Business Context and Reporting Period
Company: HMS Income Fund, Inc.
Filing Type: Form 8-K (Current Report)
Date of Report: November 11, 2013
Event: Entry into a Material Definitive Agreement regarding expense support.
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 new agreement with the investment adviser.
Material Changes and Agreements
On November 11, 2013, the Company entered into an Expense Support and Conditional Reimbursement Agreement with its investment adviser, HMS Adviser LP (an affiliate of Hines). Key terms include:
- Expense Support: The Adviser will pay up to 100% of the Company's operating expenses (defined as 2013 third-party operating costs under GAAP) until December 31, 2013, or an earlier mutually agreed date.
- Conditional Reimbursement: Payments are subject to reimbursement by the Company if the Board of Directors determines the Company has achieved a reasonable level of expenses relative to investment income.
- Repayment Terms: Any required repayment must be made within a period not exceeding three years from the date of the respective payment.
- Termination: The Company may terminate the agreement at any time. It automatically terminates upon the termination of the Investment Advisory and Administrative Services Agreement (dated May 31, 2012) or upon the liquidation/dissolution of the Company.
Guidance, Outlook, and Risks
The filing contains no forward-looking guidance, earnings outlook, or specific risk factors beyond the contingent nature of the reimbursement obligation. The agreement is designed to support the Company's expense structure temporarily, with the potential for future liability if performance targets are met.
Investor Verification Checklist
- Verify the total amount of operating expenses incurred by the Company in 2013 to assess the potential maximum liability under the reimbursement clause.
- Review the Board of Directors' criteria for determining a "reasonable level of expenses relative to investment income."
- Monitor future filings for any announcements regarding the termination of the agreement or the initiation of reimbursement payments.
- Confirm the status of the underlying Investment Advisory and Administrative Services Agreement dated May 31, 2012, as its termination would end this expense support.