HIGHLAND INCOME FUND
Massachusetts Business Trust)
5,400,000 Shares of 5.375% Series A Cumulative Preferred Shares
July 29, 2019
Morgan Stanley & Co.
As Representative of the several Underwriters Listed on Schedule A hereto
c/o Morgan Stanley & Co. LLC
New York, NY 10036
Ladies and Gentlemen:
Highland Income Fund, a Massachusetts business trust (the "Fund"), and the Funds investment adviser and administrator,
Highland Capital Management Fund Advisors, L.P., a Delaware limited partnership (the "Adviser"), each confirms its agreement with Morgan Stanley & Co. LLC ("MS") and each of the other Underwriters named in
Schedule A hereto (collectively, the "Underwriters," which term shall also include any underwriter substituted as hereinafter provided in Section 10 hereof), for whom MS is acting as representative (in such capacity, the
"Representative"), with respect to the issue and sale by the Fund and the purchase by the Underwriters, acting severally and not jointly, of the respective number of shares set forth in said Schedule A hereto of an aggregate of
5,400,000 shares of the Funds 5.375% Series A Cumulative Preferred Shares (the "Underwritten Shares").
understands that the Underwriters propose to make a public offering of the Underwritten Shares as soon as the Representative deems advisable after this Agreement has been executed and delivered. The Fund also proposes to grant to the Underwriters an
option to purchase up to an additional 810,000 shares of the Funds 5.375% Series A Cumulative Preferred Shares solely to cover over-allotments, if any (the "Option Shares"; the Option Shares, together with the Underwritten
Shares, the "Shares").
The Shares will be authorized by, and subject to the terms and conditions of, the Funds
Agreement and Declaration of Trust, as amended, and the Statement of Preferences for the Shares dated July 29, 2019 (collectively, the "Statement").
The Fund has filed with the Securities and Exchange Commission (the "Commission") a shelf registration statement on Form N-2 (File Nos. 333-219103 and 811-23268) covering the registration of the Shares under the Securities Act of 1933, as amended (the
"1933 Act"), and a notification on Form N-8A of registration (the "1940 Act Notification") of the Fund as an investment company under the Investment Company Act of 1940, as
amended (the "1940 Act"), and the rules and regulations of the Commission under the 1933 Act (the "1933 Act Regulations") and the 1940 Act (the "1940 Act Regulations"). Such registration statement
including the exhibits thereto and schedules thereto and the
amendments thereto, is herein called the "Registration Statement." Pre-effective amendment No. 3 to the Registration Statement, filed
on June 26, 2019 (the registration statement at the time pre-effective amendment No. 3 became effective, the "Original Registration Statement"), is effective. The prospectus
(including any statement of additional information incorporated by reference therein) contained in the Original Registration Statement at the time it became effective is called the "Basic Prospectus." The Basic Prospectus, together
with any preliminary prospectus supplement (including any statement of additional information incorporated by reference therein) in the form first furnished to the Underwriters for use in connection with the offering of the Shares and used prior to
the filing of the Prospectus (as defined below) is herein called the "Preliminary Prospectus." Promptly after execution and delivery of this Agreement, the Fund will prepare and file a prospectus in accordance with the provisions of
Rule 430B ("Rule 430B") and Rule 497 ("Rule 497") of the 1933 Act Regulations. The information included in any such prospectus that was omitted from the Original Registration Statement at the time it became
effective but that is deemed to be part of and included in such registration statement pursuant to Rule 430B is referred to as "Rule 430B Information." The Basic Prospectus, together with the final prospectus supplement, including
any statement of additional information incorporated by reference therein in the form furnished to the Underwriters for use in connection with the offering of the Shares is herein called the "Prospectus." For purposes of this
Agreement, all references to the Original Registration Statement, any Preliminary Prospectus or the Prospectus or any amendment or supplement to any of the foregoing shall be deemed to include the copy filed with the Commission pursuant to its
Electronic Data Gathering, Analysis and Retrieval system ("EDGAR").
All references in this Agreement to financial
statements and schedules and other information which is "contained," "included" or "stated" in the Registration Statement, any Preliminary Prospectus or the Prospectus (or other references of like import) shall be
deemed to mean and include all such financial statements and schedules and other information which is incorporated by reference in or otherwise deemed by the 1933 Act Regulations to be a part of or included in the Registration Statement, any
Preliminary Prospectus or the Prospectus, as the case may be; and all references in this Agreement to amendments or supplements to the Registration Statement, any Preliminary Prospectus or the Prospectus shall be deemed to mean and include the
filing of any document under the Securities Exchange Act of 1934, as amended (the "1934 Act") which is incorporated by reference in or otherwise deemed by 1933 Act Regulations to be a part of or included in the Registration
Statement, such Preliminary Prospectus or the Prospectus, as the case may be.
All references in this Agreement to a "Business
Day" means a day (a) other than a day on which commercial banks in The City of New York, New York are required or authorized by law or executive order to close and (b) on which the New York Stock Exchange ("NYSE") is
Section 1. Representations and Warranties.
(a) Representations and Warranties by the Fund and the Adviser. The Fund and the Adviser, jointly and severally, represent and warrant
to each Underwriter as of the date hereof, as of the Applicable Time (as defined below) and as of the Closing Time referred to in Section 2(b) hereof, and agree with each Underwriter, as follows:
(i) Compliance With Registration Requirements. The Original Registration Statement became effective under the 1933 Act
on July 1, 2019 and no stop order suspending the effectiveness of the Original Registration Statement has been issued under the 1933 Act, or order of suspension or revocation of registration pursuant to Section 8(e) of the 1940 Act, and no
proceedings for any such purpose have been instituted or are pending or, to the knowledge of the Fund or the Adviser, are contemplated by the Commission, and any request on the part of the Commission for additional information has been complied
At the respective times the Original Registration Statement and any amendment
thereto (filed before the Closing Time and on any date on which Option Shares are purchased, if such date is not the Closing Time (a "settlement date")) became effective under the 1933 Act, at each deemed effective date with respect to the
Underwriters pursuant to Rule 430B(f)(2) of the 1933 Act Regulations and at the Closing Time, as hereinafter defined, the Original Registration Statement, the notification on Form N-8A and any amendments and
supplements thereto complied and will comply in all material respects with the requirements of the 1933 Act and the 1933 Act Regulations, the 1940 Act and the 1940 Act Rules and Regulations and did not and will not contain an untrue statement of a
material fact or, except for the information included in the prospectus supplement relating to the Shares contained in the Prospectus, omit to state a material fact required to be stated therein or necessary to make the statements therein not
misleading. Neither the Prospectus nor any amendment or supplement thereto, at the time the Prospectus or any such amendment or supplement was issued and at the Closing Time, included or will include an untrue statement of a material fact or omitted
or will omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading, except that the representations and warranties set forth in this paragraph do not
apply to statements in or omissions from the Registration Statement, the Original Registration Statement, any Preliminary Prospectus or the Prospectus made in reliance upon and in conformity with information furnished in writing to the Fund or the
Adviser by or on behalf of any Underwriter for use therein.
As of the Applicable Time (as defined below), (i) any Rule 482
Statement (as defined below) issued at or prior to the Applicable Time, if any, and (ii) the Preliminary Prospectus and the information included on Schedule C hereto, all considered together (collectively, the "General Disclosure
Package"), did not include any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading.
As used in this subsection and elsewhere in this Agreement: