First Amendment to the Amended and Restated Loan and Security Agreement, dated January 26, 2018, by and between the Registrant and the Silicon Valley Bank

THIS FIRST AMENDMENT TO AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT (this “Amendment”) is entered into as of January 26, 2018, between SILICON VALLEY BANK, a California corporation with a loan production office located at 387 Park Avenue South, 2nd Floor, New York, New York 10016 (“Bank”), and (b) TELARIA, INC. (f/k/a Tremor Video, Inc.), a Delaware corporation, with its chief executive office located at 1501 Broadway, Suite 801, New York, New York 10036 (the “Borrower”).

1.Definitions. Capitalized terms used but not defined in this Amendment shall have the meanings given to them in the Loan Agreement.

2.    Amendments to Loan Agreement.

2.1    Section 2.1.1 (Revolving Advances). Subsection (a) of Section 2.1.1 is deleted in its entirety and replaced with the following:

2.2    Section 2.2 (Overadvances). Section 2.2 is amended by deleting the reference to “the Default Rate” therein and inserting in lieu thereof “a per annum rate equal to the rate that is otherwise applicable to Advances plus four percent (4.0%)”.

2.3    Section 3.2 (Conditions Precedent to all Credit Extensions). Subsections (a) and (b) of Section 3.2 are deleted in their entirety and replaced with the following:

“    (a)    timely receipt of the Credit Extension request and any materials and documents required by Section 3.4;

(b)    the representations and warranties in this Agreement shall be true, accurate, and complete in all material respects on the date of the proposed Credit Extension and on the Funding Date of each Credit Extension; provided, however, that such materiality qualifier shall not be applicable to any representations and warranties that already are qualified or modified by materiality in the text thereof; and provided, further that those representations and warranties expressly referring to a specific date shall be true, accurate and complete in all material respects as of such date, 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 this Agreement remain true, accurate, and complete in all material respects; provided, however, that such materiality qualifier shall not be applicable to any representations and warranties that already are qualified or modified by materiality in the text thereof; and provided, further that those representations and warranties expressly referring to a specific date shall be true, accurate and complete in all material respects as of such date; and”

2.4    Section 3.4 (Procedures for Borrowing). Section 3.4 is deleted in its entirety and replaced with the following:

2.5    Section 5.3 (Accounts Receivable). Section 5.3 is hereby deleted in its entirety and replaced with the following:

2.6    Section 6.2 (Financial Statements, Reports, Certificates). Subsections (a) and (b) of Section 6.2 are hereby deleted in their entirety and replaced with the following:

“    (a)     Accounts Receivable and Accounts Payable Reports. Within thirty (30) days after the last day of each month, aged listings of accounts receivable and accounts payable (by invoice date) and a detailed Account Debtor listing;

(b)     Borrowing Base Reports. Within thirty (30) days after the end of each month, a Borrowing Base Report (and any schedules related thereto and including any other information requested by Bank with respect to Borrower’s Accounts);”    

2.7    Section 6.6 (Accounts). Subsection (c) of Section 6.6 is hereby deleted in its entirety and replaced with the following:

2.8    Section 6.7 (Financial Covenants). Subsection (b) of Section 6.7 is hereby deleted in its entirety and replaced with the following:

2.9    Section 6.14 (Accounts Receivable), Section 6.15 (Remittance of Proceeds) and Section 6.16 (Online Banking). Sections 6.14, 6.15 and 6.16 are hereby inserted immediately following Section 6.13:

6.16    Online Banking.

2.10    Subsections (i), (l) and (m) in Section 7.3 are hereby deleted in their entirety and replaced with the following:

“    (i)     immediately after giving effect to such purchase or acquisition, Borrower and its Subsidiaries shall have an Adjusted Quick Ratio of at least 1.50 to 1.0, based upon financial statements delivered to the Bank at least five (5) Business Days prior to such purchase or acquisition which give effect, on a pro forma basis, to such purchase or acquisition;”

2.11    Section 8.2 (Covenant Default). Subsection (a) of Section 8.2 is hereby deleted in its entirety and replaced with the following:

2.12    Section 9.2 (Power of Attorney). Section 9.2 is deleted in its entirety and replaced with the following:

2.13    Section 13 (Definitions). The defined terms “Borrowing Base Certificate”, “Borrowing Base Reports” and “Payment/Advance Form” and their corresponding definitions appearing in Section 13.1 are hereby deleted in their entirety.

2.14    Section 13.1 (Definitions). The following defined terms and their definitions set forth in Section 13.1 are hereby deleted in their entirety and replaced with the following:

“    “Adjusted EBITDA” for any period shall mean, as calculated on a consolidated basis with respect to Borrower and its Subsidiaries the sum, without duplication, of the amounts for such period of, (a) Net Income, plus (b) to the extent deducted in the calculation of Net Income, (i) Interest Expense, (ii) income tax expense, (iii) depreciation expense and amortization expense, (iv) non-cash stock-based compensation expenses, (v) earn-out payments in connection with Borrower’s acquisition of The Video Network Pty Ltd. in an aggregate amount not to exceed Three Million Six Hundred Thousand Dollars ($3,600,000.00) in the aggregate in any twelve (12) month period, (vi) executive severance, (vii) restructuring costs relating to subletting Borrower’s location at 1501 Broadway, New York, New York in an aggregate amount not to exceed Three Million Five Hundred Thousand Dollars ($3,500,000.00) and (viii) without duplication of (i) through (vii) above, other add-backs approved by Bank on a case-by-case basis in its sole discretion.”

“    “Affiliate” is, with respect to any Person, each other 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. For purposes of the definition of Eligible Accounts but not for any other provision of this Agreement, Affiliate shall include a Specified Affiliate.”

“    “Borrowing Base” is eighty percent (80.0%) of Eligible Accounts, as reasonably determined by Bank from Borrower’s most recent Borrowing Base

Report (and as may subsequently be updated by Bank based upon information received by Bank including, without limitation, Accounts that are paid and/or billed following the date of the Borrowing Base Report); provided, however, that Bank has the right to decrease the foregoing percentage in its good faith business judgment to mitigate the impact of events, conditions, contingencies, or risks which may adversely affect the Collateral or its value.”

“    “Revolving Line” is an aggregate principal amount equal to Twenty Five Million Dollars ($25,000,000.00).”

“    “Revolving Line Maturity Date” is January 26, 2020.”

2.15    Section 13.1 (Definitions). The preamble in the definition of “Eligible Accounts” set forth in Section 13.1 is hereby deleted in its entirety and replaced with the following:

2.16    Section 13.1 (Definitions). Subsections (a), (e), (q) and (t) in the definition of “Eligible Accounts” set forth in Section 13.1 are hereby deleted in their entirety and replaced with the following:

2.17    Section 13.1 (Definitions). The definition of “Eligible Accounts” in Section 13.1 is hereby amended by deleting “.” where it appears at the end thereof and inserting in lieu thereof “; and”, and then inserting the following:

2.18    Section 13 (Definitions). The following new defined terms are hereby inserted alphabetically in Section 13.1:

2.19    Exhibit B (Borrowing Base Certificate). The Borrowing Base Certificate (as defined in the Loan Agreement until the date of this Amendment) appearing as Exhibit B to the Loan Agreement is deleted in its entirety and replaced with the following: “Exhibit B – Intentionally Omitted”.

2.20    Exhibit C (Compliance Certificate). The Compliance Certificate appearing as Exhibit C to the Loan Agreement is deleted in its entirety and replaced with the Compliance Certificate attached as Schedule 1 hereto.

2.21    Exhibit D (Payment/Advance Form). The Payment/Advance Form (as defined in the Loan Agreement until the date of this Amendment) appearing as Exhibit D to the Loan Agreement is deleted in its entirety and replaced with the following: “Exhibit D – Intentionally Omitted”.

3.    Post-Closing Condition. Borrower hereby acknowledges and agrees that Borrower will deliver to Bank, on or before the date that is thirty (30) days from the date of this Amendment, in form and substance reasonably satisfactory to Bank, a certificate of good standing/foreign qualification from the State of Michigan dated as of a date no earlier than thirty (30) days prior to the date on which such certificate is delivered to Bank. Borrower acknowledges and agrees that the failure of Borrower to satisfy any requirements set forth in the immediately preceding sentence within thirty (30) days from the date of this Amendment shall result in an immediate Event of Default under the Loan Agreement for which there shall be no grace or cure period.

4.    Limitation of Amendments.

4.1    The amendments set forth in Section 2, above, are effective for the purposes set forth herein and shall be limited precisely as written and shall not be deemed to (a) be a consent to any amendment, waiver or modification of any other term or condition of any Loan Document, or (b) otherwise prejudice any right or remedy which Bank may now have or may have in the future under or in connection with any Loan Document.

4.2    This Amendment shall be construed in connection with and as part of the Loan Documents and all terms, conditions, representations, warranties, covenants and agreements set forth in the Loan Documents, except as herein amended, are hereby ratified and confirmed and shall remain in full force and effect.

5.    Representations and Warranties. To induce Bank to enter into this Amendment, Borrower hereby represents and warrants to Bank as follows:

5.1    Immediately after giving effect to this Amendment (a) the representations and warranties contained in the Loan Documents are true, accurate and complete in all material respects as of the date hereof (except to the extent such representations and warranties relate to an earlier date, in which case they are true and correct as of such date and except as reflected on the updated Perfection Certificate delivered in connection with this Amendment), and (b) no Event of Default has occurred and is continuing;

5.2    Borrower has the power and authority to execute and deliver this Amendment and to perform its obligations under the Loan Agreement, as amended by this Amendment;

5.3    The organizational documents of Borrower previously delivered to Bank remain true, accurate and complete and have not been amended, supplemented or restated and are and continue to be in full force and effect;

5.4    The execution and delivery by Borrower of this Amendment and the performance by Borrower of its obligations under the Loan Agreement, as amended by this Amendment, have been duly authorized; and

5.5    This Amendment has been duly executed and delivered by Borrower and is the binding obligation of Borrower, enforceable against Borrower in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, reorganization, liquidation, moratorium or other similar laws of general application and equitable principles relating to or affecting creditors’ rights.

6.    Perfection Certificate. Borrower hereby ratifies, confirms and reaffirms, all and singular, the terms and disclosures contained in a certain Perfection Certificate dated as of January 26, 2018, and acknowledges, confirms and agrees the disclosures and information Borrower provided to Bank in said Perfection Certificate have not changed, as of the date hereof. Borrower hereby acknowledges and agrees that all references in the Loan Agreement to the Perfection Certificate shall mean the Perfection Certificate as described in this paragraph.

7.    Integration. This Amendment 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 Amendment and the Loan Documents merge into this Amendment and the Loan Documents.

8.    Counterparts. This Amendment may be executed in any number of counterparts and all of such counterparts taken together shall be deemed to constitute one and the same instrument.

9.    Effectiveness and Payment of Fees and Expenses. This Amendment shall be deemed effective upon (a) the due execution and delivery to Bank of this Amendment by each party hereto, and (b) Borrower’s payment of the Initial Installment (as defined below). Borrower shall pay to Bank a fully-earned, non-refundable amendment fee in an amount equal to Seventy Thousand Dollars ($70,000.00), which fee shall be deemed fully earned on the date of this Amendment and shall be due and payable as follows: (i) Thirty Five Thousand Dollars ($35,000.00) on the date of this Amendment (the “Initial Installment”) and (ii) Thirty Five Thousand Dollars ($35,000.00) on the earliest to occur of (A) the date that is one (1) year from the date of this Amendment, (B) the occurrence of an Event of Default, or (C) the termination of the Loan Agreement. In addition, Borrower shall pay Bank’s legal fees and expenses incurred in connection with this Amendment.

Date:                 

TO:    SILICON VALLEY BANK                        

FROM: TELARIA, INC.

The undersigned authorized officer of TELARIA, INC. (“Borrower”) certifies that under the terms and conditions of the Amended and Restated Loan and Security Agreement between Borrower and Bank (the “Agreement”):

(1) Borrower is in complete compliance for the period ending _______________ with all required covenants except as noted below; (2) there are no Events of Default; (3) all representations and warranties in the Agreement are true and correct in all material respects on this date except as noted below; provided, however, that such materiality qualifier shall not be applicable to any representations and warranties that already are qualified or modified by materiality in the text thereof; and provided, further that those representations and warranties expressly referring to a specific date shall be true, accurate and complete in all material respects as of such date; (4) Borrower, and each of its Subsidiaries, has timely filed all required tax returns and reports, and Borrower has timely paid all foreign, federal, state and local taxes, assessments, deposits and contributions owed by Borrower except as otherwise permitted pursuant to the terms of Section 5.9 of the Agreement; and (5) no Liens have been levied or claims made against Borrower or any of its Subsidiaries relating to unpaid employee payroll or benefits of which Borrower has not previously provided written notification to Bank.

Attached are the required documents as appropriate supporting the certification. The undersigned certifies that these are prepared in accordance with GAAP consistently applied from one period to the next except as explained in an accompanying letter or footnotes. The undersigned acknowledges that no borrowings may be requested at any time or date of determination that Borrower is not in compliance with any of the terms of the Agreement, and that compliance is determined not just at the date this certificate is delivered. Capitalized terms used but not otherwise defined herein shall have the meanings given them in the Agreement.

* As set forth in Section 6.9(b) of the Agreement

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II.    Adjusted EBITDA (tested quarterly) (Section 6.9(b))

Required: $_________________*

*As set forth in Section 6.9(b) of the Agreement.

Actual:     $_________________

Is line C equal to or greater than the required amount set forth above?

  No, not in compliance                      Yes, in compliance