SUPPLEMENT to the Loan and Security Agreement dated as of December 13, 2010 between Insider Guides, Inc. (Borrower) and Venture Lending & Leasing V, Inc. (VLL5) and Venture Lending & Leasing VI, Inc. (VLL6) (each of VLL4 and VLL5, as Lender)

This is a Supplement identified in the document entitled Loan and Security Agreement dated as of December 13, 2010 (as amended, restated, supplemented and modified from time to time, the “Loan and Security Agreement”), by and between Borrower and Lender.  All capitalized terms used in this Supplement and not otherwise defined in this Supplement have the meanings ascribed to them in Article 10 of the Loan and Security Agreement, which is incorporated in its entirety into this Supplement.  In the event of any inconsistency between the provisions of, or definitions in, that document and this Supplement, this Supplement is controlling.

The parties are entering into this single Supplement to the Loan and Security Agreement for convenience, and this Supplement is and shall be interpreted for all purposes as separate and distinct agreements between Borrower and VLL5, on the one hand, and Borrower and VLL6, on the other hand, and nothing in this Supplement shall be deemed a joint venture, partnership or other association between VLL5 and VLL6.  Each reference in this Supplement to “Lender” shall mean and refer to each of VLL5 and VLL6, singly and independent of one another.  Without limiting the generality of the foregoing, the Commitment, covenants and other obligations of “Lender” under the Loan and Security Agreement, as supplemented hereby, are several and not joint obligations of VLL5 and VLL6, and all rights and remedies of “Lender” under the Loan and Security Agreement, as supplemented hereby, may be exercised by VLL5 and/or VLL6 independently of one another.

In addition to the provisions of the Loan and Security Agreement, the parties agree as follows:

Part 1. - Additional Definitions:

“Commitment” means, as the context may require, the VLL5 Commitment or the VLL6 Commitment.  Each Lender’s Commitment is several and not joint with the Commitment of the other Lender.

“Designated Rate” means a fixed rate of interest per annum equal to the Prime Rate as published on the Business Day on which Lender prepares the Note for each Loan, plus five and three-quarters of one percent (5.75%); provided, however, that in no event shall the Designated Rate for any Loan be less than nine percent (9.00%).

“Eligible Equipment” means any (i) computer equipment, (ii) lab, shop and test equipment, (iii) office equipment, and (iv) other standard hardware acceptable to Lender, provided that none of the foregoing is subject to a license agreement between Borrower and any Person, and excluding any Soft Costs that are financed with the proceeds of a Soft Cost Loan.

“Equipment Loan” means any Loan requested by Borrower and funded by Lender under its Equipment Loan Commitment to finance Borrower’s acquisition or carrying of specific items of Eligible Equipment.

 

 

“Equipment Loan Commitment” means, as the context may require, the VLL5 Equipment Loan Commitment or the VLL6 Equipment Loan Commitment.  Each Lender’s Equipment Loan Commitment is several and not joint with the Equipment Loan Commitment of the other Lender.

“Final Payment”:   Each Equipment Loan shall have a Final Payment equal to 6.723% of the original principal amount of such Loan; and each Soft Cost Loan and each Growth Capital Loan shall have a Final Payment equal to 5.294% of the original principal amount of such Loan.

“Growth Capital Loan” means any Loan requested by Borrower and funded by Lender under its Growth Capital Loan Commitment for purposes of financing Borrower’s acquisitions.

“Growth Capital Loan Commitment” means, as the context may require, the VLL5 Growth Capital Loan Commitment or the VLL6 Growth Capital Loan Commitment.  Each Lender’s Growth Capital Loan Commitment is several and not joint with the Growth Capital Loan Commitment of the other Lender.

“Liquidity Event” means: (i) the closing of a merger, acquisition or other transaction in accordance with the provisions of Section 6.4 of the Loan and Security Agreement; (ii) the closing of a sale of all or substantially all of a Borrower’s assets in accordance with the provisions the Loan and Security Agreement; or (iii) the closing of a firmly underwritten public offering of Borrower’s securities either (A) pursuant to a registration statement filed on Form S-1 under the Securities Act of 1933, as amended or (B) on a foreign exchange.

“Loan” or “Loans” mean, as the context may require, individually an Equipment Loan, a Soft Cost Loan or a Growth Capital Loan, and collectively, the Equipment Loans, the Soft Cost Loans and the Growth Capital Loans.

“Prime Rate” means the “prime rate” of interest, as published from time to time by The Wall Street Journal in the “Money Rates” section of its Western Edition newspaper.

“Soft Cost Loan Sub-Commitment” means, as the context may require, the VLL5 Soft Cost Loan Sub-Commitment or the VLL6 Soft Cost Loan Sub-Commitment.  Each Lender’s Soft Cost Loan Sub-Commitment is several and not joint with the Soft Cost Loan Sub-Commitment of the other Lender

“Soft Costs” means Borrower’s costs of acquiring (i) custom-made or non-standard equipment (not otherwise approved by Lender as Eligible Equipment), (ii) tenant improvements at Borrower’s primary business premises, (iii) domain names, (iv) software, (v) sales tax, freight, maintenance and installation charges in respect of items of Eligible Equipment and (vi) other items of personal property approved by Lender that do not constitute Eligible Equipment.

“Termination Date” means the earlier of (i) the date Lender may terminate making Loans or extending other credit pursuant to the rights of Lender under Article 7 of the Loan and Security Agreement, or (ii)(A) with respect to the Equipment Loan Commitment, September 30, 2011, provided, however, that such date shall be extended from September 30, 2011 to December 31, 2011 with respect to the lesser of (x) 37.5% of the Commitment (i.e.,  $750,000 per Lender, for an aggregate commitment of $1,500,000) and (y) the then unfunded portion of Lender’s Equipment Loan Commitment, (B) with respect to the Growth Capital Loan Commitment, January 31, 2011.

“Threshold Amount”: Fifty Thousand Dollars ($50,000).

“VLL5 Commitment”:  Subject to the terms and conditions set forth in the Loan and Security Agreement and this Supplement, VLL5 commits to make:

(i)

Equipment Loans to Borrower up to the aggregate original principal amount of Two Million Dollars ($2,000,000) (the “VLL5 Equipment Loan Commitment”);

 

 

(ii)

as a sub-facility of the VLL5 Equipment Loan Commitment, Soft Costs Loans to Borrower up to the aggregate original principal amount of Four Hundred Thousand Dollars ($400,000) (the “VLL5 Soft Cost Loan Sub-Commitment”); and

(iii)

Growth Capital Loans to Borrower up to the aggregate original principal amount of Two Hundred Fifty Thousand Dollars ($250,000) (the “VLL5 Growth Capital Loan Commitment”); provided, however, that the aggregate original principal amount of all Equipment Loans, the Soft Cost Loans and the Growth Capital Loans advanced to Borrower by VLL5 shall not exceed Two Million Dollars ($2,000,000).

“VLL6 Commitment”:  Subject to the terms and conditions set forth in the Loan and Security Agreement and this Supplement, VLL6 commits to make:

(i)

Equipment Loans to Borrower up to the aggregate original principal amount of Two Million Dollars ($2,000,000) (the “VLL6 Equipment Loan Commitment”)

(ii)

as a sub-facility of the VLL5 Equipment Loan Commitment, Soft Costs Loans to Borrower up to the aggregate original principal amount of Four Hundred Thousand Dollars ($400,000) (the “VLL6 Soft Cost Loan Sub-Commitment”); and

(iii)

Growth Capital Loans to Borrower up to the aggregate original principal amount of Two Hundred Fifty Thousand Dollars ($250,000) (the “VLL6 Growth Capital Loan Commitment”); provided, however, that the aggregate original principal amount of all Equipment Loans, the Soft Cost Loans and the Growth Capital Loans advanced to Borrower by VLL6 shall not exceed Two Million Dollars ($2,000,000).

Part 2. - Additional Covenants and Conditions:

 
 

1.           Equipment Loan Commitment; Soft Cost Loan Commitment; Use of Proceeds; Limitations on Equipment Loans and Soft Cost Loans.

(a)           Funding of Equipment Loans.  Subject to the terms and conditions of the Loan and Security Agreement and this Supplement, Lender agrees to make Equipment Loans to Borrower from time to time from the Closing Date up to and including the Termination Date in an aggregate original principal amount up to but not exceeding the lesser of (i) the then unfunded portion of its Equipment Loan Commitment, and (ii) an amount equal to 100% (the “Original Cost”) of the amount paid by Borrower to a manufacturer, vendor or dealer who is not an Affiliate of Borrower for each item of Eligible Equipment being financed with the proceeds of such Equipment Loan as shown on an invoice therefor (excluding (x) any commissions, (y) any portion of the amount invoiced which relates to servicing or maintenance of the Eligible Equipment, and (z) delivery, freight and installation charges or sales taxes payable upon acquisition, unless the amounts described in clauses (y) and (z) constitute Soft Costs that are being financed with the proceeds of a contemporaneous Soft Cost Loan).  Notwithstanding the foregoing, no item of Eligible Equipment shall be eligible to be financed with the proceeds of an Equipment Loan if such item was acquired or first placed in service by Borrower earlier than ninety (90) days prior to the Borrowing Date of such Equipment Loan; provided, however, that so long as the Borrowing Date of the initial Equipment Loan occurs on or before December 31, 2010, Borrower may finance Eligible Equipment acquired or first placed in service from September 1, 2010 at the Original Cost of such items (so long as the same have not been financed under the 2008 Loan Agreement).

 

 

(b)           Funding of Soft Cost Loans.  Subject to the terms and conditions of the Loan and Security Agreement and this Supplement, Lender agrees to make Soft Cost Loans to Borrower from time to time from the Closing Date up to and including the Termination Date in an aggregate original principal amount up to but not exceeding the lowest of (i) the then unfunded portion of its Equipment Loan Commitment, (ii) the then unfunded portion of its Soft Cost Loan Sub-Commitment, and (i) an amount equal the Original Cost of the amount paid by Borrower to a manufacturer, vendor or dealer who is not an Affiliate of Borrower for each Soft Cost being financed with the proceeds of such Soft Cost Loan as shown on an invoice therefor.  Notwithstanding the foregoing, no Soft Cost shall be eligible to be financed with the proceeds of a Soft Cost Loan if the same was expended, acquired or first placed in service by Borrower earlier than ninety (90) days prior to the Borrowing Date of such Soft Cost Loan; provided, however, that so long as the Borrowing Date of the initial Soft Cost Loan occurs on or before December 31, 2010, Borrower may finance Soft Costs expended, acquired or first placed in service from September 1, 2010 at the Original Cost of such items (so long as the same have not been financed under the 2008 Loan Agreement).

(c)           Location of Equipment and Soft Costs.  All Eligible Equipment and Soft Costs, if applicable, financed hereunder shall be located at all times at (i) Borrower’s place of business in New Hope, Pennsylvania, (ii) ReadyTechs, LLC’s place of business in Secaucus, New Jersey or (iii) other places of business located within the United States as may be consented to by Lender in writing.

(d)           Minimum Funding Amount.  Except to the extent the remaining Equipment Loan Commitment or Soft Cost Loan Sub-Commitment is a lesser amount, any Equipment Loans and Soft Cost Loans requested by Borrower to be made on a single Business Day shall be for a minimum aggregate principal amount of Fifty Thousand Dollars ($50,000).

2.           Growth Capital Loan Commitment; Funding of Growth Capital Loans.

(a)           Funding of Growth Capital Loans.  Subject to the terms and conditions of the Loan and Security Agreement and this Supplement, Lender agrees to make Growth Capital Loans to Borrower from time to time from the Closing Date up to and including the Termination Date in an aggregate original principal amount up to but not exceeding the then unfunded portion of its Growth Capital Loan Commitment.

(b)           Minimum Funding Amount.  Except to the extent the remaining Growth Capital Loan Commitment is a lesser amount, any Growth Capital Loans requested by Borrower to be made on a single Business Day shall be for a minimum aggregate principal amount of Fifty Thousand Dollars ($50,000).

3.           Maximum Number of Borrowing Requests.  Borrower shall not submit a Borrowing Request more frequently than once each calendar month, provided that a Borrowing Request may request that more than one type of Loan be funded pursuant to it.

4.           Repayment of Loans.  

(a)           Equipment Loans.  Principal of and interest on each Equipment Loan shall be payable as set forth in a Note (substantially in the form of Exhibit “A-1” hereto) evidencing such Equipment Loan, which Note shall provide substantially as follows:  principal and interest at the Designated Rate shall be fully amortized over a period of thirty six (36) months in equal, monthly installments.  In particular, on the Borrowing Date applicable to the Equipment Loan evidenced by such Note, Borrower shall pay to Lender (i) if the Borrowing Date is not the first day of the month, interest only at a rate equal to 1.00% per month, in advance, on the outstanding principal balance of the Loan evidenced by such Note, for the period from such Borrowing Date through the last day of the calendar month in which such Borrowing Date occurs, and (ii) the first (1st) amortization installment of principal and interest at the Designated Rate.  Commencing on the first day of the second full month after the Borrowing Date, and continuing on the first day of each consecutive calendar month thereafter, principal and interest at the Designated Rate shall be payable, in advance, in 35 equal consecutive installments in an amount sufficient to fully amortize the Loan evidenced by such Note.  The Final Payment on such Loan shall be due and payable on the same date that the last installment payment of principal and interest at the Designated Rate is due.

 

 

(b)           Soft Cost Loans and Growth Capital Loans.  Principal of and interest on each Soft Cost Loan and each Growth Capital Loan shall be payable as set forth in a Note (substantially in the form of Exhibit “A-2” hereto) evidencing such Loan, which Note shall provide substantially as follows:  principal and interest at the Designated Rate shall be fully amortized over a period of thirty (30) months in equal, monthly installments.  In particular, on the Borrowing Date applicable to the Equipment Loan evidenced by such Note, Borrower shall pay to Lender (i) if the Borrowing Date is not the first day of the month, interest only at a rate equal to 1.00% per month, in advance, on the outstanding principal balance of the Loan evidenced by such Note, for the period from such Borrowing Date through the last day of the calendar month in which such Borrowing Date occurs, and (ii) the first (1st) amortization installment of principal and interest at the Designated Rate.  Commencing on the first day of the second full month after the Borrowing Date, and continuing on the first day of each consecutive calendar month thereafter, principal and interest at the Designated Rate shall be payable, in advance, in 29 equal consecutive installments in an amount sufficient to fully amortize the Loan evidenced by such Note.  The Final Payment on such Loan shall be due and payable on the same date that the last installment payment of principal and interest at the Designated Rate is due.

5.           Prepayment.  No Loan funded pursuant to the Loan and Security Agreement and this Supplement may be voluntarily prepaid except as provided in this Section 5.

(a)           Voluntary Prepayment at any Time. Borrower may voluntarily prepay all, but not less than all, Loans funded pursuant to the Loan and Security Agreement and this Supplement in whole, but not in part, at any time by tendering to each Lender cash payment in respect of such Lender’s Loans in an amount equal to the sum of: (i) all accrued and unpaid interest on such Loans as of the date of prepayment; and (ii) an amount equal to the total amount of all scheduled but unpaid payments (including Final Payments) that would have accrued and been payable from the date of prepayment through the stated maturity of the Loans had they remained outstanding and been paid in accordance with the terms of the related Note(s).

 
 

(b)           Prepayment after Twelve Months of Amortization.  Notwithstanding anything to the contrary in Section 5(a), so long as no Event of Default has then occurred and is continuing, at any time after Borrower has made at least twelve (12) consecutive payments of principal and interest with respect to all Loans funded pursuant to the Loan and Security Agreement and this Supplement, Borrower may voluntarily prepay all, but not less than all, such Loans in whole but not in part, by tendering to each Lender cash payment in respect of such Lender’s Loans in an amount equal to the sum of:  (i) all accrued and unpaid interest on such Loans as of the date of prepayment; (ii) all outstanding principal balances of such Loans as of the date of prepayment; and (iii) an amount equal to eighty percent (80%) of all interest that would have accrued and been payable from the date of prepayment through the stated date of maturity of the Loans had they remained outstanding and been paid in accordance with the terms of the related Notes, in each case, as such amounts are determined by such Lender.  Borrower agrees that its right to prepay the Loans funded pursuant to the Loan and Security Agreement and this Supplement pursuant to this Section 5(b) shall not apply in connection with a Liquidity Event or at any time thereafter.

(c)           Prepayment after Eighteen Months of Amortization.  Notwithstanding anything to the contrary in Section 5(a), so long as no Event of Default has then occurred and is continuing, at any time after Borrower has made at least eighteen (18) consecutive payments of principal and interest with respect to all Loans funded pursuant to the Loan and Security Agreement and this Supplement, Borrower may voluntarily prepay all, but not less than all, such Loans in whole but not in part, by tendering to each Lender cash payment in respect of such Lender’s Loans in an amount equal to the sum of:  (i) all accrued and unpaid interest on such Loans as of the date of prepayment; (ii) all outstanding principal balances of such Loans as of the date of prepayment; and (iii) an amount equal to seventy percent (70%) of all interest that would have accrued and been payable from the date of prepayment through the stated date of maturity of the Loans had they remained outstanding and been paid in accordance with the terms of the related Notes, in each case, as such amounts are determined by such Lender.  Borrower agrees that its right to prepay the Loans funded pursuant to the Loan and Security Agreement and this Supplement pursuant to this Section 5(c) shall not apply in connection with a Liquidity Event or at any time thereafter.

 

 

(d)           Prepayment if Lender Fails or Refuses to Fund a Loan.  Notwithstanding anything to the contrary in Section 5(a), if prior to the Termination Date Borrower satisfies all of the conditions precedent with respect to the funding of a Loan and Lenders fail or refuse to make such Loan then Borrower may voluntarily prepay all, but not less than all, outstanding Loans funded pursuant to the Loan and Security Agreement and this Supplement in whole, but not in part, at any time from the date of such failure or refusal up to the date which is sixty (60) days thereafter by tendering to each Lender cash payment in respect of such Lender’s outstanding Loans in an amount equal to the sum of: (i) all accrued and unpaid interest on such outstanding Loans as of the date of prepayment; and (ii) all outstanding principal balances of such outstanding Loans as of the date of prepayment, in each case, as such amounts are reasonably determined by such Lender.

 

6.           Issuance of Warrants.  As additional consideration for the making of the VLL5 Commitment: VLL5 has earned and is entitled to receive immediately upon the execution of the Loan and Security Agreement and this Supplement, a warrant instrument issued by Borrower (the “VLL5 Warrant”); and (b) VLL6 has earned and is entitled to receive immediately upon the execution of the Loan and Security Agreement and this Supplement, a warrant instrument issued by Borrower (the “VLL6 Warrant” and together with the VLL5 Warrant, the “Warrants”).  The Warrants shall be substantially in the form of Exhibit “D” attached hereto.  Borrower acknowledges that:  (i) VLL5 has assigned its rights to receive the VLL5 Warrant to its parent, Venture Lending & Leasing V, LLC, and in connection therewith, Borrower shall issue the VLL5 Warrant directly to Venture Lending & Leasing V, LLC; and (ii) VLL6 has assigned its rights to receive the VLL6 Warrant to its parent, Venture Lending & Leasing VI, LLC, and in connection therewith, Borrower shall issue the VLL6 Warrant directly to Venture Lending & Leasing VI, LLC.  Lender shall furnish to Borrower a copy of the agreement in which such Lender assigned its Warrant to its parent.

7.           Payment of Commitment Fee.  As an additional condition precedent under Section 4.1 of the Loan and Security Agreement, Lender shall have completed to its satisfaction its due diligence review of Borrower's business and financial condition and prospects, and Lender’s investment committee shall have approved its Commitment.  If this condition is not satisfied, the Twenty Thousand Dollars ($20,000) commitment fee (the “Commitment Fee”) previously paid by Borrower shall be refunded.  VLL5 agrees that with respect to each Loan advanced under its Commitment, on the Borrowing Date applicable to such Loan, VLL5 shall credit against the payments due from Borrower on such date in respect of such Loan an amount equal to the product of Ten Thousand Dollars ($10,000) and a fraction the numerator of which is the principal amount of such Loan and the denominator of which is Two Million Dollars ($2,000,000), until the amount of such credits made by VLL5 equals but does not exceed Ten Thousand Dollars ($10,000); and VLL6 agrees that with respect to each Loan advanced under its Commitment, on the Borrowing Date applicable to such Loan, VLL6 shall credit against the payments due from Borrower on such date in respect of such Loan an amount equal to the product of Ten Thousand Dollars ($10,000) and a fraction the numerator of which is the principal amount of such Loan and the denominator of which is Two Million Dollars ($2,000,000), until the amount of such credits made by VLL6 equals but does not exceed Ten Thousand Dollars ($10,000).  Except as set forth in this Section 7, the Commitment Fee is not refundable.

8.           Documentation Fee Payment.  Pursuant to Section 9.8(a) of the Loan and Security Agreement, Borrower shall pay Lender, on demand, the total amount of Lender’s actual costs and expenses incurred in connection with the preparation and negotiation of the Loan Documents, including legal fees, plus actual filing fees incurred by Lender or its counsel related to perfection of the Liens granted under the Loan and Security Agreement.

9.           Borrower’s Account and Wire Transfer Instructions:

Institution Name	Comerica Bank
Address	226 Airport Parkway, Suite 100, M/C 4348 San Jose, CA 95110
ABA No.
Contact Name	Brian Marshall
Phone No.	(617) 757-6343
E-mail	***@***
Account Title	Insider Guides, Inc.
Account No.

 

 

10.          Debits to Account for ACH Transfers.  For purposes of Section 2.2 and 5.10 of the Loan and Security Agreement, the Primary Operating Account shall be the bank account set forth in Section 9 above.  Borrower hereby agrees that Loans will be advanced to the account specified above and regularly scheduled payments of principal, interest and Final Payments will be automatically debited from the same account.

Part 3. - Additional Representations:

Borrower represents and warrants that as of the Closing Date and each Borrowing Date:

a)

Its chief executive office is located at:  280 Union Square Drive New Hope, PA 18938.

b)

Its Equipment is located at:  Equinix Operating Co., Inc., 275 Hartz Way, Secaucus, NJ 07094.

c)

Its Inventory is located at: 280 Union Square Drive New Hope, PA 18938.

d)

Its Records are located at:  280 Union Square Drive New Hope, PA 18938.

e)

In addition to its chief executive office, Borrower maintains offices or operates its business at the following locations:  132 W. 36th Street, 9th Floor, New York, NY  10018.

f)

Other than its current, full corporate name, Borrower has conducted business under the following corporate name(s), or using the following trade names or fictitious business names:  Myyearbook.com; Insider Guides, LLC.

g)

Borrower’s Delaware state corporation I.D. number is: 4242493.

h)

Borrower’s federal tax identification number is: 20 ###-###-####.

i)

In addition to the Primary Operating Account identified in Section 9, Borrower maintains the following Deposit Accounts and investment/securities accounts:

Institution Name	Comerica Bank
Address	226 Airport Parkway, Suite 100, M/C 4348 San Jose, CA 95110
ABA No.
Contact Name	Brian Marshall
Phone No.	(617) 757-6343
Email	***@***
Account Title	Insider Guides, Inc.
Account No.

 

 

Part 4. - Additional Loan Documents:

 

 

 

 

[Signature page to Supplement]

IN WITNESS WHEREOF, the parties have executed this Supplement as of the date first above written.