Exhibit 10.2

EXECUTION VERSION

EXPENSE SUPPORT AND CONDITIONAL REIMBURSEMENT AGREEMENT

This Expense Support and Conditional Reimbursement Agreement (this “Agreement”)
is made this 9th day of April, 2018, by and between FS INVESTMENT CORPORATION
IV, a Maryland corporation (the “Company”), and FS/KKR ADVISOR, LLC, a Delaware
limited liability company (the “Advisor”).

WHEREAS, the Company is a non-diversified, closed-end management investment
company that has elected to be regulated as a business development company under
the Investment Company Act of 1940, as amended (the “Investment Company Act”);

WHEREAS, the Advisor is the Company’s investment adviser; and

WHEREAS, the Company and the Advisor have determined that it is appropriate and
in the best interests of the Company to ensure that no portion of distributions
made to the Company’s stockholders will be paid from the Company’s offering
proceeds or borrowings.

NOW, THEREFORE, in consideration of the premises and for other good and valuable
consideration, the parties hereby agree as follows:

 

1. Advisor Expense Payments to the Company

(a)    On a quarterly basis, the Advisor shall reimburse the Company in an
amount equal to the difference between the Company’s cumulative distributions
paid to the Company’s stockholders in each calendar quarter less Available
Operating Funds (defined below) received by the Company on account of its
investment portfolio during such calendar quarter. Any payments required to be
made by the Advisor pursuant to the preceding sentence shall be referred to
herein as an “Expense Payment.”

(b)    The Advisor’s obligation to make an Expense Payment shall automatically
become a liability of the Advisor, and the right to such Expense Payment shall
be an asset of the Company on the last business day of the applicable calendar
quarter. The Expense Payment for any calendar quarter shall be paid by the
Advisor to the Company in any combination of cash or other immediately available
funds, and/or offset against amounts due from the Company to the Advisor, no
later than the earlier of (i) the date on which the Company closes its books for
such calendar quarter and (ii) forty-five days after the end of such calendar
quarter.

(c)    For purposes of this Agreement, “Available Operating Funds” means the sum
of (i) the Company’s net investment company taxable income as defined in
Section 852(b)(2) of the Internal Revenue Code of 1986, as amended (the “Code”)
(including net short-term capital gains reduced by net long-term capital losses,
as such terms are defined in Section 1222 of the Code), (ii) the Company’s net
capital gains (that is, the excess of net long-term capital gains over net
short-term capital losses, as such terms are defined in Section 1222 of the
Code) and (iii) dividends and other distributions paid to the Company on account
of investments in portfolio companies (to the extent such amounts listed in
clause (iii) are not included under clauses (i) and (ii) above).

 

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2. Reimbursement of Expense Payments by the Company

(a)    Following any calendar quarter in which Available Operating Funds exceed
the cumulative distributions paid to the Company’s stockholders in such calendar
quarter (the amount of such excess being hereinafter referred to as “Excess
Operating Funds”), the Company shall pay such Excess Operating Funds, or a
portion thereof in accordance with Sections 2(b), 2(c) and 2(d), as applicable,
to the Advisor until such time as all Expense Payments made by the Advisor to
the Company within three years prior to the last business day of such calendar
quarter have been reimbursed. Any payment required to be made by the Company
pursuant to this Section 2(a) shall be referred to herein as a “Reimbursement
Payment.”

(b)    Subject to Sections 2(c) and 2(d), as applicable, the amount of the
Reimbursement Payment for any calendar quarter shall equal the lesser of (i) the
Excess Operating Funds in such quarter and (ii) the aggregate amount of all
Expense Payments made by the Advisor to the Company within three years prior to
the last business day of such calendar quarter that have not been previously
reimbursed by the Company to the Advisor.

(c)    Notwithstanding anything to the contrary in this Agreement, the amount of
the Reimbursement Payment for any calendar quarter shall be reduced to the
extent that such Reimbursement Payment, together with all other Reimbursement
Payments paid during that fiscal year, would cause Other Operating Expenses (as
defined below) (on an annualized basis and net of any Expense Payments received
by the Company during such fiscal year) to exceed the lesser of (i) 1.75% of the
Company’s average net assets attributable to shares of the Company’s common
stock for the fiscal year-to-date period after taking such Expense Payments into
account and (ii) the percentage of the Company’s average net assets attributable
to shares of the Company’s common stock represented by Other Operating Expenses
during the fiscal year in which such Expense Payment was made (provided,
however, that this clause (ii) shall not apply to any Reimbursement Payment
which relates to an Expense Payment made during the same fiscal year). For
purposes of this Agreement, “Other Operating Expenses” means the Company’s total
Operating Expenses (as defined below), excluding base management fees, incentive
fees, distribution fees, organization and offering costs, financing fees and
costs, interest expense, brokerage commissions and extraordinary expenses.
“Operating Expenses” means all operating costs and expenses incurred, as
determined in accordance with generally accepted accounting principles for
investment companies. The calculation of average net assets shall be consistent
with the periodic calculations of average net assets in the Company’s financial
statements.

(d)    Notwithstanding anything to the contrary in this Agreement, no
Reimbursement Payment for any calendar quarter shall be made if the annualized
rate of regular cash distributions declared by the Company at the time of such
Reimbursement Payment is less than the annualized rate of regular cash
distributions declared by the Company at the time the Expense Payment was made
to which such Reimbursement Payment relates.

(e)    The Company’s obligation to make a Reimbursement Payment shall
automatically become a liability of the Company and the right to such
Reimbursement Payment shall be an asset of the Advisor on the last business day
of the applicable calendar quarter. The

 

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Reimbursement Payment for any calendar quarter shall be paid by the Company to
the Advisor in any combination of cash or other immediately available funds as
promptly as possible following such calendar quarter and in no event later than
forty-five days after the end of such calendar quarter.

(f)    All Reimbursement Payments hereunder shall be deemed to relate to the
earliest unreimbursed Expense Payments made by the Advisor to the Company within
three years prior to the last business day of the calendar quarter in which such
Reimbursement Payment obligation is accrued.

 

3. Termination and Survival

(a)    This Agreement shall become effective as of the date of this Agreement.

(b)    This Agreement may be terminated at any time, without the payment of any
penalty, by the Company or the Advisor at any time, with or without notice.

(c)    This Agreement shall automatically terminate in the event of (i) the
termination of the Investment Advisory and Administrative Services Agreement,
dated April 9, 2018, between the Company and the Advisor; (ii) the board of
directors of the Company makes a determination to dissolve or liquidate the
Company; or (iii) upon a Liquidity Event of the Company. For purposes of this
Section 3, a “Liquidity Event” means (1) a listing of the Company’s common stock
on a national securities exchange, (2) the sale of all or substantially all of
the Company’s assets either on a complete portfolio basis or individually
followed by a liquidation or (3) a merger or another transaction approved by the
board of directors in which stockholders receive cash or shares of a
publicly-traded company.

(d)    Sections 3 and 4 of this Agreement shall survive any termination of this
Agreement. Notwithstanding anything to the contrary, Section 2 of this Agreement
shall survive any termination of this Agreement with respect to any Expense
Payments that have not been reimbursed by the Company to the Advisor.

 

4.    Miscellaneous

(a)    The captions of this Agreement are included for convenience only and in
no way define or limit any of the provisions hereof or otherwise affect their
construction or effect.

(b)    This Agreement contains the entire agreement of the parties and
supersedes all prior agreements, understandings and arrangements with respect to
the subject matter hereof.

(c)    Notwithstanding the place where this Agreement may be executed by any of
the parties hereto, this Agreement shall be construed in accordance with the
laws of the State of Delaware. For so long as the Company is regulated as a
business development company under the Investment Company Act, this Agreement
shall also be construed in accordance with the applicable provisions of the
Investment Company Act. In such case, to the extent the applicable laws of the
State of Delaware or any of the provisions herein conflict with the provisions
of the Investment Company Act, the latter shall control. Further, nothing in
this Agreement shall be deemed to require the Company to take any action
contrary to the Company’s Articles of

 

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Amendment and Restatement or Bylaws, as each may be amended or restated, or to
relieve or deprive the board of directors of the Company of its responsibility
for and control of the conduct of the affairs of the Company.

(d)    If any provision of this Agreement shall be held or made invalid by a
court decision, statute, rule or otherwise, the remainder of this Agreement
shall not be affected thereby and, to this extent, the provisions of this
Agreement shall be deemed to be severable.

(e)    The Company shall not assign this Agreement or any right, interest or
benefit under this Agreement without the prior written consent of the Advisor.

(f)    This Agreement may be amended in writing by mutual consent of the
parties. This Agreement may be executed by the parties on any number of
counterparts, delivery of which may occur by facsimile or as an attachment to an
electronic communication, each of which shall be deemed an original, and all of
said counterparts taken together shall be deemed to constitute one and the same
instrument.

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
by their duly authorized representatives as of the date first written above.

 

FS INVESTMENT CORPORATION IV By:  

/s/ Stephen Sypherd

Name:   Stephen Sypherd Title:   General Counsel and Secretary FS/KKR ADVISOR,
LLC By:  

/s/ Stephen Sypherd

Name:   Stephen Sypherd Title:   General Counsel and Secretary

 

[Signature Page to Expense Support and Conditional Reimbursement Agreement]