Document

						
	
	FIRST REPUBLIC BANK
It’s a privilege to serve you®



EXECUTION VERSION




THIRD AMENDMENT TO TERM
LOAN AND SECURITY AGREEMENT


This THIRD AMENDMENT TO TERM LOAN AND SECURITY AGREEMENT (“Amendment”) is entered into as of April 22, 2021 by and between FIRST REPUBLIC BANK (“Lender”) and HAMILTON LANE ADVISORS, L.L.C. a Pennsylvania limited liability company (“Borrower”).
Recitals
    A.    Borrower and Lender are parties to that certain Term Loan and Security Agreement dated August 23, 2017, as amended by that certain First Amendment to Term Loan and Security Agreement dated as of March 24, 2020 and that certain Second Amendment to Term Loan and Security Agreement dated as of September 30, 2020 and as further amended, restated, supplemented or otherwise modified from time to time (the “Loan Agreement”).  The parties desire to amend the Loan Agreement in accordance with the terms of this Amendment.  
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.Capitalized terms used but not defined in this Amendment shall have the meanings given to them in the Loan Agreement.
2.The definition of “Adjusted EBITDA” set forth in Section 13 of the Loan Agreement is hereby amended and restated in their entirety to read as follows:
“Adjusted EBITDA” means the net income of the Borrower and its consolidated subsidiaries excluding interest expenses, income tax expenses, depreciation and amortization, equity based compensation expense, other non-operating income (loss), and transaction costs and expenses related to an IPO, acquisitions and refinancings, non-cash changes in fund portfolio valuations, gains or losses related to SPAC assets and other non-cash expenses.


3.Each of the following definitions are hereby incorporated in Section 13 of the Loan Agreement in the appropriate alphabetical sequence:
“Additional Advance” has the meaning provided in Section 2.1.1. 
“Additional Amount” means the portion of each Additional Advance that would have been repaid pursuant to the amortization table set forth on Schedule II hereof if such Additional Advance had been advanced prior to July 1, 2020.
“Additional Committed Term Advance” has the meaning provided in Section 2.1.1. 
“Additional Uncommitted Term Advance” has the meaning provided in Section 2.1.1.
“Third Amendment Effective Date” means April 22, 2021.
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4.Section 2.1.1 of the Loan Agreement is hereby amended and restated in its entirety to read as follows:
“2.1.1  Term Advances. Subject to the terms and conditions of this Agreement, (i) on the Effective Date the Lender advanced $75,000,000 (the “Initial Term Advance”) to Borrower (ii) on the First Amendment Effective Date, the Lender advanced $9,154,427.08 (the “Incremental Term Advance”); (iii) from the First Amendment Effective Date through March 24, 2023, Borrower may request advances at the sole discretion of the Lender (each, an “Additional Uncommitted Term Advance”), each Additional Uncommitted Term Advance collectively not exceeding $25,000,000; and (iv) from the Third Amendment Effective Date through March 24, 2023, Borrower may request advances and, provided that no Event of Default has occurred and is continuing or would result from the requested advance, the Lender shall make such advance (each, an “Additional Committed Term Advance” and, collectively with the Initial Term Advance, the Incremental Term Advance and each Additional Uncommitted Term Advance, “Facility I” or the “Term Advances”), each Additional Committed Term Advance collectively not exceeding $25,000,000 (the Additional Uncommitted Term Advance and the Additional Committed Term Advance, collectively, the “Additional Advances”).  As a condition precedent to any Additional Uncommitted Term Advance, Borrower and Lender shall agree to such additional terms and amendments hereto as are needed to facilitate such proposed Additional Uncommitted Term Advance, as applicable.  In connection with each Additional Advance, Lender shall update Schedule II to reflect a straight line amortization of all Additional Amounts as of such date; for the avoidance of doubt, such amortization shall evenly distribute the aggregate principal amount of all Additional Amounts across each of the remaining quarterly repayment dates.  After repayment, no Term Advance may be reborrowed.  Borrower shall make interest-only payments from the date of each Term Advance through, but excluding, July 1, 2020 (the “Amortization Date”).  Beginning with the payment due on the Amortization Date, Borrower shall repay the Term Advances (for avoidance of doubt, including the portion of the Additional Advances that do not constitute Additional Amounts) (i) on the first calendar day of each calendar quarter in installments of principal as set forth in Schedule II hereof plus (ii) monthly payments of accrued interest.  All unpaid principal and interest on each Term Advance shall be due on July 1, 2027 (the “Term Maturity Date”). To obtain a Term Advance, Borrower shall notify Lender by delivering to Lender the Payment/Advance Form attached as Exhibit B by facsimile or electronic mail in portable document format (PDF) by 12:00 p.m. Pacific time on the Business Day before the Business Day that the Term Advance is to be made.  Lender will credit Term Advances to Borrower’s deposit Account with Lender, as defined in Section 2.2(d).  Lender may make Term Advances under this Agreement based on instructions from a Designated Representative or his or her designee or without instructions if the Term Advances are necessary to meet Obligations that have become due.”




5.Section 2.3 of the Loan Agreement is hereby amended and restated in its entirety to read as follows:
“2.3    Fees.  Borrower will pay:
(a) Incremental Term Advance Fee.  A fully earned, non-refundable facility fee in the amount agreed upon by the Borrower and the Lender on the First Amendment Effective Date; 
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(b) Additional Uncommitted Term Advance Fee. A fully earned, non-refundable facility fee, equal to the amount agreed upon by the Borrower and the Lender on the First Amendment Effective Date, on the date each such Additional Uncommitted Term Advance is made; 
(c) Additional Committed Term Advance Fee. A fully earned, non-refundable facility fee, equal to (i) $10,000 plus (ii) an amount equal to 0.30% multiplied by the amount of the applicable Additional Committed Term Advance, on the date each such Additional Committed Term Advance is made;
(d) Unused Fee.  A per annum fee equal to 0.25% multiplied by the difference between the Additional Committed Term Advance available to be drawn and the average daily amount of the Additional Committed Term Advance actually drawn during the applicable calendar quarter, which fee shall accrue through the end of each calendar quarter and shall be payable in arrears on the 10th of each January, April, July and October and shall be non-refundable. Such fee shall be computed on a 365 day year for the actual number of days elapsed; and
(e) Lender Expenses.  Upon demand by Lender, all Lender Expenses reasonably incurred after the Effective Date.”
6.Clause (b) of the last sentence of Section 10 of the Loan Agreement is hereby amended and restated in its entirety to read as follows:
“(b) for Borrower, (i) until June 7, 2021, Hamilton Lane Advisors, L.L.C., One Presidential Blvd., 4th Floor, Bala Cynwyd, PA 19004 and (ii) from and after June 7, 2021, Hamilton Lane Advisors, L.L.C., 110 Washington Street, Conshohocken, PA 19428.”
7.Exhibit A to the Loan Agreement is hereby amended and restated in its entirety in the form set forth hereto as Exhibit A.
8.Exhibit D to the Loan Agreement is hereby amended and restated in its entirety in the form set forth hereto as Exhibit D.
9.Schedule II to the Loan Agreement is hereby amended and restated in its entirety in the form set forth hereto as Schedule II.
10.The Loan Agreement, as amended hereby, shall be and remain in full force and effect in accordance with its terms and hereby is ratified and confirmed in all respects.  Except as expressly set forth herein, the execution, delivery, and performance of this Amendment shall not operate as a waiver of, or as an amendment of, any right, power, or remedy of any party under the Loan Agreement, as in effect prior to the date hereof.  Borrower ratifies and reaffirms the continuing effectiveness of all promissory notes, guaranties, security agreements, mortgages, deeds of trust, environmental agreements, and all other instruments, documents and agreements entered into in connection with the Loan Agreement in each case as amended to date, including any amendments made substantially concurrently with this Amendment.
11.Borrower represents and warrants that the representations and warranties contained in the Loan Agreement are true and correct as of the date of this Amendment and that, upon execution and delivery of this Amendment, no Event of Default has occurred and is continuing.
12.This Amendment may be executed in counterparts, each of which shall constitute an original, and all of which together shall constitute one and the same agreement.  A signed copy of this Amendment transmitted by a party to another party via facsimile or an emailed “pdf” version shall be binding on the signatory thereto.  Notwithstanding the delivery of the faxed or emailed copy, the Credit Parties agree to deliver to Lender original executed copies of this Amendment.
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13.As a condition to the effectiveness of this Amendment, Lender shall have received, in form and substance satisfactory to Lender, the following:
(a)    Formal credit approval by First Republic Bank;
(b)    this Amendment duly executed by the Borrower;
(c)    payment of all fees and Lender Expenses through the date hereof; and
(d)    such other documents, and completion of such other matters, as Lender may reasonably deem necessary or appropriate.




[Signatures on following page.]


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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed and delivered as of the date first written above.
									
	BORROWER:
	HAMILTON LANE ADVISORS, L.L.C.
			
			
	By:		/s/ Atul Varma
			Name: Atul Varma
			Title: Chief Financial Officer



















									
	LENDER:
	FIRST REPUBLIC BANK
			
			
	By:		/s/ Scott Aleali
			Title: Practice Leader













EXHIBIT A


1.Financial Statements.  Borrower shall deliver to Lender (a) annual financial statements (including balance sheet and income statements) for Hamilton Lane Incorporated, which financial statements shall be audited by Ernst & Young LLP or other independent certified public accountant reasonably acceptable to Lender and (b) company-prepared annual financial statements (including balance sheet and income statements) for Borrower, in each case within ninety (90) days after the end of each of Borrower’s fiscal years.
2.Financial Statements.  Borrower shall deliver to Lender annual financial statements (including balance sheet and income statements) within one hundred eighty (180) days after the end of each Fund’s fiscal years for such Fund (in each case, to the extent such Fund accounts for 5% or more of Borrower’s aggregate  revenue as of the end of the most recently completed fiscal year, and with respect to all other Funds, upon the request of the Lender), which financial statements shall be audited by an independent certified public accountant reasonably acceptable to Lender.
3.Interim Financial Statements.  Borrower shall deliver to Lender company-prepared quarterly financial statements (including balance sheet and income statements) within forty-five (45) days after the end of each quarter referenced below certified by Borrower’s chief financial officer or another officer or representative acceptable to Lender.  Quarterly financials shall be delivered for the first three (3) fiscal quarters.
4.Compliance Certificate.  Within forty-five (45) days after the end of the first three (3) fiscal quarters and  ninety (90) days after the end of each of Borrower’s fiscal years, deliver to Lender a Compliance Certificate signed by a Designated Representative in the form of Exhibit D. 
5.Other Financial Statements.  Upon filing of any financial statements or reporting as required to be publicly filed by Borrower, a copy of such financial statement or reporting.
6.Flexibility Actions.  Borrower shall give written notice to Lender of any Flexibility Action promptly after such Flexibility Action is taken.  Any Flexibility Action taken by Borrower will be deemed a representation by Borrower that the conditions precedent therefore were satisfied.
7.Minimum Annual Management Fees.  Borrower shall, as at each March 31 and September 30 (each a “test date”) have collected for the six month period ending on such test date, on a consolidated basis, Fund Management Fees equal to the greater of (a) $100,000,000 and (b) an amount equal to 80% of the collected sum of contractually based Fund Management Fees, for the immediately preceding six month period, tested semi-annually; provided that with respect to the financial statements dated as of March 31, 2021, clause (a) above shall be deemed to be $87,500,000.
8.Minimum Adjusted EBITDA.  Borrower shall, as at each March 31 and September 30 (each a “test date”) maintain at least a minimum trailing six month Adjusted EBITDA minus dividend distributions (other than tax distributions), as at such test date, equal to the greater of (a) $50,000,000 and (b) an amount equal to 80% of the trailing six month Adjusted EBITDA minus dividend distributions (other than tax distributions), for the immediately preceding six month period, tested semi-annually; provided that with respect to the financial statements dated as of March 31, 2021, clause (a) above shall be deemed to be $40,000,000; provided further that, solely with respect to the 










test date with respect to the financial statements dated as of September 30, 2021, clause (b) above shall be disregarded when determining compliance with this covenant.
9.Minimum Tangible Net Worth.  Minimum Tangible Net Worth shall be greater than or equal to the amount set forth in the column “Tangible Net Worth” as at the end of the applicable fiscal year.


						
	Fiscal year	Tangible Net Worth
	2019	$39,700,000
	2020	$100,000,000
	2021	$110,000,000
	2022	$150,000,000
	2023	$165,000,000
	2024	$180,000,000
	2025	$200,000,000
	2026	$220,000,000
	2027	$240,000,000
	2028	$265,000,000
	2029	$290,000,000


10.No Additional Indebtedness.  Without the prior written consent of Lender, Borrower (a) shall not directly or indirectly incur Indebtedness for borrowed money excluding (i) debts as of the date of this Agreement that were previously disclosed in writing to Lender (other than those that are being paid substantially concurrently with the funding of the Loan), (ii) other borrowing from Lender, including for the avoidance of doubt Facility II and Facility III, (iii) unsecured debt incurred in the normal course of business and for the avoidance of doubt, (iv) purchase money debt and capital leases in the ordinary course of business, and (b) shall not directly or indirectly make, create, incur, assume or permit to exist any guaranty of any kind of any Indebtedness of any other person during the term of this Agreement, excluding any guaranties as of the date of this Agreement previously disclosed in writing to Lender.
11.Notification of Transfers.  Borrower shall notify Lender within 30 days of any transfer of Partner’s interests in any Funds whose Capital Commitment is greater than $10,000,000.












EXHIBIT D


COMPLIANCE CERTIFICATE


TO:        First Republic Bank                    Date:              


FROM:      Hamilton Lane Advisors, L.L.C. 
1.The undersigned authorized officer certifies on behalf of Borrower that under the terms and conditions of the Term Loan and Security Agreement between Borrower and Lender (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.  Attached are the required documents 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 Credit Extensions may be requested at any time or date of determination that Borrower is not in compliance with any of the terms of the Agreement.  Capitalized terms used but not otherwise defined herein shall have the meanings given them in the Agreement.
									
	Please indicate compliance status by circling Yes/No under “Complies” column.
	
	Reporting Covenant	Required	Complies
	Internally prepared financial statement	Quarterly within 45 days (other than Q4)	Yes   No
	Annual financial statement (Borrower)	FYE within 90 days	Yes   No
	Annual financial statement (Funds)	FYE within 180 days	Yes   No
	Partnership interest transfer (>$10,000,000)
	Within 30 days from transfer	Yes   No
	List of Capital Contributions delinquent for more than 30 days (>$1,000,000)
	Immediately	Yes   No
	Compliance certificate	[Annually][Quarterly] within [90][45] days	Yes   No
	Flexibility Action taken?  Yes   No	If Yes, provide amount:: $[__________]	Under Flexibility Cap? Yes   No














												
	Financial Covenant	Required	Actual	Complies
	Minimum Annual Management Fees	Greater of (a) $100,000,000 (or $87,500,000 with respect to the financial statements dated as of March 31, 2021) and (b) an amount equal to 80% of the collected sum of contractually based Fund Management Fees, for the immediately preceding six month period (semiannual)	$_____	Yes    No
	No Additional Debt	None	$_____	Yes    No
	Minimum Adjusted EBITDA less dividends (other than tax dividends)	Greater of (a) $50,000,000 (or $40,000,000 with respect to the financial statements dated as of March 31, 2021) and (b) an amount equal to 80% of the trailing six month Adjusted EBITDA minus dividend distributions (other than tax distributions), for the immediately preceding six month period (semiannual) (provided, that solely with respect to the test date with respect to the financial statements dated as of September 30, 2021, clause (b) shall be disregarded when determining compliance	$_____	Yes    No
	Minimum Tangible Net Worth	$_____	$_____	Yes    No




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HAMILTON LANE ADVISORS, L.L.C.
    
By: __________________________________
    
Name:________________________________
    
Title:_________________________________















Schedule II to Term Loan and Security Agreement


									
	Payment Date	Percentage of aggregate Original Term Advances to be paid	Additional Amounts to be paid
	July 1, 2020	0.625%	$0.00
	October 1, 2020	0.625%	$0.00
	January 1, 2021	0.625%	$0.00
	April 1, 2021	0.625%	$0.00
	July 1, 2021	0.625%	$0.00
	October 1, 2021	0.625%	$0.00
	January 1, 2022	0.625%	$0.00
	April 1, 2022	0.625%	$0.00
	July 1, 2022	0.625%	$0.00
	October 1, 2022	0.625%	$0.00
	January 1, 2023	0.625%	$0.00
	April 1, 2023	0.625%	$0.00
	July 1, 2023	1.875%	$0.00
	October 1, 2023	1.875%	$0.00
	January 1, 2024	1.875%	$0.00
	April 1, 2024	1.875%	$0.00
	July 1, 2024	2.5%	$0.00
	October 1, 2024	2.5%	$0.00
	January 1, 2025	2.5%	$0.00
	April 1, 2025	2.5%	$0.00
	July 1, 2025	6.25%	$0.00
	October 1, 2025	6.25%	$0.00
	January 1, 2026	6.25%	$0.00
	April 1, 2026	6.25%	$0.00
	July 1, 2026	12.5%	$0.00
	October 1, 2026	12.5%	$0.00
	January 1, 2027	12.5%	$0.00
	April 1, 2027	12.5%	$0.00




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