Document:

Unassociated Document

    

    

    (Working
Capital Line of Credit)

     

    LOAN
AND SECURITY AGREEMENT

     

    This LOAN AND SECURITY AGREEMENT
(this “Agreement”) dated as of September 10, 2010 (the “Effective Date”) is
among (a) SILICON VALLEY
BANK, a California corporation (“Bank”), with its principal place of
business at 3003 Tasman Drive, Santa Clara, California 95054 with a loan
production office located at 535 Fifth Avenue, 27th Floor,
New York, New York 10017 (FAX 212-688-5994), and (b) INTERCLICK, INC., a Delaware
corporation (“interCLICK”), with its principal place of business at 11 West
19th
Street, 10th Floor,
New York, New York 10011 (FAX 646-558-1225), and DESKTOP ACQUISITION SUB, INC.,
a Delaware corporation (“Desktop”), with its principal place of business at 11
West 19th Street,
10th
Floor, New York, New York 10011 (FAX 646-558-1225) (interCLICK and Desktop are
hereinafter jointly and severally, individually and collectively, referred to as
“Borrower”), and provides the terms on which Bank shall lend to Borrower, and
Borrower shall repay Bank.  The parties agree as follows:

     

    1            ACCOUNTING AND OTHER
TERMS

     

    Accounting
terms not defined in this Agreement shall be construed following GAAP. 
Calculations and determinations must be made following GAAP.  The term
“financial statements” includes the notes and schedules.  The terms
“including” and “includes” always mean “including (or includes) without
limitation,” in this or any Loan Document.  Capitalized terms not otherwise
defined in this Agreement shall have the meanings set forth in Section 13. 
All other terms contained in this Agreement, unless otherwise indicated, shall
have the meanings provided by the Code, to the extent such terms are defined
therein.

     

    2           
LOAN AND TERMS OF
PAYMENT

     

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

     

    2.1.1      Financing
of Accounts.

     

    (a)          Availability.

     

    (i)           Subject
to the terms of this Agreement and provided that Borrower is not Streamline
Facility Eligible, Borrower may request that Bank finance specific Eligible
Accounts.  Bank may, in its good faith business discretion, finance such
Eligible Accounts by extending credit to Borrower in an amount equal to the
result of the Advance Rate multiplied by the face amount of the Eligible
Account.  Bank may, in its sole discretion, change the percentage of the
Advance Rate for a particular Eligible Account on a case by case
basis.

     

    (ii)           Subject
to the terms of this Agreement and provided that Borrower is Streamline Facility
Eligible, Borrower may request that Bank finance Eligible Accounts on an
aggregate basis (the “Aggregate Eligible Accounts”).  Bank may, in its good
faith business discretion, finance Aggregate Eligible Accounts by extending
credit to Borrower in an amount equal to the result of the Advance Rate
multiplied by the face amount of the Aggregate Eligible Accounts.  Bank
may, in its sole discretion, change the percentage of the Advance Rate or
Borrowing Base for the Aggregate Eligible Accounts on a case by case
basis.

     

    (iii)           Any
extension of credit made pursuant to the terms of subsections (i) or (ii) above
shall hereinafter be referred to as an “Advance”, and, collectively, the
“Advances”.  When Bank makes an Advance, the Eligible Account or the
Aggregate Eligible Accounts each become a separate “Financed
Receivable”.

     

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

    (b)          Maximum Advances;
Sublimit.

     

    (i)           The
aggregate face amount of all Financed Receivables outstanding at any time may
not exceed the Facility Amount.  In addition and notwithstanding the
foregoing, (A) the aggregate amount of Advances outstanding at any time may not
exceed Fifteen Million Dollars ($15,000,000.00), and (B) while Borrower is
Streamline Facility Eligible, the aggregate amount of (1) Advances
outstanding hereunder, plus (2) the Dollar Equivalent amount of outstanding
Letters of Credit (including drawn but unreimbursed Letters of Credit and any
Letter of Credit Reserve) issued pursuant to Section 2.1.2, plus (3) the FX
Reduction Amount, plus (4) the sum of amounts utilized for Cash Management
Services pursuant to Section 2.1.4, may not exceed at any time the Availability
Amount.

     

    (ii)           The
sum of (A) the aggregate amount of the Dollar Equivalent amount of outstanding
Letters of Credit (including drawn but unreimbursed Letters of Credit and any
Letter of Credit Reserve) issued pursuant to Section 2.1.2, plus (B) the FX
Reduction Amount, plus (C) the sum of amounts utilized for Cash Management
Services pursuant to Section 2.1.4, may not exceed One Million Five Hundred
Thousand Dollars ($1,500,000.00) at any time.

     

    (iii)           If,
at any time, amounts outstanding exceed the amounts set forth in this Section
2.1.1(b), Borrower shall immediately pay to Bank in cash such excess amount, and
Borrower hereby irrevocably authorizes Bank to debit any of its accounts
maintained with Bank or any of Bank’s Affiliates in connection
therewith.

     

    (c)          Borrowing
Procedure.  Borrower will deliver an Advance Request and Invoice
Transmittal in the form attached hereto as Exhibit
C signed by a Responsible Officer for each Credit Extension it requests,
accompanied by (i) an accounts receivable aging and a Borrowing Base Certificate
in the form attached hereto as Exhibit
D, with respect to requests for Credit Extensions while Borrower is
Streamline Facility Eligible, or (ii) invoices, with respect to requests for
Credit Extensions while Borrower is not Streamline Facility Eligible.  Bank
may rely on information set forth in or provided with the Advance Request and
Invoice Transmittal.  In addition, upon Bank’s request, Borrower shall
deliver to Bank any contracts, purchase orders, or other underlying supporting
documentation with respect to any Eligible Account or Aggregate Eligible
Accounts.

     

    (d)          Credit Quality;
Confirmations.  Bank may, at its option, conduct a credit check of
the Account Debtor for each Account requested by Borrower for financing
hereunder in order to approve any such Account Debtor’s credit before agreeing
to finance such Account.  Bank may also verify directly with the respective
Account Debtors the validity, amount and other matters relating to the Accounts
(including confirmations of Borrower’s representations in Section 5.3) by means
of mail, telephone or otherwise, either in the name of Borrower or Bank from
time to time in its sole discretion; provided, however, prior to the occurrence
and continuance of an Event of Default, Bank will notify Borrower prior to
making any direct contact with Borrower ’s Account Debtors.

     

    (e)          Accounts
Notification/Collection.  Bank may notify any Person owing Borrower
money of Bank’s security interest in the funds and verify and/or collect the
amount of the Account, provided, however, prior to the occurrence and
continuance of an Event of Default, Bank will notify Borrower prior to making
any direct contact with Borrower’s Account Debtors.

     

    (f)          Early
Termination.  This Agreement may be terminated prior to the Maturity
Date as follows: (i) by Borrower, effective three Business Days after written
notice of termination is given to Bank; or (ii) by Bank at any time after the
occurrence of an Event of Default, without notice, effective immediately. 
If this Agreement is terminated (A) by Bank in accordance with clause (ii) in
the foregoing sentence, or (B) by Borrower for any reason, Borrower shall pay to
Bank a termination fee in an amount equal to (1) on or prior to the Anniversary
Date, Three Hundred Thousand Dollars ($300,000.00), and (2) after the
Anniversary Date, One Hundred Fifty Thousand Dollars ($150,000.00) (the “Early
Termination Fee”).  The Early Termination Fee shall be due and payable on
the effective date of such termination and thereafter shall bear interest at a
rate equal to the highest rate applicable to any of the Obligations. 
Notwithstanding the foregoing, Bank agrees to waive the Early Termination Fee if
Bank agrees to refinance and redocument this Agreement under another division of
Bank (in its sole and exclusive discretion) prior to the Maturity
Date.

     

    
      
         

      

      
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    (g)          Maturity.  This
Agreement shall terminate and all Obligations outstanding hereunder shall be
immediately due and payable on the Maturity Date.

     

    (h)          Suspension of Credit
Extensions.  Borrower’s ability to request that Bank make Credit
Extensions hereunder will terminate if, in Bank’s sole discretion, there has
been a material adverse change in the general affairs, results of operation,
condition (financial or otherwise) or the prospect of repayment of the
Obligations, or there has been any material adverse deviation by Borrower from
the most recent business plan of Borrower presented to and accepted by Bank
prior to the execution of this Agreement.

     

    (i)           End of Streamline Facility
Eligible Status.  On any day that Borrower ceases to be Streamline
Facility Eligible, (i) all outstanding Advances made based on Aggregate Eligible
Accounts shall be immediately due and payable, together with all Finance Charges
accrued thereon, and (ii) all amounts outstanding and/or utilized pursuant to
Sections 2.1.2, 2.1.3 and 2.1.4 shall immediately be cash secured pursuant to
the terms of Sections 2.1.2, 2.1.3 and/or 2.1.4, as applicable.  Provided
no Event of Default then exists hereunder and subject to the terms of this
Agreement, Bank may, in its good faith business discretion, refinance the
outstanding principal amount of the Advances with new Advances made based on
specific Eligible Accounts (in accordance with this Agreement, including,
without limitation, Section 2.1.1 hereof).  In connection with same,
Borrower shall deliver to Bank an Advance Request and Invoice Transmittal in the
form attached hereto as Exhibit
C
containing detailed invoice reporting, signed by a Responsible Officer together
with a current accounts receivable aging and a copy of each invoice, all in
accordance with Section 6.2(h) hereof and Bank, in its good faith business
discretion, may finance same (in accordance with this Agreement, including,
without limitation, Section 2.1.1 hereof) and each Eligible Account financed
shall thereafter be deemed to be a Financed Receivable for purposes of this
Agreement.  If, following such determination, the outstanding principal
amount of the Obligations in connection with Advances made pursuant to Section
2.1.1 exceeds the amount of Advances Bank has made based on specific Eligible
Accounts, Borrower shall immediately pay to Bank the excess and, in connection
with same, hereby irrevocably authorizes Bank to debit any account of Borrower
maintained by Borrower with Bank or any of Bank’s Affiliates for the amount of
such excess.

     

    (j)           Commencement of Streamline
Facility Eligible Status.  On any day that Borrower becomes
Streamline Facility Eligible, all outstanding Advances made based on Eligible
Accounts shall be immediately due and payable, together with all Finance Charges
and Collateral Handling Fees accrued thereon.  Provided no Event of Default
then exists hereunder and subject to the terms of this Agreement, Bank may, in
its good faith business discretion, refinance such Advances with new Advances
made based on Aggregate Eligible Accounts (in accordance with this Agreement,
including, without limitation, Section 2.1.1 hereof).  In connection with
such request, Borrower shall deliver to Bank (i) an Advance Request and Invoice
Transmittal in the form attached hereto as Exhibit
C
containing a current accounts receivable aging, and (ii) a Borrowing Base
Certificate in the form attached hereto as Exhibit
D, and Bank may, in its good faith business discretion, refinance the
outstanding principal amount of such Advances with new Advances made based
on Aggregate Eligible Accounts (in accordance with this Agreement, including,
without limitation, Section 2.1.1 hereof) and the Aggregate Eligible Accounts
financed shall thereafter be deemed to be a Financed Receivable for purposes of
this Agreement.  If, following such determination, the outstanding
principal amount of the Obligations in connection with Advances made pursuant to
Section 2.1.1 exceeds the amount of Advances Bank has made based on Aggregate
Eligible Accounts, Borrower shall immediately pay to Bank the excess and, in
connection with same, hereby irrevocably authorizes Bank to debit any account of
Borrower maintained by Borrower with Bank or any of Bank’s Affiliates for the
amount of such excess.

     

    
      
         

      

      
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    2.1.2 
    Letters
of Credit.

     

    (a)           For
so long as Borrower is Streamline Facility Eligible, upon Borrower’s request,
Bank may, in its good faith business discretion, issue or have issued Letters of
Credit denominated in Dollars or a Foreign Currency for Borrower’s
account.  The aggregate Dollar Equivalent amount of outstanding Letters of
Credit (including drawn but unreimbursed Letters of Credit and any Letters of
Credit Reserve) may not exceed the amounts set forth in Section 2.1.1(b)
above.  Any such aggregate amounts utilized hereunder shall reduce the
amount otherwise available for Credit Extensions hereunder.  If, on the
Maturity Date, and immediately when Borrower is no longer Streamline Facility
Eligible, there are any outstanding Letters of Credit, then on such date
Borrower shall provide to Bank cash collateral in an amount equal to (i) with
respect to Letters of Credit denominated in Dollars, one hundred and five
percent (105.0%), and (ii) with respect to Letters of Credit denominated in a
currency other than Dollars, one hundred ten percent (110.0%), of the Dollar
Equivalent amount of all such Letters of Credit plus all interest, fees, and
costs due or to become due in connection therewith (as estimated by Bank in its
good faith business judgment), to secure all of the Obligations relating to such
Letters of Credit.  All Letters of Credit shall be in form and substance
acceptable to Bank in its sole discretion and shall be subject to the terms and
conditions of Bank’s standard Application and Letter of Credit Agreement (the
“Letter of Credit Application”).  Borrower agrees to execute any further
documentation in connection with the Letters of Credit as Bank may reasonably
request.  Borrower further agrees to be bound by the regulations and
interpretations of the issuer of any Letters of Credit guaranteed by Bank and
opened for Borrower’s account or by Bank’s interpretations of any Letters of
Credit issued by Bank for Borrower’s account, and Borrower understands and
agrees that Bank shall not be liable for any error, negligence, or mistake,
whether of omission or commission, in following Borrower’s instructions or those
contained in the Letters of Credit or any modifications, amendments, or
supplements thereto, except for errors or mistakes directly resulting from
Bank’s gross negligence or willful misconduct.

     

    (b)           The
obligation of Borrower to immediately reimburse Bank for drawings made under
Letters of Credit shall be absolute, unconditional, and irrevocable, and shall
be performed strictly in accordance with the terms of this Agreement, such
Letters of Credit, and the Letter of Credit Application.

     

    (c)           Borrower
may request that Bank issue a Letter of Credit payable in a Foreign
Currency.  If a demand for payment is made under any such Letters of
Credit, Bank shall treat such demand as an Advance to Borrower of the equivalent
of the amount thereof (plus fees and charges in connection therewith such as
wire, cable, SWIFT or similar charges) in Dollars at the then-prevailing rate of
exchange in San Francisco, California, for sales of the Foreign Currency for
transfer to the country issuing such Foreign Currency.

     

    (d)           To
guard against fluctuations in currency exchange rates, upon the issuance of any
Letters of Credit payable in a Foreign Currency, Bank shall create a reserve
(the “Letter of Credit Reserve”) in an amount equal to ten percent (10.0%) of
the Dollar Equivalent amount of such Letters of Credit.  The amount of the
Letter of Credit Reserve may be adjusted by Bank from time to time to account
for fluctuations in the exchange rate.  While Borrower is Streamline
Facility Eligible, the availability of funds under Section 2.1.1 shall be
reduced by the amount of such Letter of Credit Reserve for as long as such
Letters of Credit remain outstanding.

     

    (e)           Borrower
shall pay Bank’s customary fees and expenses for the issuance or renewal of
Letters of Credit, including, without limitation, a letter of credit fee of two
percent (2.0%) per annum of the Dollar Equivalent of the face amount of each
Letter of Credit issued, upon the issuance of such Letter of Credit, on each
anniversary of the issuance during the term of such Letter of Credit, and upon
the renewal of such Letter of Credit by Bank.

     

    2.1.3   
  Foreign
Exchange Sublimit.  For so long as Borrower is Streamline Facility
Eligible, upon Borrower’s request, Borrower may use a portion of its
availability hereunder (which amount is set forth in Section 2.1.1(b)) to enter
into foreign exchange contracts with Bank under which Borrower commits to
purchase from or sell to Bank a specific amount of Foreign Currency (each, a
“FX Forward Contract”)
on a specified date (the “Settlement Date”).  FX
Forward Contracts shall have a Settlement Date of at least one (1) FX Business
Day after the contract date and shall be subject to a reserve of ten percent
(10.0%) of each outstanding FX Forward Contract.  The amount otherwise
available for Credit Extensions hereunder shall be reduced by an amount equal to
ten percent (10.0%) of each outstanding FX Forward Contract (the “FX Reduction Amount”). 
Any amounts needed to fully reimburse Bank for any amounts not paid by Borrower
in connection with FX Forward Contracts will be treated as Advances made based
on Aggregate Eligible Accounts and will accrue interest at the interest rate
applicable to Advances made based upon Aggregate Eligible Accounts.  If, on
the Maturity Date, and immediately when Borrower is no longer Streamline
Facility Eligible, there are any outstanding FX Forward Contracts, then on such
date Borrower shall provide to Bank cash collateral in an amount consistent with
Bank’s current foreign exchange contracts policies to secure all of the
Obligations relating to such FX Forward Contracts.

     

    
      
         

      

      
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    2.1.4  
   Cash
Management Services Sublimit.  For so long as Borrower is Streamline
Facility Eligible, upon Borrower’s request, Bank may, in its good faith business
discretion, permit Borrower to use a portion of its availability hereunder
(which amount is set forth in Section 2.1.1(b)) for Bank’s cash management
services, which may include merchant services, direct deposit of payroll,
business credit card, and check cashing services identified in Bank’s various
cash management services agreements (collectively, the “Cash Management
Services”).  Any amounts Bank pays on behalf of Borrower for any Cash
Management Services shall reduce the amount otherwise available for Credit
Extensions hereunder.  If, on the Maturity Date, and immediately when
Borrower is no longer Streamline Facility Eligible, there are any outstanding
Cash Management Services, then on such date Borrower shall provide to Bank cash
collateral in an amount consistent with Bank’s current cash management services
policies to secure all of the Obligations relating to such Cash Management
Services.

     

    2.2  
       Collections,
Finance Charges, Remittances and Fees.  The Obligations shall be
subject to the following fees and Finance Charges.  Unpaid fees and Finance
Charges may, in Bank’s discretion, accrue interest and fees as described in
Section 9.2 hereof.

     

    2.2.1 
    Collections. 
Collections will be credited to the Financed Receivable Balance for such
Financed Receivable, but if there is an Event of Default, Bank may apply
Collections to the Obligations in any order it chooses.  If Bank receives a
payment for both a Financed Receivable and a non-Financed Receivable, the funds
will first be applied to the Financed Receivable and, if there is no Event of
Default then existing, the excess will be remitted to Borrower, subject to
Section 2.2.7.

     

    2.2.2
     Facility
Fee.  A fully earned, non-refundable facility fee of One Hundred
Twelve Thousand Five Hundred Dollars ($112,500.00) is earned as of the Effective
Date, and is due and payable as follows: (a) Seventy Five Thousand Dollars
($75,000.00) is due and payable on the Effective Date, and (b) Thirty Seven
Thousand Five Hundred Dollars ($37,500.00) is due and payable upon the earlier
to occur of (i) the Anniversary Date, (ii) the occurrence of an Event of
Default, or (iii) the early termination of this Agreement (the “Facility Fee”).

     

    2.2.3 
    Finance
Charges.  In computing Finance Charges on the Obligations under this
Agreement, all Collections received by Bank shall be deemed applied by Bank on
account of the Obligations (a) with respect to Financed Receivables based upon
Eligible Accounts, three (3) Business Days after receipt of such
Collections, and (b) with respect to Financed Receivables based upon Aggregate
Eligible Accounts, on the day of receipt of such Collections.  Borrower
will pay a finance charge (the “Finance Charge”) on the Financed Receivable
Balance or Account Balance (as applicable) which is equal to the Applicable Rate
divided by 360
multiplied by
the number of days each such Financed Receivable is outstanding multiplied by (a)
with respect to Financed Receivables based on Eligible Accounts, the outstanding
Financed Receivable Balance, and (b) with respect to Financed Receivables based
on Aggregate Eligible Accounts, the outstanding Account Balance.  Except as
otherwise provided in Section 2.1.1(i), Section 2.1.1(j) and/or Section
2.3.1(b)(i), the Finance Charge is payable when the Advance made based on such
Financed Receivable is payable in accordance with Section 2.3 hereof. 
After an Event of Default, the Applicable Rate will increase an additional five
percent (5.0%) per annum effective immediately upon the occurrence of such Event
of Default. 

     

    2.2.4  
   Collateral
Handling Fee.  With respect to Financed Receivables based upon
Eligible Accounts, Borrower will pay to Bank a collateral handling fee equal to
0.15% per month of the Financed Receivable Balance for each such Financed
Receivable outstanding based upon a 360 day year (the “Collateral Handling
Fee”).  This fee is charged on a daily basis which is equal to the
Collateral Handling Fee divided by 30, multiplied by the number of days each
such Financed Receivable is outstanding, multiplied by the outstanding Financed
Receivable Balance.  Except as otherwise provided in Section 2.1.1(j), the
Collateral Handling Fee is payable when the Advance made based on such Financed
Receivable is payable in accordance with Section 2.3 hereof.  In computing
Collateral Handling Fees under this Agreement, all Collections received by Bank
shall be deemed applied by Bank on account of Obligations three (3) Business
Days after receipt of the Collections.  After an Event of Default, the
Collateral Handling Fee will increase an additional 0.50% effective immediately
upon such Event of Default.

    

    2.2.5  
   Accounting. 
After each Reconciliation Period, Bank will provide an accounting of the
transactions for that Reconciliation Period, including the amount of all
Financed Receivables, all Collections, Adjustments, Finance Charges, Collateral
Handling Fee, and the Facility Fee.  If Borrower does not object to the
accounting in writing within sixty (60) days it shall be considered
accurate.  All Finance Charges and other interest and fees are calculated
on the basis of a 360 day year and actual days elapsed.

     

    
      
         

      

      
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    2.2.6  
   Deductions. 
Bank may deduct fees, Finance Charges, Advances which become due pursuant to
Section 2.3, and other amounts due pursuant to this Agreement from any Credit
Extensions made or Collections received by Bank.

     

    2.2.7 
    Lockbox;
Account Collection Services.

     

    (a)          As
and when directed by Bank from time to time, at Bank’s option and at the sole
and exclusive discretion of Bank (regardless of whether an Event of Default has
occurred), Borrower shall direct each Account Debtor (and each depository
institution where proceeds of Accounts are on deposit) to remit payments with
respect to the Accounts to a lockbox account established with Bank or to wire
transfer payments to a cash collateral account that Bank controls (collectively,
the “Lockbox”).  It
will be considered an immediate Event of Default if the Lockbox is not set-up
and operational on the Effective Date.

     

    (b)     
    For any time at which such Lockbox is not established,
the proceeds of the Accounts shall be paid by the Account Debtors to an address
consented to by Bank.  Upon receipt by Borrower of such proceeds, Borrower
shall immediately transfer and deliver same to Bank, along with a detailed cash
receipts journal.

     

    (c)      
    Provided no Event of Default exists or an event that
with notice or lapse of time will be an Event of Default, within three (3) days
of receipt of any amounts by Bank (whether in the Lockbox, directly from
Borrower, or otherwise), Bank will turn over to Borrower the proceeds of the
Accounts other than Collections with respect to Financed Receivables based upon
Eligible Accounts and the amount of Collections in excess of the amounts for
which Bank has made an Advance to Borrower based upon Eligible Accounts, less
any amounts due to Bank, such as the Finance Charge, the Facility Fee, payments
due to Bank, other fees and expenses, or otherwise; provided, however, Bank may
hold such excess amount and the proceeds of  any Accounts (whether
Financed Receivables or non-Financed Receivables) as a reserve until the end of
the applicable Reconciliation Period if Bank, in its discretion, determines that
other Financed Receivable(s) may no longer qualify as an Eligible Account or
Aggregate Eligible Accounts at any time prior to the end of the subject
Reconciliation Period.

     

    (d)     
    This Section 2.2.7 does not impose any affirmative duty
on Bank to perform any act other than as specifically set forth herein. 
All Accounts and the proceeds thereof are Collateral and if an Event of Default
occurs, Bank may apply the proceeds of such Accounts to the
Obligations.

     

    2.2.8  
   Bank
Expenses.  Borrower shall pay all Bank Expenses (including
reasonable attorneys’ fees and expenses for documentation and negotiation of
this Agreement) incurred through and after the Effective Date, when
due.

     

    2.2.9  
   Good
Faith Deposit.  Borrower has paid to Bank a deposit of Fifty
Thousand Dollars ($50,000.00) (the “Good Faith Deposit”) to
initiate Bank’s due diligence review process.  Any portion of the Good
Faith Deposit not utilized to pay Bank Expenses will be applied to the Facility
Fee.

     

    2.3      
   Repayment
of Obligations; Adjustments.

     

    2.3.1  
   Repayment.

     

    
      (a)          
Borrower
will repay each Advance made based upon a specific Eligible Account on the
earliest of: (i) the date on which payment is received of the Financed
Receivable with respect to which the Advance was made, (ii) the date on which
the Financed Receivable is no longer an Eligible Account, (iii) the date on
which any Adjustment is asserted to the Financed Receivable (but only to the
extent of the Adjustment if the Financed Receivable remains otherwise an
Eligible Account), (iv) the date on which there is a breach of any warranty or
representation set forth in Section 5.3, or a breach of any covenant in this
Agreement, (v) as required pursuant to Section 2.1.1(j), or (vi) the Maturity
Date (including any early termination).  Each payment will also include all
accrued Finance Charges and Collateral Handling Fees with respect to such
Advance and all other amounts then due and payable hereunder.

    

     

    (b)           With
respect to each Advance made based upon Aggregate Eligible
Accounts:

     

    
      
         

      

      
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    (i)           Borrower
shall pay to Bank, on the first day of each Reconciliation Period, all accrued
Finance Charges on the Advances made based upon the Aggregate Eligible Accounts;
and

     

    (ii)           Borrower
will pay the principal amount of the Advances made based upon Aggregate Eligible
Accounts on the earliest of: (A) the date on which the aggregate amount of
outstanding Advances, plus the Dollar Equivalent amount of outstanding Letters
of Credit (including drawn but unreimbursed Letters of Credit and any Letter of
Credit Reserve) issued pursuant to Section 2.1.2, plus the FX Reduction Amount,
plus the sum of amounts utilized for Cash Management Services pursuant to
Section 2.1.4, exceeds the Availability Amount (but only up to the amount
exceeding the Availability Amount), (B) the Maturity Date (including any early
termination), or (C) as required pursuant to Section 2.1.1(i).  Each
payment will also include all accrued Finance Charges with respect to such
Advance and all other amounts then due and payable hereunder.

     

    2.3.2   
  Repayment
on Event of Default.  When there is an Event of Default, Borrower
will, if Bank demands (or, upon the occurrence of an Event of Default under
Section 8.5, immediately without notice or demand from Bank) repay all of the
Credit Extensions.  The demand may, at Bank’s option, include any or all
Credit Extensions, and all accrued Finance Charges, the Early Termination
Fee, Collateral Handling Fee, the unpaid portion of the Facility Fee, attorneys’
and professional fees, court costs and expenses, and any other
Obligations.

     

    2.3.3
     Debit of
Accounts.  Bank may debit any of Borrower’s deposit accounts for
payments or any amounts Borrower owes Bank hereunder.  Bank shall promptly
notify Borrower when it debits Borrower’s accounts.  These debits shall not
constitute a set-off.

     

    2.3.4
     Adjustments. 
If, at any time during the term of this Agreement, any Account Debtor asserts an
Adjustment, Borrower issues a credit memorandum, or any of the representations
and warranties in Section 5.3 or covenants in this Agreement are no longer true
in all material respects, Borrower will promptly advise Bank.

     

    2.4  
      Power of
Attorney.  Borrower irrevocably appoints Bank and its successors and
assigns as attorney-in-fact and authorizes Bank, to: (a) following the
occurrence of an Event of Default, (i) sell, assign, transfer, pledge,
compromise, or discharge all or any part of the Financed Receivables; (ii)
demand, collect, sue, and give releases to any Account Debtor for monies due and
compromise, prosecute, or defend any action, claim, case or proceeding about the
Financed Receivables, including filing a claim or voting a claim in any
bankruptcy case in Bank’s or Borrower’s name, as Bank chooses; and (iii)
prepare, file and sign Borrower’s name on any notice, claim, assignment, demand,
draft, or notice of or satisfaction of lien or mechanics’ lien or similar
document; and (b) regardless of whether there has been an Event of Default,
(i) notify all Account Debtors to pay Bank directly, provided, however, prior to
the occurrence  and continuance of an Event of Default, Bank will
notify Borrower prior to making any direct contact with an Account Debtor of
Borrower; (ii) receive, open, and dispose of mail addressed to Borrower,
provided, however, that as long as an Event of Default does not then exist, such
actions with respect to clause (ii) may only be taken in connection with the
Lockbox; (iii) endorse Borrower’s name on checks or other instruments (to the
extent necessary to pay amounts owed pursuant to this Agreement); and (iv)
execute on Borrower’s behalf any instruments, documents, financing statements to
perfect Bank’s interests in the Financed Receivables and Collateral and do all
acts and things necessary or expedient, as determined solely and exclusively by
Bank, to protect or  preserve Bank’s rights and remedies under this
Agreement, as directed by Bank.

     

    3       
    CONDITIONS OF
LOANS

     

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

     

    (a)         a
certificate of the Secretary of interCLICK with respect to certificate of
incorporation, bylaws, incumbency and resolutions authorizing the execution and
delivery of this Agreement and the Loan Documents;

     

    
      
         

      

      
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    (b)         a
certificate of the Secretary of Desktop with respect to certificate of
incorporation, bylaws, incumbency and resolutions authorizing the execution and
delivery of this Agreement and the Loan Documents;

     

    (c)         a
Perfection Certificate by each Borrower;

     

    (d)         a
legal opinion of Borrower’s counsel (authority/enforceability), in form and
substance reasonably acceptable to Bank;

     

    (e)         evidence
satisfactory to Bank that the insurance policies required by Section 6.4 hereof
are in full force and effect, together with appropriate evidence showing lender
loss payable and/or additional insured clauses or endorsements in favor of
Bank;

     

    (f)          duly
executed original signature to a payoff letter from Crestmark;

     

    (g)         evidence
that (i) the Liens securing Indebtedness owed by Borrower to Crestmark will be
terminated and (ii) the documents and/or filings evidencing the perfection of
such Liens, including without limitation any financing statements and/or control
agreements, have or will, concurrently with the initial Credit Extension, be
terminated;

     

    (h)         payment
of the fees and Bank Expenses then due and payable;

     

    (i)          Certificates
of Foreign Qualification (New York, and others, if applicable);

     

    (j)          long
form Certificates of Good Standing/Legal Existence (Delaware); and

     

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

     

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

     

    (a)         receipt
of the Advance Request and Invoice Transmittal;

     

    (b)         Bank
shall have (at its option) conducted the confirmations and verifications as
described in Section 2.1.1(d); and

     

    (c)         each
of the representations and warranties in Section 5 shall be true on the date of
the Advance Request and Invoice Transmittal and on the effective date of each
Credit Extension and no Event of Default shall have occurred and be continuing,
or result from the Credit Extension.  Each Credit Extension is Borrower’s
representation and warranty on that date that the representations and warranties
in Section 5 remain true.

     

    4         
  CREATION
OF SECURITY INTEREST

     

    4.1        Grant of
Security Interest.  Borrower hereby grants Bank, to secure the
payment and performance in full of all of the Obligations and the performance of
each of Borrower’s duties under the Loan Documents, a continuing security
interest in, and pledges to Bank, the Collateral, wherever located, whether now
owned or hereafter acquired or arising, and all proceeds and products
thereof.  Borrower represents, warrants, and covenants that the security
interest granted herein shall be a first priority security interest in the
Collateral (subject only to Permitted Liens that are permitted to have superior
priority over Bank’s Liens).  If Borrower shall at any time, acquire a
commercial tort claim, Borrower shall promptly notify Bank in a writing signed
by Borrower of the general details thereof and grant to Bank in such writing a
security interest therein and in the proceeds thereof, all upon the terms of
this Agreement, with such writing to be in form and substance satisfactory to
Bank.

     

    If this
Agreement is terminated, Bank’s Lien in the Collateral shall continue until the
Obligations (other than inchoate indemnity obligations) are repaid in full in
cash.  Upon payment in full in cash of the Obligations and at such time
this Agreement has been terminated, Bank shall, at Borrower’s sole cost and
expense, release its Liens in the Collateral and all rights therein shall revert
to Borrower.

     

    
      
         

      

      
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    4.2        Authorization
to File Financing Statements.  Borrower hereby authorizes Bank to
file financing statements, without notice to Borrower, with all appropriate
jurisdictions to perfect or protect Bank’s interest or rights hereunder,
including a notice that any disposition of the Collateral, by either Borrower or
any other Person, shall be deemed to violate the rights of Bank under the
Code.  Any such financing statements may indicate the Collateral as “all
assets of the Debtor” or words of similar effect, or as being of an equal or
lesser scope, or with greater detail, all in Bank’s discretion.  Upon
Borrower’s reasonable request, Bank will provide Borrower with copies of any
financing statements filed by pursuant to this Section 4.2.

     

    5       
    REPRESENTATIONS AND
WARRANTIES

     

    Borrower
represents and warrants as follows:

     

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

     

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

     

    5.2        Collateral. 
Borrower has good title to, has rights in, and the power to transfer each item
of the Collateral upon which it purports to grant a Lien hereunder, free and
clear of any and all Liens except Permitted Liens.  Borrower has no deposit
accounts other than the deposit accounts with Bank, the deposit accounts, if
any, described in the Perfection Certificate delivered to Bank in connection
herewith, or of which Borrower has given Bank notice and taken such actions as
are necessary to give Bank a perfected security interest therein. The Accounts
are bona fide, existing obligations of the Account Debtors.  All Inventory
is in all material respects of good and marketable quality, free from material
defects.

     

    The
Collateral is not in the possession of any third party bailee (such as a
warehouse) except as otherwise provided in the Perfection Certificate. 
None of the components of the Collateral shall be maintained at locations other
than as provided in the Perfection Certificate or as permitted pursuant to
Section 7.2.  In the event that Borrower, after the date hereof, intends to
store or otherwise deliver any portion of the Collateral to a bailee, then
Borrower will first receive the written consent of Bank and such bailee must
execute and deliver a bailee agreement in form and substance satisfactory to
Bank in its sole discretion.

     

    
      
         

      

      
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    Except as
noted on the Perfection Certificate, Borrower is not a party to, nor is bound
by, any material license or other agreement with respect to which Borrower is
the licensee (a) that prohibits or otherwise restricts Borrower from
granting a security interest in Borrower’s interest in such license or agreement
or any other property, or (b) for which a default under or termination of
could interfere with Bank’s right to sell any Collateral.  Without prior
consent from Bank, Borrower shall not enter into, or become bound by, any such
license or agreement which is reasonably likely to have a material impact on
Borrower’s business or financial condition.  Borrower shall take such steps
as Bank requests to obtain the consent of, or waiver by, any person whose
consent or waiver is necessary for all such licenses or contract rights to be
deemed “Collateral” and for Bank to have a security interest in it that might
otherwise be restricted or prohibited by law or by the terms of any such license
or agreement, whether now existing or entered into in the future.

     

    5.3        Financed
Receivables.  Borrower represents and warrants for each Financed
Receivable:

     

    (a)          Such
Financed Receivable is an Eligible Account;

     

    (b)         Borrower
is the owner of and has the legal right to sell, transfer, assign and encumber
such Financed Receivable;

     

    (c)          The
correct amount is on the Advance Request and Invoice Transmittal and is not
disputed;

     

    (d)         Payment
is not contingent on any obligation or contract and Borrower has fulfilled all
its obligations as of the Advance Request and Invoice Transmittal
date;

     

    (e)          Such
Financed Receivable is based on an actual sale and delivery of goods and/or
services rendered, is due to Borrower, is not in default, has not been
previously sold, assigned, transferred, or pledged and is free of any liens,
security interests and encumbrances other than Permitted Liens;

     

    (f)          There
are no defenses, offsets, counterclaims or agreements for which the Account
Debtor may claim any deduction or discount;

     

    (g)         Borrower
reasonably believes no Account Debtor is insolvent or subject to any Insolvency
Proceedings;

     

    (h)         Borrower
has not filed or had filed against it Insolvency Proceedings and does not
anticipate any filing;

     

    (i)           Bank
has the right to endorse and/or require Borrower to endorse all payments
received on Financed Receivables and all proceeds of Collateral;
and

     

    (j)           No
representation, warranty or other statement of Borrower in any certificate or
written statement given to Bank contains any untrue statement of a material fact
or omits to state a material fact necessary to make the statement contained in
the certificates or statement not misleading.

     

    5.4        Litigation. 
There are no actions or proceedings pending or, to the knowledge of Borrower’s
Responsible Officers, threatened in writing by or against Borrower or any
Subsidiary in which an adverse decision could reasonably be expected to cause a
Material Adverse Change.

     

    5.5         No
Material Deterioration in Financial Statements.  All consolidated
financial statements for Borrower and any Subsidiaries delivered to Bank fairly
present in all material respects Borrower’s consolidated financial condition and
Borrower’s consolidated results of operations.  There has not been any
material deterioration in Borrower’s consolidated financial condition since the
date of the most recent financial statements submitted to Bank.

     

    
      
         

      

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

     

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

     

    5.8        Subsidiaries. 
Borrower does not own any stock, partnership interest or other equity securities
except for (a) Permitted Investments, and (b) the stock that interCLICK owns as
of the Effective Date in Desktop and Customer Acquisition Network,
Inc.

     

    5.9        Tax
Returns and Payments; Pension Contributions.  Borrower and each
Subsidiary have timely filed all required tax returns and reports, and Borrower
and each Subsidiary have timely paid all foreign, federal, state and local
taxes, assessments, deposits and contributions owed by Borrower and each
Subsidiary.  Borrower may defer payment of any contested taxes, provided
that Borrower (a) in good faith contests its obligation to pay the taxes by
appropriate proceedings promptly and diligently instituted and conducted, (b)
notifies Bank in writing of the commencement of, and any material development
in, the proceedings, and (c) posts bonds or takes any other steps required to
prevent the governmental authority levying such contested taxes from obtaining a
Lien upon any of the Collateral that is other than a “Permitted Lien”. 
Borrower is unaware of any claims or adjustments proposed for any of Borrower's
prior tax years which could result in additional taxes becoming due and payable
by Borrower.  Borrower has paid all amounts necessary to fund all present
pension, profit sharing and deferred compensation plans in accordance with their
terms, and Borrower has not withdrawn from participation in, and has not
permitted partial or complete termination of, or permitted the occurrence of any
other event with respect to, any such plan which could reasonably be expected to
result in any liability of Borrower, including any liability to the Pension
Benefit Guaranty Corporation or its successors or any other governmental
agency.

     

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

     

    6           
AFFIRMATIVE
COVENANTS

     

    Borrower
shall do all of the following:

     

    6.1        Government
Compliance.

     

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

     

    
      
         

      

      
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    (b)           Obtain
all of the Governmental Approvals necessary for the performance by Borrower of
its obligations under the Loan Documents to which it is a party and the grant of
a security interest to Bank in all of its property.  Borrower shall
promptly provide copies of any such obtained Governmental Approvals to
Bank.

     

    6.2         Financial
Statements, Reports, Certificates.

     

    (a)           Deliver
to Bank:  (i) as soon as available, but no later than thirty (30)
days after the last
day of each month, a company prepared consolidated and consolidating balance
sheet and income statement covering Borrower’s and each of its Subsidiaries’
consolidated and consolidating operations during the period certified by a
Responsible Officer and in a form acceptable to Bank; (ii) as soon as available,
but no later than ninety (90) days after the last day
of Borrower’s fiscal year, audited consolidated financial statements prepared
under GAAP, consistently applied, together with an unqualified opinion on the
financial statements from an independent certified public accounting firm
reasonably acceptable to Bank; (iii) within five (5) days of filing, copies of
all statements, reports and notices made available to Borrower’s security
holders or to any holders of Subordinated Debt and all reports on Form 10-K,
10-Q and 8-K filed with the Securities and Exchange Commission; (iv) a prompt
report of any legal actions pending or threatened against Borrower or any
Subsidiary that could result in damages or costs to Borrower or any Subsidiary
of One Hundred Thousand Dollars ($100,000.00) or more; (v) as soon as available,
but not later than sixty (60) days prior to the last day of Borrower’s fiscal
year, and contemporaneously with any updates thereto, board-approved projections
for the subsequent fiscal year; and (vi) budgets, sales projections,
operating plans or other financial
information reasonably requested by Bank.

     

    (b)           Within
thirty (30) days
after the last day of each month, deliver to Bank with the monthly financial
statements a Compliance Certificate signed by a Responsible Officer in the form
of Exhibit
B.

     

    (c)           Allow
Bank to audit Borrower’s Collateral, including, but not limited to, Borrower’s
Accounts at Borrower’s expense, upon reasonable notice to Borrower and at
reasonable times; provided, however, prior to the occurrence of an Event of
Default, Borrower shall be obligated to pay for not more than two (2) audits per
year.  Borrower hereby acknowledges that the first such audit will be
conducted within ninety (90) days after the Effective Date. The charge for each such
audit shall be Eight Hundred Fifty Dollars ($850.00) per person per day (or such
higher amount as shall represent Bank’s then-current standard charge for the
same), plus reasonable out-of-pocket expenses.  After the occurrence of an
Event of Default, Bank may audit Borrower’s Collateral, including, but not
limited to, Borrower’s Accounts at Borrower’s expense and at Bank’s sole and
exclusive discretion and without notification and authorization from
Borrower.

     

    (d)           Upon
Bank’s request, provide a written report respecting any Financed Receivable, if
payment of any Financed Receivable does not occur by its due date and include
the reasons for the delay.

     

    (e)           Provide
Bank with, as soon as available, but no later than (i) (A) the first (1st) and
fifteenth (15th) day of
each Reconciliation Period while Borrower is Streamline Facility Eligible, or
(B) thirty (30) days following each
Reconciliation Period while Borrower is not Streamline Facility Eligible, an
aged listing of accounts receivable, in form acceptable to Bank, and (ii) thirty
(30) days following each Reconciliation Period, accounts payable by invoice
date, in form acceptable to Bank.

     

    (f)     
      For each Reconciliation Period during which
Borrower has Deferred Revenue, provide Bank with, as soon as available, but no
later than thirty (30) days following each such Reconciliation Period, a
Deferred Revenue report, in form acceptable to Bank.

     

    (g)           Immediately
upon Borrower becoming Streamline Facility Eligible, and thereafter until
Borrower is no longer Streamline Facility Eligible, provide Bank with, as soon
as available, but no later than the first (1st) and
fifteenth (15th) day of
each Reconciliation Period, a duly completed Borrowing Base Certificate signed
by a Responsible Officer.

     

    (h)           Immediately
upon Borrower ceasing to be Streamline Facility Eligible, provide Bank with a
current aging of Accounts and, to the extent not previously delivered to Bank, a
copy of the invoice for each Eligible Account and an Advance Request and Invoice
Transmittal with respect to each such Account.

     

    
      
         

      

      
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    6.3        Taxes. 
Borrower shall make, and cause each Subsidiary to make, timely payment of all
federal, state, and local taxes or assessments (other than taxes and assessments
which Borrower is contesting in good faith, with adequate reserves maintained in
accordance with GAAP) and will deliver to Bank, on demand, appropriate
certificates attesting to such payments.

     

    6.4        Insurance. 
Keep its business and the Collateral insured for risks and in amounts standard
for companies in Borrower’s industry and location, and as Bank may reasonably
request.  Insurance policies shall be in a form, with companies, and in
amounts that are satisfactory to Bank.  All property policies shall have a
lender’s loss payable endorsement showing Bank as the sole lender loss payee and
waive subrogation against Bank, and all liability policies shall show, or have
endorsements showing, Bank as an additional insured.  All policies (or the
loss payable and additional insured endorsements) shall provide that the insurer
must give Bank at least twenty (20) days notice before canceling, amending, or
declining to renew its policy.  At Bank’s request, Borrower shall deliver
certified copies of policies and evidence of all premium payments. Proceeds
payable under any policy shall, at Bank’s option, be payable to Bank on account
of the Obligations.  If Borrower fails to obtain insurance as required
under this Section 6.4 or to pay any amount or furnish any required proof of
payment to third persons and Bank, Bank may make all or part of such payment or
obtain such insurance policies required in this Section 6.4, and take any action
under the policies Bank deems prudent.

     

    6.5        Accounts.

     

    (a)           To
permit Bank to monitor Borrower’s financial performance and condition, within
sixty (60) days of the Effective Date and at all times thereafter, Borrower, and
all Borrower’s Subsidiaries, shall maintain Borrower’s and such Subsidiaries’
depository and operating accounts and securities accounts with Bank and Bank’s
affiliates; provided, however, Borrower may maintain (i) an account with Delaney
Equity Group LLC so long as the only property maintained in such account is the
shares owned by interCLICK in Options Media Group, Inc., and (ii) an account
with Morgan Stanley Smith Barney so long as the aggregate amount of cash and
funds in such account does not exceed Seventy-Five Thousand Dollars ($75,000.00)
at any time.

     

    (b)           Borrower
shall identify to Bank, in writing, any deposit or securities account opened by
Borrower with any institution other than Bank.  In addition, for each such
account that Borrower at any time opens or maintains, Borrower shall, at Bank’s
request and option, pursuant to an agreement in form and substance acceptable to
Bank, cause the depository bank or securities intermediary to agree that such
account is the collateral of Bank pursuant to the terms hereunder, which control
agreement may not be terminated without the prior written consent of Bank. 
The provisions of the previous sentence shall not apply to deposit accounts
exclusively used for payroll, payroll taxes and other employee wage and benefit
payments to or for the benefit of Borrower’s employees.

     

    6.6        Inventory;
Returns.  Keep all Inventory in good and marketable condition, free
from material defects.  Returns and allowances between Borrower and its
Account Debtors shall follow Borrower’s customary practices as they exist at the
Effective Date.  Borrower must promptly notify Bank of all returns,
recoveries, disputes and claims that involve more than One Hundred Thousand
Dollars ($100,000.00).

     

    6.7        Financial
Covenant – Adjusted Quick Ratio.  Borrower shall maintain at all
times, to be tested as of the last day of each month, an Adjusted Quick Ratio of
at least 1.0 to 1.0.

     

    6.8        Protection
of Intellectual Property Rights.  Borrower shall:  (a)
protect, defend and maintain the validity and enforceability of its intellectual
property; (b) promptly advise Bank in writing of material infringements of its
intellectual property; and (c) not allow any intellectual property material to
Borrower’s business to be abandoned, forfeited or dedicated to the public
without Bank’s written consent.

     

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

     

    
      
         

      

      
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    6.10      Further
Assurances.  Borrower shall execute any further instruments and take
further action as Bank reasonably requests to perfect or continue Bank’s
security interest in the Collateral or to effect the purposes of this
Agreement.

     

    7           
NEGATIVE
COVENANTS

     

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

     

    7.1        Dispositions. 
Convey, sell, lease, transfer, assign, or otherwise dispose of (collectively a
“Transfer”), or permit any of its Subsidiaries to Transfer, all or any part of
its business or property, except for Transfers (a) of Inventory in the ordinary
course of business; (b) of worn-out or obsolete Equipment; and (c) in connection
with Permitted Liens and Permitted Investments.

     

    7.2        Changes
in Business, Ownership, Management or Business Locations.  Engage in
or permit any of its Subsidiaries to engage in any business other than the
businesses currently engaged in by Borrower or reasonably related thereto, enter
into any transaction or series of related transactions in which the stockholders
of Borrower who were not stockholders immediately prior to the first such
transaction own more than fifty percent (50.0%) of the voting stock of Borrower
immediately after giving effect to such transaction or related series of such
transactions (other than by the sale of Borrower’s equity securities in a public
offering or to venture capital investors so long as Borrower identifies to Bank
the venture capital investors prior to the closing of the investment), or suffer
the resignation or departure of any Key Person and not hire a replacement
reasonably acceptable to Bank for such Key Person within ninety (90) days of
such Key Person’s resignation or departure.  Borrower shall not, without at
least thirty (30) days prior written notice to Bank: (a) relocate its chief
executive office, or add any new offices or business locations, including
warehouses  (unless such new offices or business locations contain
less than Five Thousand Dollars ($5,000.00) in Borrower’s assets or property),
or (b) change its jurisdiction of organization, or (c) change its organizational
structure or type, or (d) change its legal name, or (e) change any
organizational number (if any) assigned by its jurisdiction of
organization.

     

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

     

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

     

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

     

    7.6        Distributions;
Investments.  (a) Directly or indirectly acquire or own any Person,
or make any Investment in any Person, other than Permitted Investments, or
permit any of its Subsidiaries to do so; or (b) pay any dividends or make any
distribution or payment or redeem, retire or purchase any capital
stock.

     

    7.7        Transactions
with Affiliates.  Directly or indirectly enter into or permit to
exist any material transaction with any Affiliate of Borrower, except for
transactions that are in the ordinary course of Borrower’s business, upon fair
and reasonable terms that are no less favorable to Borrower than would be
obtained in an arm’s length transaction with a non-affiliated
Person.

     

    7.8       
Subordinated
Debt.  (a) Make or permit any payment on any Subordinated Debt,
except under the terms of the subordination, intercreditor, or other similar
agreement to which such Subordinated Debt is subject, or (b) amend any provision
in any document relating to the Subordinated Debt which would increase the
amount thereof or adversely affect the subordination thereof to Obligations owed
to Bank.

     

    
      
         

      

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

     

    8           
EVENTS OF
DEFAULT

     

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

     

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

     

    8.2        Covenant
Default. Borrower fails or
neglects to perform any obligation in Section 6 or violates any covenant in
Section 7 or fails or neglects to perform, keep, or observe any other material
term, provision, condition, covenant or agreement contained in this Agreement,
any Loan Documents and as to any default under such other term, provision,
condition, covenant or agreement that can be cured, has failed to cure the
default within ten (10) days after the occurrence thereof; provided, however,
grace and cure periods provided under this Section 8.2 shall not apply to
financial covenants or any other covenants that are required to be satisfied,
completed or tested by a date certain;

     

    8.3        Material
Adverse Change.  A Material Adverse Change occurs;

     

    8.4        Attachment;
Levy; Restraint on Business.  (a) (i) The service of process seeking
to attach, by trustee or similar process, any funds of Borrower or of any entity
under control of Borrower (including a Subsidiary) on deposit with Bank or any
Bank Affiliate, or (ii) a notice of lien, levy, or assessment is filed against
any of Borrower’s assets by any government agency, and the same under subclauses
(i) and (ii) hereof are not, within ten (10) days after the occurrence thereof,
discharged or stayed (whether through the posting of a bond or otherwise);
provided, however, no Credit Extensions shall be made during any ten (10) day
cure period; or (b) (i) any material portion of Borrower’s assets is attached,
seized, levied on, or comes into possession of a trustee or receiver, or
(ii) any court order enjoins, restrains, or prevents Borrower from
conducting any part of its business;

     

    8.5        Insolvency. 
(a) Borrower is unable to pay its debts (including trade debts) as they become
due or otherwise becomes insolvent; (b) Borrower begins an Insolvency
Proceeding; or (c) an Insolvency Proceeding is begun against Borrower and not
dismissed or stayed within thirty (30) days (but no Credit Extensions shall be
made while any of the conditions described in clause (a) exist and/or until any
Insolvency Proceeding is dismissed);

     

    8.6        Other
Agreements.  If there is a default in any agreement to which
Borrower is a party with a third party or parties resulting in a right by such
third party or parties, whether or not exercised, to accelerate the maturity of
any Indebtedness in an amount in excess of One Hundred Thousand Dollars
($100,000.00) or that could result in a Material Adverse Change;

     

    8.7       
Judgments. 
One or more judgments, orders, or decrees for the payment of money in an amount,
individually or in the aggregate, of at least One Hundred Thousand Dollars
($100,000.00) (not covered by independent third-party insurance as to which
liability has been accepted by such insurance carrier) shall be rendered against
Borrower and shall remain unsatisfied, unvacated, or unstayed for a period of
ten (10) days after the entry thereof (provided that no Credit Extensions will
be made prior to the satisfaction, vacation, or stay of such judgment, order, or
decree);

     

    
      
         

      

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

       

      8.9        Subordinated
Debt.  A default or breach occurs under any agreement between
Borrower and any creditor of Borrower that signed a subordination agreement,
intercreditor agreement, or other similar agreement with Bank, or any creditor
that has signed such an agreement with Bank breaches any terms of the
agreement.

       

      9           BANK’S RIGHTS AND
REMEDIES

       

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

       

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

       

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

       

      (c)           demand
that Borrower (i) deposits cash with Bank in an amount equal to the aggregate
amount of any letters of credit (including, without limitation, Letters of
Credit) remaining undrawn, as collateral security for the repayment of any
future drawings under such letters of credit, and Borrower shall forthwith
deposit and pay such amounts, and (ii) pay in advance all letter of credit fees
scheduled to be paid or payable over the remaining term of any letters of credit
(including, without limitation, Letters of Credit);

       

      (d)           terminate
any FX Forward Contracts;

       

      (e)           settle
or adjust disputes and claims directly with Account Debtors for amounts, on
terms and in any order that Bank considers advisable and notify any Person owing
Borrower money of Bank’s security interest in such funds and verify the amount
of such account.  Borrower shall collect all payments in trust for Bank
and, if requested by Bank, immediately deliver the payments to Bank in the form
received from the Account Debtor, with proper endorsements for
deposit;

       

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

       

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

       

      (h)           ship,
reclaim, recover, store, finish, maintain, repair, prepare for sale, advertise
for sale, and sell the Collateral.  Bank is hereby granted a non-exclusive,
royalty-free license or other right to use, without charge, Borrower’s labels,
patents, copyrights, mask works, rights of use of any name, trade secrets, trade
names, trademarks, service marks, and advertising matter, or any similar
property as it pertains to the Collateral, in completing production of,
advertising for sale, and selling any Collateral and, in connection with Bank’s
exercise of its rights under this Section 9.1, Borrower’s rights under all
licenses and all franchise agreements inure to Bank’s benefit;

       

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

       

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

      
        
           

        

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

       

      9.2         Protective
Payments.  If Borrower fails to obtain insurance called for by
Section 6.4 or fails to pay any premium thereon or fails to pay any other amount
which Borrower is obligated to pay under this Agreement or by any other Loan
Document, Bank may obtain such insurance or make such payment, and all amounts
so paid by Bank are Bank Expenses and immediately due and payable, bearing
interest at the then highest applicable rate, and secured by the
Collateral.  Bank will make reasonable effort to provide Borrower with
notice of Bank obtaining such insurance at the time it is obtained or within a
reasonable time thereafter. No payments by Bank are deemed an agreement to make
similar payments in the future or Bank’s waiver of any Event of
Default.

       

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

       

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

       

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

       

      10         NOTICES

       

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

       

      11         CHOICE OF LAW, VENUE AND
JURY TRIAL WAIVER

       

      New York
law governs the Loan Documents without regard to principles of conflicts of
law.  Borrower and Bank each submit to the exclusive jurisdiction of the
State and Federal courts in New York; provided, however, that if for any reason
Bank cannot avail itself of such courts in the State of New York, Borrower
accepts jurisdiction of the courts and venue in Santa Clara County,
California.  Notwithstanding the foregoing, nothing in this Agreement shall
be deemed to operate to preclude Bank from bringing suit or taking other legal
action in any other jurisdiction to realize on the Collateral or any other
security for the Obligations, or to enforce a judgment or other court order in
favor of Bank.  Borrower expressly submits and consents in advance to such
jurisdiction in any action or suit commenced in any such court, and Borrower
hereby waives any objection that it may have based upon lack of personal
jurisdiction, improper venue, or forum non conveniens and hereby consents to the
granting of such legal or equitable relief as is deemed appropriate by such
court.  Borrower hereby waives personal service of the summons, complaints,
and other process issued in such action or suit and agrees that service of such
summons, complaints, and other process may be made by registered or certified
mail addressed to Borrower at the address set forth at the beginning of this
Agreement and that service so made shall be deemed completed upon the earlier to
occur of Borrower’s actual receipt thereof or three (3) days after deposit in
the U.S. mails, proper postage prepaid.

      
        
           

        

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

       

      12        GENERAL
PROVISIONS

       

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

       

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

       

      12.3      Right of
Set-Off.  Borrower hereby grants to Bank, a lien, security interest
and right of setoff as security for all Obligations to Bank, whether now
existing or hereafter arising upon and against all deposits, credits, collateral
and property, now or hereafter in the possession, custody, safekeeping or
control of Bank or any entity under the control of Bank (including a Bank
subsidiary) or in transit to any of them.  At any time after the occurrence
and during the continuance of an Event of Default, without demand or notice,
Bank may set off the same or any part thereof and apply the same to any
liability or obligation of Borrower even though unmatured and regardless of the
adequacy of any other collateral securing the Obligations.  ANY AND ALL
RIGHTS TO REQUIRE BANK TO EXERCISE ITS RIGHTS OR REMEDIES WITH RESPECT TO ANY
OTHER COLLATERAL WHICH SECURES THE OBLIGATIONS, PRIOR TO EXERCISING ITS RIGHT OF
SETOFF WITH RESPECT TO SUCH DEPOSITS, CREDITS OR OTHER PROPERTY OF BORROWER, ARE
HEREBY KNOWINGLY, VOLUNTARILY AND IRREVOCABLY WAIVED.

       

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

       

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

       

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

       

      12.7      Amendments
in Writing; Integration.  All amendments to this Agreement must be
in writing signed by both Bank and Borrower.  This Agreement and the Loan
Documents represent the entire agreement about this subject matter, and
supersede prior negotiations or agreements.  All prior agreements,
understandings, representations, warranties, and negotiations between the
parties about the subject matter of this Agreement and the Loan Documents merge
into this Agreement and the Loan Documents.

       

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

      
        
           

        

        
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      12.9      Borrower
Liability. Either Borrower may,
acting singly, request Credit Extensions hereunder.  Each Borrower hereby
appoints the other as agent for the other for all purposes hereunder, including
with respect to requesting Credit Extensions hereunder. Each Borrower hereunder
shall be obligated to repay all Credit Extensions made hereunder, regardless of
which Borrower actually receives said Credit Extension, as if each Borrower
hereunder directly received all Credit
Extensions.  Notwithstanding any other provision of this Agreement or other
related document, each Borrower irrevocably waives all rights that it may have
at law or in equity (including, without limitation, any law subrogating Borrower
to the rights of Bank under this Agreement) to seek contribution,
indemnification or any other form of reimbursement from any other Borrower, or
any other Person now or hereafter primarily or secondarily liable for any of the
Obligations, for any payment made by Borrower with respect to the Obligations in
connection with this Agreement or otherwise and all rights that it might have to
benefit from, or to participate in, any security for the Obligations as a result
of any payment made by  Borrower with respect to the Obligations in
connection with this Agreement or otherwise.  Any agreement providing for
indemnification, reimbursement or any other arrangement prohibited under this
Section 12.9 shall be null and void.  If any payment is made to a Borrower
in contravention of this Section 12.9, such Borrower shall hold such payment in
trust for Bank and such payment shall be promptly delivered to Bank for
application to the Obligations, whether matured or unmatured.

       

      Each
Borrower waives any suretyship defenses available to it under the Code or any
other applicable law.  Each Borrower waives any right to require Bank to:
(a) proceed against any Borrower or any other person; (b) proceed against
or exhaust any security; or (c) pursue any other remedy.  Bank may exercise
or not exercise any right or remedy it has against any Borrower or any security
it holds (including the right to foreclose by judicial or non-judicial sale)
without affecting any Borrower’s liability.

       

      12.10    Survival. 
All covenants, representations and warranties made in this Agreement continue in
full force until this Agreement has terminated pursuant to its terms and all
Obligations (other than inchoate indemnity obligations and any other obligations
which, by their terms, are to survive the termination of this Agreement) have
been satisfied.  The obligation of Borrower in Section 12.2 to indemnify
Bank shall survive until the statute of limitations with respect to such claim
or cause of action shall have run.

       

      12.11    Confidentiality. 
In handling any confidential information, Bank shall exercise the same degree of
care that it exercises for its own proprietary information, but disclosure of
information may be made: (a) to Bank’s Subsidiaries or Affiliates; (b) to
prospective transferees or purchasers of any interest in the Credit Extensions
(provided, however, Bank shall use commercially reasonable efforts to obtain
such prospective transferee’s or purchaser’s agreement to the terms of this
provision); (c) as required by law, regulation, subpoena, or other order;
(d) to Bank’s regulators or as otherwise required in connection with Bank’s
examination or audit; (e) as Bank considers appropriate in exercising remedies
under the Loan Documents; and (f) to third-party service providers of Bank so
long as such service providers have executed a confidentiality agreement with
Bank with terms no less restrictive than those contained herein. 
Confidential information does not include information that either: (i) is
in the public domain or in Bank’s possession when disclosed to Bank, or becomes
part of the public domain after disclosure to Bank (but not through Bank’s
disclosure); or (ii) is disclosed to Bank by a third party, if Bank does not
know that the third party is prohibited from disclosing the
information.

       

      Bank may
use confidential information for any purpose, including, without limitation, for
the development of client databases, reporting purposes, and market analysis, so
long as Bank does not disclose Borrower’s identity or the identity of any person
associated with Borrower unless otherwise expressly permitted by this
Agreement.  The provisions of the immediately preceding sentence shall
survive the termination of this Agreement.

      

      13        DEFINITIONS

       

      13.1      Definitions. 
In this Agreement:

       

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

       

      “Account Balance” is the
aggregate outstanding amount of all Advances made based upon Aggregate Eligible
Accounts.

      
        
           

        

        
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      “Account Debtor” is as defined
in the Code and shall include, without limitation, any person liable on any
Financed Receivable, such as, a guarantor of the Financed Receivable and any
issuer of a letter of credit or banker’s acceptance.

       

      “Adjusted Quick Ratio” is the
ratio of (a) Quick Assets to (b) Current Liabilities minus the current portion
of Deferred Revenue of interCLICK and its Subsidiaries (including Desktop) on a
consolidated basis.

       

      “Adjustments” are all
discounts, allowances, returns, disputes, counterclaims, offsets, defenses,
rights of recoupment, rights of return, warranty claims, or short payments,
asserted by or on behalf of any Account Debtor for any Financed
Receivable.

       

      “Advance” is defined in Section
2.1.1.

       

      “Advance Rate” is eighty percent
(80.0%), net of any offsets related to each specific Account Debtor, including,
without limitation, Deferred Revenue, or such other percentage as Bank
establishes under Section 2.1.1.

       

      “Advance Request and Invoice
Transmittal” shows Eligible Accounts and/or Aggregate Eligible Accounts,
which Bank may finance, and (a) with respect to requests for Advances based upon
Eligible Accounts, includes the Account Debtor’s name, address, invoice amount,
invoice date and invoice number, (b) with respect to requests for Advances based
upon Aggregate Eligible Accounts, includes (i) the Account Debtor’s name,
address, invoice amount, invoice date and invoice number, (ii) the current
outstanding amount of Advances made based upon Aggregate Eligible Accounts and
(iii) the Availability Amount, and (c) with respect to requests for Credit
Extensions made pursuant to Sections 2.1.2, 2.1.3 and/or 2.1.4, includes (i) the
type of Credit Extension requested and (ii) the requested amount of such Credit
Extension.

       

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

       

      “Aggregate Eligible Accounts”
is defined in Section 2.1.1.

       

      “Anniversary Date” is the date
that is one (1) year from the Effective Date.

       

      “Applicable Rate” is a per
annum rate equal to the Prime Rate plus two and one-half of one percent
(2.50%).

       

      “Availability Amount” is the
lesser of (a) Fifteen Million Dollars ($15,000,000.00), and (b) the Borrowing
Base.

       

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

       

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

       

      “Borrowing Base” is eighty
percent (80.0%) (or such other percentage as Bank establishes under Section
2.1.1) multiplied by Borrower’s Aggregate Eligible Accounts (net of any offsets
related to each specific Account Debtor, including, without limitation, Deferred
Revenue).

       

      “Borrowing Base Certificate” is
that certain certificate in the form attached hereto as Exhibit
D.

       

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

       

      
        
           

        

        
          20

          
            

          

        

        
           

        

      

       

      “Cash Management Services” is defined in Section
2.1.4.

       

      “Claims” are defined in Section
12.2.

       

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

       

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

       

      “Collateral Handling Fee” is defined in Section
2.2.4.

       

      “Collections” are all funds received
by Bank from or on behalf of an Account Debtor for Financed
Receivables.

       

      “Compliance Certificate” is
attached as Exhibit
B.

       

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

       

      “Credit Extension” is any
Advance, Letter of Credit, FX Forward Contract, amount utilized for Cash
Management Services, or any other extension of credit by Bank for Borrower’s
benefit.

       

      “Current Liabilities” are all
obligations and liabilities of Borrower to Bank, plus, without duplication, the
aggregate amount of Borrower’s Total Liabilities that mature within one (1) year
(but excluding all intercompany and intracompany liabilities payable between
interCLICK and its Subsidiaries (including Desktop)).

       

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

       

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

       

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

       

      “Early Termination Fee” is defined in Section
2.1.1.

       

      “Effective Date” is defined in
the preamble of this Agreement.

       

      
        
           

        

        
          21

          
            

          

        

        
           

        

      

       

      “Eligible Accounts” are billed
Accounts in the ordinary course of Borrower’s business that meet all Borrower’s
representations and warranties in Section 5.3, have been, at the option of Bank,
confirmed in accordance with Section 2.1.1(d), and are due and owing from
Account Debtors deemed creditworthy by Bank in its sole discretion. 
Without limiting the fact that the determination of which Accounts are eligible
hereunder is a matter of Bank discretion in each instance, Eligible Accounts
shall not include the following Accounts (which listing may be amended or
changed in Bank’s discretion with notice to Borrower):

       

      (a)           Accounts
that the Account Debtor has not paid within one hundred twenty (120) days of
invoice date regardless of invoice payment period terms, unless otherwise
approved by Bank in writing on a case-by-case basis in its sole
discretion;

       

      (b)           Accounts
owing from an Account Debtor which does not have its principal place of business
in the United States or Canada, unless otherwise approved by Bank in writing on
a case-by-case basis in its sole discretion;

       

      (c)           Accounts
billed and/or payable outside of the United States, unless otherwise approved by
Bank in writing on a case-by-case basis in its sole discretion;

       

      (d)           Accounts
owing from an Account Debtor to the extent that Borrower is indebted or
obligated in any manner to the Account Debtor (as creditor, lessor, supplier or
otherwise - sometimes called “contra” accounts, accounts payable, customer
deposits or credit accounts), with the exception of customary credits,
adjustments and/or discounts given to an Account Debtor by Borrower in the
ordinary course of its business;

       

      (e)           Accounts
for which the Account Debtor is Borrower’s Affiliate, officer, employee, or
agent;

       

      (f)           Accounts
owing from an Account Debtor which is a United States government entity or any
department, agency, or instrumentality thereof unless Borrower has assigned its
payment rights to Bank and the assignment has been acknowledged under the
Federal Assignment of Claims Act of 1940, as amended;

       

      (g)           Accounts
for demonstration or promotional equipment, or in which goods are consigned, or
sold on a “sale guaranteed”, “sale or return”, “sale on approval”, or other
terms if Account Debtor’s payment may be conditional;

       

      (h)           Accounts
owing from an Account Debtor that has not been invoiced or where goods or
services have not yet been rendered to the Account Debtor (sometimes called memo
billings or pre-billings);

       

      (i)     
      Accounts subject to contractual arrangements
between Borrower and an Account Debtor where payments shall be scheduled or due
according to completion or fulfillment requirements where the Account Debtor has
a right of offset for damages suffered as a result of Borrower’s failure to
perform in accordance with the contract (sometimes called contracts accounts
receivable, progress billings, milestone billings, or fulfillment
contracts);

       

      (j)    
       Accounts owing from an Account Debtor
the amount of which may be subject to withholding based on the Account Debtor’s
satisfaction of Borrower’s complete performance (but only to the extent of the
amount withheld; sometimes called retainage billings);

       

      (k)           Accounts
subject to trust provisions, subrogation rights of a bonding company, or a
statutory trust;

       

      (l)     
      Accounts owing from an Account Debtor that
has been invoiced for goods that have not been shipped to the Account Debtor
unless Bank, Borrower, and the Account Debtor have entered into an agreement
acceptable to Bank in its sole discretion wherein the Account Debtor
acknowledges that (i) it has title to and has ownership of the goods wherever
located, (ii) a bona fide sale of the goods has occurred, and (iii) it owes
payment for such goods in accordance with invoices from Borrower (sometimes
called “bill and hold” accounts);

       

      (m)          Accounts
for which the Account Debtor has not been invoiced;

       

      (n)           Accounts
that represent non-trade receivables or that are derived by means other than in
the ordinary course of Borrower’s business;

       

      
        
           

        

        
          22

          
            

          

        

        
           

        

      

       

      (o)           Accounts
subject to chargebacks or other payment deductions taken by an Account Debtor
(but only to the extent the chargeback is determined invalid and subsequently
collected by Borrower);

       

      (p)           Accounts
owing from an Account Debtor with respect to which Borrower has received
Deferred Revenue (but only to the extent of such Deferred Revenue);

       

      (q)           Accounts
owing from an Account Debtor, fifty percent (50.0%) or more of whose Accounts
have not been paid within one hundred twenty (120) days of invoice date, unless
otherwise approved by Bank in writing on a case-by-case basis in its sole
discretion;

       

      (r)           Accounts
in which the Account Debtor disputes liability or makes any claim (but only up
to the disputed or claimed amount), or if the Account Debtor is subject to an
Insolvency Proceeding, or becomes insolvent, or goes out of business;
and

       

      (s)           Accounts
for which Bank in its good faith business judgment determines collection to be
doubtful.

       

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

       

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

       

      “Events of Default” are set
forth in Section 8.

       

      “Facility Amount” is Eighteen
Million Seven Hundred Fifty Thousand Dollars ($18,750,000.00).

       

      “Facility Fee” is defined in
Section 2.2.2.

       

      “Finance Charges” is defined in
Section 2.2.3.

       

      “Financed Receivables” are all
those Eligible Accounts and Aggregate Eligible Accounts, including their
proceeds which Bank finances and makes an Advance, as set forth in Section
2.1.1.  A Financed Receivable stops being a Financed Receivable (but
remains Collateral) when the Advance made for the Financed Receivable has been
fully paid.

       

      “Financed Receivable
Balance” is
the total outstanding gross face amount, at any time, of any Financed
Receivable.

       

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

       

      “FX Business Day” is any day
when (a) Bank’s Foreign Exchange Department is conducting its normal business
and (b) the Foreign Currency being purchased or sold by Borrower is available to
Bank from the entity from which Bank shall buy or sell such Foreign
Currency.

       

      “FX Forward Contract” is defined in Section
2.1.3.

       

      “FX Reduction Amount” is
defined in Section 2.1.3.

       

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

       

      “Good Faith Deposit” is defined
in Section 2.2.9.

       

      
        
           

        

        
          23

          
            

          

        

        
           

        

      

       

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

       

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

       

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

       

      “Indemnified Person” is defined
in Section 12.2.

       

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

       

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

       

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

       

      “Key Person” is either of the
Chief Executive Officer or Chief Financial Officer of Borrower.

       

      “Letter of Credit” means a
standby letter of credit issued by Bank or another institution based upon an
application, guarantee, indemnity or similar agreement on the part of Bank as
set forth in Section 2.1.2.

       

      “Letter of Credit Application”
is defined in Section 2.1.2(a).

       

      “Letter of Credit Reserve” has
the meaning set forth in Section 2.1.2(d).

       

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

       

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

       

      “Lockbox” is defined in Section
2.2.7.

       

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

       

      “Maturity Date” is 728 days
from the Effective Date.

       

      
        
           

        

        
          24

          
            

          

        

        
           

        

      

       

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

       

      “Perfection Certificate” is
defined in Section 5.1.

       

      “Permitted Indebtedness”
is:

       

      (a)           Borrower’s
indebtedness to Bank under this Agreement or the Loan Documents;

       

      (b)           Subordinated
Debt;

       

      (c)           Indebtedness
to trade creditors incurred in the ordinary course of business; and

       

      (d)           Indebtedness
secured by Permitted Liens.

       

      “Permitted Investments” are:
(i)  marketable direct obligations issued or unconditionally
guaranteed by the United States or its agency or any state maturing within 1
year from its acquisition, (ii) commercial paper maturing no more than 1 year
after its creation and having the highest rating from either Standard &
Poor’s Corporation or Moody’s Investors Service, Inc., (iii) Bank’s certificates
of deposit issued maturing no more than 1 year after issue, (iv) investments in
interCLICK’s Subsidiaries existing as of the Effective Date which are described
on the Perfection Certificate (but specifically excluding any investments in any
Subsidiaries on or at any time after the Effective Date), (v) interCLICK’s
ownership of 7,043,585 shares of Options Media Group, Inc. (which shares are
owned as of the Effective Date) (but specifically excluding any investments in
such entity on or at any time after the Effective Date), and (vi) any other
investments administered through Bank.

       

      “Permitted Liens”
are:

       

      (a)           Liens
arising under this Agreement or other Loan Documents;

       

      (b)           Liens
for taxes, fees, assessments or other government charges or levies, either not
delinquent or being contested in good faith and for which Borrower maintains
adequate reserves on its Books, if they have no priority over any of Bank’s
security interests;

       

      (c)           Purchase
money Liens securing no more than One Hundred Thousand Dollars ($100,000.00) in
the aggregate amount outstanding  (i) on equipment acquired or held by
Borrower incurred for financing the acquisition of the equipment, or
(ii) existing on equipment when acquired, if the Lien is
confined to the property and improvements and the proceeds of the
equipment;

       

      (d)           Leases
or subleases and non-exclusive licenses or sublicenses granted in the ordinary
course of Borrower’s business, if the leases,
subleases, licenses and sublicenses permit granting Bank a security interest;
and

       

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

       

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

       

      “Prime Rate” is Bank’s most
recently announced “prime rate,” even if it is not Bank’s lowest
rate.

       

      “Quick Assets” is, on any date,
Borrower’s unrestricted cash maintained with Bank and net billed accounts
receivable (but excluding all intercompany and intracompany accounts receivable
between interCLICK and any of its Subsidiaries (including Desktop)), determined
according to GAAP.

       

      
        
           

        

        
          25

          
            

          

        

        
           

        

      

       

      “Reconciliation Period” is each
calendar month.

       

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

       

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

       

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

       

      “Settlement Date” is defined in Section
2.1.3.

       

      “Streamline Facility Eligible”
means, as of any day during any Subject Month, Borrower has provided evidence to
Bank that it had an Adjusted Quick Ratio of at least 1.25 to 1.0 as of the last
day of the applicable Testing Month.

       

      “Subject Month” is the month
which is two (2) calendar months after any Testing Month.

       

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

       

      “Subsidiary” is, with respect
to any Person, any Person of which more than fifty percent (50.0%) of the voting
stock or other equity interests (in the case of Persons other than corporations)
is owned or controlled directly or indirectly by such Person or one or more of
Affiliates of such Person.

       

      “Testing Month” is any month
with respect to which Bank has tested Borrower’s Adjusted Quick Ratio in order
to determine whether Borrower is Streamline Facility Eligible.

       

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

       

      [signature page
follows]

       

      
        
           

        

        
          26

          
            

          

        

        
           

        

      

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

       

      
        
          	
                  BORROWER:

                
	 
      	 
      
	
                  INTERCLICK,
      INC.

                
	 
      	 
      
	
                  By:

                	
                  

                    /s/
      Michael Mathews

                  

                
	
                  Name: 
      

                	
                  

                    Michael
      Mathews

                  

                
	
                  Title:

                	
                  

                    Chief
      Executive Officer

                  

                
	 
      	 
      
	
                  DESKTOP
      ACQUISITION SUB, INC.

                
	 
      	 
      
	
                  By:

                	
                  

                    /s/
      Michael Mathews

                  

                
	
                  Name:

                	
                  

                    Michael
      Mathews

                  

                
	
                  Title:

                	
                  

                    Chief
      Executive Officer

                  

                
	 
      	 
      
	
                  BANK:

                
	 
      	 
      
	
                  SILICON
      VALLEY BANK

                
	 
      	 
      
	
                  By:

                	
                  

                    /s/
      Michael McMahon

                  

                
	
                  Name:

                	
                  

                    Michael
      McMahon

                  

                
	
                  Title:

                	
                  Vice
President

                

        

      

      
        
           

        

        
          27Unassociated Document

    SUBSCRIPTION
AGREEMENT

     

    SUBSCRIPTION
AGREEMENT (this “Agreement”) made as
of the last date set forth on the signature page hereof between STW RESOURCES
HOLDING CORP., a Nevada corporation (the “Company”), and the
undersigned (the “Subscriber”).

     

    WITNESSETH:

     

    WHEREAS,
the Company is conducting a private offering (the “Offering”) for which
Viewpoint Securities, LLC (the “Placement Agent”) is
acting as placement agent and any other NASD Member firms which the Placement
Agent may choose to engage (the “Select Dealer”), consisting of up to a maximum
of $1,500,000 (the “Maximum Offering”) in
the aggregate face amount of 12% Convertible Notes (the “Notes”), pursuant to
Section 4(2) of the Securities Act of 1933, as amended (the “Securities Act”) and
Rule 506 promulgated thereunder; and

     

    WHEREAS,
the Subscriber desires to purchase that number of Notes set forth on the
signature page hereof on the terms and conditions hereinafter set forth;
and

     

    WHEREAS,
for each Note purchased, each Subscriber will receive a warrant to purchase such
number of shares of common stock (the “Common Stock”) of the
Company equal to one-half of the aggregate face amount of their Note divided by
the conversion price of the Note (the “Warrants” and
collectively with the Note, the “Securities”).

     

    NOW,
THEREFORE, in consideration of the premises and the mutual representations and
covenants hereinafter set forth, the parties hereto do hereby agree as
follows:

     

    
      	
              I.

            	
              SUBSCRIPTION FOR
      SHARES AND REPRESENTATIONS AND COVENANTS BY
    SUBSCRIBER

            

    

     

    1.1 Subject
to the terms and conditions hereinafter set forth, the Subscriber hereby
irrevocably subscribes for and agrees to purchase from the Company, and the
Company agrees to sell to the Subscriber, such aggregate face amount of the
Notes as is set forth on the signature page hereof.  The purchase
price is payable by wire transfer, to be sent directly to the
Company:

     

    TD Bank,
N.A

    ABA#

    BNF:  

    DDA#  

    FFC:  

     

    1.2 
Offering Period;
Maximum.  The Securities will be offered for sale until the
closing on the Maximum Offering (the “Termination
Date”).  The Offering is being conducted on a best-efforts
basis.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    1.3 
Closings.  The
Company may hold closings with respect to any Securities at any time prior to
the Termination Date as determined by the Company, with respect to subscriptions
accepted prior to the Termination Date (each such closing being referred to as a
“Closing”).  The
last Closing of the Offering, occurring on or prior to the Termination Date,
shall be referred to as the “Final
Closing”.  Any subscription documents or funds received after
the Final Closing will be returned, without interest or deduction.

     

    1.4 
The Subscriber recognizes that the purchase of the Securities involves a high
degree of risk including, but not limited to, the following: (a) the Company has
limited operating history and requires substantial funds in addition to the
proceeds of the Offering; (b) an investment in the Company is highly
speculative, and only investors who can afford the loss of their entire
investment should consider investing in the Company and the Securities; (c) the
Subscriber may not be able to liquidate its investment; (d) transferability of
the Securities is extremely limited; (e) in the event of a disposition, the
Subscriber could sustain the loss of its entire investment; and (f) the Company
has not paid any dividends since its inception and does not anticipate paying
any dividends.  Without limiting the generality of the representations
set forth in Section 1.5 below, the Subscriber represents that the Subscriber
has carefully reviewed the Company’s business plan including “Risk
Factors.”

     

    1.5 
The Subscriber represents that the Subscriber is an “accredited investor” as
such term is defined in Rule 501 of Regulation D (“Regulation D”)
promulgated under the Securities Act, as indicated by the Subscriber’s responses
to the questions contained in Article VII hereof, and that the Subscriber is
able to bear the economic risk of an investment in the Securities.

     

    1.6 
The Subscriber hereby acknowledges and represents that (a) the Subscriber has
knowledge and experience in business and financial matters, prior investment
experience, including investment in securities that are non-listed, unregistered
and/or not traded on a national securities exchange nor on the National
Association of Securities Dealers, Inc. automated quotation system (“NASDAQ”), or the
Subscriber has employed the services of a “purchaser representative” (as defined
in Rule 501 of Regulation D), attorney and/or accountant to read all of the
documents furnished or made available by the Company both to the Subscriber and
to all other prospective investors in the Securities to evaluate the merits and
risks of such an investment on the Subscriber’s behalf; (b) the Subscriber
recognizes the highly speculative nature of this investment; and (c) the
Subscriber is able to bear the economic risk that the Subscriber hereby
assumes.

     

    1.7 
The Subscriber hereby acknowledges receipt and careful review of this Agreement,
the business plan (which includes the “Risk Factors”), including the Warrant and
the Note and all other exhibits thereto, and any documents which may have been
made available upon request as reflected therein (collectively referred to as
the “Offering
Materials”) and hereby represents that the Subscriber has been furnished
by the Company during the course of the Offering with all information regarding
the Company, the terms and conditions of the Offering and any additional
information that the Subscriber has requested or desired to know, and has been
afforded the opportunity to ask questions of and receive answers from duly
authorized officers or other representatives of the Company concerning the
Company and the terms and conditions of the Offering.

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    1.8 
(a)  In making the decision to invest in the Securities the Subscriber has
relied solely upon the information provided by the Company in the Offering
Materials.  To the extent necessary, the Subscriber has retained, at
its own expense, and relied upon appropriate professional advice regarding the
investment, tax and legal merits and consequences of this Agreement and the
purchase of the Securities hereunder.  The Subscriber disclaims
reliance on any statements made or information provided by any person or entity
in the course of Subscriber’s consideration of an investment in the Securities
other than the Offering Materials.

     

    (b) 
The Subscriber represents that (i) the Subscriber was contacted regarding the
sale of the Securities by the Company (or an authorized agent or representative
thereof) with whom the Subscriber had a prior substantial pre-existing
relationship and (ii) no Securities were offered or sold to it by means of any
form of general solicitation or general advertising, and in connection
therewith, the Subscriber did not (A) receive or review any advertisement,
article, notice or other communication published in a newspaper or magazine or
similar media or broadcast over television or radio, whether closed circuit, or
generally available; or (B) attend any seminar meeting or industry investor
conference whose attendees were invited by any general solicitation or general
advertising.

     

    1.9 
The Subscriber hereby represents that the Subscriber, either by reason of the
Subscriber’s business or financial experience or the business or financial
experience of the Subscriber’s professional advisors (who are unaffiliated with
and not compensated by the Company or any affiliate or selling agent of the
Company, directly or indirectly), has the capacity to protect the Subscriber’s
own interests in connection with the transaction contemplated
hereby.

     

    1.10 The
Subscriber hereby acknowledges that the Offering has not been reviewed by the
United States Securities and Exchange Commission (the “SEC”) nor any state
regulatory authority since the Offering is intended to be exempt from the
registration requirements of Section 5 of the Securities Act, pursuant to
Regulation D.  The Subscriber understands that the Securities have not
been registered under the Securities Act or under any state securities or “blue
sky” laws and agrees not to sell, pledge, assign or otherwise transfer or
dispose of the Securities unless they are registered under the Securities Act
and under any applicable state securities or “blue sky” laws or unless an
exemption from such registration is available.

     

    1.11 The
Subscriber understands that the Securities have not been registered under the
Securities Act by reason of a claimed exemption under the provisions of the
Securities Act that depends, in part, upon the Subscriber’s investment
intention.  In this connection, the Subscriber hereby represents that
the Subscriber is purchasing the Securities for the Subscriber’s own account for
investment and not with a view toward the resale or distribution to
others.  The Subscriber, if an entity, further represents that it was
not formed for the purpose of purchasing the Securities.

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

    1.12 The
Subscriber understands that the Common Stock issuable upon conversion of the
Notes (the “Conversion
Shares”) and upon exercise of the Warrants (the “Warrant Shares” and
collectively with the Conversion Shares, the “Common Shares”) is
not listed on any national securities exchange or quoted on any over-the-counter
market or the Pink Sheets, LLC and that there is no market for the Common
Stock.  The Subscriber understands that even if a public market
develops for the Common Shares, Rule 144 (“Rule 144”) promulgated under the
Securities Act requires for non-affiliates, among other conditions, a \ holding
period prior to the resale (subject to certain limitations) of securities
acquired in a non-public offering without having to satisfy the registration
requirements under the Securities Act.  The Subscriber understands and
hereby acknowledges that the Company is under no obligation to register any of
the Securities or the Common Shares under the Securities Act or any state
securities or “blue sky” laws.

     

    1.13 The
Subscriber consents to the placement of a legend on any certificate or other
document evidencing the Securities and the Common Shares that such securities
have not been registered under the Securities Act or any state securities or
“blue sky” laws and setting forth or referring to the restrictions on
transferability and sale thereof contained in this Agreement.  The
Subscriber is aware that the Company will make a notation in its appropriate
records with respect to the restrictions on the transferability of such
Securities. The legend to be placed on each certificate shall be in form
substantially similar to the following:

     

    “THE
SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES
SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”) OR ANY STATE SECURITIES OR “BLUE
SKY LAWS,” AND MAY NOT BE OFFERED, SOLD, TRANSFERRED, ASSIGNED, PLEDGED OR
HYPOTHECATED ABSENT AN EFFECTIVE REGISTRATION THEREOF UNDER SUCH ACT OR
COMPLIANCE WITH RULE 144 PROMULGATED UNDER SUCH ACT, OR UNLESS THE COMPANY HAS
RECEIVED AN OPINION OF COUNSEL, REASONABLY SATISFACTORY TO THE COMPANY AND ITS
COUNSEL, THAT SUCH REGISTRATION IS NOT REQUIRED.”

     

    1.14 It
is agreed that the Company, at its sole discretion, reserves the unrestricted
right, without further documentation or agreement on the part of the Subscriber,
to reject or limit any subscription, to accept subscriptions for fractional
Shares and to close the Offering to the Subscriber at any time and that the
Company will issue stop transfer instructions to its transfer agent with respect
to such Securities.

     

    1.15 The
Subscriber hereby represents that the address of the Subscriber furnished by
Subscriber on the signature page hereof is the Subscriber’s principal residence
if Subscriber is an individual or its principal business address if it is a
corporation or other entity.

     

    1.16 The
Subscriber represents that the Subscriber has full power and authority
(corporate, statutory and otherwise) to execute and deliver this Agreement and
to purchase the Securities.  This Agreement constitutes the legal,
valid and binding obligation of the Subscriber, enforceable against the
Subscriber in accordance with its terms.

     

    1.17 If
the Subscriber is a corporation, partnership, limited liability company, trust,
employee benefit plan, individual retirement account, Keogh Plan, or other
tax-exempt entity, it is authorized and qualified to invest in the Company and
the person signing this Agreement on behalf of such entity has been duly
authorized by such entity to do so.

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

    1.18 The
Subscriber acknowledges that if he or she is a Registered Representative of a
FINRA member firm, he or she must give such firm the notice required by the
FINRA’s Rules of Fair Practice, receipt of which must be acknowledged by such
firm in Section 7.4 below.

     

    1.19 The
Subscriber acknowledges that at such time, if ever, as the Securities or the
Common Shares are registered, sales of the Securities and the Common Shares will
be subject to state securities laws.

     

    1.20 The
Subscriber agrees not to issue any public statement with respect to the
Subscriber’s investment or proposed investment in the Company or the terms of
any agreement or covenant between them and the Company without the Company’s
prior written consent, except such disclosures as may be required under
applicable law or under any applicable order, rule or regulation.

     

    1.21 The
Subscriber agrees to hold the Company and its directors, officers, employees,
affiliates, controlling persons and agents and their respective heirs,
representatives, successors and assigns harmless and to indemnify them against
all liabilities, costs and expenses incurred by them as a result of (a) any sale
or distribution of the Securities by the Subscriber in violation of the
Securities Act or any applicable state securities or “blue sky” laws; or (b) any
false representation or warranty or any breach or failure by the Subscriber to
comply with any covenant made by the Subscriber in this Agreement (including the
Confidential Investor Questionnaire contained in Article VII herein) or any
other document furnished by the Subscriber to any of the foregoing in connection
with this Agreement.

     

    1.22
 To effectuate the terms and provisions hereof, the Subscriber hereby
appoint the Placement Agent as its attorney-in-fact (and the Placement Agent
hereby accepts such appointment) for the purpose of carrying out the provisions
of the Escrow Agreement by and between the Company, the Placement Agent and Law
Offices of Stephen M. Fleming PLLC (the “Escrow Agreement”)
including, without limitation, taking any action on behalf of, or at the
instruction of, the Subscribers and executing any release notices required under
the Escrow Agreement and taking any action and executing any instrument that the
Placement Agent may deem necessary or advisable (and lawful) to accomplish the
purposes hereof. All acts done under the foregoing authorization are hereby
ratified and approved and neither the Placement Agent nor any designee nor agent
thereof shall be liable for any acts of commission or omission, for any error of
judgment, for any mistake of fact or law except for acts of gross negligence or
willful misconduct. This power of attorney, being coupled with an interest,
is irrevocable while the Escrow Agreement remains in effect.

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

     

    
      	
              II.

            	
              REPRESENTATIONS BY AND
      COVENANTS OF THE COMPANY

            

    

     

    The
Company hereby represents and warrants to the Subscriber that:

     

    2.1 
Organization, Good
Standing and Qualification.  The Company is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Nevada and has full corporate power and authority to own and use its properties
and its assets and conduct its business as currently conducted.  Each
of the Company’s subsidiaries (the “Subsidiaries”) is
an entity duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation with the requisite corporate power and
authority to own and use its properties and assets and to conduct its business
as currently conducted. Neither the Company, nor any of its Subsidiaries is in
violation of any of the provisions of their respective articles of
incorporation, by-laws or other organizational or charter documents (as defined
below). Each of the Company and its Subsidiaries is duly qualified to conduct
business and is in good standing as a foreign corporation in each jurisdiction
in which the nature of the business conducted or property owned by it makes such
qualification necessary, except where the failure to be so qualified or in good
standing, as the case may be, would not result in a direct and/or indirect
(i) material adverse effect on the legality, validity or enforceability of
any of the Securities and/or this Agreement, (ii) material adverse effect
on the results of operations, assets, business or financial condition of the
Company or its Subsidiaries, or (iii) material adverse effect on the Company’s
ability to perform in any material respect on a timely basis its obligations
under this Agreement, the Warrants and the Notes.

     

    2.2 
Capitalization and
Voting Rights.  The authorized, issued and outstanding capital
stock of the Company is as set forth on Schedule 2.2 hereto and all issued and
outstanding shares of capital stock of the Company are validly issued, fully
paid and nonassessable. Except as set forth on Schedule 2.2 hereto, (i) there
are no outstanding securities of the Company or any of its Subsidiaries which
contain any preemptive, redemption or similar provisions, nor is any holder of
securities of the Company or any Subsidiary entitled to preemptive or similar
rights arising out of any agreement or understanding with the Company or any
Subsidiary by virtue of any of the Offering Materials, and there are no
contracts, commitments, understandings or arrangements by which the Company or
any of its Subsidiaries is or may become bound to redeem a security of the
Company or any of its Subsidiaries; (ii) the Company does not have any stock
appreciation rights or "phantom stock" plans or agreements or any similar plan
or agreement; and (iii) there are no outstanding options, warrants, agreements,
convertible securities, preemptive rights or other rights to subscribe for or to
purchase or acquire, any shares of capital stock of the Company or contracts,
commitments, understandings, or arrangements by which the Company or any
Subsidiary is or may become bound to issue any shares of capital stock of the
Company, or securities or rights convertible or exchangeable into shares of
capital stock of the Company.  Except as set forth on the Schedule 2.2
and as otherwise required by law, there are no restrictions upon the voting or
transfer of any of the shares of capital stock of the Company pursuant to the
Company’s Charter Documents or other governing documents or any agreement or
other instruments to which the Company is a party or by which the Company is
bound.

     

    2.3 
Authorization;
Enforceability.  The Company has all corporate right, power and
authority to enter into, execute and deliver this Agreement and each other
agreement, document, instrument and certificate to be executed by the Company in
connection with the consummation of the transactions contemplated hereby,
including, but not limited to the Offering Materials and to perform fully its
obligations hereunder and thereunder.  All corporate action on the
part of the Company, its directors and stockholders necessary for the (a)
authorization execution, delivery and performance of this Agreement and the
Offering Materials by the Company; and (b) authorization, sale, issuance and
delivery of the Securities and the Common Shares contemplated hereby and the
performance of the Company’s obligations under this Agreement and the Offering
Materials has been taken.  This Agreement and the Offering Materials
have been duly executed and delivered by the Company and each constitutes a
legal, valid and binding obligation of the Company, enforceable against the
Company in accordance with its respective terms, subject to laws of general
application relating to bankruptcy, insolvency and the relief of debtors and
rules of law governing specific performance, injunctive relief or other
equitable remedies, and to limitations of public policy.  The
Securities and Common Shares, when issued and fully paid for in accordance with
the terms of this Agreement, will be validly issued, fully paid and
nonassessable.  The issuance and sale of the Securities and Common
Shares contemplated hereby will not give rise to any preemptive rights or rights
of first refusal on behalf of any person.

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

     

    2.4 
No Conflict;
Governmental Consents.

     

    (a)           The
execution and delivery by the Company of this Agreement and the Offering
Materials and the consummation of the transactions contemplated hereby will not
(i) result in the violation of any material law, statute, rule, regulation,
order, writ, injunction, judgment or decree of any court or governmental
authority to or by which the Company is bound, (ii) conflict with or violate any
provision of the Company’s Articles of Incorporation (the “Articles”), as
amended or the Bylaws, (and collectively with the Articles, the “Charter Documents”) of
the Company, and (iii) will not conflict with, or result in a material breach or
violation of, any of the terms or provisions of, or constitute (with or without
due notice or lapse of time or both) a default or give to others any rights of
termination, amendment, acceleration or cancellation (with  or without
due notice, lapse of time or both) under any agreement, credit facility, lease,
loan agreement, mortgage, security agreement, trust indenture or other agreement
or instrument to which the Company is a party or by which it is bound or to
which any of its properties or assets is subject, nor result in the creation or
imposition of any lien upon any of the properties or assets of the
Company.

     

    (b)           No
approval by the holders of Common Stock, or other equity securities of the
Company is required to be obtained by the Company in connection with the
authorization, execution and delivery of this Agreement or the Offering
Materials or in connection with the authorization, issue and sale of the
Securities, except as has been previously obtained,

     

    (c)           No
consent, approval, authorization or other order of any governmental authority is
required to be obtained by the Company in connection with the authorization,
execution and delivery of this Agreement or the Transaction Documents or in
connection with the authorization, issue and sale of the Securities, except such
filings as may be required to be made with the SEC, FINRA, NASDAQ and with any
state or foreign blue sky or securities regulatory authority.

     

    2.5 
Privacy.  The
Company agrees not to disclose the names, addresses or any other information
about the Subscribers, except as required by law.

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

     

    2.6 
No Additional
Agreements.  The Company does not have any agreement or
understanding with any Subscribers with respect to the transactions contemplated
by this Agreement other than as specified in this Agreement.

    

    
      	
              III.

            	
              TERMS OF
      SUBSCRIPTION

            

    

     

    3.1 
All funds shall be submitted directly to the Company’s account identified in
Section 1.1 hereof.

     

    3.2 
The Notes and Warrants purchased by the Subscriber pursuant to this Agreement
will be prepared for delivery to the Subscriber as soon as practicable following
the Closing at which such purchase takes place. The Subscriber hereby authorizes
and directs the Company to deliver the Notes and Warrants purchased by the
Subscriber pursuant to this Agreement directly to the Subscriber’s residential
or business or brokerage house address indicated on the signature page
hereto.

     

    
      	
              IV.

            	
              CONDITIONS TO
      OBLIGATIONS OF THE
SUBSCRIBERS

            

    

     

    4.1 
The Subscriber’s obligation to purchase the Securities at the Closing at which
such purchase is to be consummated is subject to the fulfillment on or prior to
such Closing of the following conditions, which conditions may be waived at the
option of each Subscriber to the extent permitted by law:

     

    (a)           Covenants.  All
covenants, agreements and conditions contained in this Agreement to be performed
by the Company on or prior to the date of such Closing shall have been performed
or complied with in all material respects.

     

    (b)           No Legal Order
Pending.  There shall not then be in effect any legal or other
order enjoining or restraining the transactions contemplated by this
Agreement.

     

    (c)           No Law Prohibiting or
Restricting Such Sale.  There shall not be in effect any law,
rule or regulation prohibiting or restricting such sale or requiring any consent
or approval of any person, which shall not have been obtained, to issue the
Securities (except as otherwise provided in this Agreement).

     

    (d)           Adverse
Changes.  Since the date of execution of this Agreement, no
event or series of events shall have occurred that reasonably could have or
result in a material adverse effect.

     

    (e)           Blue
Sky.  The Company shall have completed qualification for the
Securities and the Common Shares under applicable Blue Sky laws.

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

     

    
      	
              V.

            	
              COVENANTS OF THE
      COMPANY

            

    

     

    5.1 
Integration.  The Company shall not, and shall ensure that no
affiliate of the Company shall, sell, offer for sale or solicit offers to buy or
otherwise negotiate in respect of any security (as defined in Section 2 of the
Securities Act) that would be integrated with the offer or sale of the
Securities in a manner that would require the registration under the Securities
Act of the sale of the Securities to the Subscribers, or that would be
integrated with the offer or sale of the Securities for purposes of the rules
and regulations of any trading market in a manner that would require stockholder
approval of the sale of the securities to the Subscribers.

     

    5.2 
Reservation of
Shares.  The Company shall at all times while the Securities
are outstanding maintain a reserve from its duly authorized shares of Common
Stock of a number of shares of Common Stock sufficient to allow for the issuance
of all Conversion Shares and Warrant Shares.

     

    5.3 
Conversion and
Exercise Procedures.  The conversion procedures described in
and the form of Notice of Conversion included in the Notes set forth the
totality of the procedures required by the Subscribers in order to convert the
Shares.  The exercise procedures described in and the form of Form of
Subscription included in the Warrant set forth the totality of the procedures
required by the Subscribers in order to exercise the warrants.  The
Company shall honor conversions of Shares and exercises of Warrants and shall
deliver Common Stock in accordance with the terms, conditions and time periods
set forth in this Agreement and the Certificate of Designation or Warrant (as
applicable).

     

    5.4 
Rescission and
Withdrawal Right.  Notwithstanding anything to the contrary
contained in (and without limiting any similar provisions of) this Agreement,
whenever any Subscriber exercises a right, election, demand or option under this
Agreement and the Company does not timely perform its related obligations within
the periods therein provided, then such Subscriber may rescind or withdraw, in
its sole discretion from time to time upon written notice to the Company, any
relevant notice, demand or election in whole or in part without prejudice to its
future actions and rights.

     

    5.5 
Replacement of
Securities.  If any certificate or instrument evidencing any
Securities is mutilated, lost, stolen or destroyed, the Company shall issue or
cause to be issued in exchange and substitution for and upon cancellation
thereof, or in lieu of and substitution therefor, a new certificate or
instrument, but only upon receipt of evidence reasonably satisfactory to the
Company of such loss, theft or destruction and customary and reasonable
indemnity, if requested.  The applicants for a new certificate or
instrument under such circumstances shall also pay any reasonable third-party
costs associated with the issuance of such replacement Securities.  If
a replacement certificate or instrument evidencing any Securities is requested
due to a mutilation thereof, the Company may require delivery of such mutilated
certificate or instrument as a condition precedent to any issuance of a
replacement.

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

     

    5.6          Indemnification. 

     

    (a)   The
Company agrees to indemnify and hold harmless the Subscriber, its affiliates and
their respective officers, directors, employees, agents and controlling persons
(collectively, the “Indemnified
Parties”) from and against , any and all loss, liability, damage or
deficiency suffered or incurred by any Indemnified Party by reason of any
misrepresentation or breach of warranty by the Company or nonfulfillment of any
covenant or agreement to be performed or complied with by the Company under this
Agreement, the Transaction Documents; and will promptly reimburse the
Indemnified Parties for all expenses (including reasonable fees and expenses of
legal counsel) as incurred in connection with the investigation of, preparation
for or defense of any pending or threatened claim related to or arising in any
manner out of any of the foregoing, or any action or proceeding arising
therefrom (collectively, “Proceedings”),
whether or not such Indemnified Party is a formal party to any such
Proceeding.

    

    (b)   If
for any reason (other than a final non-appealable judgment finding any
Indemnified Party liable for losses, claims, damages, liabilities or expenses
for its gross negligence or willful misconduct) the foregoing indemnity is
unavailable to an Indemnified Party or insufficient to hold an Indemnified Party
harmless, then the Company shall contribute to the amount paid or payable by an
Indemnified Party as a result of such loss, claim, damage, liability or expense
in such proportion as is appropriate to reflect not only the relative benefits
received by the Company on the one hand and the Advisor on the other, but also
the relative fault by the Company and the Indemnified Party, as well as any
relevant equitable considerations.

     

    
      	
              VI.

            	
              MISCELLANEOUS

            

    

     

    6.1   Any
notice or other communication given hereunder shall be deemed sufficient if in
writing and sent by registered or certified mail, return receipt requested, or
delivered by hand against written receipt therefore, addressed as
follows:

     

    if to the
Company, to it at:

     

    STW
RESOURCES HOLDING CORP.

    619 West
Texas Avenue Suite 126

    Midland,
Texas  79701

    Attn:  Stan
Weiner, CEO

    

    if to the
Subscriber, to the Subscriber’s address indicated on the signature page of this
Agreement.

     

    Notices
shall be deemed to have been given or delivered on the date of
receipt.

     

    6.2  No
provision of this Agreement may be waived, modified, supplemented or amended
except in a written instrument signed, in the case of an amendment, by the
Company and the Purchasers holding at least 50% in interest of the Securities
then outstanding or, in the case of a waiver, by the party against whom
enforcement of any such waived provision is sought.  No waiver of any
default with respect to any provision, condition or requirement of this
Agreement shall be deemed to be a continuing waiver in the future or a waiver of
any subsequent default or a waiver of any other provision, condition or
requirement hereof, nor shall any delay or omission of any party to exercise any
right hereunder in any manner impair the exercise of any such right

     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

     

    6.3  This
Agreement shall be binding upon and inure to the benefit of the parties hereto
and to their respective heirs, legal representatives, successors and
assigns.  This Agreement sets forth the entire agreement and
understanding between the parties as to the subject matter hereof and merges and
supersedes all prior discussions, agreements and understandings of any and every
nature among them.

     

    6.4   Upon
the execution and delivery of this Agreement by the Subscriber and the Company,
this Agreement shall become a binding obligation of the Subscriber with respect
to the purchase of Securities as herein provided, subject, however, to the right
hereby reserved by the Company to enter into the same agreements with other
subscribers and to reject any subscription, in whole or in part, provided the
Company returns to Subscriber any funds paid by Subscriber with respect to such
rejected subscription or portion thereof, without interest or
deduction.

     

    6.5   NOTWITHSTANDING
THE PLACE WHERE THIS AGREEMENT MAY BE EXECUTED BY ANY OF THE PARTIES HERETO, THE
PARTIES EXPRESSLY AGREE THAT ALL THE TERMS AND PROVISIONS HEREOF SHALL BE
CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK
WITHOUT REGARD TO SUCH STATE’S PRINCIPLES OF CONFLICTS OF LAW.  IN THE
EVENT THAT A JUDICIAL PROCEEDING IS NECESSARY, THE SOLE FORUM FOR RESOLVING
DISPUTES ARISING OUT OF OR RELATING TO THIS AGREEMENT IS THE COURTS STATE OF NEW
YORK IN AND FOR THE COUNTY OF NEW YORK OR THE FEDERAL COURTS FOR SUCH STATE AND
COUNTY, AND ALL RELATED APPELLATE COURTS, THE PARTIES HEREBY IRREVOCABLY CONSENT
TO THE JURISDICTION OF SUCH COURTS AND AGREE TO SAID VENUE. IN ANY ACTION, SUIT, OR PROCEEDING IN
ANY JURISDICTION BROUGHT BY ANY PARTY AGAINST ANY OTHER PARTY, THE PARTIES EACH
KNOWINGLY AND INTENTIONALLY, TO THE GREATEST EXTENT PERMITTED BY APPLICABLE LAW,
HEREBY ABSOLUTELY, UNCONDITIONALLY, IRREVOCABLY AND EXPRESSLY WAIVES FOREVER
TRIAL BY JURY

     

    6.6   In
order to discourage frivolous claims the parties agree that unless a claimant in
any proceeding arising out of this Agreement succeeds in establishing his claim
and recovering a judgment against another party (regardless of whether such
claimant succeeds against one of the other parties to the action), then the
other party shall be entitled to recover from such claimant all of its/their
reasonable legal costs and expenses relating to such proceeding and/or incurred
in preparation therefor.

     

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

     

    6.7   The
holding of any provision of this Agreement to be invalid or unenforceable by a
court of competent jurisdiction shall not affect any other provision of this
Agreement, which shall remain in full force and effect.  If any
provision of this Agreement shall be declared by a court of competent
jurisdiction to be invalid, illegal or incapable of being enforced in whole or
in part, such provision shall be interpreted so as to remain enforceable to the
maximum extent permissible consistent with applicable law and the remaining
conditions and provisions or portions thereof shall nevertheless remain in full
force and effect and enforceable to the extent they are valid, legal and
enforceable, and no provisions shall be deemed dependent upon any other covenant
or provision unless so expressed herein.

     

    6.8   The
Company agrees to execute and deliver all such further documents, agreements and
instruments and take such other and further action as may be necessary or
appropriate to carry out the purposes and intent of this Agreement.

     

    6.9   Nothing
in this Agreement shall create or be deemed to create any rights in any person
or entity not a party to this Agreement, except for the holders of Registrable
Securities.

     

    6.10 In
addition to being entitled to exercise all rights provided herein or granted by
law, including recovery of damages, each of the Subscribers and the Company will
be entitled to specific performance under this Agreement.  The parties
agree that monetary damages may not be adequate compensation for any loss
incurred by reason of any breach of obligations described in the foregoing
sentence and hereby agrees to waive in any action for specific performance of
any such obligation the defense that a remedy at law would be
adequate.

     

    6.11 The
obligations of each Subscriber under this Agreement are several and not joint
with the obligations of any other Subscriber, and no Subscriber shall be
responsible in any way for the performance of the obligations of any other
Subscriber under this Agreement.  The decision of each Subscriber to
purchase Securities pursuant to this Agreement has been made by such Subscriber
independently of any other Subscriber.  Nothing contained herein, and
no action taken by any Subscriber pursuant thereto, shall be deemed to
constitute the Subscribers as a partnership, an association, a joint venture or
any other kind of entity, or create a presumption that the Subscribers are in
any way acting in concert or as a group with respect to such obligations or the
transactions contemplated herein.  Each Subscriber acknowledges that
no other Subscriber has acted as agent for such Subscriber in connection with
making its investment hereunder and that no Subscriber will be acting as agent
of such Subscriber in connection with monitoring its investment in the
Securities or enforcing its rights under this Agreement.  Each
Subscriber shall be entitled to independently protect and enforce its rights,
including without limitation the rights arising out of this Agreement, and it
shall not be necessary for any other Subscriber to be joined as an additional
party in any proceeding for such purpose.  The Company acknowledges
that each of the Subscribers has been provided with this same Agreement for the
purpose of closing a transaction with multiple Subscribers and not because it
was required or requested to do so by any Subscriber.

     

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

     

    6.12    The parties
agree that each of them and/or their respective counsel has reviewed and had an
opportunity to revise the Offering Materials and, therefore, the normal rule of
construction to the effect that any ambiguities are to be resolved against the
drafting party shall not be employed in the interpretation of the Offering
Materials or any amendments hereto.

     

    6.13    Notwithstanding any
provision to the contrary contained in any Transaction Document, it is expressly
agreed and provided that the total liability of the Company under the
Transaction Documents for payments in the nature of interest shall not exceed
the maximum lawful rate authorized under applicable law (the “Maximum Rate”), and,
without limiting the foregoing, in no event shall any rate of interest or
default interest, or both of them, when aggregated with any other sums in the
nature of interest that the Company may be obligated to pay under the
Transaction Documents exceed such Maximum Rate.

     

    6.14    The
headings herein are for convenience only, do not constitute a part of this
Agreement and shall not be deemed to limit or affect any of the provisions
hereof.

     

    6.15    This
Agreement may be executed in two or more counterparts, all of which when taken
together shall be considered one and the same agreement and shall become
effective when counterparts have been signed by each party and delivered to the
other party, it being understood that both parties need not sign the same
counterpart.

    

    
      	
              VII.

            	
              CONFIDENTIAL INVESTOR
      QUESTIONNAIRE

            

    

     

    7.1 
The Subscriber represents and warrants that he, she or it comes within one
category marked below, and that for any category marked, he, she or it has
truthfully set forth, where applicable, the factual basis or reason the
Subscriber comes within that category.  ALL INFORMATION IN RESPONSE TO
THIS SECTION WILL BE KEPT STRICTLY CONFIDENTIAL.  The undersigned
agrees to furnish any additional information which the Company deems necessary
in order to verify the answers set forth below.

     

    
      	
              Category
      A __ 

            	
              The
      undersigned is an individual (not a partnership, corporation, etc.) whose
      individual net worth, or joint net worth with his or her spouse, presently
      exceeds $1,000,000.

            

    

    

    Explanation.  In
calculating net worth you may include equity in personal property and real
estate, including your principal residence, cash, short-term investments, stock
and securities.  Equity in personal property and real estate should be
based on the fair market value of such property less debt secured by such
property.

    

    
      	
              Category
      B __

            	
              The
      undersigned is an individual (not a partnership, corporation, etc.) who
      had an income in excess of $200,000 in each of the two most recent years,
      or joint income with his or her spouse in excess of $300,000 in each of
      those years (in each case including foreign income, tax exempt income and
      full amount of capital gains and losses but excluding any income of other
      family members and any unrealized capital appreciation) and has a
      reasonable expectation of reaching the same income level in the current
      year.

            

    

    

    
      	
              Category
      C __

            	
              The
      undersigned is a director or executive officer of the Company which is
      issuing and selling the Securities.

            

    

     

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    

     

    
      
        	
                Category
      D __

              	
                The
      undersigned is a bank; a savings and loan association; insurance company;
      registered investment company; registered business development company;
      licensed small business investment company (“SBIC”); or employee benefit
      plan within the meaning of Title 1 of ERISA and (a) the investment
      decision is made by a plan fiduciary which is either a bank, savings and
      loan association, insurance company or registered investment advisor, or
      (b) the plan has total assets in excess of $5,000,000 or (c) is a self
      directed plan with investment decisions made solely by persons that are
      accredited investors. (describe entity)

              
	 	 
	 	 
	 	 

      

    

     

    
      
        	
                Category
      E  __

              	
                The
      undersigned is a private business development company as defined in
      section 202(a)(22) of the Investment Advisors Act of 1940. (describe
      entity)

              
	 	 
	 	 
	 	 

      

    

     

    
      
        	
                Category
      F  __

              	
                The
      undersigned is either a corporation, partnership, Massachusetts business
      trust, or non-profit organization within the meaning of Section 501(c)(3)
      of the Internal Revenue Code, in each case not formed for the specific
      purpose of acquiring the Securities and with total assets in excess of
      $5,000,000. (describe entity)

              
	 	 
	 	 
	 	 

      

    

     

    
      	
              Category
      G  __

            	
              The
      undersigned is a trust with total assets in excess of $5,000,000, not
      formed for the specific purpose of acquiring the Securities, where the
      purchase is directed by a “sophisticated investor” as defined in
      Regulation 506(b)(2)(ii) under the
Act.

            

    

     

    
      
        	
                Category
      H  __

              	
                The
      undersigned is an entity (other than a trust) in which all of the equity
      owners are “accredited investors” within one or more of the above
      categories.  If relying upon this Category alone, each equity
      owner must complete a separate copy of this
      Agreement.  (describe entity)

              
	 	 
	 	 
	 	 

      

    

     

    
      	
              Category
      I  

            	
              The
      undersigned is not within any of the categories above and is therefore not
      an accredited investor.

            

    

     

    The
undersigned agrees that the undersigned will notify the Company at any time on
or prior to the Closing in the event that the representations and warranties in
this Agreement shall cease to be true, accurate and complete.

     

    
      
        
        

      

      
        14

        
          

        

      

      
        
        

      

    

     

    7.2  SUITABILITY (please
answer each question)

     

    (a)           For
an individual Subscriber, please describe your current employment, including the
company by which you are employed and its principal business:

    
       

      
        

      

      
        

        

      

      
        

      

       

    

    (b)           For
an individual Subscriber, please describe any college or graduate degrees held
by you:

    
       

      
        

      

      
        
          

          

        

        
          

        

         

      

    

    (c)           For
all Subscribers, please list types of prior investments:

     

    
      
        

        

      

    

    
      

      

    

     

    (d)           For
all Subscribers, please state whether you have participated in other private placements
before:

     

    YES_______                                                      NO_______

     

    (e)           If
your answer to question (d) above was “YES”, please indicate frequency of such
prior participation in private placements
of:

     

    
      
        
          	 
      	 	
                  Public

                  Companies

                	 	
                  Private

                  Companies

                	 	
                  Public or Private Companies

                  with no, or insignificant,

                  assets and operations

                
	 	 	 	 	 	 	 
	
                  Frequently

                	 	 
      	 	 
      	 	 
      
	
                  Occasionally

                	 	 
      	 	 
      	 	 
      
	
                  Never

                	 	 
      	 	 
      	 	 
      

        

      

    

    

    (f)           For
individual Subscribers, do you expect your current level of income to
significantly decrease in the foreseeable future:

     

    YES_______                                                      NO_______

     

    (g)           For
trust, corporate, partnership and other institutional Subscribers, do you expect
your total assets to significantly decrease in the foreseeable
future:

     

    YES_______                                                      NO_______

     

    (h)           For
all Subscribers, do you have any other investments or contingent liabilities
which you reasonably anticipate could cause you to need sudden cash requirements
in excess of cash readily available to you:

     

    YES_______                                                      NO_______

     

    
      
        
        

      

      
        15

        
          

        

      

      
        
        

      

    

     

    (i)           For
all Subscribers, are you familiar with the risk aspects and the non-liquidity of
investments such as the securities for which you seek to subscribe?

     

    YES_______                                                      NO_______

     

    (j)           
For all Subscribers, do you understand that there is no guarantee of financial
return on this investment and that you run the risk of losing your entire
investment?

     

    YES_______                                                      NO_______

     

    7.3   MANNER IN WHICH TITLE IS TO
BE HELD.  (circle one)

     

    (a)          Individual
Ownership

    (b)          Common
Share Property

    (c)          Joint
Tenant with Right of

    Survivorship (both
parties

    must sign)

    (d)          Partnership*

    (e)          Tenants
in Common

    (f)           Company*

    (g)          Trust*

    (h)          Other*

     

    *If
Securities are being subscribed for by an entity, the attached Certificate of
Signatory must also be completed.

     

    7.4   FINRA
AFFILIATION.

     

    Are you
affiliated or associated with an FINRA member firm (please check
one):

     

    Yes
_________                                           No
__________

     

    If Yes,
please describe:

    
       

      
        

      

      
        

      

      
        

      

    

    

    *If
Subscriber is a Registered Representative with an FINRA member firm, have the
following acknowledgment signed by the appropriate party:

     

    The
undersigned FINRA member firm acknowledges receipt of the notice required by
Article 3, Sections 28(a) and (b) of the Rules of Fair Practice.

     

    _________________________________

    Name of
NASD Member Firm

    

    
      
        
          
            
              	
                      By:
      

                    	 
      
	 
      	
                      Authorized
      Officer

                    

            

          

        

      

    

     

    
      
        
        

      

      
        16

        
          

        

      

      
        
        

      

    

    

    Date:
____________________________

    

    7.5  The
undersigned is informed of the significance to the Company of the foregoing
representations and answers contained in the Confidential Investor Questionnaire
contained in this Article VII and such answers have been provided under the
assumption that the Company will rely on them.

     

    [REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK]

     

    
      
        
        

      

      
        17

        
          

        

      

      
        
        

      

    

     

    AGGREGATE
FACE AMOUNT OF THE NOTE = $_________ (the “Purchase Price”)

    

    
      
        
          
            
              
                
                  
                    
                      
                        
                          
                            
                              
                                
                                  
                                    
                                      
                                        
                                          
                                            
                                              
                                                
                                                  
                                                    
                                                      
                                                        
                                                          	 
      	 	 
      
	
                                                                  Signature

                                                                	 	
                                                                  Signature
      (if purchasing jointly)

                                                                
	 
      	 	 
      
	 
      	 	 
      
	
                                                                  Name
      Typed or Printed

                                                                	 	
                                                                  Name
      Typed or Printed

                                                                
	 
      	 	 
      
	 
      	 	 
      
	
                                                                  Title
      (if Subscriber is an Entity)

                                                                	 	
                                                                  Title
      (if Subscriber is an Entity)

                                                                
	 
      	 	 
      
	 
      	 	 
      
	
                                                                  Entity
      Name (if applicable)

                                                                	 	
                                                                  Entity
      Name (if applicable

                                                                
	 
      	 	 
      
	 
      	 	 
      
	 
      	 	 
      
	
                                                                  Address

                                                                	 	
                                                                  Address

                                                                
	 
      	 	 
      
	 
      	 	 
      
	
                                                                  City,
      State and Zip Code

                                                                	 	
                                                                  City,
      State and Zip Code

                                                                
	 
      	 	 
      
	 
      	 	 
      
	
                                                                  Telephone-Business

                                                                	 	
                                                                  Telephone-Business

                                                                
	 
      	 	 
      
	 
      	 	 
      
	
                                                                  Telephone-Residence

                                                                	 	
                                                                  Telephone-Residence

                                                                
	 
      	 	 
      
	 
      	 	 
      
	
                                                                  Facsimile-Business

                                                                	 	
                                                                  Facsimile-Business

                                                                
	 
      	 	 
      
	 
      	 	 
      
	
                                                                  Facsimile-Residence

                                                                	 	
                                                                  Facsimile-Residence

                                                                
	 
      	 	 
      
	 
      	 	 
      
	
                                                                  Tax
      ID # or Social Security #

                                                                	 	
                                                                  Tax
      ID # or Social Security
#

                                                                

                                                        

                                                      

                                                    

                                                  

                                                

                                              

                                            

                                          

                                        

                                      

                                    

                                  

                                

                              

                            

                          

                        

                      

                    

                  

                

              

            

          

        

      

    

     

    Name in
which securities should be issued:                                                                           

    

    Dated:                                                        
 , 2010

    

    This
Subscription Agreement is agreed to and accepted as of ________________ ,
2010.

     

    
      
        
          
            
              
                
                  
                    	 
      	
                            STW
      RESOURCES HOLDING CORP.

                          	 
	 
      	 
      	 
	 
      	
                            By:____________________________________

                          	 
	 
      	Name:	 
	 
      	Title:	 

                  

                

              

            

          

        

      

    

     

    
      
        
        

      

      
        18

        
          

        

      

      
        
        

      

    

     

    CERTIFICATE OF
SIGNATORY

    

    (To be
completed if Securities are

    being
subscribed for by an entity)

    

    I,
____________________________, am the ____________________________ of
__________________________________________ (the “Entity”).

    

    I certify
that I am empowered and duly authorized by the Entity to execute and carry out
the terms of the Subscription Agreement and to purchase and hold the Notes, and
certify further that the Subscription Agreement has been duly and validly
executed on behalf of the Entity and constitutes a legal and binding obligation
of the Entity.

    

    IN
WITNESS WHEREOF, I have set my hand this ________ day of _________________,
2010

     

    
      
        
          
            	 
      	 
      	 
	 
      	
                    (Signature)

                  	 

          

        

      

    

     

    
      
        
        

      

      
        19

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