Business Context and Reporting Period
Company: HMS Income Fund, Inc.
Filing Type: Form 8-K (Current Report)
Date of Report: May 9, 2016
Event: Entry into a Material Definitive Agreement regarding fee waivers.
Key Financial Metrics
This filing does not report specific revenue, profit, cash flow, margin, debt, or liquidity figures. The document focuses exclusively on the terms of a fee waiver agreement.
Material Changes and Agreements
On May 9, 2016, the Company entered into the 2016 Conditional Income Incentive Fee Waiver Agreement with HMS Adviser LP and MSC Adviser I, LLC. Key terms include:
- Waiver Period: January 1, 2016, through June 30, 2016.
- Waiver Scope: Advisers may waive the "subordinated incentive fee on income" at their sole discretion if deemed necessary.
- Repayment Obligation: The Company may be required to repay previously waived fees (base management fees, incentive fees) and "Expense Support Payments" (operating expense reimbursements) if a surplus exists.
- Repayment Priority: Surplus funds, subject to Board approval, will first reimburse Expense Support Payments (starting with the earliest eligible year), followed by waived fees (starting with the earliest eligible year).
- Repayment Window: Repayment of waived fees, if required, must occur within three years of the respective waiver date.
Guidance, Outlook, and Risks
Management Commentary: The filing indicates that fee waivers are conditional and subject to the Advisers' discretion based on specific events.
Risks and Contingencies: The primary contingency is the potential future repayment of waived fees and expense support payments. This creates a contingent liability that depends on the Company generating a surplus in future quarters. The filing does not provide specific forward-looking financial guidance or outlook beyond the terms of this agreement.
Investor Verification Checklist
- Verify the total amount of previously waived fees and Expense Support Payments eligible for repayment.
- Review the Company's current and projected surplus status to assess the likelihood of triggering repayment obligations.
- Examine the full text of the "2016 Conditional Income Incentive Fee Waiver Agreement" (Exhibit 10.1) for specific definitions of "surplus" and "necessary events."
- Confirm the Board of Directors' stance on approving surplus usage for fee reimbursements.