Each of the Investment Companies listed on Appendix I hereto c/o Highland Capital Management Fund Advisors, L.P.
Exhibit (h)(20)
May 20, 2016
Each of the Investment Companies listed on
Appendix I hereto
c/o Highland Capital Management Fund Advisors, L.P.
000 Xxxxxxxx Xxxxx, Xxxxx 000
Dallas, Texas 75201
| RE: | Amendment No. 6 to Loan Agreement |
Ladies and Gentlemen:
Pursuant to an amended and restated letter agreement dated May 24, 2013 (as amended from time to time, the “Loan Agreement”), State Street Bank and Trust Company (the “Bank”) has made available to each of the investment companies listed on Appendix I to the Loan Agreement (each, a “Borrower”), acting on behalf of its respective fund series listed on such Appendix I to the Loan Agreement (each such series, a “Fund”), a $150,000,000.00 committed unsecured revolving line of credit on a several basis (the “Committed Line”). Obligations of the Borrowers with respect to Loans made pursuant to the Committed Line are evidenced by an amended and restated promissory note in the original principal amount of $150,000,000.00, dated as of October 27, 2014, executed by each of the Borrowers, on behalf of its respective Funds, to the order of the Bank (the “Note”). Capitalized terms not hereinafter defined shall have the same meanings as set forth in the Loan Agreement.
The Borrowers have requested, and the Bank has agreed, to extend the Committed Line for an additional period and to make the changes set forth below. Therefore, for good and valuable consideration, the receipt of which is hereby acknowledged, the parties hereto agree as follows:
I. Amendments to Loan Documents
1. Section I(1) of the Loan Agreement is hereby amended by deleting the first sentence of such section in its entirety and substituting the following therefor: “The Committed Line shall expire on September 20, 2016 (the “Expiration Date”), unless extended in the discretion of the Bank or, with respect to any Fund, terminated by the applicable Borrower on behalf of such Fund as provided herein.”
2. Section I(5)(a) of the Loan Agreement is hereby amended by:
(a) deleting the second sentence of such section in its entirety and substituting the following therefor: “Each of the Borrowers, on behalf of its respective Funds, hereby promises
Each of the Investment Companies listed on
Appendix I hereto
c/o Highland Capital Management Fund Advisors, L.P.
May 20, 2016
Page 2
to repay: (A) the principal amount of each Loan outstanding on the Sixth Amendment Effective Date, together with all accrued and unpaid interest thereon, upon the earliest of (i) 60 calendar days following the Sixth Amendment Effective Date, (ii) the date on which such Loan becomes due pursuant to Section II(4) below following the occurrence of an Event of Default with respect to such Fund, or (iii) the Expiration Date; and (B) the principal amount of each other outstanding Loan, together with all accrued and unpaid interest thereon, upon the earliest of (i) 30 calendar days following the date on which such Loan is made, (ii) the date on which such Loan becomes due pursuant to Section II(4) below following the occurrence of an Event of Default with respect to such Fund, or (iii) the Expiration Date.”; and
(b) deleting the penultimate sentence of such section in its entirety and substituting the following therefor: “Notwithstanding the foregoing or any other provision of this Agreement and other than with respect to those Loans outstanding on the Sixth Amendment Effective Date, there shall be a period consisting of at least one Business Day during each thirty (30) day period during which this Agreement is in effect when no Loans are outstanding.”
3. Section I(5)(b) of the Loan Agreement is hereby amended by deleting the first sentence thereof and inserting the following new sentences in lieu thereof:
All payments by the Borrowers on behalf of their respective Funds hereunder and under any of the other Loan Documents shall be made not later than 3:00 p.m. Boston time on the date due in immediately available United States dollars at the Bank’s office at Xxxxxx Place, Tower 2, Floor 0, 000 Xxxxxxxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx or as otherwise directed in writing by the Bank. Each of the Borrowers, on behalf of its respective Funds, hereby authorizes and irrevocably directs the Bank, at the Bank’s option at any time upon and following the due date for payment by such Borrower of any amounts under the Loan Documents, and without any further notice to or consent of such Borrower, to debit any account(s) of such Borrower with the Bank and apply amounts so debited toward the payment of any such amounts due and owing by such Borrower under the Loan Documents. Notwithstanding such authorization and direction, each Borrower hereby further acknowledges and agrees that (i) the Bank shall have no obligation to so debit any such account(s) and shall have no liability whatsoever to such Borrower for any failure to do so, and (ii) such Borrower shall fully retain the obligation under the Loan Documents to make all payments thereunder when due.
4. Section I(8) of the Loan Agreement is hereby amended by replacing the percentage “0.20%” appearing therein with the percentage “0.25%”.
5. Section II(1) of the Loan Agreement is hereby amended by (i) deleting the word “and” which appears at the end of Section II(1)(i); (ii) deleting the period which appears at the end of Section II(1)(j) and substituting in place thereof a semicolon and the word “and”; and (iii) inserting immediately after the end of Section II(1)(j), the following new paragraph (k):
Each of the Investment Companies listed on
Appendix I hereto
c/o Highland Capital Management Fund Advisors, L.P.
May 20, 2016
Page 3
(k) to provide such documents and information requested by the Bank that are reasonably required in order to comply with “know-your-customer” and other anti-terrorism, anti-money laundering and similar rules and regulations and related policies.
6. Section II(15) of the Loan Agreement is hereby amended by inserting the following definition of “Sixth Amendment Effective Date” in the appropriate alphabetical sequence therein:
“Sixth Amendment Effective Date” shall mean May 20, 2016.
7. The Borrowers have informed the Bank that, prior to the date hereof, (a) each of Highland HFR Equity Hedge ETF, Highland HFR Event-Driven ETF, and Highland HFR Global ETF, each a fund series of Highland Funds I and an existing Fund under the Loan Agreement (the “HFI Liquidated Funds”), has been liquidated, and (b) Highland Dividend Equity Fund, a fund series of Highland Funds II and existing Fund under the Loan Agreement (the “HFII Liquidated Fund”), has been liquidated. Each of the HFI Liquidated Funds and the HFII Liquidated Fund is hereby terminated as a Fund for all purposes under the Loan Documents.
8. The Appendix I attached to each of the Loan Agreement, the Note and, as applicable, each other certificate, agreement or form executed and/or delivered in connection with the Loan Agreement which includes an Appendix I listing the Borrowers and Funds, is hereby deleted, and Appendix I attached hereto is substituted in each instance therefor, such revised Appendix I reflecting the changes described in paragraph 7 above as well as the termination on March 2, 2016 of Highland Energy MLP Fund, a fund series of Highland Funds II, as a Fund under the Loan Agreement.
9. Exhibit A to the Loan Agreement is hereby amended by deleting the second sentence of the first paragraph thereof and substituting the following sentence therefor: “Each Loan outstanding on the Sixth Amendment Effective Date shall be payable upon the earliest to occur of (a) 60 calendar days following the Sixth Amendment Effective Date, (b) the Expiration Date, or (c) the date on which such Loan otherwise becomes due and payable under the terms of the Loan Agreement referred to below, whether following the occurrence of an Event of Default or otherwise; and each other outstanding Loan shall be payable upon the earliest to occur of (i) 30 calendar days following the date on which such Loan is made, (ii) the Expiration Date, or (iii) the date on which such Loan otherwise becomes due and payable under the terms of the Loan Agreement, whether following the occurrence of an Event of Default or otherwise.”
10. Exhibit B to the Loan Agreement is hereby replaced in its entirety with the new Exhibit B attached hereto.
Each of the Investment Companies listed on
Appendix I hereto
c/o Highland Capital Management Fund Advisors, L.P.
May 20, 2016
Page 4
11. The Note is hereby amended by deleting the second sentence of the first paragraph thereof and substituting the following sentence therefor: “Each Loan outstanding on the Sixth Amendment Effective Date shall be payable upon the earliest to occur of (a) 60 calendar days following the Sixth Amendment Effective Date, (b) the Expiration Date, or (c) the date on which such Loan otherwise becomes due and payable under the terms of the Loan Agreement referred to below, whether following the occurrence of an Event of Default or otherwise; and each other outstanding Loan shall be payable upon the earliest to occur of (i) 30 calendar days following the date on which such Loan is made, (ii) the Expiration Date, or (iii) the date on which such Loan otherwise becomes due and payable under the terms of the Loan Agreement, whether following the occurrence of an Event of Default or otherwise.”
II. Miscellaneous
1. Other than as amended hereby, all terms and conditions of the Loan Agreement and each of the other Loan Documents are ratified and affirmed as of the date hereof in order to give effect to the terms thereof.
2. Each of the Borrowers severally (and not jointly) represents and warrants to the Bank, both as to itself (where applicable) and severally (and not jointly) as to each of its respective Funds (but not as to any other Borrower or Fund) as follows: (a) no Default or Event of Default has occurred and is continuing on the date hereof under the Loan Agreement; (b) each of the representations and warranties contained in Section II(2) of the Loan Agreement is true and correct on and as of the date of this letter agreement; (c) the execution, delivery and performance of each of this letter agreement, the Loan Agreement and the Note (collectively, the “Amended Loan Documents”) (i) are, and will be, within such Borrower’s or Fund’s power and authority, (ii) have been authorized by all necessary trust proceedings of such Borrower; (iii) do not, and will not, require the consent of any shareholders or other equity holders of such Borrower or Fund or the approval or consent of, or any notice to or filing with, any governmental authority, other than those which have been received; (iv) will not contravene any provision of, or exceed any limitation contained in, the agreement and declaration of trust, by-laws and/or other organizational documents of such Borrower or Fund or its Prospectus or any judgment, decree or order or any law, rule or regulation applicable to such Borrower or Fund, including, without limitation, the Investment Company Act; (v) do not and will not constitute a violation of, or a default under any other agreement, order or undertaking binding on such Borrower or Fund; and (vi) do not require the consent or approval of any obligee or holder of any instrument relating to any Indebtedness of the Borrower or Fund or the consent or approval of any other party other than for those consents and approvals which have been received; and (d) each of the Amended Loan Documents constitutes the legal, valid, binding and enforceable obligation of such Borrower, on behalf of its respective Funds, except as the same may be limited by bankruptcy, insolvency, reorganization, moratorium or other laws affecting the enforcement of creditors’ rights generally and by general equitable principles.
Each of the Investment Companies listed on
Appendix I hereto
c/o Highland Capital Management Fund Advisors, L.P.
May 20, 2016
Page 5
3. Upon receipt of a fully executed copy of this letter agreement and such other documents or instruments as the Bank may reasonably request, this letter agreement shall be deemed to be an instrument under seal and an amendment to the Loan Documents to be governed by the laws of The Commonwealth of Massachusetts.
4. This letter agreement may be executed in counterparts, each of which shall be deemed to be an original document.
[Remainder of this page is intentionally left blank.]
Amendment No. 6 Signature Page
If the foregoing is acceptable to you, please have an authorized officer of each of the Borrowers execute this letter agreement below where indicated and return the same to the undersigned.
| Sincerely, | ||
| STATE STREET BANK AND TRUST COMPANY, as Bank | ||
| By: |
/s/ Xxxxx Xxxxxxxx | |
| Xxxxx X. Xxxxxxxx, Vice President | ||
Acknowledged and Accepted:
EACH OF THE BORROWERS LISTED
ON APPENDIX I HERETO,
for itself or on behalf of each of its respective
portfolio series listed on Appendix I hereto
| By: |
/s/ Xxxxx Xxxxxxxxxx | |
| Name: |
Xxxxx Xxxxxxxxxx | |
| Title: |
Treasurer |
APPENDIX I
List of Borrowers and Funds
Highland Funds I, on behalf of:
Highland/iBoxx Senior Loan ETF
Highland Long/Short Equity Fund
Highland Long/Short Healthcare Fund
Highland Opportunistic Credit Fund
Highland Funds II, on behalf of:
Highland Fixed Income Fund
Highland Global Allocation Fund
Highland Premier Growth Equity Fund
Highland Small Cap Equity Fund
Highland Tax-Exempt Fund
Highland Total Return Fund
EXHIBIT B
ADVANCE/PAYDOWN
REQUEST FORM
| DATE: |
| |
| TO: |
STATE STREET BANK AND TRUST COMPANY | |
| ATTN: |
LOAN OPERATIONS CUSTOMER SERVICE UNIT telephone [ ]; fax [ ] Email: [ .com] | |
| FROM: |
[BORROWER] on behalf of [FUND] | |
| (Fund # ) (DDA # ) | ||
In connection with the letter agreement dated May 24, 2013 and related documents currently in effect with State Street Bank and Trust Company (as amended, collectively, the “Agreement”), please increase/reduce (circle one) the outstanding balance on behalf of the above-indicated Fund by $ . Any requested Xxxx should be recorded on the books of the Fund with the Bank and interest payable to the Bank should be recorded at the agreed upon rate.
| 1. | This request is (check one): Loan Advance Paydown Overnight Rollover |
| 2. | The proceeds of any requested Loan shall be used only to the extent consistent with and not prohibited by the applicable Prospectus, the terms of the Agreement and applicable laws and regulations, including, without limitation, Regulation U, and no Default or Event of Default with respect to the Fund has occurred under the Agreement. |
| 3. | All of the representations and warranties of the undersigned Borrower and Fund set forth in Section II(2) of the Agreement are true and correct on and as of the date hereof. |
| 4. | Each of the Borrower and the Fund is in compliance with all the terms and conditions in the Agreement (including the Maximum Amount and other borrowing limitations thereunder) and will remain in compliance therewith after giving effect to the making of any requested Loan. |
| 5. | The following amounts and statements are true in connection with any requested Loan: |
| (a) |
Adjusted Net Assets of the Fund: |
|||||||
| (i) |
Total Assets of the Fund |
$ | ||||||
| (ii) |
Total Liabilities (excluding Senior Securities Representing Indebtedness) of the Fund1 |
$ | ||||||
1 For purposes of calculating the Adjusted Net Assets, (x) the amount of any liability included in Total Liabilities shall be equal to the greater of (i) the outstanding amount of such liability and (ii) the fair market value of all assets pledged or otherwise segregated to secure such liability, (y) the liability in respect of any derivative or other financial contract shall be equal to the net amount, if any, that the Fund would be obligated to pay to the relevant counterparty thereto if such financial contract and all transactions thereunder terminated at such time in accordance therewith on a complete no-fault basis, and (z) any amounts invested by the Fund in any of the Fund’s direct or indirect subsidiaries or any direct investment by the Fund in physical commodities shall be excluded.
| (iii | ) | illiquid assets, assets not priced daily, and investments in registered investment companies or other pooled investment vehicles |
$ |
|||||||
| (iv | ) | Adjusted Net Assets [item (a)(i) less item (a)(ii) less item (a)(iii)]: |
$ | |||||||
| (b) | 33-1/3% times (a)(iv) |
|||||||||
| (c) | (i | ) | Beginning Loan Balance: |
$ |
||||||
| (ii | ) | Paydown Amount (if any): |
$ |
|||||||
| (iii | ) | Requested Loan (if any) |
$ |
|||||||
| (iv | ) | Requested Loans Balance ((i) minus (ii) or (i) plus (iii)): |
$ | |||||||
| (d) | |
The aggregate outstanding principal amount of Indebtedness of the Fund other than the Loans as |
$ | |||||||
| (e) | Total Indebtedness |
|||||||||
| ((c)(iv) plus (d)): |
$ | |||||||||
| 6. | The amount set forth in 5(e) above does not exceed the lesser of (a) the amount set forth in 5(b) above, or (b) the maximum amount which the relevant Fund is permitted to borrow (after taking into account all outstanding Indebtedness) pursuant to its Prospectus, the Investment Company Act or any registration made thereunder, any vote of the shareholders of the applicable Borrower or such Fund, any agreement of such Borrower or Fund with any foreign, federal, state or local securities division to which such Borrower or Fund is subject, any other applicable agreement or document to which such Borrower or Fund is a party or any law, rule or regulation applicable to such Borrower or Fund. |
| 7. | The amount set forth in 5(c)(iii) above does not exceed the Committed Line Amount ($150,000,000), and the aggregate principal amount of Loans outstanding to all Borrowers on behalf of all Funds under the Agreement (after giving effect to the amount of any requested Loan) does not exceed the Committed Line Amount ($150,000,000). |
| 8. | The undersigned is a duly authorized officer of the Borrower identified above with authority to execute and deliver this document to the Bank and request the Loan described herein on behalf of the Fund identified above. |
| [BORROWER], on behalf of [FUND] | ||
| By: |
| |
| Name: |
| |
| Title |
| |
| Date: |
| |
