AMENDMENT NO. 1
to
REVOLVING CREDIT AND SECURITY AGREEMENT
THIS
AMENDMENT NO. 1 TO REVOLVING CREDIT AND SECURITY AGREEMENT (this
“ Amendment ”) is made as of November 25,
2008 by and among HIGHLAND DISTRESSED OPPORTUNITIES, INC. (the
“ Borrower ”), LIBERTY STREET FUNDING LLC, as
the Conduit Lender (the “ Lender ”), THE BANK OF
NOVA SCOTIA, ACTING THROUGH ITS NEW YORK AGENCY, as Secondary
Lender (the “ Secondary Lender ”), and THE BANK
OF NOVA SCOTIA, ACTING THROUGH ITS NEW YORK AGENCY, as Agent (the
“ Agent ”) under that certain Revolving Credit
and Security Agreement dated as of June 27, 2008 by and among
the Borrower, the Lender, the Secondary Lender and the Agent (as
amended, restated, supplemented or otherwise modified from time to
time, the “ Credit Agreement ”). Defined terms
used herein and not otherwise defined herein shall have the meaning
given to them in the Credit Agreement.
WHEREAS,
the Borrower, the Lender, the Secondary Lender and the Agent are
parties to the Credit Agreement and have agreed to amend the Credit
Agreement on the terms and conditions set forth herein;
and
WHEREAS,
the Borrower and the Agent are parties to the Fee Letter and have
agreed to amend the Fee Letter on the terms and conditions set
forth herein.
NOW,
THEREFORE, in consideration of the premises set forth above, the
terms and conditions contained herein, and other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto hereby agree as
follows:
1.
Amendments to the Credit Agreement . Subject to the
satisfaction of the conditions precedent set forth in
Section 3 below, the Credit Agreement is hereby amended
as follows:
1.1. The
definition of “Applicable Margin” set forth in
Section 1.01 of the Credit Agreement is hereby amended
and restated in its entirety as follows:
“
Applicable Margin ” means, with respect to the
Eurodollar Rate, 3.00% per annum and with respect to the Alternate
Base Rate, 2.50% per annum.
1.2. The
definition of “Asset Coverage Test” set forth in
Section 1.01 of the Credit Agreement is hereby amended
to delete therefrom the figure “300%” to insert
therefor the following figure: “350%”.
1.3. The
definition of “Borrowing Base Advance Rate” set forth
in Section 1.01 of the Credit Agreement is hereby
amended to delete therefrom the phrase “(d) in respect of
Class A Loan Assets, 82.7%, (e) in respect of
Class B Loan Assets, 76.6%, (f) in respect of
Class C Loan Assets, 60.3%, (g) in respect of
Class D Loan Assets, 50.5%, (h) in respect of any Bond
Asset, Second Lien Loan Asset or Senior Unsecured Loan
Asset, the
Borrowing Base Advance Rate determined according to Schedule I
hereto,” and insert therefor the following phrase: “(d)
in respect of Class A Loan Assets, 75.0%, (e) in respect
of Class B Loan Assets, 69.0%, (f) in respect of
Class C Loan Assets, 40.0%, (g) in respect of
Class D Loan Assets, 30.0%, (h) in respect of any Bond
Asset or Senior Unsecured Loan Asset, the Borrowing Base Advance
Rate determined according to Schedule I
hereto,”
1.4. The
definition of “Borrowing Base Excess Amount” set forth
in Section 1.01 of the Credit Agreement is hereby amended to
(i) delete from clause (i) thereof the phrase
“five percent (5%)” and insert therefor the phrase
“four percent (4%)”, (ii) delete from clause
(ii) thereof the phrase “twenty percent (20%)” and
insert therefor the phrase “seventeen and one-half percent
(17.5%)” and (iii) amend and restate clause
(viii) thereof in its entirety as follows:
(viii) the amount
by which the aggregate Borrowing Base Adjusted Asset Value of all
Borrowing Base Eligible Assets which constitute Participation
Interests exceeds two and one-half percent (2.5%) of the aggregate
Borrowing Base Adjusted Asset Value of all Borrowing Base Eligible
Assets;
1.5. The
definition of “Eligible Loan Asset” set forth in
Section 1.01 of the Credit Agreement is hereby amended
to delete from clause (iv) thereof the phrase: “, Second
Lien Loan Asset”.
1.6. The
definition of “Secondary Lender Stated Expiration Date”
set forth in Section 1.01 of the Credit Agreement is
hereby amended to delete therefrom the date “December 1,
2008” and to insert therefor the following date:
“May 29, 2009”.
1.7. The
definition of “Total Commitment” set forth in
Section 1.01 of the Credit Agreement is hereby amended
to delete therefrom the figure “$100,000,000” and to
insert therefor the following figure:
“$60,000,000”.
1.8.
Section 1.01 of the Credit Agreement is hereby amended
to insert the following definition therein in the proper
alphabetical location:
“
Participation Interest ” means any Loan Asset that
consists of a participation interest in a loan or other extension
of credit.
1.9.
Section 2.01 of the Credit Agreement is hereby amended
and restated in its entirety as follows:
On the terms and
conditions hereinafter set forth, including without limitation,
Sections 3.01 and 3.02, the Conduit Lender may, in its sole
discretion, make Advances to the Borrower on any Borrowing Date
from the date hereof to the Lender Termination Date. On the terms
and conditions hereinafter set forth, including without limitation,
Sections 3.01 and 3.02 and during the period from the date
hereof to the Secondary Lender Termination Date, the Secondary
Lenders shall make Advances to the Borrower, ra
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