Exhibit 10.2

 

THIRD AMENDMENT TO LOAN AND SECURITY AGREEMENT

 

This Third Amendment to Loan and Security Agreement (this “Amendment”), dated as
of April 1, 2019, is entered into by and among GREAT LAKES KCAP FUNDING I, LLC,
f/k/a KCAP Funding I, LLC, a Delaware limited liability company (“Borrower”),
PORTMAN RIDGE FINANCE CORPORATION, f/k/a KCAP FINANCIAL, INC., a Delaware
corporation (“Servicer”), the lenders party hereto, and CADENCE BANK, N.A., a
national banking association, successor by merger to State Bank and Trust
Company, as agent for the Lenders (in such capacity, “Agent”).

 

Recitals

 

Borrower, Servicer, Agent and certain lenders party thereto (the “Existing
Lenders”) entered into that certain Loan and Security Agreement dated as of
March 1, 2018, as amended by that certain First Amendment to Loan and Security
Agreement dated as of June 4, 2018 and that certain Second Amendment to Loan and
Security Agreement dated as of March 27, 2019 (as the same may be further
amended, amended and restated, supplemented, or otherwise modified from time to
time, the “Loan Agreement”). Capitalized terms used in this Amendment have the
meanings given to them in the Loan Agreement unless otherwise specified.

 

Pursuant to the Loan Agreement, the Existing Lenders have extended a revolving
credit facility to Borrower in an amount not to exceed $57,500,000 (the
“Existing Revolving Facility”).

 

Borrower proposed to the Agent and Existing Lenders that certain amendments be
made to the Loan Agreement to increase the size of Existing Revolving Facility
and to make certain other revisions to the Loan Agreement as more fully set
forth herein (collectively, the “Proposed Amendments”).

 

In connection with the increase in the size of Existing Revolving Facility,
Centennial Bank (the “New Lender”) have agreed to become a Lender under the Loan
Agreement with the aggregate amount of New Lender’s Revolver Commitment set
forth on Schedule 1 attached hereto.

 

The Agent and Lenders have agreed enter into this Amendment to give effect to
the Proposed Amendments, but only to the extent, and in accordance with the
terms and conditions set forth herein.

 

NOW, THEREFORE, in consideration of the foregoing and of other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
Agent, the Existing Lenders, the New Lender and the Borrower agree as follows:

 

1.                   New Lender.

 

(a)                New Lender, by its signature to this Amendment, agrees to
become a Lender under the Loan Agreement, with a Revolver Commitment in the
amount set forth with respect to the New Lender on Schedule 1 hereto, and to be
bound by all of the terms and conditions applicable to Lenders under the Loan
Agreement and each other Transaction Document.

 

(b)                New Lender (i) represents and warrants that (A) it has full
power and authority, and has taken all action necessary, to execute and deliver
this Amendment and to consummate the transactions contemplated hereby and to
become a Lender under the Loan Agreement, (B) it meets all requirements of an
Eligible Assignee under the Loan Agreement, (C) from and after the Third
Amendment Effective Date (as such term is hereinafter defined), it shall be
bound by the provisions of the Loan Agreement and the other Transaction
Documents as a Lender thereunder and shall have the obligations of a Lender
thereunder, (D) it has received a copy of the Loan Agreement, together with
copies of the most recent financial statements delivered pursuant to Section
9.1.3 thereof, and such other documents and information as it has deemed
appropriate to make its own credit analysis and decision to enter into this
Amendment and to become a party to the Loan Agreement, and (E) it has,
independently and without reliance upon the Agent or any other Lender, and based
on such documents and information as it has deemed appropriate, made its own
credit analysis and decision to enter into this Amendment and to become a party
to the Loan Agreement; and (ii) agrees that (A) it will, independently and
without reliance on the Agent or any other Lender, and based on such documents
and information as it shall deem appropriate at the time, continue to make its
own credit decisions in taking or not taking action under the Transaction
Documents, and (B) it will perform in accordance with their terms all of the
obligations which by the terms of the Transaction Documents are required to be
performed by it as a Lender.

 

 

 

 

(c)                 Each of the Agent, each Existing Lender, the Borrower, and
Servicer agrees that, as of the Third Amendment Effective Date, New Lender shall
(i) be a party to the Loan Agreement with a Revolver Commitment in the amount
set forth with respect to New Lender on Schedule 1 hereto, (ii) be a Lender for
all purposes of the Loan Agreement and the other Transaction Documents, and
(iii) have the rights and obligations of a Lender under the Loan Agreement and
the other Transaction Documents.

 

(d)                The address of New Lender for purposes of all notices and
other communications is as set forth on the signature page hereto.

 

2.                   Effective Date Reallocation. On the Third Amendment
Effective Date, the Existing Lenders shall automatically and without further act
assign to the New Lender, and the New Lender shall purchase from the Existing
Lenders, at the principal amount thereof, such interests in the Loans
outstanding on the Third Amendment Effective Date as shall be necessary in order
that, after giving effect to all such assignments and purchases, such Loans are
held by the Existing Lenders and the New Lender ratably in accordance with their
Revolver Commitments as set forth on Schedule 1 attached hereto and incorporated
herein by reference. The requirements under Section 12 of the Loan Agreement and
requirements in respect of minimum borrowing, pro rata borrowing and pro rata
payment requirements contained elsewhere in the Loan Agreement shall not apply
to the transactions effected pursuant to the immediately preceding sentence.

 

3.                   Amendments to Loan Agreement. As of the effective date of
this Amendment, the Loan Agreement is amended as follows:

 

(a)                The following terms and their respective definitions set
forth in Section 1.1 of the Loan Agreement are hereby amended in their entirety
and replaced with the following:

 

“Change of Control” means (a) Parent ceases to own and control, beneficially and
of record, directly or indirectly, all Equity Interests in Borrower; (b) the
acquisition of ownership, directly or indirectly, beneficially or of record, by
any Person or group (within the meaning of the Securities Exchange Act of 1934
and the rules of the SEC thereunder as in effect on the date hereof) of shares
representing more than 35% of the aggregate ordinary voting power represented by
the issued and outstanding capital stock of the Parent; (c) a change in the
majority of directors of Parent during any 24 month period, unless such new
directors were either approved or nominated by the majority of directors serving
at the beginning of such period; (d) the sale or transfer of all or
substantially all of Parent’s or Borrower’s assets; (e) Borrower ceases to own
and control, beneficially and of record, directly, all Equity Interests in all
of its Subsidiaries existing as of the Closing Date or formed after the Closing
Date in accordance with the Transaction Documents; or (f) BC Partners, directly
or through a wholly-owned Subsidiaries, ceases to be the investment advisor to
the Servicer and the Borrower.

 

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“Commitment” means for any Lender, the aggregate amount of such Lender’s
Revolver Commitment. “Commitments” means the aggregate amount of all Revolver
Commitments. The initial aggregate amount of the Commitments shall not exceed
$67,500,000.”

 

(b)                Section 1.1 of the Loan Agreement is hereby amended to add,
in appropriate alphabetical order, the following defined term to read as
follows:

 

“”BC Partners” means BC Partners Advisors L.P. a Delaware limited partnership.

 

(c)                 Schedule 1 to the Loan Agreement is amended by deleting it
in its entirety and replacing it with the Schedule 1 attached hereto.

 

4.                   Effect of Amendment. Except as set forth expressly herein,
all terms of the Loan Agreement, as amended hereby, and the other Transaction
Documents shall be and remain in full force and effect and shall constitute the
legal, valid, binding and enforceable obligations of the Borrower and the
Servicer to the Lenders and the Agent. The execution, delivery and effectiveness
of this Amendment shall not, except as expressly provided herein, operate as a
waiver of any right, power or remedy of the Agent or the Lenders under the Loan
Agreement, nor constitute a waiver of any provision of the Loan Agreement. This
Amendment shall constitute a Transaction Document for all purposes of the Loan
Agreement.

 

5.                   Conditions Precedent. This Amendment, and the New Lender’s
Revolver Commitment to make Loans under the Loan Agreement, shall become
effective as of such date (such date, the “Third Amendment Effective Date”) that
each of the following conditions are satisfied or specifically waived in writing
by Agent (with the consent of the Lenders):

 

(a)                Agent shall have received counterparts of this Amendment,
duly executed by the Borrower, the Servicer, the Agent, the Existing Lenders and
the New Lender;

 

(b)                Borrower shall have executed and delivered to the New Lender,
to the extent the New Lender has so requested a note pursuant to Section 2.1.2
of the Loan Agreement, a promissory note evidencing Borrower’s obligations in
respect of the Revolver Commitments of New Lender;

 

(c)                 Agent shall have received certificates, in form and
substance satisfactory to it, from a knowledgeable Senior Officer of Borrower
certifying that, after giving effect to this Amendment and the making of the
initial Loans after the Third Amendment Effective Date, (i) Borrower is Solvent;
(ii) no Default or Event of Default exists; (iii) the representations and
warranties set forth in Section 8 of the Loan Agreement are true and correct in
all material respects on the date hereof (except for representations and
warranties that expressly relate to an earlier date, and that any representation
or warranty which is subject to any materiality qualifier is true and correct in
all respects); and (iv) Borrower has complied with all agreements and conditions
to be satisfied by it under the Transaction Documents;

 

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(d)                Agent shall have received a certificate of a duly authorized
officer of Borrower and Servicer, certifying (i) that attached copies of such
Person’s Organic Documents are true and complete, and in full force and effect,
without amendment except as shown, and that such Person is in good standing in
the applicable jurisdictions, with good standing certificates attached; (ii)
that an attached copy of resolutions authorizing execution and delivery of this
Amendment and the other Transaction Documents is true and complete, and that
such resolutions are in full force and effect, were duly adopted, have not been
amended, modified or revoked, and constitute all resolutions adopted with
respect to this credit facility; (iii) to the title, name and signature of each
Person authorized to sign the this Amendment and other Transaction Documents;
and (iv) that attached copies of Borrower’s Material Contracts are true and
complete, and in full force and effect, without amendment except as shown. Agent
may conclusively rely on this certificate until it is otherwise notified by
Borrower or Servicer in writing;

 

(e)                Agent shall have received a favorable written opinion of
counsel to Borrower and Servicer in form and substance satisfactory to Agent
covering, among other matters, (i) the enforceability of this Amendment, the
Loan Agreement as amended hereby and the other Transaction Documents, (ii) the
grant and perfection of security interests in the Collateral, and (iii) such
other matters as Agent may require in Agent’s sole discretion, as well as a
reliance letter in favor of the New Lender;

 

(f)                  Agent and New Lender shall have received, at least one
Business Day prior to the Third Amendment Effective Date, of all documentation
and other information required by regulatory authorities under applicable “know
your customer” and anti-money laundering rules and regulations, including,
without limitation, the PATRIOT Act, in each case to the extent requested by the
Agent or the New Lender in writing at least two Business Days prior to the Third
Amendment Effective Date;

 

(g)                after giving effect to this Amendment, no Default or Event of
Default shall have occurred and be continuing or shall be caused by the
transactions contemplated by this Amendment;

 

(h)                after giving effect to this Amendment, the representations
and warranties of the Borrower and the Servicer set forth in this Amendment and
the other Loan Documents shall be true and correct in all material respects with
the same effect as if then made (except to the extent stated to relate to a
specific earlier date, in which case such representations and warranties shall
be true and correct in all material respects as of such earlier date);

 

(i)                  Parent shall have consummated the transactions contemplated
by that certain Stock Purchase and Transaction Agreement, dated as of December
14, 2018 (the “Transaction Agreement”) between Parent and BC Partners, Agent,
including, but not limited to, entering into the Investment Advisory Agreement
(as such term is defined in the Transaction Agreement) on the terms and
conditions set forth in the Transaction Agreement, without giving effect to any
material amendments thereto that are adverse to any Lender except as have been
approved by the Agent, the New Lender and the Required Lenders; and

 

(j)                  the Borrower shall have paid all reasonable and documented
fees and expenses of Agent in connection with the negotiation, preparation,
execution and delivery of this Amendment and the Loan Documents (including,
without limitation, the fees and expenses of counsel to Agent) and all fees
payable under the Fee Letter of even date herewith between Borrower and New
Lender.

 

6.                   Representations and Warranties. The Borrower hereby
represents and warrants to the Agent and Lenders as follows:

 

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(a)                The Amendment and the transactions contemplated herein are
within the Borrower’s organizational powers and have been duly authorized by all
necessary organizational actions and, if required, actions by equity holders.
The Amendment has been duly executed and delivered by the Borrower and
constitutes a legal, valid and binding obligation of the Borrower, enforceable
in accordance with its terms, subject to applicable bankruptcy, insolvency,
reorganization, moratorium or other laws affecting creditors’ rights generally
and subject to general principles of equity, regardless of whether considered in
a proceeding in equity or at law.

 

(b)                The Amendment (i) does not require any consent or approval
of, registration or filing with, or any other action by, any governmental
authority, except such as have been obtained or made and are in full force and
effect, (b) will not violate any law applicable to the Borrower or any
Subsidiary, (c) will not violate or result in a default under any indenture,
agreement or other instrument binding upon the Borrower or any Subsidiary or the
assets of the Borrower or any Subsidiary, or give rise to a right thereunder to
require any payment to be made by the Borrower or any Subsidiary, and (d) will
not result in the creation or imposition of any Lien on any asset of the
Borrower or any Subsidiary, except Liens created pursuant to the Transaction
Documents.

 

(c)                 All of the representations and warranties contained in
Section 8 of the Loan Agreement are correct in all material respects on and as
of the date hereof as though made on and as of such date (except for
representations and warranties that expressly relate to an earlier date, and
that any representation or warranty which is subject to any materiality
qualifier is true and correct in all respects).

 

7.                   Reaffirmation. Servicer, in its capacity as the “Pledgor”
under and as defined in the Pledge Agreement, hereby (a) consents to the
execution and delivery by the Borrower of this Amendment and ratifies and
confirms the terms of the Pledge Agreement with respect to the Obligations now
or hereafter outstanding under the Loan Agreement as amended hereby, (b)
acknowledges and agrees that all obligations of the Borrower owing to the New
Lender under the Loan Agreement and the other Transaction Documents, as amended
hereby, are included in the "Obligations," as such term is used in the Pledge
Agreement, and are secured by the Pledge Agreement, and (c) acknowledges that,
notwithstanding anything to the contrary contained herein or in any other
document evidencing any indebtedness of the Borrower to the Agent or the Lenders
or any other obligation of the Borrower, or any actions now or hereafter taken
by the Agent or the Lenders with respect to any obligation of the Borrower, the
Pledge Agreement is and shall continue to be in full force and effect in
accordance with its terms.

 

8.                   References. All references in the Loan Agreement to “this
Agreement” shall be deemed to refer to the Loan Agreement as amended hereby; and
any and all references in the Transaction Documents to the Loan Agreement shall
be deemed to refer to the Loan Agreement as amended hereby.

 

9.                   No Waiver. The execution of this Amendment and any
documents related hereto and the acceptance of all other agreements and
instruments related hereto shall not be deemed to be a waiver of any Default or
Event of Default under the Loan Agreement or a waiver of any breach, default or
event of default under any Transaction Document or other document held by
Lenders, whether or not known to Lenders and whether or not existing on the date
of this Amendment.

 

10.               Release. The Borrower and Servicer each hereby absolutely and
unconditionally releases and forever discharges Agent and Lenders, and any and
all participants, parent corporations, subsidiary corporations, affiliated
corporations, insurers, indemnitors, successors and assigns thereof, together
with all of the present and former directors, officers, agents and employees of
any of the foregoing, from any and all claims, demands or causes of action of
any kind, nature or description, whether arising in law or equity or upon
contract or tort or under any state or federal law or otherwise, which the
Borrower or Servicer has had, now has or has made claim to have against any such
person for or by reason of any act, omission, matter, cause or thing whatsoever
arising from the beginning of time to and including the date of this Amendment,
whether such claims, demands and causes of action are matured or unmatured or
known or unknown.

 

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11.               Costs and Expenses. The Borrower hereby reaffirms its
agreement under the Loan Agreement to pay or reimburse Agent on demand for all
costs and expenses incurred by Agent in connection with the Transaction
Documents, including without limitation all reasonable fees and disbursements of
legal counsel. Without limiting the generality of the foregoing, the Borrower
specifically agrees to pay all fees and disbursements of counsel to Agent for
the services performed by such counsel in connection with the preparation of
this Amendment and the documents and instruments incidental hereto. Borrower
hereby agrees that Lenders may, at any time or from time to time in its sole
discretion and without further authorization by Borrower, make a loan to
Borrower under the Loan Agreement, or apply the proceeds of any loan, for the
purpose of paying any such fees, disbursements, costs and expenses.

 

12.               Counterparts. This Amendment may be executed in counterparts,
each of which shall constitute an original, but all of which when taken together
shall constitute a single contract. Delivery of a signature page of this
Amendment by telecopy or other electronic means (including, but not limited to,
in “tif” or ‘pdf” format) shall be effective as delivery of a manually executed
counterpart of such agreement.

 

13.               Choice of Law and Venue. With limiting the applicability of
any other provisions of the Loan Agreement or any other Transaction Document,
the terms and provisions set forth in Section 13.13 and 13.14 of the Loan
Agreement are expressly incorporated herein by reference.

 

 

[Signature Page Follows]

 

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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly
executed and delivered by their respective authorized officers as of the day and
year first above written.

 

 

ATTEST:

 

_________________________________

[SEAL]

BORROWER:

 

GREAT LAKES KCAP FUNDING I, LLC

 

 

By:                                                                 

Name: Dan Gilligan

Title: Manager

   

 

ATTEST:

 

_________________________________
[SEAL]

SERVICER:

 

PORTMAN RIDGE FINANCE CORPORATION

 

 

By: ____________________________

Name: Dan Gilligan

Title: Chief Compliance Officer

 

Signature Page – Third Amendment to Loan and Security Agreement

 

 

AGENT AND LENDERS:

 

CADENCE BANK N.A., as Agent and a Lender

 

 

By:                                                                     

Name: Megan Enlow

Title: Director

 

 

Signature Page – Third Amendment to Loan and Security Agreement

 

 

 

CIBC BANK USA,

as a Lender and as Documentation Agent

 

 

By:                                                                     

Name:

Title:

 

Signature Page – Third Amendment to Loan and Security Agreement

 

 

 

CONGRESSIONAL BANK, as an Existing Lender

 

 

By:                                                                     

Name:

Title:

 

Signature Page – Third Amendment to Loan and Security Agreement

 

 

  BANCALLIANCE INC., as an Existing Lender             By: Alliance Partners, a
wholly owned subsidiary of Congressional Bank, as its attorney in fact       By:
                                                                       Name:  
Title:    

  

Signature Page – Third Amendment to Loan and Security Agreement

 

  

 

HITACHI CAPITAL AMERICA CORP.,

as an Existing Lender

 

 

By:                                                                     

Name:

Title:

 

Signature Page – Third Amendment to Loan and Security Agreement

 

 

CENTENNIAL Bank, as a New Lender

 

 

By:                                                                     

Stephen O’Keefe

Managing Director

 

Address for Notices:

 

Centennial Bank

12 East 49th Street, 34th Floor

New York, NY 10017

  

Signature Page – Third Amendment to Loan and Security Agreement

 

 

SCHEDULE 1

to

Loan and Security Agreement

 

 

COMMITMENTS OF LENDERS

 

 

 

Lender

 

Revolver Commitment

 

Total Commitments

Cadence Bank, N.A. $20,000,000 $20,000,000 CIBC Bank USA $15,000,000 $15,000,000
Centennial Bank $10,000,000 $10,000,000 Congressional Bank $10,000,000
$10,000,000 BankAlliance Inc. $2,500,000 $2,500,000 Hitachi Capital America
Corp. $10,000,000 $10,000,000 TOTAL $67,500,000 $67,500,000