tlra10k2018exhibit103






                            SECOND AMENDMENT                                      TO         AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT        THIS SECOND AMENDMENT TO AMENDED AND RESTATED LOAN AND  SECURITY AGREEMENT (this “Amendment”) is entered into as of November 7, 2018,  between SILICON VALLEY BANK, a California corporation with a loan production office  located at 387 Park Avenue South, 2nd Floor, New York, New York 10016 (“Bank”), and (b)  TELARIA, INC. (f/k/a Tremor Video, Inc.), a Delaware corporation, with its chief executive  office located at 222 Broadway, 16th Floor, New York, New York 10038 (the “Borrower”).                                     Recitals        A.    Bank and Borrower have entered into that certain Amended and Restated Loan  and Security Agreement dated as of January 27, 2017, as amended by that certain First  Amendment to Amended and Restated Loan and Security Agreement dated as of January 26,  2018 (as has been and as may be further amended, modified, supplemented or restated from time  to time, the “Loan Agreement”).        B.    Bank has extended credit to Borrower for the purposes permitted in the Loan Agreement.        C.    Borrower has requested that Bank amend the Loan Agreement to (a) amend a  financial covenant and (b) make certain other revisions to the Loan Agreement as more fully set  forth herein.        D.    Bank has agreed to so amend certain provisions of the Loan Agreement, but only  to the extent, in accordance with the terms, subject to the conditions and in reliance upon the  representations and warranties set forth below.                                    Agreement        Now, Therefore, in consideration of the foregoing recitals and other good and  valuable consideration, the receipt and adequacy of which is hereby acknowledged, and  intending to be legally bound, the parties hereto agree as follows:        1.    Definitions. Capitalized terms used but not defined in this Amendment shall  have the meanings given to them in the Loan Agreement.        2.    Amendments to Loan Agreement.                 2.1   Section 6.2 (Financial Statements, Reports, Certificates).    Subsection (b) of Section 6.2 is hereby deleted in its entirety and replaced with the following:                    (b)   Borrowing Base Reports. Within fourteen (14) days after the end              of each month, a Borrowing Base Report (and any schedules related thereto and              including any other information requested by Bank with respect to Borrower’s              Accounts);”                                         1 





 






            2.2   Section 6.7 (Financial Covenants). Subsection (b) of Section 6.7 is  hereby deleted in its entirety and replaced with the following:                 (b)   Adjusted EBITDA. Maintain at all times, to be tested as of the last           day of each calendar quarter, Adjusted EBITDA for the following periods of at           least: (i) negative Seven Million Five Hundred Thousand Dollars           (-$7,500,000.00) for the twelve (12) month period ending December 31, 2016; (ii)           negative Six Million Five Hundred Thousand Dollars (-$6,500,000.00) for the           twelve (12) month period ending March 31, 2017; (iii) negative Six Million           Dollars (-$6,000,000.00) for the twelve (12) month period ending June 30, 2017;           (iv) Zero Dollars ($0.00) for the three (3) month period ending December 31,           2017; (v) (-$1,000,000.00) for the six (6) month period ending March 31, 2018;           (vi) Zero Dollars ($0.00) for the nine (9) month period ending June 30, 2018; (vii)           Zero Dollars ($0.00) for the twelve (12) month period ending September 30,          2018; (viii) negative Six Million Dollars (-$6,000,000.00) for the twelve month           period ending December 31, 2018; (ix) negative Five Million Five Hundred           Thousand Dollars (-$5,500,000.00) for the twelve month period ending March 31,           2019; (x) negative Four Million Dollars (-$4,000,000.00) for the twelve month           period ending June 30, 2019; (xi) negative One Million Five Hundred Thousand           Dollars (-$1,500,000.00) for the twelve month period ending September 30, 2019;           and (xii) Zero Dollars ($0.00) for the twelve month period ending December 31,           2019.                 Notwithstanding the foregoing, the financial covenant set forth in this           Section 6.7(b) will not be tested for any calendar quarter with respect to which           Bank has received evidence, satisfactory to Bank in its sole discretion, that           Borrower had, at all times during such quarter, both (i) an Adjusted Quick Ratio           of at least 1.60 to 1.0 and (ii) unrestricted and unencumbered cash and Cash           Equivalents in an amount of at least Twenty-Five Million Dollars           ($25,000,000.00).”              2.3   Section 6.10 (Access to Collateral; Books and Records). The last  sentence in Section 6.10 is hereby deleted in its entirety and replaced with the following:           “In the event Borrower and Bank schedule an audit more than eight (8) days in           advance, and Borrower cancels or seeks to or reschedules the audit with less than           eight (8) days written notice to Bank, then (without limiting any of Bank’s rights           or remedies) Borrower shall pay Bank a fee of Two Thousand Dollars ($2,000.00)           plus any out-of-pocket expenses incurred by Bank to compensate Bank for the           anticipated costs and expenses of the cancellation or rescheduling.”              2.4   Section 6.16 (Online Banking). Subsection (b) of Section 6.16 is  hereby deleted in its entirety and replaced with the following:                 (b)   Comply with the terms of Bank’s Online Banking Agreement as in           effect from time to time and ensure that all persons utilizing Bank’s online           banking platform are duly authorized to do so by an Administrator. Bank shall be                                      2 





 






         entitled to assume the authenticity, accuracy and completeness on any           information, instruction or request for a Credit Extension submitted via Bank’s           online banking platform and to further assume that any submissions or requests           made via Bank’s online banking platform have been duly authorized by an           Administrator.”              2.5   Section 7.2 (Changes in Business, Management, Control, or  Business Locations). The following new text is inserted at the end of Section 7.2:           “If Borrower intends to add any new offices or business locations, including           warehouses, containing in excess of One Hundred Fifty Thousand Dollars           ($150,000.00) of Borrower’s assets or property, then Borrower will first receive           the written consent of Bank, and the landlord of any such new offices or business           locations, including warehouses, shall execute and deliver a landlord consent in           form and substance satisfactory to Bank.”              2.6   Section 7.7 (Distributions; Investments). Clause (a)(iii) of Section  7.7 is hereby deleted in its entirety and replaced with the following:           “(iii) repurchase shares of common stock so long as an Event of Default does not           exist at the time of such repurchase and would not exist after giving effect to such           repurchase, provided such repurchases do not exceed in the aggregate           Twenty-Eight Million Five Hundred Thousand Dollars ($28,500,000.00) minus           the amount of any such repurchases conducted during the period commencing on           March 29, 2016 through and including the date immediately prior to the Effective           Date; and”              2.7   Section 10 (Notices). Section 10 is amended by deleting the notice  information in its entirety and replacing it with the following:            If to Borrower:  Telaria, Inc.                            222 Broadway, 16''' Floor                             New York, New York 10038                             Attn: Aaron Saltz                             Email: asaltz@Tremorvideo.com           with a copy to:   Cooley LLP                             1114 Avenue of the Americas                             New York, New York 10036                             Attn: J. Peyton Worley                             Fax: (212)479-6275                             Email: pworley@cooley.com           If to Bank:       Silicon Valley Bank                            387 Park Avenue South, 2"'' Floor                            New York, New York 10016                            Attn: Hillary Le                            Fax: ______________                                     3 





 






                           Email: Hle2@svb.com           with a copy to:   Riemer & Braunstein LLP                             One Center Plaza                             Boston, Massachusetts 02108                             Attn: David A. Ephraim, Esquire                             Fax:  (617) 880-3456                            Email: DEphraim@riemerlaw.com'              2.8   Section 13.1 (Definitions). The following defined terms and their  definitions set forth in Section 13.1 are hereby deleted in their entirety and replaced with the  following:           “ “Account” is, as to any Person, any “account” of such Person as           “account” is defined in the Code with such additions to such term as may           hereafter be made, and includes, without limitation, all accounts receivable and           other sums owing to such Person.”                  'Administrator” is an individual that is named:                 (a)   as an 'Administrator” in the “SVB Online Services” form           completed by Borrower with the authority to determine who will be authorized to           use SVB Online Services (as defined in Bank’s Online Banking Agreement as in           effect from time to time) on behalf of Borrower; and                 (b)   as an Authorized Signer of Borrower in an approval by the Board.              2.9   Exhibit C (Compliance Certificate). The Compliance Certificate  appearing as Exhibit C to the Loan Agreement is deleted in its entirety and replaced with the  Compliance Certificate attached as Schedule 1 hereto.     3.    Waiver. Bank hereby waives Borrower’s existing default under the Loan  Agreement by virtue of Borrower’s failure to comply with the financial covenant set forth in  Section 6.7(b) thereof (relative to the requirement that Borrower maintain a certain minimum  Adjusted EBITDA) as of the twelve (12) month period ended September 30, 2018. Bank’s  waiver of Borrower’s compliance of said financial covenant shall apply only to the foregoing  specific period.     4.    Limitation of Amendments.              4.1 The amendments set forth in Section 2, above, are effective for the  purposes set forth herein and shall be limited precisely as written and shall not be deemed to  (a) be a consent to any amendment, waiver or modification of any other term or condition of  any Loan Document, or (b) otherwise prejudice any right or remedy which Bank may now  have or may have in the future under or in connection with any Loan Document.              4.2 This Amendment shall be construed in connection with and as part of the                                      4 





 






   Loan Documents and all terms, conditions, representations, warranties, covenants and     agreements set forth in the Loan Documents, except as herein amended, are hereby ratified     and confirmed and shall remain in full force and effect.        5.    Representations and Warranties.   To induce Bank to enter into this Amendment, Borrower hereby represents and warrants to Bank as follows:                 5.1 Immediately after giving effect to this Amendment (a) the representations     and warranties contained in the Loan Documents are true, accurate and complete in all     material respects as of the date hereof (except to the extent such representations and     warranties relate to an earlier date, in which case they are true and correct as of such date,     and except as reflected in the updated Perfection Certificate delivered in connection with this     Amendment), and (b) no Event of Default has occurred and is continuing;                 5.2 Borrower has the power and authority to execute and deliver this     Amendment and to perform its obligations under the Loan Agreement, as amended by this     Amendment;                 5.3 The organizational documents of Borrower previously delivered to Bank     remain true, accurate and complete and have not been amended, supplemented or restated     and are and continue to be in full force and effect;                 5.4 The execution and delivery by Borrower of this Amendment and the     performance by Borrower of its obligations under the Loan Agreement, as amended by this     Amendment, have been duly authorized; and                 5.5 This Amendment has been duly executed and delivered by Borrower and     is the binding obligation of Borrower, enforceable against Borrower in accordance with its     terms, except as such enforceability may be limited by bankruptcy, insolvency,     reorganization, liquidation, moratorium or other similar laws of general application and     equitable principles relating to or affecting creditors’ rights.        6.    Perfection Certificate. Borrower hereby ratifies, confirms and reaffirms, all and  singular, the terms and disclosures contained in a certain Perfection Certificate dated as of  November 7, 2018, and acknowledges, confirms and agrees the disclosures and information  Borrower provided to Bank in said Perfection Certificate have not changed, as of the date hereof.  Borrower hereby acknowledges and agrees that all references in the Loan Agreement shall mean  the Perfection Certificate as described in this paragraph.        7.    No Defenses of Borrower. Borrower hereby acknowledges and agrees that  Borrower has no offsets, defenses, claims, or counterclaims against Bank with respect to the  Obligations, or otherwise, and that if Borrower now has, or ever did have, any offsets, defenses,  claims, or counterclaims against Bank, whether known or unknown, at law or in equity, all of  them are hereby expressly WAIVED and Borrower hereby RELEASES Bank from any liability  thereunder.        8.    Integration. This Amendment and the Loan Documents represent the entire  agreement about this subject matter and supersede prior negotiations or agreements. All prior                                        5 





 






agreements, understandings, representations, warranties, and negotiations between the parties  about the subject matter of this Amendment and the Loan Documents merge into this  Amendment and the Loan Documents.        9.    Counterparts. This Amendment may be executed in any number of counterparts  and all of such counterparts taken together shall be deemed to constitute one and the same  instrument.        10.   Effectiveness. This Amendment shall be deemed effective upon (a) the due  execution and delivery to Bank of this Amendment by each party hereto, and (b) Borrower’s  payment of a fully-earned, non-refundable amendment fee in an amount equal to Twenty-Five  Thousand Dollars ($25,000.00). In addition. Borrower shall pay Bank’s legal fees and expenses  incurred in connection with this Amendment.                               [Signature page follows.]                                          6 





 






      In Witness Whereof, the parties hereto have caused this Amendment to be duly  executed and delivered as of the date first written above.   BANK                                  BORROWER   SILICON VALLEY BANK                   TELARIA, INC.   By  Name:                                 Naane;_,__a  Title:           if                   Title; ” 





 






                                               Schedule 1                                                 EXHIBIT C                                       COMPLIANCE CERTIFICATE                                                                          Date:  TO:     SILICON VALLEY BANK FROM: TELARIA,INC.         The undersigned authorized officer of TELARIA, INC. (“Borrower”) certifies that under the terms and conditions of  the Amended and Restated Loan and Security Agreement between Borrower and Bank (the “Agreement”):         (I) Borrower is in eomplete compliance for the period ending         with all required covenants except as noted below; (2) there are no Events of Default; (3) all representations and warranties in the Agreement are true and  correct in all material respects on this date except as noted below; provided, however, that such materiality qualifier shall not  be applicable to any representations and warranties that already are qualified or modified by materiality in the text thereof;  and provided, further that those representations and warranties expressly referring to a specific date shall be true, accurate  and complete in all material respects as of such date; (4) Borrower, and each of its Subsidiaries, has timely filed all required  tax returns and reports, and Borrower has timely paid all foreign, federal, state and local taxes, assessments, deposits and  contributions owed by Borrower except as otherwise permitted pursuant to the terms of Section 5.9 of the Agreement; and  (5) no Liens have been levied or claims made against Borrower or any of its Subsidiaries relating to unpaid employee payroll  or benefits of which Borrower has not previously provided written notification to Bank.         Attached are the required documents as appropriate supporting the certification. The undersigned certifies that these  are prepared in accordance with GAAP consistently applied from one period to the next except as explained in an  accompanying letter or footnotes. The undersigned acknowledges that no borrowings may be requested at any time or date of  determination that Borrower is not in compliance with any of the terms of the Agreement, and that compliance is determined  not just at the date this certificate is delivered. Capitalized terms used but not otherwise defined herein shall have the  meanings given them in the Agreement. Please indicate compliance status by circling Yes/No under “Complies” column.   Reporting Covenants                                             Required                    Complies   Monthly financial statements with                   Monthly within 30 days                  Yes No  Compliance Certificate____________  Annual financial statements (Audited)               EYE within 120 days                     Yes No   10-Q, 10-Kand 8-K_____________________             Within 5 days after filing with SEC     Yes No  AIR & A/P Agings and Account Debtor listing         Monthly within 30 days                  Yes No  Borrowing Base Report__________________             Monthly within 14 days                  Yes No  Board-approved Projections                          Earlier of EYE within 45 days or 10     Yes No                                                      days of Board approval, and within                                                       10 days of updates/amendments  Stock Repurchase Reports                            First Business Day of each month        Yes No   Financial Covenants                                       Required      Actual             Complies   Maintain at all times:  Adjusted Quick Ratio (at all times) (tested monthly)      > 1.20:1.0         :L0           Yes No  Adjusted EBITDA (tested quarterly)____________            >                                Yes No N/A**      * As set forth in Section 6.7(b) of the Agreement        Testing waived for any quarter for which the Adjusted Quick Ratio and minimum cash and Cash Equivalents      requirements set forth in Section 6.7(b) are satisfied 





 






       The following financial covenant analyses and information set forth in Schedule 1 attached hereto are true  and accurate as of the date of this Certificate.         The following are the exceptions with respect to the certification above: (If no exceptions exist, state “No  exceptions to note.”)   TELARIA, INC.                                      BANK USE ONLY                                                     Received by: By:                                                               AUTHORIZED SIGNER Name:                                              Date: Title:                                                    Verified:                                                                   AUTHORIZED SIGNER                                                    Date:                                                     Compliance Status:    Yes No 





 






                                Schedule 1 to Compliance Certificate                                    Financial Covenant of Borrower         In the event of a conflict between this Schedule and the Agreement, the terms of the Agreement shall govern.  Dated:  NOTE - All calculations below are on a consolidated basis with respect to Borrower and its Subsidiaries.  I.     Adjusted Quick Ratio (at all times) (tested monthly) (Section 6,7(a))  Required:      1.20:1.00  Actual:   A.    Aggregate value of the unrestricted cash and cash equivalents of Borrower and its Subsidiaries         maintained at Bank and Bank’s Affiliates  B.    Aggregate value of net billed accounts receivable of Borrower and its Subsidiaries   C.    Quick Assets (sum of lines A and B)  D.    Aggregate value of Obligations to Bank  E.    Aggregate value of liabilities that should, under GAAP, be classified as liabilities on $.        Borrower’s and its Subsidiaries’ consolidated balance sheet, including all Indebtedness, and not         otherwise reflected in line D above, that matures within one (1) year   F.    Current Liabilities (the sum of lines D and E)                                       $.  G.    Aggregate value of the current portion of amounts received or invoiced by Borrower and/or its $.        Subsidiaries in advance of performance under contracts and not yet recognized as revenue   H.    Line F minus line G  I.    Adjusted Quick Ratio (line C divided by line H)  Is line I equal to or greater than 1.20:1:00?                         No, not in compliance                               Yes, in compliance  II.     Adjusted EBITDA (tested quarterly) (Section 6.7(b))  Required: $,                *  *As set forth in Section 6.7(b) of the Agreement. Note: Testing waived for any quarter for which the Adjusted  Quick Ratio and minimum cash and Cash Equivalents requirements set forth in Section 6.7(b) are satisfied.  Actual:    $.   A.    Net Income                                                                   $.   B.    To the extent included in the determination of Net Income         1.      Interest Expense                                                     $. 





 






       2.      Income Tax Expense         3.      Depreciation                                                         $.         4.      Amortization         5.     Non-cash stock-based compensation expense         6.      Earn-out payments in connection with Borrower’s acquisition of The Video                 Network Pty Ltd. in an aggregate amount not to exceed $3,600,000 in the                 aggregate in any 12-month period         7.      Executive severance                                                  $.                Restructuring costs relating to subletting Borrower’s location at 1501 Broadway,                 New York, New York in an aggregate amount not to exceed $3,500,000         9.      Other add-backs approved by Bank                                     $.         10.     The sum of lines 1 through 9   C.    Adjusted EBITDA (line A plus lines B.IO)  Is line C equal to or greater than the required amount set forth above?                          No, not in compliance                               Yes, in compliance