exv10w15






Exhibit 10.15




EXECUTION COPY




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.




WITNESSETH




          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, ratably in accordance with their respective
Secondary Lender Commitments, to the extent the Conduit Lender has



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determined not
to make such Advance. Under no circumstances shall the Conduit Lender or any
Secondary Lender make any such Advance, to the extent that after giving effect to
the making of such Advance the aggregate principal amount of all outstanding
Advances would exceed the Total Commitment. Within the foregoing limits and subject
to the terms and conditions set forth herein, the Borrower may borrow, prepay and
reborrow Advances.




     1.10. Schedule I to the Credit Agreement is hereby deleted in its entirety and
replaced with Exhibit A to this Amendment.



          2. Amendment to Fee Letter. Subject to the satisfaction of the conditions precedent
set forth in Section 3 below, the Fee Letter is hereby amended as follows:





     2.1. Paragraph 1 of the Fee Letter is hereby amended to delete therefrom the figure
“0.30%” and to insert therefor the following figure: “0.75%”.




     2.2. Paragraph 2 of the Fee Letter is hereby amended to delete therefrom the figure
“0.70%” and to insert therefor the following figure: “1.25%”.



          3. Conditions of Effectiveness. The effectiveness of this Amendment is subject to the
conditions precedent that the Agent shall have received:





	 	(a)	 	duly executed counterparts of this Amendment from each of the Borrower, the
Lender, the Secondary Lender and the Agent;
	 
	 	(b)	 	duly certified resolutions of the Board of Directors of the Borrower (in form
and substance reasonably acceptable to the Agent) authorizing the execution and
delivery of this Amendment and performance of this Amendment and the Credit Agreement
and the Fee Letter as amended hereby; and
	 
	 	(c)	 	such other documents, instruments and agreements as the Agent shall
reasonably request.





          4. Representations and Warranties of the Borrower.





	 	4.1.	 	The Borrower hereby represents and warrants that this Amendment and the
Credit Agreement and the Fee Letter as previously executed and as
amended hereby constitute legal, valid and binding obligations of the Borrower and
are enforceable against the Borrower in accordance with their terms (except as
enforceability may be limited by bankruptcy, insolvency, or similar laws affecting
the enforcement of creditors’ rights generally).
	 
	 	4.2.	 	Upon the effectiveness of this Amendment and after giving effect hereto, the
Borrower hereby (i) reaffirms all covenants, representations and warranties made in
the Credit Agreement and the Fee Letter as amended hereby, and agrees that all such
covenants, representations and warranties are true and correct as of the effective
date of this Amendment and (ii) certifies that no Default or Event of Default has
occurred and is continuing.






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                   5. Effect on the Credit Agreement and the Fee Letter.




	 	5.1.	 	Upon the effectiveness of Section 1 hereof, on and after the date
hereof, each reference to the Credit Agreement in the Credit Agreement (including any
reference therein to “this Agreement,” “hereunder,” “hereof,” “herein” or words of like
import referring thereto) or in any other Program Document shall mean and be a
reference to the Credit Agreement as amended hereby.






	 	5.2.	 	Upon the effectiveness of Section 2 hereof, on and after the date
hereof, each reference to the Fee Letter in the Fee Letter (including any reference
therein to “this Fee Letter,” “hereunder,” “hereof,” “herein” or words of like import
referring thereto) or in any other Program Document shall mean and be a reference to
the Fee Letter as amended hereby.






	 	5.3.	 	Except as specifically amended above, each of the Credit Agreement, the Fee
Letter and all other documents, instruments and agreements executed and/or delivered in
connection therewith, shall remain in full force and effect, and is hereby ratified and
confirmed.






	 	5.4.	 	The execution, delivery and effectiveness of this Amendment shall not operate
as a waiver of any right, power or remedy of the Agent, the Lender or the Secondary
Lender, nor constitute a waiver of any provision of the Credit Agreement or any other
documents, instruments and agreements executed and/or delivered in connection
therewith.





                   6. GOVERNING LAW. THIS AGREEMENT SHALL BE DEEMED TO BE A CONTRACT MADE UNDER THE LAWS
OF THE STATE OF NEW YORK, AND FOR ALL PURPOSES SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF SAID STATE.



                  7. Headings. Section headings in this Amendment are included herein for convenience
of reference only and shall not constitute a part of this Amendment for any other purpose.



                  8. Counterparts. This Amendment may be executed in any number of counterparts and by
different parties hereto on separate counterparts, each of which counterparts, when so executed and
delivered, shall be deemed to be an original and all of which counterparts, taken together, shall
constitute but one and the same agreement. Delivery of an executed counterpart of this Amendment
by facsimile shall be deemed as effective as delivery of an originally executed counterpart.



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          IN WITNESS WHEREOF, this Amendment has been duly executed as of the day and year first above
written.




	 	 	 	 	 
	 
	 	HIGHLAND DISTRESSED

OPPORTUNITIES, INC.,

as the Borrower

 	 
	 	By:  	 	 
	 	Name:  	 	 	 
	 	Title:  	 	 	 
	 
	 
	 
	 	LIBERTY STREET FUNDING LLC,

as the Lender

 	 
	 	By:  	 	 
	 	Name:  	 	 	 
	 	Title:  	 	 	 
	 
	 
	 
	 	THE BANK OF NOVA SCOTIA, ACTING

THROUGH ITS NEW YORK AGENCY,

as the Secondary Lender

 	 
	 	By:  	 	 
	 	Name:  	 	 	 
	 	Title:  	 	 	 
	 
	 
	 
	 	THE BANK OF NOVA SCOTIA, ACTING

THROUGH ITS NEW YORK AGENCY,

as the Agent

 	 
	 	By:  	 	 
	 	Name:  	 	 	 
	 	Title:  	 	 	 
	 



 




Signature Page to Amendment No. 1 

to Revolving Credit and Security Agreement




 









 








Schedule I to Credit Agreement




Certain Borrowing Base Advance Rates




          The Borrowing Base Advance Rate with respect to any Bond Asset or Senior Unsecured Loan Asset
shall be determined according to the chart set forth below as the rate corresponding to the lower
of the Moody’s Rating and S&P Rating applicable to such Asset; provided, that (a) if such
Asset is rated by only S&P, the Borrowing Base Advance Rate with respect thereto shall be (i) if
such Asset is rated at least “BBB-” by S&P, the rate set forth below corresponding to the rating
one level below the S&P Rating applicable to such Asset, (ii) if such Asset is rated at least
“CCC+” and less than “BBB-” by S&P, the rate set forth below corresponding to the rating two levels
below the S&P Rating applicable to such Asset and (iii) if such Asset is rated “CCC” or “CCC-” by
S&P, 0.0%, (b) if such Asset is rated only by Moody’s, the Borrowing Base Advance Rate with respect
thereto shall be (i) if such Asset is rated at least “Baa3” by Moody’s, the rate set forth below
corresponding to the rating one level below the Moody’s Rating applicable to such Asset, (ii) if
such Asset is rated at least “Caa1” and less than “Baa3” by Moody’s, the rate set forth below
corresponding to the rating two levels below the Moody’s Rating applicable to such Asset and (iii)
if such Asset is rated “Caa2” or “Caa3” by Moody’s, 0.0% and (c) if such Asset is unrated by both
S&P and Moody’s, the Borrowing Base Advance Rate with respect thereto shall be (i) the rate set
forth below corresponding to the most recent credit estimate received by the Borrower from S&P with
respect to such Asset within the prior twelve months (a copy of which shall be delivered by the
Borrower to the Administrative Agent) or (ii) if no such credit estimate has been obtained, 0.0%;
provided, further, that the Borrowing Base Advance Rate with respect to any such
Asset that constitutes a Distressed Bond Asset or Distressed Loan Asset shall be 0.0%.




	 	 	 	 	 
	S&P Rating	 	Moody’s Rating	 	Borrowing Base Advance Rate
	AAA
	 	Aaa	 	69.0%
	AA+
	 	Aa1	 	69.0%
	AA
	 	Aa2	 	69.0%
	AA-
	 	Aa3	 	69.0%
	A+
	 	A1	 	69.0%
	A
	 	A2	 	69.0%
	A-
	 	A3	 	69.0%
	BBB+
	 	Baa1	 	69.0%
	BBB
	 	Baa2	 	69.0%
	BBB-
	 	Baa3	 	69.0%
	BB+
	 	Ba1	 	64.6%
	BB
	 	Ba2	 	64.2%
	BB-
	 	Ba3	 	60.8%
	B+
	 	B1	 	55.9%
	B
	 	B2	 	49.6%
	B-
	 	B3	 	43.5%
	CCC+
	 	Caa1	 	41.9%
	CCC
	 	Caa2	 	32.1%
	CCC-
	 	Caa3	 	19.3%