Prospect Management Advisers, L.P. 13455 Noel Road Suite 1300 Dallas, Texas 75240 Dear _________:

____________, 2006                    

Prospect Management Advisers, L.P.
00000 Xxxx Xxxx
Xxxxx 0000
Xxxxxx, Xxxxx 00000

Dear _________:

                              In consideration of our appointing you sub-adviser to the Highland Equity Opportunities Fund of Highland Funds I pursuant to the Investment Sub-Advisory Agreement of today’s date between you and us, you hereby agree to waive 0.50% of your compensation determined pursuant to Section 10 of that agreement.  This waiver agreement shall remain in effect until terminated by us, Highland Capital Management L.P.  Please indicate your agreement by signing and returning to us a copy of this letter.

Very truly yours,

HIGHLAND CAPITAL MANAGEMENT, L.P.

By:

Xxxxx X. Xxxxxxx

President and Managing Partner

Agreed to and accepted as of _________ 2006:
PROSPECT MANAGEMENT ADVISERS, L.P.

By: