Lender, and the provisions of this sentence shall
survive, and continue in effect, notwithstanding any revocation or release of
this Agreement.  Each Borrower hereby expressly and unconditionally waives all
rights of subrogation, reimbursement and indemnity of every kind against any
other Borrower, and all rights of recourse to any assets or property of any
other Borrower, and all rights to any collateral or security held for the
payment and performance of any Secured Obligations, including (but not limited
to) any of the foregoing rights which Borrower may have under any present or
future document or agreement with any other Borrower or other person, and
including (but not limited to) any of the foregoing rights which any Borrower
may have under any equitable doctrine of subrogation, implied contract, or
unjust enrichment, or any other equitable or legal doctrine. 

(c)Consents.  Each Borrower hereby consents and agrees that, without notice to
or by Borrower and without affecting or impairing in any way the obligations or
liability of Borrower hereunder, the Agent may, from time to time before or
after revocation of this Agreement, do any one or more of the following in its
sole and absolute discretion:  (i) accept partial payments of, compromise or
settle, renew, extend the time for the payment, discharge, or performance of,
refuse to enforce, and release all or any parties to, any or all of the
Obligations; (ii) grant any other indulgence to any Borrower or any other Person
in respect of any or all of the Secured Obligations or any other matter;
(iii) accept, release, waive, surrender, enforce, exchange, modify, impair, or
extend the time for the performance, discharge, or payment of, any and all
property of any kind securing any or all of the Secured Obligations or any
guaranty of any or all of the Secured Obligations, or on which the Agent at any
time may have a Lien, or refuse to enforce its rights or make any compromise or
settlement or agreement therefor in respect of any or all of such property; (iv)
substitute or add, or take any action or omit to take any action which results
in the release of, any one or more other Borrowers or any endorsers or
guarantors of all or any part of the Secured Obligations, including, without
limitation one or more parties to this Agreement, regardless of any destruction
or impairment of any right of contribution or other right of Borrower; (v) apply
any sums received from any other Borrower, any guarantor, endorser, or
co-signer, or from the disposition of any Collateral or security, to any
Indebtedness whatsoever owing from such person or secured by such Collateral or
security, in such manner and order as the Agent determines in its sole
discretion, and regardless of whether such Indebtedness is part of the Secured
Obligations, is secured, or is due and payable.  Each Borrower consents and
agrees that the Agent shall be under no obligation to marshal any assets in
favor of Borrower, or

 

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

 

against or in payment of any or all of the Secured Obligations.  Each Borrower
further consents and agrees that the Agent shall have no duties or
responsibilities whatsoever with respect to any property securing any or all of
the Secured Obligations.  Without limiting the generality of the foregoing, the
Agent shall have no obligation to monitor, verify, audit, examine, or obtain or
maintain any insurance with respect to, any property securing any or all of the
Secured Obligations. 

(d)Independent Liability.  Each Borrower hereby agrees that one or more
successive or concurrent actions may be brought hereon against such Borrower, in
the same action in which any other Borrower may be sued or in separate actions,
as often as deemed advisable by Agent. Each Borrower is fully aware of the
financial condition of each other Borrower and is executing and delivering this
Agreement based solely upon its own independent investigation of all matters
pertinent hereto, and such Borrower is not relying in any manner upon any
representation or statement of the Agent or any Lender with respect thereto. 
Each Borrower represents and warrants that it is in a position to obtain, and
each Borrower hereby assumes full responsibility for obtaining, any additional
information concerning any other Borrower’s financial condition and any other
matter pertinent hereto as such Borrower may desire, and such Borrower is not
relying upon or expecting the Agent to furnish to it any information now or
hereafter in the Agent’s possession concerning the same or any other matter.

(e)Subordination.  All Indebtedness of a Borrower now or hereafter arising held
by another Borrower is subordinated to the Secured Obligations and the Borrower
holding the Indebtedness shall take all actions reasonably requested by Agent to
effect, to enforce and to give notice of such subordination.

(SIGNATURES TO FOLLOW)

 

 

 

 

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

 

IN WITNESS WHEREOF, Borrower, Agent and Lender have duly executed and delivered
this Loan and Security Agreement as of the day and year first above written.

 

BORROWER:

 

MATTERSIGHT CORPORATION

 

 

Signature:

/s/ David Gustafson

 

 

Print Name:

David Gustafson

 

 

Title:

EVP, COO and Interim CFO

 

Accepted in Palo Alto, California:

 

AGENT:

 

 

 

HERCULES CAPITAL, INC.

 

Signature:

/s/ Jennifer Choe

 

 

Print Name:

Jennifer Choe

 

 

Title:

Assistant General Counsel

 

LENDER:

 

 

 

HERCULES CAPITAL, INC.

 

Signature:

/s/ Jennifer Choe

 

 

Print Name:

Jennifer Choe

 

 

Title:

Assistant General Counsel

 

 

 

 

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

 

Table of Addenda, Exhibits and Schedules

 

Exhibit A:

Advance Request

 

Attachment to Advance Request

 

 

Exhibit B:

Term Note

 

 

Exhibit C:

Name, Locations, and Other Information for Borrower

 

 

Exhibit D:

Borrower’s Patents, Trademarks, Copyrights and Licenses

 

 

Exhibit E:

Borrower’s Deposit Accounts and Investment Accounts

 

 

Exhibit F:

Compliance Certificate

 

 

Exhibit G:

Joinder Agreement

 

 

Exhibit H:

ACH Debit Authorization Agreement

 

 

Exhibit I:

Projections

 

 

Exhibit J:

Permitted Subsidiary Deposit Accounts and Investment Accounts

 

 

Schedule 1

Subsidiaries

Schedule 1.1

Commitments

Schedule 1A

Existing Permitted Indebtedness

Schedule 1B

Existing Permitted Investments

Schedule 1C

Existing Permitted Liens

Schedule 5.3

Consents, Etc.

Schedule 5.8

Tax Matters

Schedule 5.9

Intellectual Property Claims

Schedule 5.10

Intellectual Property

Schedule 5.11

Borrower Products

Schedule 5.14

Capitalization

 

 

 

 

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

 

EXHIBIT A

ADVANCE REQUEST

 

To:

Agent:

 

Date:

 

__________, 20[__]

 

 

 

 

 

 

 

Hercules Capital, Inc. (the “Agent”)

 

 

 

 

 

400 Hamilton Avenue, Suite 310

 

 

 

 

 

Palo Alto, CA 94301

 

 

 

 

 

email: legal@herculestech.com

 

 

 

 

 

Attn:

 

 

 

 

 

Mattersight Corporation (“Borrower”) hereby requests from Hercules Capital, Inc.
(“Lender”) an Advance in the amount of _____________________ Dollars
($________________) on ______________, _____ (the “Advance Date”) pursuant to
the Loan and Security Agreement among Borrower, Agent and Lender (the
“Agreement”). Capitalized words and other terms used but not otherwise defined
herein are used with the same meanings as defined in the Agreement.

Please:

 

(a)

  Issue a check payable to Borrower ________

 

 

or

 

(b)

  Wire Funds to Borrower’s account ________ [IF FILED PUBLICLY, ACCOUNT INFO
REDACTED FOR SECURITY PURPOSES]

 

 

 

 

 

Bank:

 

 

 

Address:

 

 

 

 

 

 

 

ABA Number:

 

 

 

Account Number:

 

 

 

Account Name:

 

 

 

Contact Person:

 

 

 

Phone Number

 

 

 

To Verify Wire Info:

 

 

 

Email address:

 

 

 

Borrower represents that the conditions precedent to the Advance set forth in
the Agreement are satisfied and shall be satisfied upon the making of such
Advance, including but not limited to:  (i) that no event that has had or could
reasonably be expected to have a Material Adverse Effect has occurred and is
continuing; (ii) that the representations and warranties set forth in the
Agreement and in the Warrant are and shall be true and correct in all material
respects on and as of the Advance Date with the same effect as though made on
and as of such date, except to the extent such representations and warranties
expressly relate to an earlier date; (iii) that Borrower is in compliance with
all the terms and provisions set forth in each Loan Document on its part to be
observed or performed; and (iv) that as of the Advance Date, no fact or
condition exists that would (or would, with the passage of time, the giving of
notice, or both) constitute an Event of Default under the Loan
Documents.  Borrower understands and acknowledges that Agent has the right to
review the financial information supporting this

 

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

 

representation and, based upon such review in its sole discretion, Lender may
decline to fund the requested Advance.

Borrower hereby represents that Borrower’s corporate status and locations have
not changed since the date of the Agreement or, if the Attachment to this
Advance Request is completed, are as set forth in the Attachment to this Advance
Request.

Borrower agrees to notify Agent promptly before the funding of the Loan if any
of the matters which have been represented above shall not be true and correct
on the Borrowing Date and if Agent has received no such notice before the
Advance Date then the statements set forth above shall be deemed to have been
made and shall be deemed to be true and correct as of the Advance Date.

Executed as of [              ], 20[   ].

 

BORROWER: Mattersight Corporation

 

 

SIGNATURE:

 

TITLE:

 

PRINT NAME:

 

 

 

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

 

ATTACHMENT TO ADVANCE REQUEST

Dated: _______________________

Borrower hereby represents and warrants to Agent that Borrower’s current name
and organizational status is as follows:

 

Name:

Mattersight Corporation

 

 

Type of organization:

Corporation

 

 

State of organization:

Delaware

 

 

Organization file number:

3041162

 

Borrower hereby represents and warrants to Agent that the street addresses,
cities, states and postal codes of its current locations are as follows:

200 W. Madison Street, Suite 3100, Chicago, IL  60606

3801 S. Capital of Texas Highway, Suite 100, Austin, TX  78704

7700 France Ave. South, Suite 210, Edina, MN  55435

 

 

 

 

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

 

EXHIBIT B

SECURED TERM PROMISSORY NOTE

 

$[  ],000,000

Advance Date:  ___ __, 20[  ]

 

 

 

Maturity Date:  _____ ___, 20[ ]

 

FOR VALUE RECEIVED, Mattersight Corporation, a Delaware corporation, for itself
and each of its Subsidiaries (the “Borrower”) hereby promises to pay to the
order of Hercules Captial, Inc., a Maryland corporation or the holder of this
Note (the “Lender”) at 400 Hamilton Avenue, Suite 310, Palo Alto, CA 94301 or
such other place of payment as the holder of this Secured Term Promissory Note
(this “Promissory Note”) may specify from time to time in writing, in lawful
money of the United States of America, the principal amount of [  ] Million
Dollars ($[  ],000,000) or such other principal amount as Lender has advanced to
Borrower, together with interest at a rate as set forth in Section 2.2(c) of the
Loan Agreement based upon a year consisting of 360 days, with interest computed
daily based on the actual number of days in each month.  

This Promissory Note is the Note referred to in, and is executed and delivered
in connection with, that certain Loan and Security Agreement dated August 1,
2016, by and among Borrower, Hercules Capital, Inc., in its capacity as
administrative agent and collateral agent (the “Agent”) and the several banks
and other financial institutions or entities from time to time party thereto as
lender (as the same may from time to time be amended, modified or supplemented
in accordance with its terms, the “Loan Agreement”), and is entitled to the
benefit and security of the Loan Agreement and the other Loan Documents (as
defined in the Loan Agreement), to which reference is made for a statement of
all of the terms and conditions thereof.  All payments shall be made in
accordance with the Loan Agreement.  All terms defined in the Loan Agreement
shall have the same definitions when used herein, unless otherwise defined
herein.  An Event of Default under the Loan Agreement shall constitute a default
under this Promissory Note.  

Borrower waives presentment and demand for payment, notice of dishonor, protest
and notice of protest under the UCC or any applicable law.   Borrower agrees to
make all payments under this Promissory Note without setoff, recoupment or
deduction and regardless of any counterclaim or defense.  This Promissory Note
has been negotiated and delivered to Lender and is payable in the State of
California.  This Promissory Note shall be governed by and construed and
enforced in accordance with, the laws of the State of California, excluding any
conflicts of law rules or principles that would cause the application of the
laws of any other jurisdiction.

 

BORROWER FOR ITSELF AND

ON BEHALF OF ITS SUBSIDIARIES:

Mattersight Corporation

 

 

 

By:

 

Title:

 

 

 

 

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

 

EXHIBIT C

NAME, LOCATIONS, AND OTHER INFORMATION FOR BORROWER

1.  Borrower represents and warrants to Agent that Borrower’s current name and
organizational status as of the Closing Date is as follows:

 

Name:

Mattersight Corporation

 

 

Type of organization:

Corporation

 

 

State of organization:

Delaware

 

 

Organization file number:

3041162

 

2.  Borrower represents and warrants to Agent that for five (5) years prior to
the Closing Date, Borrower did not do business under any other name or
organization or form.

3.  Borrower represents and warrants to Agent that its chief executive office is
located at 200 W. Madison Street, Suite 3100, Chicago, IL  60606.

 

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

 

EXHIBIT D

BORROWER’S PATENTS, TRADEMARKS, COPYRIGHTS AND LICENSES

 

 

 

 

 

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

 

EXHIBIT E

BORROWER’S DEPOSIT ACCOUNTS AND INVESTMENT ACCOUNTS

 

 

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

 

EXHIBIT F

COMPLIANCE CERTIFICATE

Hercules Capital, Inc. (as “Agent”)
400 Hamilton Avenue, Suite 310
Palo Alto, CA 94301

Reference is made to that certain Loan and Security Agreement dated August 1,
2016 and the Loan Documents (as defined therein) entered into in connection with
such Loan and Security Agreement all as may be amended from time to time
(hereinafter referred to collectively as the “Loan Agreement”) by and among the
several banks and other financial institutions or entities from time to time
party thereto (collectively, the “Lender”) and Hercules Capital, Inc., as agent
for the Lender (the “Agent”) and Mattersight Corporation (the “Company”) as
Borrower. All capitalized terms not defined herein shall have the same meaning
as defined in the Loan Agreement.

The undersigned is an Officer of the Company, knowledgeable of all Company
financial matters, and is authorized to provide certification of information
regarding the Company; hereby certifies, in such capacity, that in accordance
with the terms and conditions of the Loan Agreement, the Company is in
compliance for the period ending ___________ of all covenants, conditions and
terms and hereby reaffirms that all representations and warranties contained
therein are true and correct on and as of the date of this Compliance
Certificate with the same effect as though made on and as of such date, except
to the extent such representations and warranties expressly relate to an earlier
date, after giving effect in all cases to any standard(s) of materiality
contained in the Loan Agreement as to such representations and
warranties.  Attached are the required documents supporting the above
certification.  The undersigned further certifies that these are prepared in
accordance with GAAP (except for the absence of footnotes with respect to
unaudited financial statement and subject to normal year end adjustments) and
are consistent from one period to the next except as explained below.

REPORTING REQUIREMENT

REQUIRED

CHECK IF ATTACHED

 

 

 

Interim Financial Statements

Monthly within 40 days

 

 

 

 

Interim Financial Statements

Quarterly within 40 days

 

 

 

 

Audited Financial Statements

FYE within 90 days

 

 

FINANCIAL COVENANTS: (Borrower to provide detailed documentation supporting each
calculation.)

7.17(a) - Subscription Revenues

(1) forecasted Subscription Revenues for period:       $_____________

(2) product of item (1) multiplied by 0.80:                 $_____________

(3) actual Subscription Revenues for period:              $_____________

Is item (3) greater than or equal to item (2)?  __ Yes (in compliance); __ No
(not in compliance)

 

 

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

 

7.17(b) – Minimum Cash

(A) Unrestricted Cash:  $___________

(B) amount of Borrower’s accounts payable under GAAP in excess of $100,000 and
not paid after the 90th day following the invoice date for such accounts
payable:  $___________

(C) item (A) minus item (B):  $___________

(D) Has the Unrestricted Cash Milestone has been achieved? __ Yes; __ No

If item (D) is No: Is item (C) greater than or equal to $7,500,000?

           __ Yes (in compliance); __ No (not in compliance)

If item (D) is Yes: Is item (C) greater than or equal to $6,000,000?

           __ Yes (in compliance); __ No (not in compliance)

 

The undersigned hereby also confirms the accounts disclosed in the Compliance
Certificate Addendum attached hereto represent all depository accounts and
securities accounts presently open in the name of each Borrower or Subsidiary,
as applicable.

 

Very Truly Yours,

 

[                                                          ]

 

By:

 

 

Name:

 

 

Its:

 

 

 

 

 

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

BORROWER: Mattersight Corporation

[g3s30erkkvfw000001.jpg]

COMPLIANCE CERTIFICATE ADDENDUM - For Period Ended _______

DISCLOSURE OF DEPOSITORY AND SECURITIES ACCOUNTS OPENED SINCE LAST COMPLIANCE
CERTIFICATE SUBMISSION

 

 

 

 

Account #

Financial

Institution

Account Type

(Depository /

Securities)

Last Month

Ending

Account Balance

Purpose of

Account

BORROWER Name/Address:

 

 

1

 

 

 

$

 

2

 

 

 

$

 

3

 

 

 

$

 

4

 

 

 

$

 

5

 

 

 

$

 

6

 

 

 

$

 

7

 

 

 

$

 

 

BORROWER SUBSIDIARY / AFFILIATE  / GUARANTOR Name/Address

 

 

1

2

3

4

5

6

7

 

 

 

$

 

 

 

 

$

 

 

 

 

$

 

 

 

 

$

 

 

 

 

$

 

 

 

 

$

 

 

 

 

$

 

 

 

The undersigned hereby confirms the above disclosed accounts represent all new
depository and securities accounts opened by Borrower, co-Borrower, Subsidiary
or Guarantor (as applicable) since the last monthly Compliance Certificate
submission.

Borrower Name:

 

 

 

Authorized Signatory:

 

 

 

 

 

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

 

EXHIBIT G

FORM OF JOINDER AGREEMENT

This Joinder Agreement (the “Joinder Agreement”) is made and dated as of
[          ], 20[  ], and is entered into by and between__________________., a
___________ corporation (“Subsidiary”), and HERCULES CAPITAL, INC., a Maryland
corporation (as “Agent”).  

RECITALS

A.  Subsidiary’s Affiliate, Mattersight Corporation (“Company”) [has
entered/desires to enter] into that certain Loan and Security Agreement dated
August 1, 2016, with the several banks and other financial institutions or
entities from time to time party thereto as lender (collectively, the “Lender”)
and the Agent, as such agreement may be amended (the “Loan Agreement”), together
with the other agreements executed and delivered in connection therewith;

B.  Subsidiary acknowledges and agrees that it will benefit both directly and
indirectly from Company’s execution of the Loan Agreement and the other
agreements executed and delivered in connection therewith (including, but not
limited to the IP Security Agreement (as defined in the Loan Agreement);

AGREEMENT

NOW THEREFORE, Subsidiary and Agent agree as follows:

1.

The recitals set forth above are incorporated into and made part of this Joinder
Agreement.  Capitalized terms not defined herein shall have the meaning provided
in the Loan Agreement.

2.

By signing this Joinder Agreement, Subsidiary shall be bound by the terms and
conditions of the Loan Agreement the same as if it were the Borrower (as defined
in the Loan Agreement) under the Loan Agreement, mutatis mutandis, provided
however, that (a) with respect to (i) Section 5.1 of the Loan Agreement,
Subsidiary represents that it is an entity duly organized, legally existing and
in good standing under the laws of [        ], (b) neither Agent nor Lender
shall have any duties, responsibilities or obligations to Subsidiary arising
under or related to the Loan Agreement or the other Loan Documents, (c) that if
Subsidiary is covered by Company’s insurance, Subsidiary shall not be required
to maintain separate insurance or comply with the provisions of Sections 6.1 and
6.2 of the Loan Agreement, and (d) that as long as Company satisfies the
requirements of Section 7.1 of the Loan Agreement, Subsidiary shall not have to
provide Agent separate Financial Statements.  To the extent that Agent or Lender
has any duties, responsibilities or obligations arising under or related to the
Loan Agreement or the other Loan Documents, those duties, responsibilities or
obligations shall flow only to Company and not to Subsidiary or any other Person
or entity.  By way of example (and not an exclusive list): (i) Agent’s providing
notice to Company in accordance with the Loan Agreement or as otherwise agreed
among Company, Agent and Lender shall be deemed provided to Subsidiary; (ii) a
Lender’s providing an Advance to Company shall be deemed an Advance to
Subsidiary; and (iii) Subsidiary shall have no right to request an Advance or
make any other demand on Lender.

3.

Subsidiary agrees not to certificate its equity securities without Agent’s prior
written consent, which consent may be conditioned on the delivery of such equity
securities to Agent in order to perfect Agent’s security interest in such equity
securities.

 

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

 

4.

Subsidiary acknowledges that it benefits, both directly and indirectly, from the
Loan Agreement, and hereby waives, for itself and on behalf on any and all
successors in interest (including without limitation any assignee for the
benefit of creditors, receiver, bankruptcy trustee or itself as
debtor-in-possession under any bankruptcy proceeding) to the fullest extent
provided by law, any and all claims, rights or defenses to the enforcement of
this Joinder Agreement on the basis that (a) it failed to receive adequate
consideration for the execution and delivery of this Joinder Agreement or (b)
its obligations under this Joinder Agreement are avoidable as a fraudulent
conveyance. 

5.

As security for the prompt and complete payment when due (whether on the payment
dates or otherwise) of all the Secured Obligations, Subsidiary grants to Agent a
security interest in all of Subsidiary’s right, title, and interest in and to
the Collateral and the Intellectual Property Collateral (as defined in the IP
Security Agreement).

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

 

 

 

 

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

 

[SIGNATURE PAGE TO JOINDER AGREEMENT]

SUBSIDIARY:

 

 

 

 

 

By:

 

Name:

 

Title:

 

 

 

Address:

 

 

 

 

 

Telephone:

 

 

 

email:

 

 

 

 

AGENT:

 

 

HERCULES CAPITAL, INC.

 

 

By:

 

 

 

Name:

 

 

 

Title:

 

 

 

 

 

Address:

 

400 Hamilton Ave., Suite 310

 

Palo Alto, CA 94301

 

email: legal@herculestech.com

 

Telephone:  650-289-3060

 

 

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

 

EXHIBIT H

ACH DEBIT AUTHORIZATION AGREEMENT

Hercules Capital, Inc.

400 Hamilton Avenue, Suite 310

Palo Alto, CA  94301

Re:  Loan and Security Agreement dated August 1, 2016 (the “Agreement”) by and
among Mattersight Corporation (“Borrower”) and Hercules Capital, Inc., as agent
(“Company”) and the lenders party thereto (collectively, the “Lender”)

In connection with the above referenced Agreement, the Borrower hereby
authorizes the Company to initiate debit entries for (i) the periodic payments
due under the Agreement and (ii) out-of-pocket legal fees and costs incurred by
Agent or Lender pursuant to Section 11.11 of the Agreement to the Borrower’s
account indicated below.  The Borrower authorizes the depository institution
named below to debit to such account.

[IF FILED PUBLICLY, ACCOUNT INFO REDACTED FOR SECURITY PURPOSES]

Depository Name

Branch

City

State and Zip Code

Transit/ABA Number

Account Number

This authority will remain in full force and effect so long as any amounts are
due under the Agreement.

 

 

(Borrower)(Please Print)

 

 

 

By:

 

 

 

 

 

Date:

 

 

 

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

 

EXHIBIT I

PROJECTIONS

 

 

 

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

 

EXHIBIT J

Permitted Subsidiary DEPOSIT ACCOUNTS AND INVESTMENT ACCOUNTS

 

 

 

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

 

Schedule 1    Subsidiaries

 

Mattersight Europe Holding Corporation

Mattersight (Netherlands) B.V.

Mattersight (Deutschland) GmbH

Mattersight (U.K.) Limited

Mattersight International Holding, Inc.

Mattersight (Canada) Corporation

Mattersight Corporation (Australia) Pty. Ltd.

 

 

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

 

SCHEDULE 1.1    COMMITMENTS

 

LENDER

TRANCHE

TERM COMMITMENT

Hercules Capital, Inc.

Tranche I

$22,500,000

Hercules Capital, Inc.

Tranche II

$2,500,000

Hercules Capital, Inc.

Tranche III (uncommitted; subject to approval by Lender’s investment committee)

$5,000,000

 

TOTAL COMMITMENTS

Up to $30,000,000, including uncommitted Tranche III