EXHIBIT 10.2

MODIFICATION NO. 2 TO LOAN AND SECURITY AGREEMENT

This Second Modification No. 2 to Loan and Security Agreement (the “Second
Modification”) is entered into as of June 27, 2014 (the “Second Modification
Effective Date”), by and between Partners for Growth IV, L.P. (“PFG”),
Mattersight Corporation, a Delaware corporation, Mattersight Europe Holding
Corporation, a Delaware corporation and Mattersight International Holding, Inc.,
an Illinois corporation (individually and collectively, jointly and severally,
“Borrower”), whose address is 200 S Wacker Drive, Suite 820, Chicago, IL 60606.

Recitals

A. PFG and Borrower have entered into that certain Loan and Security Agreement
dated as of August 19, 2013 (as the same may from time to time be further
amended, modified, supplemented or restated, the “Loan Agreement”). PFG has
extended credit to Borrower for the purposes permitted in the Loan Agreement.

B. PFG and Borrower entered into that certain Modification No. 1 to Loan and
Security Agreement (the “First Modification”) as of April 30, 2014 to address
the treatment under the Loan Agreement of Defaults or Events of Default when no
monetary Obligations are then outstanding.

C. The parties desire to amend the Financial Covenants set forth in Section 5 of
the Schedule.

Agreement

NOW, THEREFORE, in consideration of the foregoing recitals and other good and
valuable consideration, the receipt and adequacy of which is hereby
acknowledged, and intending to be legally bound, the parties hereto agree as
follows:

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

2. Modifications to Loan Agreement.

(a) Financial Covenant Modifications. Section 5 of the Schedule which, prior to
the Second Modification Effective Date, read as follows:

“5. FINANCIAL COVENANTS

 

    (Section 5.1):

Borrower shall comply with each of the following covenants. Compliance shall be
determined as of the end of each month, except as otherwise specifically
provided below:

 

Minimum Tangible

Borrower shall maintain at all times, to be tested as of the last day of each
month

    Net Worth:

and calculated on a consolidated basis for Borrower and its Subsidiaries, a
Tangible Net Worth in an amount equal to or greater than $3,000,000, increasing
by (i) fifty percent (50%) of positive quarterly Net

 

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Income plus (ii) fifty percent (50%) of the proceeds from issuances of equity
and the principal amount of Subordinated Debt, in each case issued after the
Effective Date; provided that the maximum Tangible Net Worth financial covenant
requirement hereunder, after giving effect to such increases, shall not exceed
$10,000,000.

 

Minimum Revenues:

Borrower shall maintain Revenues, to be tested as of the last day of each
calendar quarter and calculated on a consolidated basis for Borrower and its
Subsidiaries, of not less than the following amounts for each corresponding
period:

 

Period

   Minimum Revenues  

Q3-2013

   $ 6,521,000   

Q4-2013

   $ 7,221,000   

Q1-2014

   $ 6,669,000   

Q2-2014

   $ 7,333,000   

Q3-2014

   $ 8,340,000   

Q4-2014

   $ 9,533,000   

 

  For periods after Q4-2014, the minimum threshold shall be 80% of Borrower’s
Plan Revenues for each period.

 

Minimum EBITDA:

Borrower shall maintain EBITDA, to be tested as of the last day of each calendar
quarter and calculated on a consolidated basis for Borrower and its
Subsidiaries, of not less than the following amounts for each corresponding
period:

 

Period

   Minimum EBITDA  

Q3-2013

   $ (750,000 ) 

Q4-2013

   $ (750,000 ) 

Q1-2014

   $ (1,350,000 ) 

Q2-2014

   $ (600,000 ) 

Q3-2014

   $ 1   

Q4-2014

   $ 1   

 

  For periods after Q4-2014, the minimum threshold shall be at least $1.00 in
EBITDA for each period.”

shall, as from the Second Modification Effective Date, be amended to read in its
entirety as follows:

“5. FINANCIAL COVENANTS

 

(Section 5.1):

Borrower shall comply with each of the following covenants. Compliance shall be
determined as of the end of each month, except as otherwise specifically
provided below:

 

Minimum Tangible

Borrower shall maintain at all times, to be tested as of the last day of each
month

    Net Worth:

and calculated on a consolidated basis for Borrower and its Subsidiaries, a
Tangible Net Worth in an amount equalto or greater than $1,250,000, increasing
by (i) fifty percent (50%) of positive quarterly Net Income plus

 

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(ii) fifty percent (50%) of the proceeds from issuances of equity and the
principal amount of Subordinated Debt, in each case issued after the Second
Modification Effective Date.

 

Minimum Revenues:

Borrower shall maintain Revenues, to be tested as of the last day of each
calendar quarter and calculated on a consolidated basis for Borrower and its
Subsidiaries, of not less than the following amounts for each corresponding
period:

 

 

Period

   Minimum Revenues  

Q2-2014

   $ 6,100,000   

Q3-2014

   $ 7,100,000   

Q4-2014

   $ 8,700,000   

 

  For the quarterly period ending March 31, 2015 and for each quarterly period
ending thereafter, the minimum revenue requirements will be based on Borrower’s
Board-approved projections delivered to Bank pursuant to Section 6.2(i) hereof,
which requirement shall in any event be at least eighty percent (80%) of the
projected revenue in such Board-approved projections for each such quarterly
period.”

(b) New Compliance Certificate. The Compliance Certificate is amended to read as
set forth in Exhibit A to this Second Modification.

3. Limitation of Modification. The modifications 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 an express or implied consent or
imply any obligation of PFG to consider any future amendment, waiver, or
modification of any other term or condition of any Loan Document, or
(b) otherwise prejudice any right or remedy which PFG may now have or may have
in the future under or in connection with any Loan Document. This Second
Modification 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 are hereby ratified and confirmed and
shall remain in full force and effect.

4. Representations and Warranties. To induce PFG to enter into this Second
Modification, Borrower hereby represents and warrants to PFG as follows:

(a) Immediately after giving effect to this Second Modification (i) 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 (ii) no Event of
Default has occurred and is continuing;

(b) Borrower has the power and authority to execute and deliver this Second
Modification and to perform its obligations under the Loan Agreement;

 

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(c) The organizational documents of Borrower most recently delivered to PFG
remain true, accurate, and complete and have not been amended, supplemented, or
restated and are and continue to be in full force and effect;

(d) The execution and delivery by Borrower of this Second Modification and the
performance by Borrower of its obligations under the Loan Agreement have been
duly authorized by all necessary action on the part of Borrower;

(e) The execution and delivery by Borrower of this Second Modification and the
performance by Borrower of its obligations under the Loan Agreement do not and
will not contravene (i) any law or regulation binding on or affecting Borrower,
(ii) any contractual restriction with a Person binding on Borrower, (iii) any
order, judgment, or decree of any court or other governmental or public body or
authority, or subdivision thereof, binding on Borrower, or (iv) the
organizational documents of Borrower;

(f) The execution and delivery by Borrower of this Second Modification and the
performance by Borrower of its obligations under the Loan Agreement do not
require any order, consent, approval, license, authorization or validation of,
or filing, recording or registration with, or exemption by any governmental or
public body or authority, or subdivision thereof, binding on Borrower, except as
already has been obtained or made;

(g) This Second Modification 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; and

(h) Each of the disclosures and information contained in Borrower’s
Representations Letter dated as of August 19, 2013, unless such Representations
Letter is updated under Section 6.2 hereof or such updates are otherwise
disclosed in Exhibit B hereto, remains true, complete and correct as of the
Second Modification Effective Date.

5. Reaffirmation of Loan Documents. Except as expressly provided for in this
Second Modification, the Loan Documents are hereby ratified and reaffirmed and
shall remain in full force and effect. This Second Modification is not a
novation and the terms and conditions of this Second Modification shall be in
addition to and supplemental to all terms and conditions set forth in the Loan
Documents. In the event of any conflict or inconsistency between this Second
Modification and the terms of such documents, the terms of this Second
Modification shall be controlling, but such document shall not otherwise be
affected or the rights therein impaired.

6. Release by Borrower. For good and valuable consideration, Borrower hereby
forever relieves, releases, and discharges PFG and its present or former
employees, officers, directors, agents, representatives, attorneys, and each of
them, from any and all claims, debts, liabilities, demands, obligations,
promises, acts, agreements, costs and expenses, actions and causes of action, of
every type, kind, nature, description or character whatsoever, whether known or
unknown, suspected or unsuspected, absolute or contingent, arising out of or in
any manner whatsoever connected with or related to facts, circumstances, issues,
controversies or claims existing or arising from the beginning of time through
and including the date of execution of this

 

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Second Modification (collectively “Released Claims”). Without limiting the
foregoing, the Released Claims shall include any and all liabilities or claims
arising out of or in any manner whatsoever connected with or related to the Loan
Documents, the Recitals hereto, any instruments, agreements or documents
executed in connection with any of the foregoing or the origination,
negotiation, administration, servicing and/or enforcement of any of the
foregoing. In furtherance of this release, Borrower expressly acknowledges and
waives any and all rights under Section 1542 of the California Civil Code, which
provides as follows: “A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE
CREDITOR DOES NOT KNOW OR EXPECT TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING
THE RELEASE, WHICH IF KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED HIS SETTLEMENT
WITH THE DEBTOR.” By entering into this release, Borrower recognizes that no
facts or representations are ever absolutely certain and it may hereafter
discover facts in addition to or different from those which it presently knows
or believes to be true, but that it is the intention of Borrower hereby to
fully, finally and forever settle and release all matters, disputes and
differences, known or unknown, suspected or unsuspected; accordingly, if
Borrower should subsequently discover that any fact that it relied upon in
entering into this release was untrue, or that any understanding of the facts
was incorrect, Borrower shall not be entitled to set aside this release by
reason thereof, regardless of any claim of mistake of fact or law or any other
circumstances whatsoever. Borrower acknowledges that it is not relying upon and
has not relied upon any representation or statement made by PFG with respect to
the facts underlying this release or with regard to any of such party’s rights
or asserted rights. This release may be pleaded as a full and complete defense
and/or as a cross-complaint or counterclaim against any action, suit, or other
proceeding that may be instituted, prosecuted or attempted in breach of this
release. Borrower acknowledges that the release contained herein constitutes a
material inducement to PFG to enter into this Second Modification, and that PFG
would not have done so but for PFG’s expectation that such release is valid and
enforceable in all events. Borrower hereby represents and warrants to PFG, and
PFG is relying thereon, as follows: (i) except as expressly stated in this
Second Modification, neither PFG nor any agent, employee or representative of
PFG has made any statement or representation to Borrower regarding any fact
relied upon by Borrower in entering into this Second Modification, (ii) Borrower
has made such investigation of the facts pertaining to this Second Modification
and all of the matters appertaining thereto, as it deems necessary, (iii) the
terms of this Second Modification are contractual and not a mere recital,
(iv) this Second Modification has been carefully read by Borrower, the contents
hereof are known and understood by Borrower, and this Second Modification is
signed freely, and without duress, by Borrower, and (v) it is the sole and
lawful owner of all right, title and interest in and to every claim and every
other matter which it releases herein, and that it has not heretofore assigned
or transferred, or purported to assign or transfer, to any person, firm or
entity any claims or other matters herein released. Borrower shall indemnify
PFG, defend and hold it harmless from and against all claims based upon or
arising in connection with prior assignments or purported assignments or
transfers of any claims or matters released herein.

6. Conditions. The effectiveness of this Second Modification is conditioned upon
satisfaction of the conditions specified below on or prior to the Second
Modification Effective Date or, if so specified, when otherwise required to be
satisfied:

 

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6.1 Execution and Delivery. Borrower shall have duly executed and electronically
delivered a counterpart of this Second Modification to PFG, with the original to
be delivered to PFG within two (2) Business Days thereafter.

6.2 Delivery of Updated Representations. If required to render the
Representations Letter true, accurate and complete to the extent required under
the Loan Agreement, Borrower shall have executed and delivered to PFG any
necessary updates to the disclosures made therein in Exhibit B.

6.3 Modification Fee. Borrower shall have paid PFG a fee in consideration of
this Second Modification in the sum of $50,000.

6.4 Payment of PFG Expenses. Borrower shall promptly pay to PFG upon invoice all
reasonable expenses incurred in connection with this Second Modification, which
expenses shall include all reasonable attorneys’ fees and expenses.

7. Integration; Construction. This Second Modification, the First Modification,
the Loan Agreement, and the other 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 Second Modification and the
Loan Documents merge into this Second Modification and the Loan Documents.
Quotation marks around modified provisions of the Loan Agreement, italicized
text and the like are for convenience of reading only.

8. Counterparts. This Second Modification 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. This Second Modification shall be deemed effective upon the
due execution and delivery to PFG of this Second Modification by each party
hereto, and shall be conditioned upon there being no Defaults or Events of
Default under the Loan Documents other than the Existing Defaults.

10. Governing Law. This Second Modification and the rights and obligations of
the parties hereto shall be governed by and construed in accordance with the
laws of the State of California.

[Signature page follows]

 

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In Witness Whereof, the parties hereto have caused this Second Modification to
be duly executed and delivered as of the date first written above.

 

PFG     BORROWER Partners for Growth IV, L.P.     Mattersight Corporation By:  

/S/ JASON GEORGATOS

      Name:   Jason Georgatos, Manager       Title:   Partners for Growth IV,
LLC, its General Partner     By:   

/s/ MARK ISERLOTH

      Name:   Mark Iserloth       Title:   CFO       Mattersight Europe Holding
Corporation       By:  

/s/ MARK ISERLOTH

      Name:   Mark Iserloth       Title:   CFO       Mattersight International
Holding Inc.       By:  

/s/ MARK ISERLOTH

      Name:   Mark Iserloth       Title:   CFO

 

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EXHIBIT A – Compliance Certificate

 

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Compliance Certificate

 

Borrower:  

Mattersight Corporation

Mattersight Europe Holding Corporation

Mattersight International Holding, Inc.

  Lender:
  

Partners for Growth III, L.P. (“PFG”)

150 Pacific Avenue

San Francisco, CA 94111

The undersigned authorized officer of Borrower hereby certifies that in
accordance with the terms and conditions of the Loan and Security Agreement
between Borrower and PFG dated as of August 19, 2013 (as amended, the
“Agreement”), (i) (each) Borrower is in complete compliance for the period
ending             with all required covenants except as detailed below,
(ii) all representations and warranties of Borrower stated in the Agreement,
including to the extent required in Section 5.7 in respect of the
Representations Letter, as defined in the Agreement, are true, complete, correct
and accurate in all material respects on this date except those representations
and warranties expressly referring to a specific date shall be true, complete,
correct and accurate in all material respects as of such date, and except as
noted below or on any disclosure letter attached to this Certificate,
(iii) (each) Borrower and each of its Subsidiaries has timely filed all required
tax returns and reports, and (each) Borrower has timely paid all foreign,
federal state and local taxes, assessments, deposits and contributions owed by
Borrower(s) except as otherwise permitted pursuant to the Loan Agreement,
(iv) no Liens have been levied or claims made against any Borrower or any of its
Subsidiaries relating to unpaid employee payroll or benefits of which such
Borrower has not previously provided written notification to PFG, and (v) there
are no Defaults or Events of Default. Attached herewith are the required
documents supporting the above certification. The undersigned further certifies
that the financial statements, information and schedules referred to below have
been prepared in accordance with Generally Accepted Accounting Principles (GAAP)
and are consistent from one period to the next except as explained in an
accompanying letter or footnotes.

Please indicate compliance status by circling Yes/No under “Complies” column.

 

Reporting Covenants

  

Required

   Complies Compliance Certificates    Monthly within 30 Days        Yes   
    No Unaudited Financial Statements    Monthly within 30 Days        Yes   
    No AR/AP Agings, Def. Rev Sched.    Monthly within 30 Days        Yes   
    No Annual Budgets/Projections    As soon as available / 60 days of FYE   
    Yes        No Audited Financial Statements    Annually within 150 Days of
FYE        Yes        No Other Reports    When Requested by PFG        Yes   
    No Representations Letter Update    When Required1        Yes        No
Senior Loan Reports    As and when delivered        Yes        No SEC Reports   
Within 5 days        Yes        No

 

Financial Covenants2    Required    Actual    Complies

 

Minimum TNW Minimum Revenues

 

Sincerely,

 

SIGNATURE

 

TITLE

 

DATE

 

1 To be updated as and when necessary to keep the information current, accurate
and complete as set forth in Section 5.7 of the Agreement.

2 See page 2

 

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Financial Covenants (Section 5 of Schedule to Loan and Security Agreement)

5. FINANCIAL COVENANTS

 

    (Section 5.1):

Borrower shall comply with each of the following covenants. Compliance shall be
determined as of the end of each month, except as otherwise specifically
provided below:

 

Minimum Tangible

Borrower shall maintain at all times, to be tested as of the last day of each
month

Net Worth:

and calculated on a consolidated basis for Borrower and its Subsidiaries, a
Tangible Net Worth in an amount equal to or greater than $1,250,000, increasing
by (i) fifty percent (50%) of positive quarterly Net Income plus (ii) fifty
percent (50%) of the proceeds from issuances of equity and the principal amount
of Subordinated Debt, in each case issued after the Second Modification
Effective Date.

 

Minimum Revenues:

Borrower shall maintain Revenues, to be tested as of the last day of each
calendar quarter and calculated on a consolidated basis for Borrower and its
Subsidiaries, of not less than the following amounts for each corresponding
period:

 

Period

   Minimum Revenues  

Q2-2014

   $ 6,100,000   

Q3-2014

   $ 7,100,000   

Q4-2014

   $ 8,700,000   

 

  For the quarterly period ending March 31, 2015 and for each quarterly period
ending thereafter, the minimum revenue requirements will be based on Borrower’s
Board-approved projections delivered to Bank pursuant to Section 6.2(i) hereof,
which requirement shall in any event be at least eighty percent (80%) of the
projected revenue in such Board-approved projections for each such quarterly
period.

 

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