FS Energy and Power Fund 8-K [fsep-8k_031418.htm]

 

Exhibit 10.2

 

 

CONSENT AND THIRD AMENDMENT TO

TERM LOAN AND SECURITY AGREEMENT

This CONSENT AND THIRD AMENDMENT TO TERM LOAN AND SECURITY AGREEMENT, is made as
of March 16, 2018 (this “Amendment”), among FOXFIELDS FUNDING LLC, a Delaware
limited liability company (“Company”), FORTRESS CREDIT CO LLC, as Administrative
Agent for Lenders (“Administrative Agent”), and the Lenders signatory hereto.

WHEREAS, the Company, Administrative Agent and the Lenders signatory thereto
from time to time are party to that certain Term Loan and Security Agreement,
dated as of November 6, 2015 (as amended by (a) the First Amendment to Term Loan
and Security Agreement, dated as of November 25, 2015 and (b) the Second
Amendment to Term Loan and Security Agreement, dated as of May 31, 2016, and as
the same may be further amended, restated, supplemented or otherwise modified
from time to time, and as amended herein, the “Loan Agreement;” capitalized
terms used herein and not otherwise defined herein shall have the meanings
ascribed to such terms in the Loan Agreement), pursuant to which Lenders have
extended to the Company certain Term Loans and other financial accommodations;

WHEREAS, the Company has requested that Administrative Agent and Lenders (a)
consent to certain actions related to FSEP and the Company and (b) make certain
amendments to the Loan Agreement, as more fully-described herein; and

WHEREAS, Administrative Agent and Lenders are willing to agree to such consents
and amendments to the Loan Agreement on the terms and conditions set forth
herein;

NOW, THEREFORE, in consideration of the foregoing premises, and other good and
valuable consideration, the receipt and legal sufficiency of which are hereby
acknowledged, the parties hereto hereby agree as follows:

1.       

Consents under the Loan Agreement. Subject to the satisfaction of the conditions
set forth below, and the other conditions precedent and conditions subsequent
herein, and in reliance on the representations, warranties, covenants and
agreements set forth in this Agreement (including the effectiveness of the
applicable amendments as set forth herein), Administrative Agent and Lenders do
hereby consent:

(a)       

on and as of the date hereof, to (i) the termination of that certain Investment
Sub-Advisory Agreement, dated April 28, 2011, between FS Investment Advisor, LLC
and GSO Capital Partners LP, (ii) GSO Capital Partners LP ceasing to be the
“Sub-Advisor” of FS Investment Advisor, LLC, and (iii) EIG Global Energy
Partners, LLC and/or any one or more of its Affiliates providing certain
origination and investment servicing services to FSEP and/or FS Investment
Advisor, LLC; and

   

 

 

(b)       

to the extent such date occurs, on and as of the Investment Advisor Replacement
Effective Date (as defined below), to (i) the termination of that certain
Investment Advisory and Administrative Services Agreement, dated April 28, 2011,
between FSEP and FS Investment Advisor, LLC and (ii) FS/EIG Advisor, LLC (the
“Joint Advisor”) acting as the Investment Advisor to FSEP (and replacing FS
Investment Advisor, LLC in such capacity), as long as (I) the Joint Advisor is
appointed by FSEP pursuant to an investment advisory and administrative services
agreement substantially similar in all material respects to the form of
Investment Advisory and Administrative Services Agreement between FSEP and the
Joint Advisor attached hereto as Exhibit A (such agreement in such form, the
“Joint Advisor Agreement”), (II) the Joint Advisor is appointed on or after the
date which is the earlier of (x) the date which is 60 days after the
shareholders of FSEP have approved the Joint Advisor Agreement or (y) any date
following the date on which the shareholders of FSEP have approved the Joint
Advisor Agreement and the SEC has issued an exemptive relief order, or an
amendment to an existing exemptive relief order, to, among other things, permit
FSEP to co-invest in privately negotiated investment transactions with accounts
managed by EIG Global Energy Partners, LLC and/or its Affiliates (such date, if
it occurs, the “Investment Advisor Replacement Effective Date”), and (III) the
Joint Advisor is owned and managed in accordance with the terms of a limited
liability company (or other operating) agreement substantially similar in all
material respects to the form of FS/EIG Advisor, LLC Limited Liability Company
Agreement most recently provided to the Administrative Agent on or prior to the
date hereof.

2.       

Amendments to the Loan Agreement. Subject to the satisfaction of the conditions
set forth below, and the other conditions precedent and conditions subsequent
herein, and in reliance on the representations, warranties, covenants and
agreements set forth in this Agreement, the Loan Agreement is hereby amended as
follows:

(a)       

on and as of the date hereof, the Loan Agreement is hereby amended by:

(i)       

deleting the reference to the number “$1,500,000,000” from the third line of
Section 7.16(a)(i) thereof and inserting a reference to the number
“$1,700,000,000” in lieu thereof;

(ii)       

adding the following new sub-clause (v) to the end of Section 7.16(a) thereof
(immediately following the end of sub-clause (iv) thereof):

, or (v) FSEP and its Subsidiaries to have a ratio at any time of (A) tangible
net worth (as calculated in accordance with GAAP) to (B) Indebtedness which is
recourse, and only to the extent of such recourse, to FSEP of less than
2.50:1.00.

(iii)       

deleting Section 7.17 thereof in its entirety.

(b)       

on and as of the Investment Advisor Replacement Effective Date, if it occurs,
the Loan Agreement is hereby amended by:

(i)       

in Section 1.01 of the Loan Agreement, deleting clause (b) of the definition of
“Change of Control” in its entirety and inserting the following in lieu thereof:

(b)       

FS/EIG Advisor, LLC, a Delaware limited liability company, ceases to be (i) a
registered “Investment Advisor” under the Investment Advisers Act of 1940, as
amended (a Person, in such capacity, an “Investment Advisor”), (ii) the
Investment Advisor for FSEP, or (iii) beneficially owned, controlled and managed
as set forth in its Organizational Documents (including changes to such
ownership, control or management as contemplated therein), as the same are in
effect on and as of the Investment Advisor Replacement Effective Date (as
defined in the Third Amendment); or

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(ii)       

in Section 1.01 of the Loan Agreement, adding the following defined term in the
correct alphabetical order:

“Third Amendment” means that certain Consent and Third Amendment to Term Loan
and Security Agreement, dated as of March 16, 2018, among the Loan Parties,
Administrative Agent and Lenders.

(iii)       

in Section 9.01 of the Loan Agreement, deleting from clause (j) thereof
sub-clause (ii) therefrom in its entirety and inserting the following in lieu
thereof:

(ii)       

that certain Investment Advisory and Administrative Services Agreement, dated as
of the Investment Advisor Replacement Effective Date (as defined in the Third
Amendment), between FSEP and FS/EIG Advisor, LLC ceases to be in full force and
effect or shall have been amended in any manner that is materially adverse to
the Administrative Agent or any Lender; or

3.       

Acknowledgment. Administrative Agent’s and Lenders’ agreement to the amendments,
consents and agreements contained herein does not and shall not create (nor
shall FSEP, the Company or any other Loan Party rely upon the existence of or
claim or assert that there exists) any obligation of Administrative Agent or any
Lender to consider or agree to any further amendments, consents or agreements.
In the event Administrative Agent and Lenders subsequently agree to consider any
further amendments, consents or agreements, neither the amendments, consents and
agreements contained herein nor any other conduct of Administrative Agent or any
Lender shall be of any force or effect on Administrative Agent’s or any Lender’s
consideration or decision with respect to any such requested amendment, consent
or agreement, and Administrative Agent and Lenders shall have no further
obligation whatsoever to consider or agree to further amendments, consents or
agreements.

4.       

Representations, Warranties, Covenants and Acknowledgments. To induce
Administrative Agent and Lenders to enter into this Amendment:

(a)       

The Company does hereby represent and warrant that, as of the date hereof and
after giving effect hereto, (i) all of the representations and warranties made
or deemed to be made under the Loan Documents are true and correct in all
material respects (provided, that any representation or warranty that is
qualified by materiality or by reference to Material Adverse Effect shall be
true and correct in all respects), except such representations and warranties
which, by their express terms, are applicable only to the Closing Date, (ii)
there exists no Default or Event of Default under the Loan Agreement or any of
the other Loan Documents, (iii) the Company has the power and is duly authorized
to enter into, deliver and perform this Amendment, and (iv) this Amendment and
each of the Loan Documents is the legal, valid and binding obligation of the
Company enforceable against the Company in accordance with its terms.

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(b)       

The Company does hereby reaffirm each of the agreements, covenants, and
undertakings set forth in the Loan Agreement and each and every other Loan
Document executed in connection therewith or pursuant thereto, as amended and
modified hereby, as if the Company were making said agreements, covenants and
undertakings on the date hereof.

(c)       

The Company does hereby acknowledge and agree that no right of offset, defense,
counterclaim, claim, cause of action or objection in favor of the Company
against Administrative Agent or any Lender exists arising out of or with respect
to (i) the Obligations, this Amendment, the Loan Agreement or any of the other
Loan Documents, or (ii) any other documents now or heretofore evidencing,
securing or in any way relating to the foregoing.

(d)       

The Company acknowledges and agrees that this Amendment shall be deemed a Loan
Document for all purposes under the Loan Agreement.

5.       

Indemnification. The Company and each other Loan Party hereby agree to indemnify
and hold Administrative Agent, the Lenders, each Agent-Related Person and each
other Indemnitee in accordance with Section 12.05 of the Loan Agreement. The
foregoing indemnity shall survive the payment in full of the Obligations and the
termination of this Amendment, the Loan Agreement and the other Loan Documents.

6.       

Conditions Precedent. The effectiveness of this Amendment is subject to the
following conditions precedent:

(a)       

Delivery of Documents.

(i)       

On or before the date hereof, the Company shall have delivered to Administrative
Agent, all in form and substance acceptable to Administrative Agent in its
reasonable discretion, counterparts of this Amendment executed by each party
hereto, together with counterparts of an Acknowledgment and Consent,
substantially in the form attached hereto; and

(ii)       

any and all other documents reasonably requested by Administrative Agent.

(b)       

Accuracy of Representations and Warranties. As of the date hereof and after
giving effect hereto, all of the representations and warranties made or deemed
to be made in this Amendment and under the Loan Documents shall be true and
correct in all material respects (provided, that any representation or warranty
that is qualified by materiality or by reference to Material Adverse Effect
shall be true and correct in all respects) as of the date of this Amendment,
except such representations and warranties which, by their terms, are applicable
to a prior specific date or period.

(c)       

Expenses. The Loan Parties shall have paid on or before the date hereof to
Administrative Agent any and all outstanding fees and other charges owing
pursuant to Section 12.04 of the Loan Agreement, to the extent invoiced at least
one (1) Business Day prior to the date hereof.

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7.       

Effect; Relationship of Parties. Except as expressly amended hereby, the Loan
Agreement shall be and remain in full force and effect as written immediately
prior to the execution of this Amendment, and shall constitute the legal, valid,
binding and enforceable obligations of the Company to Administrative Agent and
each Lender. The relationship of Administrative Agent and Lenders, on the one
hand, and the Loan Parties, on the other hand, has been and shall continue to
be, at all times, that of creditor and debtor and not as joint venturers or
partners. Nothing contained in this Amendment, any instrument, document or
agreement delivered in connection herewith or in the Loan Agreement or any of
the other Loan Documents shall be deemed or construed to create a fiduciary
relationship between or among the parties.

8.       

Miscellaneous. This Amendment may be executed in any number of counterparts and
by different parties hereto in separate counterparts, each of which, when so
executed and delivered, shall be deemed to be an original and all of which
counterparts, taken together, shall constitute but one and the same instrument.
Delivery of an executed counterpart of a signature page to this Amendment by
facsimile or other electronic transmission shall be as effective as delivery of
a manually executed counterpart of this Amendment. Any party delivering an
executed counterpart of this consent via facsimile or electronic mail shall also
deliver a manually executed original to Administrative Agent or its counsel, but
the failure to do so does not and will not affect the validity, enforceability
or binding effect of this Amendment or result in a Default or Event of Default
under any Loan Document. This Amendment shall be binding upon and inure to the
benefit of the successors and permitted assigns of the parties hereto. This
Amendment shall be governed by, and construed in accordance with, the laws of
the State of New York without regard to conflict of laws principles (other than
Sections 5-1401 and 5-1402 of the New York General Obligations Law) thereof.
This Amendment embodies the entire agreement and understanding between the
parties hereto with respect to the subject matter hereof and supersedes all
prior oral or written negotiations, agreements and understandings of the parties
with respect to the subject matter hereof, except the agreements embodied in the
Loan Agreement and the other Loan Documents (as modified herein).

[Remainder of Page Intentionally Blank]

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IN WITNESS WHEREOF, the Company, Administrative Agent and Lenders have caused
this Amendment to be duly executed as of the date first above written.

 

  FOXFIELDS FUNDING LLC,   as the Company           By: /s/ Edward T. Gallivan,
Jr.     Name: Edward T. Gallivan, Jr.     Title: Chief Financial Officer

 

 

   

 

 

  FORTRESS CREDIT CO LLC,   as Administrative Agent           By: /s/ Scott
Silvers     Name: Scott Silvers     Title: Authorized Signatory

 

  FORTRESS CREDIT OPPORTUNITIES V CLO LIMITED, as a Lender   By:  FCO V CLO CM
LLC, its collateral manager           By: /s/ Scott Silvers     Name: Scott
Silvers     Title: Authorized Signatory

  

  FORTRESS CREDIT OPPORTUNITIES VI CLO LIMITED, as a Lender   By: FCO VI CLO CM
LLC, its collateral manager         By: /s/ Scott Silvers     Name: Scott
Silvers   Title: Authorized Signatory

 

  FORTRESS CREDIT OPPORTUNITIES VII CLO LIMITED, as a Lender   By: FCO VII CLO
CM LLC, its collateral manager           By: /s/ Scott Silvers     Name: Scott
Silvers     Title: Authorized Signatory

 

  FORTRESS CREDIT OPPORTUNITIES IX CLO LIMITED, as a Lender   By: FCOD CLO
Management LLC, its collateral manager         By: /s/ Scott Silvers     Name:
Scott Silvers     Title: Authorized Signatory

 

  DBDB FUNDING LLC, as a Lender           By: /s/ Scott Silvers     Name: Scott
Silvers     Title: Authorized Signatory

   

 

 

  ORIX FINANCE, LP, as a Lender   By: ORIX Corporate Capital Inc., its General
Partner       By: /s/ Mark Campbell     Name: Mark Campbell     Title:
Authorized Representative

 

   

 

 

ACKNOWLEDGEMENT AND CONSENT

Foxfields Funding LLC, a Delaware limited liability company (“Company”),
Fortress Credit Co LLC, a Delaware limited liability company, as Administrative
Agent (“Administrative Agent”), and certain lenders (the “Lenders”) are party to
that certain Term Loan and Security Agreement, dated November 6, 2015 (as
amended, restated or otherwise modified from time to time, the “Loan
Agreement”), pursuant to which the Lenders have extended to Company certain Term
Loans and other financial accommodations.

In connection with the Loan Agreement, FS Energy and Power Fund, a Delaware
statutory trust (“FSEP”), executed (i) that certain Guaranty, dated November 6,
2015, in favor of Administrative Agent (the “Guaranty”) and (ii) that certain
Pledge Agreement, dated November 6, 2015, by and between FSEP and Administrative
Agent (the “Pledge Agreement”).

Company, Administrative Agent and the Lenders are amending the Loan Agreement
pursuant to that certain Consent and Third Amendment to Term Loan and Security
Agreement, dated as of March 16, 2018 (the “Loan Agreement Amendment”). FSEP
desires to acknowledge and consent to the Loan Agreement Amendment and reaffirm
its obligations under the Guaranty and the Pledge Agreement.

In connection with the foregoing, on March 16, 2018 (the “Effective Date”), FSEP
hereby acknowledges and consents to the Loan Agreement Amendment. Furthermore,
FSEP agrees that the Guaranty and the Pledge Agreement remain in full force and
effect and continue to be the legal, valid and binding obligation of FSEP,
enforceable against FSEP in accordance with its terms.

Delivery of an executed counterpart of a signature page to this Acknowledgment
and Consent by facsimile or other electronic transmission shall be as effective
as delivery of a manually executed counterpart of this Acknowledgment and
Consent. This Acknowledgment and Consent shall be binding upon and inure to the
benefit of FSEP’s successors and permitted assigns. This Acknowledgment and
Consent shall be governed by, and construed in accordance with, the laws of the
State of New York, without giving effect to any choice of law or conflict of law
provision or rule (whether of the State of New York or any other jurisdictions)
that would cause the application of the laws of any jurisdictions other than the
State of New York. If any provision of this Acknowledgment and Consent is
prohibited by law or otherwise determined to be invalid or unenforceable by a
court of competent jurisdiction, the provision that would otherwise be
prohibited, invalid or unenforceable shall be deemed amended to apply to the
broadest extent that it would be valid and enforceable, and the invalidity or
unenforceability of such provision shall not affect the validity of the
remaining provisions of this Acknowledgment and Consent so long as this
Acknowledgment and Consent as so modified continues to express, without material
change, the original intentions of the parties as to the subject matter hereof
and the prohibited nature, invalidity or unenforceability of the provision(s) in
question does not substantially impair the expectations or obligations of the
parties or the practical realization of the benefits that would otherwise be
conferred.

[Remainder of Page Intentionally Blank]

   

 

 

IN WITNESS WHEREOF, the undersigned has executed this Acknowledgement and
Consent as of the Effective Date.

  FS ENERGY AND POWER FUND           By: /s/ Edward T. Gallivan, Jr.     Name:
Edward T. Gallivan, Jr.     Title: Chief Financial Officer

 

   

 

 

EXHIBIT A

Form of Investment Advisory and Administrative Services Agreement

See Attached.