FS Investment Corporation II 8-K [fsicii-8k_121514.htm]

 

Exhibit 10.7

 

COLLATERAL ADMINISTRATION AGREEMENT

This COLLATERAL ADMINISTRATION AGREEMENT, dated as of December 15, 2014 (as the
same may be amended from time to time in accordance with the terms hereof (this
“Agreement”) is entered into by and among Green Creek LLC, a limited liability
company organized under the laws of the State of Delaware, as issuer (the
“Issuer”), FS Investment Corporation II, a corporation organized under the laws
of the State of Maryland, in its capacity as investment manager under the
Investment Management Agreement referred to below (in such capacity, together
with its successors in such capacity, the “Investment Manager”) and Virtus
Group, LP, a limited partnership organized under the laws of the State of Texas,
as collateral administrator (the “Collateral Administrator”).

WITNESSETH:

WHEREAS, the Issuer and Citibank, N.A., as trustee (the “Trustee”), have entered
into an Indenture (the “Indenture”) dated as of December 15, 2014, pursuant to
which the Notes (as defined in the Indenture) were issued;

WHEREAS, pursuant to the terms of the Indenture, the Issuer pledged certain
Collateral Obligations and Eligible Investments (each as defined in the
Indenture and herein, the “Assets”) as security for the Notes;

WHEREAS, the Investment Manager has entered into an amended and restated
investment management agreement (the “Investment Management Agreement”) with the
Issuer, dated as of December 15, 2014, in connection with which the Investment
Manager has agreed to provide certain services to the Issuer with respect to the
Assets;

WHEREAS, the Issuer wishes to engage the Collateral Administrator to perform on
its behalf certain administrative duties of the Issuer with respect to the
Assets pursuant to the Indenture; and

WHEREAS, the Collateral Administrator, on behalf of the Issuer, is prepared to
perform certain specified obligations of the Issuer under the Indenture or of
the Investment Manager under the Indenture, and certain other services as
specified herein.

NOW, THEREFORE, in consideration of the mutual covenants contained herein, and
other good and valuable consideration the receipt of which is hereby
acknowledged, the parties hereto agree as follows:

1.                   Definitions. Capitalized terms not otherwise defined in
this Agreement shall have the meanings set forth in the Indenture.

2.                   Powers and Duties of the Collateral Administrator and the
Investment Manager.

(a)                 The Collateral Administrator shall act as agent for the
Issuer until the earlier of (i) its resignation or removal pursuant to Section 7
hereof or (ii) the termination of this Agreement pursuant to Section 6 or
Section 7 hereof. The Collateral Administrator shall assist the Investment
Manager in connection with monitoring the Collateral Obligations and Eligible
Investments on an ongoing basis and providing to the Issuer certain reports,
schedules and other data which the Issuer is required to prepare and deliver
under Article 10 of the Indenture. The Collateral Administrator’s duties and
authority to act as collateral administrator hereunder are limited to the duties
and authority specifically provided for in this Agreement and under the
Indenture. The Collateral Administrator shall not be deemed to assume the
obligations of the Issuer under the Indenture or of the Investment Manager under
the Investment Management Agreement or the Indenture. The Collateral
Administrator shall perform those duties and functions assigned to it in the
Indenture, comply with all obligations applicable to it under the Indenture and
perform its duties hereunder in accordance with the terms of this Agreement and
the terms of the Indenture applicable to it.

 

 

In addition, the Collateral Administrator shall prepare and provide to the
Specified Holder (as defined in the Indenture), at the addresses from time to
time specified by the Specified Holder, a report on each Business Day setting
forth the cash flows on the Collateral Obligations for the preceding Business
Day and the positions in the Collateral Obligations held by the Issuer at the
end of such preceding Business Day (all in such form and in the scope agreed by
the Collateral Administrator and the Specified Holder on or prior to the Closing
Date), and shall provide to the Specified Holder, at the addresses from time to
time specified by the Specified Holder, notice of all corporate actions
affecting the obligors on the Collateral Obligations promptly following the
Collateral Administrator's obtaining notice of the same.

(b)                 Promptly following the Closing Date, the Collateral
Administrator shall create a Collateral Obligation and Eligible Investments
database. Upon request for specific information in the Collateral Obligation and
Eligible Investments database from the Investment Manager, the Collateral
Administrator shall promptly provide such information to the Investment Manager.
The Collateral Administrator shall update the Collateral Obligation and Eligible
Investments database promptly following (i) the sale or disposition of any
Collateral Obligation or Eligible Investment and (ii) the purchase of any
Collateral Obligation or Eligible Investment.

(c)                 Not later than the Business Day prior to the day on which
each Monthly Report or Valuation Report is required to be provided by the Issuer
to the Trustee pursuant to Section 10.5(a) or Section 10.5(b) of the Indenture,
respectively, the Collateral Administrator shall prepare the relevant report by
calculating, using the information contained in the Collateral Obligation and
Eligible Investments database created by the Collateral Administrator pursuant
to Section 2(b) above, and subject to the Collateral Administrator’s receipt
from the Investment Manager of information with respect to the Collateral
Obligation or Eligible Investment that is not contained in such database and
subject further to the provisions of this Section 2, each item required to be
stated in such Monthly Report or Valuation Report (together with Payment Date
disbursement instructions) in accordance with the Indenture and provide the
results of such calculations to the Investment Manager so that the Investment
Manager may confirm such results. Upon approval by the Investment Manager, the
Collateral Administrator shall deliver the Monthly Report or Valuation Report to
the Trustee, to be posted to the Trustee’s website in the manner contemplated in
the Indenture.

(d)                 Upon request of the Investment Manager in connection with a
proposed purchase of a Collateral Obligation pursuant to Section 12.2 of the
Indenture (accompanied by such information concerning the Collateral Obligation
to be purchased as may be necessary to make the calculations referred to in this
Section 2(d)), the Collateral Administrator shall calculate each criterion as a
condition to such purchase in accordance with the Indenture and provide the
results of such calculations to the Investment Manager for comparison to the
Investment Manager’s own calculations in determining whether such purchase is
permitted by the Indenture.

(e)                 Upon notification by the Investment Manager during each time
period as set forth in Section 12.1 of the Indenture of a proposed disposition
of a Defaulted Obligation, Equity Security, Withholding Tax Security or
Collateral Obligation (accompanied by such information as may be necessary to
make the calculation referred to in this Section 2(e)), the Collateral
Administrator shall calculate each criterion set forth in the designated
subsection of Section 12.2 of the Indenture as a condition to such disposition
in accordance with the Indenture and shall provide the results of such
calculations to the Investment Manager.

(f)                  The Collateral Administrator shall have no liability for
any determination to purchase or sell a Collateral Obligation made by the
Investment Manager based on the calculations provided by the Collateral
Administrator pursuant to Section 2(d) or Section 2(e), as applicable, except to
the extent due to the gross negligence, fraud or willful misconduct of the
Collateral Administrator. The Investment Manager hereby agrees that any
determination to purchase or sell a Collateral Obligation made by the Investment
Manager is not based solely upon the calculations of the Collateral
Administrator.

(g)                 [Reserved].

(h)                 [Reserved].

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(i)                   The Collateral Administrator shall assist the Investment
Manager in the preparation of such other reports that may be required by the
Indenture and that are reasonably requested in writing by the Investment Manager
and agreed to by the Collateral Administrator, which agreement shall not be
unreasonably withheld.

(j)                   [Reserved].

(k)                 The Collateral Administrator shall promptly forward to the
Investment Manager copies of notices and other writings received by it, in its
capacity as Collateral Administrator hereunder, from the obligor or other Person
with respect to any Collateral Obligation or from any Clearing Agency with
respect to any Collateral Obligation advising the holders of such obligation of
any rights that the holders might have with respect thereto (including notices
of calls and redemptions thereof) as well as all periodic financial reports
received from such obligor or other Person with respect to such obligation and
Clearing Agencies with respect to such obligor.

(l)                   The Investment Manager reasonably shall assist and
cooperate with the Collateral Administrator in connection with the preparation
by the Collateral Administrator of all reports, instructions, the Monthly
Reports, the Valuation Reports and statements and certificates required in
connection with the acquisition and disposition of Collateral Obligations,
Defaulted Obligations, Withholding Tax Securities, Eligible Investments and
Equity Securities or as otherwise required under the Indenture. Without limiting
the generality of the foregoing, the Investment Manager shall advise the
Collateral Administrator in a timely manner of the results of any
determinations, designations and selections made by it as required or permitted
under the Indenture and supply the Collateral Administrator with such other
information as is in the possession of the Investment Manager that the
Collateral Administrator may from time to time reasonably request with respect
to the Assets and is reasonably needed to complete the reports and certificates
required to be prepared by the Collateral Administrator hereunder or reasonably
required to permit the Collateral Administrator to perform its obligations
hereunder, including any information that may be reasonably required under the
Indenture with respect to or as to the designation of any Collateral Obligation,
including but not limited to a Credit Risk Obligation, Defaulted Obligation,
Equity Security, Withholding Tax Security, Substitute Collateral Obligation,
Bonds, Synthetic Security, Participation (and the related selling institution
and its rating by each Rating Agency) and Structured Finance Obligation, whether
a Specified Amendment or Specified Event has occurred and the S&P rating and the
Market Value of any Collateral Obligation to the extent required by the
Indenture. Nothing herein shall obligate the Collateral Administrator to
determine independently the correct characterization, classification or
categorization of any Asset held under the Indenture or the Market Value of any
Asset (it being understood that any such characterization, classification,
categorization or Market Value shall be based exclusively upon the determination
and notification received by the Collateral Administrator from the Investment
Manager or the Issuer). The Collateral Administrator shall have no obligation to
determine whether any Asset meets the definition of “Collateral Obligation”. The
Investment Manager shall review and verify the contents of the aforesaid
reports, instructions, statements and certificates and shall send such reports,
instructions, statements and certificates to the Issuer for execution. Such
reports, instructions, statements and certificates after execution by the Issuer
or the Investment Manager, as applicable, will be made available to Holders on
the Trustee’s website.

(m)               Not later than two Business Days prior to each Payment Date,
the Collateral Administrator shall calculate the Priority of Payments and
provide a written report to the Investment Manager and the Trustee setting forth
all amounts that the Trustee will be required to remit on such Payment Date and
such other information required for the Trustee to make such remittances.

(n)                 If, in performing its duties under this Agreement, the
Collateral Administrator is required to decide between alternative courses of
action or if there are alternative methodologies that can be used in connection
with any calculations required to be performed by the Collateral Administrator
hereunder, the Collateral Administrator may request written instructions from
the Investment Manager as to the course of action or methodology to be used by
the Collateral Administrator; provided, however, that except to the extent
required by the Indenture or the Investment Management Agreement, the Investment
Manager shall be under no obligation to provide such instructions. If the
Collateral Administrator does not receive such instructions within two Business
Days after it has requested them, it may, but shall be under no duty to, take or
refrain from taking such action provided that the Collateral Administrator as
promptly as possible notifies the Investment Manager and the Issuer which course
of action, if any (or refrainment from taking any course of action), it has
decided to take. The Collateral Administrator shall act in accordance with
instructions received after such two-Business Day period. The Collateral
Administrator shall be entitled to rely on the advice of legal counsel selected
with due care and Independent certified public accountants in performing its
duties hereunder and shall be deemed to have acted in good faith if it acts in
accordance with such advice, unless such advice is in conflict with this
Agreement. Nothing herein shall prevent the Collateral Administrator or any of
its Affiliates from engaging in other businesses or from rendering services of
any kind to any Person.

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3.                   Compensation. Subject to Section 13, the Issuer agrees to
pay, and the Collateral Administrator shall be entitled to receive, as
compensation for and reimbursement of expenses in connection with the Collateral
Administrator’s performance of the duties called for herein, the amounts set
forth in a separate fee letter among the Investment Manager, the Trustee and the
Collateral Administrator. In accordance with Section 13, all amounts payable
under this Section 3 shall be payable only in accordance with, and subject to,
the Priority of Payments as set forth in the Indenture.

4.                   Limitation of Responsibility of the Collateral
Administrator. (a) The Collateral Administrator will have no responsibility
under this Agreement other than to render the services called for hereunder in
good faith and without willful misfeasance, gross negligence or reckless
disregard of its duties hereunder. The Collateral Administrator shall incur no
liability to anyone in acting upon, and may rely conclusively upon, any
signature, instrument, statement, notice, resolution, request, direction,
consent, order, certificate, report, opinion, bond or other document or paper
reasonably believed by it to be genuine and reasonably believed by it to be
signed by the proper party or parties. Subject to Section 12, the Collateral
Administrator may exercise any of its rights or powers hereunder or perform any
of its duties hereunder either directly or by or through agents or attorneys,
and the Collateral Administrator shall not be responsible for any misconduct or
negligence on the part of any agent or attorney appointed hereunder with due
care by it. The Collateral Administrator shall be entitled to the same rights,
protections and immunities that are afforded to the Trustee under Article 6 of
the Indenture. Neither the Collateral Administrator nor any of its Affiliates,
directors, officers, shareholders, members, agents or employees will be liable
to the Investment Manager, the Issuer or others, except by reason of acts or
omissions constituting bad faith, willful misfeasance, gross negligence or
reckless disregard of the Collateral Administrator’s duties hereunder. Anything
in this Agreement notwithstanding, in no event shall the Collateral
Administrator be liable for special, punitive, indirect or consequential damage
of any kind whatsoever (including but not limited to lost profits), even if the
Collateral Administrator has been advised of such loss or damage and regardless
of the form of action under or pursuant to this Agreement, its duties or
obligations hereunder or arising out of or relating to the subject matter
hereof. The Collateral Administrator shall in no event have any liability for
the actions or omissions of the Issuer, the Investment Manager or any other
Person, and shall have no liability for any inaccuracy or error in any duty
performed by it that results from or is caused by inaccurate, untimely or
incomplete information or data received by it from the Issuer, the Investment
Manager or another Person except to the extent that such inaccuracies or errors
are caused by the Collateral Administrator’s own bad faith, willful misfeasance,
gross negligence or reckless disregard of its duties hereunder. The Collateral
Administrator shall not be liable for failing to perform or delay in performing
its specified duties hereunder which results from or is caused by a failure or
delay on the part of the Issuer, the Investment Manager or another Person in
furnishing necessary, timely and accurate information to the Collateral
Administrator except to the extent that any failure or delay is caused by the
Collateral Administrator’s own criminal conduct, fraud, bad faith, willful
misfeasance, gross negligence or reckless disregard of its duties hereunder. The
duties and obligations of the Collateral Administrator and its employees or
agents shall be determined solely by the express provisions of this Agreement
and they shall not be under any obligation or duty except for the performance of
such duties and obligations as are specifically set forth herein, and no implied
covenants shall be read into this Agreement against them. For purposes of
monitoring changes in ratings, the Collateral Administrator shall be entitled to
use and rely (in good faith) exclusively upon one or more reputable electronic
financial information reporting services, and shall have no liability for any
inaccuracies in the information reported by, or other errors or omissions of,
any such services.

(b)                 To the extent of any ambiguity in the interpretation of any
definition or term contained in the Indenture, the Collateral Administrator
shall request direction from the Investment Manager as to the interpretation
used, and the Collateral Administrator shall follow such direction, and together
with the Trustee, shall be entitled to conclusively rely thereon without any
responsibility or liability therefor.

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(c)                 The Issuer shall reimburse, indemnify and hold harmless the
Collateral Administrator, and its Affiliates, directors, officers, shareholders,
members, agents and employees with respect to all out-of-pocket expenses,
losses, damages, liabilities, demands, charges and claims of any nature
(including the reasonable fees and expenses of counsel and other experts) in
connection with or arising out of this Agreement and the Indenture, other than
any such expenses, losses, damages, liabilities, demands, charges or claims
incurred by reason of the bad faith, willful misfeasance, gross negligence or
reckless disregard by the Collateral Administrator of its duties hereunder.

(d)                 The Collateral Administrator shall reimburse, indemnify and
hold harmless the Investment Manager and the Issuer and their respective
Affiliates, directors, officers, shareholders, members, agents and employees
with respect to all expenses, losses, damages, liabilities, demands, charges and
claims of any nature (including the reasonable fees and expenses of counsel and
other experts) in respect of or arising out of any acts or omissions performed
or omitted, as the case may be, by the Collateral Administrator, its Affiliates,
directors, officers, shareholders, members, agents or employees hereunder or in
connection with the Indenture made in bad faith or constituting willful
misfeasance, gross negligence or reckless disregard of its duties hereunder.

(e)                 The Investment Manager will have no responsibility under
this Agreement other than to render the services called for hereunder or in
connection with the Indenture in good faith and without willful misfeasance,
gross negligence or reckless disregard of its duties hereunder. The Investment
Manager will not be liable to the Collateral Administrator, the Issuer or
others, except by reason of acts or omissions constituting bad faith, willful
misfeasance, gross negligence or reckless disregard of the Investment Manager’s
duties hereunder. The Investment Manager shall reimburse, indemnify and hold
harmless the Collateral Administrator and its Affiliates, directors, officers,
shareholders, members, agents and employees with respect to all expenses,
losses, damages, liabilities, demands, charges and claims of any nature
(including the reasonable fees and expenses of counsel and other experts) in
respect of or arising out of any acts or omissions performed or omitted, as the
case may be, by the Investment Manager, its Affiliates, directors, officers,
shareholders, members, agents or employees hereunder made in bad faith or
constituting willful misfeasance, gross negligence or reckless disregard of its
duties hereunder or under the Indenture. Anything in this Agreement
notwithstanding, in no event shall the Investment Manager be liable for special,
indirect or consequential damage of any kind whatsoever (including but not
limited to lost profits), even if Investment Manager has been advised of such
loss or damage and regardless of the form of action.

(f)                  In connection with the aforesaid indemnification
provisions, upon reasonable prior notice, any indemnified party will afford to
the applicable indemnifying party the right, in its sole discretion and at its
sole expense, to assume the defense of any claim, including, but not limited to,
the right to designate counsel and to control all negotiations, litigation,
arbitration, settlements, compromises and appeals of such claim; provided, that
if the indemnifying party assumes the defense of such claim, it shall not be
liable for any fees and expenses of counsel for any indemnified party incurred
thereafter in connection with such claim except that if such indemnified party
reasonably determines that counsel designated by the indemnifying party has a
conflict of interest, such indemnifying party shall pay the reasonable fees and
disbursements of one counsel (in addition to any local counsel) separate from
its own counsel for all indemnified parties in connection with any one action or
separate but similar or related actions in the same jurisdiction arising out of
the same general allegations or circumstances; and provided, further, that prior
to entering into any final settlement or compromise, such indemnifying party
shall seek the consent of the indemnified party and use its best efforts in the
light of the then-prevailing circumstances (including, without limitation, any
express or implied time constraint on any pending settlement offer) to obtain
the consent of such indemnified party as to the terms of settlement or
compromise. If an indemnified party does not consent to the settlement or
compromise within a reasonable time under the circumstances, the indemnifying
party shall not thereafter be obligated to indemnify the indemnified party for
any amount in excess of such proposed settlement or compromise.

5.                   No Joint Venture. Nothing contained in this Agreement (i)
shall constitute the Collateral Administrator, the Issuer and the Investment
Manager as members of any partnership, joint venture, association, syndicate,
unincorporated business or other separate entity, (ii) shall be construed to
impose any liability as such on any of them or (iii) shall be deemed to confer
on any of them any express, implied or apparent authority to incur any
obligation or liability on behalf of the others.

 

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6.                   Term. This Agreement shall continue in effect so long as
the Indenture remains in effect with respect to the Notes, unless this Agreement
has been previously terminated in accordance with Section 7 hereof.
Notwithstanding the foregoing, the indemnification obligations of all parties
under Section 4 hereof shall survive the termination of this Agreement or
release of any party hereto with respect to matters occurring prior to such
termination or release.

7.                   Termination; Resignation and Appointment of Successor.

(a)                 This Agreement may be terminated without cause by any party
hereto upon not less than 90 days’ prior written notice to each other party
hereto.

(b)                 At the option of the Investment Manager or the Issuer, this
Agreement shall be terminated upon ten days’ written notice of termination from
the Investment Manager or the Issuer to the Collateral Administrator if any of
the following events shall occur:

(i)                   The Collateral Administrator shall default in the
performance of any of its material duties under this Agreement and shall not
cure such default within thirty days (or, if such default cannot be cured in
such time, shall not give within 30 days such assurance of cure as shall be
reasonably satisfactory to the Investment Manager or the Issuer);

(ii)                 The Collateral Administrator shall be dissolved (other than
pursuant to a consolidation, amalgamation or merger) or shall have a resolution
passed for its winding up, official management or liquidation (other than
pursuant to a consolidation, amalgamation or merger);

(iii)                A court having jurisdiction in the premises shall enter a
decree or order for relief in respect of the Collateral Administrator in any
involuntary case under any applicable bankruptcy, insolvency or other similar
law now or hereafter in effect, or appoint a receiver, liquidator, assignee,
custodian, trustee, sequestrator (or similar official) of the Collateral
Administrator or for any substantial part of its property, or order the
winding-up or liquidation of its affairs; or

(iv)               The Collateral Administrator shall commence a voluntary case
under applicable bankruptcy, insolvency or other similar law now or hereafter in
effect, or shall consent to the entry of an order for relief in an involuntary
case under any such law, or shall consent to the appointment of or taking
possession by a receiver, liquidator, assignee, trustee, custodian, sequestrator
(or similar official) of the Collateral Administrator or for any substantial
part of its property, or shall make any general assignment for the benefit of
creditors, or shall fail generally to pay its debts as they become due.

 

If any of the events specified in clauses (ii), (iii) or (iv) of this Section
7(b) shall occur, the Collateral Administrator shall give written notice thereof
to the Investment Manager and the Issuer within one Business Day after the
happening of such event.

(c)                 Upon receiving any notice of resignation of the Collateral
Administrator or removal by the Issuer, the Issuer shall promptly appoint a
successor collateral administrator by written instrument, in duplicate, executed
by an Authorized Officer of the Issuer, one copy of which shall be delivered to
the Collateral Administrator so resigning or removed and one copy to·the
successor collateral administrator. No resignation or removal of the Collateral
Administrator shall be effective until a successor collateral administrator
shall have been appointed and shall have accepted such appointment hereunder in
writing. If the Issuer shall fail to appoint a successor collateral
administrator within 30 days after such notice of resignation, then the
Collateral Administrator may petition any court of competent jurisdiction for
the appointment of a successor collateral administrator. Notwithstanding the
foregoing, the Collateral Administrator may resign its duties hereunder without
any requirement that a successor collateral administrator be obligated hereunder
and without any liability for further performance of any duties hereunder upon
at least 90 days’ prior written notice to the other parties hereto upon the
occurrence of any of the following events and the failure to cure such event
within such 90 day notice period: (i) failure of the Issuer to pay any of the
amounts specified in Section 3 within 90 days after such amount is due pursuant
to Section 3 hereof or (ii) failure of the Investment Manager or the Issuer to
provide any indemnity payment or expense reimbursement to the Collateral
Administrator required under Section 4 hereof within 90 days of the receipt by
the Investment Manager or the Issuer of a written request for such payment or
reimbursement.

 

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8.                   Representations and Warranties.

(a)                 The Issuer hereby represents and warrants to the Collateral
Administrator and the Investment Manager as follows:

(i)                   The Issuer has been duly incorporated and is validly
existing and in good standing under the laws of the State of Delaware and has
the full power and authority to execute, deliver and perform this Agreement and
all obligations required hereunder and has taken all necessary action to
authorize this Agreement on the terms and conditions hereof, the execution,
delivery and performance of this Agreement and the performance of all
obligations imposed upon it hereunder. No consent of any other person including,
without limitation, members, shareholders and creditors of the Issuer, and no
license, permit, approval or authorization of, exemption by, notice or report
to, or registration, filing or declaration with, any governmental authority is
required to be obtained or made by the Issuer in connection with this Agreement
or the execution, delivery, performance, validity or enforceability of this
Agreement and the obligations imposed upon it hereunder. This Agreement
constitutes, and each instrument or document required hereunder, when executed
and delivered by the Issuer hereunder, will constitute, the legally valid and
binding obligations of the Issuer enforceable against the Issuer in accordance
with their terms subject, as to enforcement, (a) to the effect of bankruptcy,
insolvency or similar laws affecting generally the enforcement of creditors’
rights as such laws would apply in the event of any bankruptcy, receivership,
insolvency or similar event applicable to the Issuer and (b) to general
equitable principles (whether enforceability of such principles is considered in
a proceeding at law or in equity).

(ii)                 The execution, delivery and performance by the Issuer of
this Agreement, the Issuer’s obligations hereunder and the documents and
instruments required hereunder will not violate any provision of any existing
law or regulation binding on the Issuer, or any order, judgment, award or decree
of any court, arbitrator or governmental authority binding on the Issuer, or the
governing instruments of, or any securities issued by, the Issuer or of any
mortgage, indenture, lease, contract or other agreement, instrument or
undertaking to which the Issuer is a party or by which the Issuer or any of its
assets may be bound, the violation of which would have a material adverse effect
on the business, operations, assets or financial condition of the Issuer and
will not result in, or require, the creation or imposition of any lien on any of
its property, assets or revenues pursuant to the provisions of any such
mortgage, indenture, lease, contract or other agreement, instrument or
undertaking.

(b)                 The Investment Manager hereby represents and warrants to the
Collateral Administrator and the Issuer as follows:

(i)                   The Investment Manager has been duly formed and is validly
existing and in good standing under the laws of the State of Maryland as a
corporation and has the full power and authority to execute, deliver and perform
this Agreement and all obligations required hereunder and has taken all
necessary action to authorize this Agreement on the terms and conditions hereof,
the execution, delivery and performance of this Agreement and the performance of
all obligations imposed upon it hereunder. No consent of any other person
including, without limitation, shareholders and creditors of the Investment
Manager, and no license, permit, approval or authorization of, exemption by,
notice or report to, or registration, filing or declaration with, any
governmental authority is required by the Investment Manager in connection with
this Agreement or the execution, delivery, performance, validity or
enforceability of this Agreement and the obligations imposed upon it hereunder.
This Agreement constitutes, and each instrument or document required hereunder,
when executed and delivered by the Investment Manager hereunder, will
constitute, the legally valid and binding obligations of the Investment Manager
enforceable against the Investment Manager in accordance with their terms
subject, as to enforcement, (a) to the effect of bankruptcy, insolvency or
similar laws affecting generally the enforcement of creditors’ rights as such
laws would apply in the event of any bankruptcy, receivership, insolvency or
similar event applicable to the Investment Manager and (b) to general equitable
principles (whether enforceability of such principles is considered in a
proceeding at law or in equity).

 

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(ii)                 The execution, delivery and performance of this Agreement,
the Investment Manager’s obligations hereunder and the documents and instruments
required hereunder will not violate any provision of any existing law or
regulation binding on the Investment Manager, or any order, judgment, award or
decree of any court, arbitrator or governmental authority binding on the
Investment Manager, or the governing instruments of, or any securities issued
by, the Investment Manager or of any mortgage, indenture, lease, contract or
other agreement, instrument or undertaking to which the Investment Manager is a
party or by which the Investment Manager or any of its assets may be bound, the
violation of which would have a material adverse effect on the business,
operations, assets or financial condition of the Investment Manager and will not
result in, or require, the creation or imposition of any lien on any of its
property, assets or revenues pursuant to the provisions of any such mortgage,
indenture, lease, contract or other agreement, instrument or undertaking.

(c)                 The Collateral Administrator hereby represents and warrants
to the Investment Manager and the Issuer as follows:

(i)                   The Collateral Administrator is a limited partnership duly
organized and validly existing under the laws of the State of Texas and has full
power and authority to execute and deliver this Agreement and perform all
obligations required hereunder and has taken all necessary action to authorize
this Agreement on the terms and conditions hereof, the execution and delivery of
this Agreement and the performance of all obligations required hereunder. No
consent of any other person including, without limitation, partners and
creditors of the Collateral Administrator, and no license, permit, approval or
authorization of, exemption by, notice or report to, or registration, filing or
declaration with, any governmental authority is required by the Collateral
Administrator in connection with this Agreement or the execution, delivery,
performance, validity or enforceability of this Agreement and the obligations
imposed upon it hereunder. This Agreement constitutes, and each instrument and
document required hereunder, when executed and delivered by the Collateral
Administrator hereunder, will constitute, the legally valid and binding
obligations of the Collateral Administrator enforceable against the Collateral
Administrator in accordance with their terms subject, as to enforcement, (a) to
the effect of bankruptcy, insolvency or similar laws affecting generally the
enforcement of creditors’ rights as such laws would apply in the event of any
bankruptcy, receivership, insolvency or similar event applicable to the
Collateral Administrator and (b) to general equitable principles (whether
enforceability of such principles is considered in a proceeding at law or in
equity).

(ii)                 The execution, delivery and performance of this Agreement,
the Collateral Administrator’s obligations hereunder and the documents and
instruments required hereunder will not violate any provision of any existing
law or regulation binding on the Collateral Administrator, or any order,
judgment, award or decree of any court, arbitrator or governmental authority
binding on the Collateral Administrator, or the organizational documents of the
Collateral Administrator or of any mortgage, indenture, lease, contract or other
agreement, instrument or undertaking to which the Collateral Administrator is a
party or by which the Collateral Administrator or any of its assets may be
bound, the violation of which would have a material adverse effect on the
business, operations, assets or financial condition of the Collateral
Administrator and will not result in, or require, the creation or imposition of
any lien on any of its property, assets or revenues pursuant to the provisions
of any such mortgage, indenture, lease, contract or other agreement, instrument
or undertaking.

9.                   Amendments. This Agreement may not be amended, changed,
modified or terminated (except as otherwise expressly provided herein) except by
the Investment Manager, the Issuer, the Collateral Administrator and, for so
long as the Notes issued under the Indenture remain Outstanding, Holders of a
Majority of the Notes in writing.

10.                Governing Law. THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH, AND THIS AGREEMENT AND ANY MATTERS ARISING OUT OF OR RELATING
IN ANY WAY WHATSOEVER TO THIS AGREEMENT (WHETHER IN CONTRACT, TORT OR OTHERWISE)
SHALL BE GOVERNED BY, THE LAWS OF THE STATE OF NEW YORK.

 

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11.                Notices. All notices, requests, directions and other
communications permitted or required hereunder shall be in writing and shall be
deemed to have been duly given (i) when delivered personally, (ii) when
transmitted by facsimile or other electronic means of communication (it being
agreed that such notice shall be effective at the time that a transmission
report confirming transmission is generated by the sender's facsimile machine)
or (iii) when mailed, first class postage prepaid, or sent by overnight courier
service, to the parties at their respective addresses set forth below (or to
such other address as a party may have specified by written notice given to the
other parties pursuant to this provision.

 

If to the Collateral Administrator, to:

 

Virtus Group, LP
5400 Westheimer Court
Suite 760

Houston, Texas 77056
Telecopy: (866) 816-3203

 

If to the Issuer, to:

Green Creek LLC

c/o FS Investment Corporation II
Cira Centre
2929 Arch Street, Suite 675
Philadelphia, Pennsylvania 19104
Facsimile: (215) 222-4649
Attention: Gerald F. Stahlecker

 

If to the Investment Manager, to:

FS Investment Corporation II

Cira Centre
2929 Arch Street, Suite 675
Philadelphia, Pennsylvania 19104
Facsimile: (215) 222-4649
Attention: Gerald F. Stahlecker

12.                Successors and Assigns. This Agreement shall inure to the
benefit of, and be binding upon, the successors and assigns of each of the
Investment Manager, the Issuer and the Collateral Administrator (including by
merger or consolidation); provided, however, that the Collateral Administrator
may not assign its rights and obligations hereunder without the prior written
consent of the Investment Manager and the Issuer, except that the Collateral
Administrator may delegate to, employ as agent, or otherwise cause any duty or
obligation hereunder to be performed by, any Affiliate of the Collateral
Administrator or its successors without the prior written consent of the
Investment Manager and the Issuer, provided that the Collateral Administrator
shall remain directly liable to the Issuer for the performance of its duties
hereunder.

13.                Bankruptcy Non-Petition and Limited Recourse. Notwithstanding
any other provision of this Agreement, the Collateral Administrator and the
Investment Manager may not, prior to the date which is one year and one day (or,
if longer, the then applicable preference period plus one day) after the payment
in full of all the Notes, institute against, or join any other Person in
instituting against, the Issuer, any bankruptcy, reorganization, arrangement,
insolvency, moratorium or liquidation proceedings, or other proceedings under
United States federal or state bankruptcy laws, or any similar laws; provided,
however, that nothing in this agreement by the Investment Manager, the
Collateral Administrator or the Issuer (i) shall preclude, or be deemed to
estop, the Investment Manager or the Collateral Administrator (A) from taking
any action prior to the expiration of the aforementioned one year plus one day
period (or if longer, the applicable preference period plus one day) in (x) any
case or proceeding voluntarily filed or commenced by the Issuer or (y) any
involuntary insolvency proceeding filed or commenced against the Issuer by a
Person other than the Investment Manager or the Collateral Administrator or any
of their respective Affiliates or (B) from commencing against the Issuer or any
properties of the Issuer, any legal action which is not a bankruptcy,
reorganization, arrangement, insolvency, moratorium or liquidation proceeding.
The Issuer’s obligations hereunder will be solely the corporate obligations of
the Issuer, and the Collateral Administrator and the Investment Manager will not
have any recourse to any of the directors, officers, employees, shareholders,
members, governors or Affiliates of the Issuer with respect to any claims,
losses, damages, liabilities, indemnities or other obligations in connection
with any transactions contemplated hereby. The obligations of the Issuer
hereunder shall be limited to the net proceeds of the Assets (if any), payable
solely in accordance with the order specified in the Priority of Payments under
the Indenture, and following realization of the Assets and the application of
their proceeds in accordance with the Priority of Payments under the Indenture,
any outstanding obligations of the Issuer hereunder, and any claims in respect
thereof, shall be extinguished and shall not thereafter revive. The provisions
of this Section 13 shall survive the termination of this Agreement.

 

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14.                Counterparts. This Agreement may be executed in any number of
counterparts, including by facsimile or other electronic means of communication,
each of which shall be deemed to be an original, but all of which together shall
constitute but one and the same instrument. Delivery of an executed counterpart
of this Agreement by e-mail (PDF) or telecopy shall be as effective as delivery
of a manually executed counterpart of this Agreement.

15.                Conflict with the Indenture. If this Agreement shall require
that any action be taken with respect to any matter and the Indenture shall
require that, a different action be taken with respect to such matter, and such
actions shall be mutually exclusive, or if this Agreement should otherwise
conflict with the Indenture, the Indenture shall govern.

16.                Assignment of Issuer’s Rights. The parties hereto hereby
acknowledge the Issuer’s Grant pursuant to the Indenture of its right, title and
interest in, to and under this Agreement.

17.                Jurisdiction. The parties hereto hereby irrevocably submit to
the non-exclusive jurisdiction of any New York State or Federal court sitting in
the Borough of Manhattan in The City of New York in any action or proceeding
arising out of or relating to this Agreement, and the parties hereto hereby
irrevocably agree that all claims in respect of such action or proceeding may be
heard and determined in such New York State or Federal court. The parties hereto
hereby irrevocably waive, to the fullest extent that they may legally do so, the
defense of an inconvenient forum to the maintenance of such action or
proceeding. The parties hereto hereby agree that a final judgment in any such
action or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by law.

18.                Waiver of Jury Trial Right. EACH PARTY HEREBY IRREVOCABLY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT
THAT IT MAY HAVE TO A TRIAL BY JURY (BUT NO OTHER JUDICIAL REMEDIES) IN RESPECT
OF ANY PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT AND THE
TRANSACTIONS CONTEMPLATED HEREBY. Each party hereby (i) certifies that no
representative, agent or attorney of the other has represented, expressly or
otherwise, that the other would not, in the event of such proceedings, seek to
enforce the foregoing waiver and (ii) acknowledges that it has been induced to
enter into this Agreement by, among other things, the mutual waivers and
certifications in this Section 18.

 

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IN WITNESS WHEREOF, the parties hereto have caused this Collateral
Administration Agreement to be executed effective as of the day first above
written.

  GREEN CREEK LLC   the Issuer               By: /s/ Gerald F. Stahlecker    
Name: Gerald F. Stahlecker     Title: Executive Vice President                  
  FS INVESTMENT CORPORATION II   the Investment Manager               By: /s/
Gerald F. Stahlecker     Name: Gerald F. Stahlecker     Title: Executive Vice
President                     VIRTUS GROUP, LP   the Collateral Administrator  
            By: /s/ Joseph U. Elston     Name: Joseph U. Elston     Title:
Partner