FS Investment Corporation IV 8-K [fsiciv-8k_112219.htm]

 

 

Exhibit 10.1 

 

 

 

U.S. $200,000,000

 

LOAN AND SECURITY AGREEMENT

 

by and among

 

AMBLER FUNDING LLC,
as the Borrower

 

EACH OF THE LENDERS FROM TIME TO TIME PARTY HERETO,
as the Lenders

 

ALLY BANK,
as the Administrative Agent and Arranger

 

and

 

WELLS FARGO BANK, N.A.,
as the Collateral Administrator and the Collateral Custodian

 

Dated as of November 22, 2019

 

 

  

 

 

 

TABLE OF CONTENTS

 

Page

 

ARTICLE I

 

DEFINITIONS

  Section 1.1    Certain Defined Terms 2 Section 1.2    Other Terms 53 Section
1.3    Computation of Time Periods 53 Section 1.4    Interpretation 53 Section
1.5    Calculation of Borrowing Base 54      

ARTICLE II

 

THE NOTES

  Section 2.1    The Notes 54 Section 2.2    Procedures for Advances by the
Lenders 55 Section 2.3    Principal Repayments 57 Section 2.4    Determination
of Interest 57 Section 2.5    Notations on Notes 57 Section 2.6    Reduction of
Borrowing Base Deficiency 58 Section 2.7    Settlement Procedures 58 Section
2.8    Alternate Settlement Procedures 61 Section 2.9    Collections and
Allocations 62 Section 2.10    Payments, Computations, Etc 64 Section 2.11   
Fees 65 Section 2.12   Increased Costs; Capital Adequacy; Illegality 65 Section
2.13    Taxes 67 Section 2.14    Reinvestment; Discretionary Sales,
Substitutions and Repurchases of Loans 70 Section 2.15    Assignment of the Sale
Agreement 74 Section 2.16    Defaulting Lenders 74 Section 2.17    Mitigation
Obligations; Replacement of Lenders 75 Section 2.18    Increase of Commitment;
Facility Amount 76 Section 2.19    Termination or Reduction of Commitments 77  
   

ARTICLE III

 

CONDITIONS TO THE EFFECTIVE DATE AND ADVANCES

  Section 3.1    Conditions to Effective Date 77 Section 3.2    Conditions
Precedent to All Advances and Acquisitions of Loans 79 Section 3.3   
Custodianship; Transfer of Loans and Permitted Investments 81

 

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ARTICLE IV

 

REPRESENTATIONS AND WARRANTIES

  Section 4.1    Representations and Warranties of the Borrower 83 Section
4.2    Representations and Warranties of the Borrower Relating to the Agreement
and the Collateral 92 Section 4.3    [Reserved] 93 Section 4.4   
Representations and Warranties of the Collateral Custodian 93 Section 4.5   
[Reserved] 94      

ARTICLE V

 

GENERAL COVENANTS

  Section 5.1    Affirmative Covenants of the Borrower 94 Section 5.2   
Negative Covenants of the Borrower 103 Section 5.3   [Reserved] 106 Section
5.4    [Reserved] 106 Section 5.5    Affirmative Covenants of the Collateral
Custodian 106 Section 5.6    Negative Covenants of the Collateral Custodian 106
Section 5.7    Affirmative Covenants of the Collateral Administrator 106 Section
5.8    Negative Covenants of the Collateral Administrator 107      

ARTICLE VI

 

COLLATERAL ADMINISTRATION

  Section 6.1    Accounts 107 Section 6.2    [Reserved] 108 Section 6.3   
[Reserved] 108 Section 6.4    [Reserved] 108 Section 6.5    [Reserved] 108
Section 6.6    [Reserved] 108 Section 6.7    [Reserved] 108 Section 6.8   
Reports 108 Section 6.9    [Reserved] 109 Section 6.10    [Reserved] 109 Section
6.11    [Reserved] 109 Section 6.12    [Reserved] 109

ARTICLE VII

 

THE COLLATERAL CUSTODIAN AND COLLATERAL ADMINISTRATOR

 

Section 7.1    Designation of Collateral Custodian. 109

 

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Section 7.2    Duties of Collateral Custodian 109 Section 7.3    Merger or
Consolidation 112 Section 7.4    Collateral Custodian Compensation 112 Section
7.5    Collateral Custodian Removal 113 Section 7.6    Limitation on Liability
113 Section 7.7    Resignation of the Collateral Custodian 116 Section 7.8   
Release of Documents 116 Section 7.9    Return of Required Loan Documents 117
Section 7.10    Access to Certain Documentation and Information Regarding the
Collateral; Audits 118 Section 7.11    Designation of Collateral Administrator
118 Section 7.12    Appointment of Collateral Administrator 119 Section 7.13   
Merger or Consolidation 119 Section 7.14    Reserved 119 Section 7.15   
Collateral Administrator Removal 119 Section 7.16   Limitation on Liability 119
Section 7.17   Resignation of the Collateral Administrator 121      

ARTICLE VIII

 

SECURITY INTEREST

  Section 8.1    Grant of Security Interest 122 Section 8.2    Release of Lien
on Collateral 123 Section 8.3    Remedies 123 Section 8.4    Waiver of Certain
Laws 124 Section 8.5    Power of Attorney 124      

ARTICLE IX

 

EVENTS OF DEFAULT

  Section 9.1    Events of Default 124 Section 9.2    Remedies 128      

ARTICLE X

 

INDEMNIFICATION

  Section 10.1    Indemnities by the Borrower 130 Section 10.2    [Reserved] 133
Section 10.3    After-Tax Basis 133

 

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ARTICLE XI

 

THE ADMINISTRATIVE AGENT

  Section 11.1    Appointment 133 Section 11.2    Standard of Care; Exculpatory
Provisions 134 Section 11.3    Administrative Agent’s Reliance, Etc 135 Section
11.4    Credit Decision with Respect to the Administrative Agent 136 Section
11.5    Indemnification of the Administrative Agent 136 Section 11.6   
Successor Administrative Agent 136 Section 11.7    Delegation of Duties 137
Section 11.8    Payments by the Administrative Agent 137 Section 11.9   
Collateral Matters 137

ARTICLE XII

 

MISCELLANEOUS

Section 12.1    Amendments and Waivers 138 Section 12.2    Notices, Etc 140
Section 12.3    Ratable Payments 141 Section 12.4    No Waiver; Remedies 141
Section 12.5    Binding Effect; Benefit of Agreement 142 Section 12.6    Term of
this Agreement 142 Section 12.7    Governing Law; Jury Waiver 142 Section
12.8    Consent to Jurisdiction; Waivers 142 Section 12.9    Costs and Expenses
143 Section 12.10    No Proceedings 143 Section 12.11    Recourse Against
Certain Parties 144 Section 12.12    Protection of Right, Title and Interest in
the Collateral; Further Action Evidencing Advances 145 Section 12.13   
Confidentiality 145 Section 12.14    Execution in Counterparts; Severability;
Integration 147 Section 12.15    Waiver of Setoff 147 Section 12.16   
Assignments by the Lenders 148 Section 12.17    Heading and Exhibits 150 Section
12.18    Effect of Benchmark Transition Event 150 Section 12.19    Divisions 151
Section 12.20    Judgment Currency 152

ARTICLE XIII

 

tax considerations

 

Section 13.1    Acknowledgement of Parties 153

 

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ARTICLE XIV

 

[RESERVED]

 

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EXHIBITS     EXHIBIT A-1 Form of Funding Notice EXHIBIT A-2 Form of Repayment
Notice EXHIBIT A-3 Form of Reinvestment Notice EXHIBIT A-4 Form of Borrowing
Base Certificate EXHIBIT A-5 [Reserved] EXHIBIT A-6 Form of Payment Date Report
EXHIBIT A-7 Form of Static Pool Analysis EXHIBIT B Form of Promissory Note
EXHIBIT C Form of Officer’s Certificate as to Solvency EXHIBIT D Form of
Officer’s Closing Certificate EXHIBIT E Form of Release of Underlying
Instruments EXHIBIT F [Reserved] EXHIBIT G Form of Transferee Letter EXHIBIT H
Form of Joinder Supplement EXHIBIT I Form of Section 2.13 Certificate EXHIBIT J
Form of Collateral Custodian Certification EXHIBIT K Form of Compliance
Certificate     SCHEDULES     SCHEDULE I FS/KKR Party Names SCHEDULE II Loan
List SCHEDULE III [Reserved] SCHEDULE IV Agreed-Upon Procedures SCHEDULE V S&P
Industry Classifications     ANNEXES     ANNEX A Addresses for Notices ANNEX B
Commitments

 

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LOAN AND SECURITY AGREEMENT

 

THIS LOAN AND SECURITY AGREEMENT (as amended, modified, waived, supplemented,
restated or replaced from time to time, this “Agreement”) is made as of November
22, 2019, by and among:

 

(1)               Ambler funding llc, a Delaware limited liability company, as
the borrower (the “Borrower”);

 

(2)               EACH OF THE LENDERS FROM TIME TO TIME PARTY HERETO (together
with its respective successors and assigns in such capacity, each a “Lender”,
collectively, the “Lenders”);

 

(3)               ALLY BANK (together with its successors and assigns, “Ally
Bank”), as the administrative agent hereunder (together with its successors and
assigns in such capacity, the “Administrative Agent”) and as Arranger; and

 

(4)               WELLS FARGO BANK, N.A., not in its individual capacity but as
the collateral custodian (together with its successors and assigns in such
capacity, the “Collateral Custodian”) and the collateral administrator (together
with its successors and assigns in such capacity, the “Collateral
Administrator”).

 

RECITALS

 

WHEREAS, the Borrower has requested that the Lenders extend credit hereunder by
providing Commitments and making Advances under the Notes from time to time for
the purchase of certain Eligible Loans from the Transferor pursuant to the Sale
Agreement or directly from a third party pursuant to any Third Party Sale
Agreement and for the general business purposes of the Borrower; and

 

WHEREAS, the Lenders are willing to extend such credit to the Borrower on the
terms and subject to the conditions set forth herein;

  

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ARTICLE I

DEFINITIONS

 

NOW, THEREFORE, based upon the foregoing Recitals, the mutual premises and
agreements contained herein, and other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the parties hereto,
intending to be legally bound, hereby agree as follows:

 

Section 1.1            Certain Defined Terms.

 

Certain capitalized terms used throughout this Agreement are defined in this
Section 1.1. As used in this Agreement and its schedules, exhibits and other
attachments, unless the context requires a different meaning, the following
terms shall have the following meanings:

 

“1940 Act”: The Investment Company Act of 1940, as amended, and the rules and
regulations promulgated thereunder.

 

“Account”: Any of the Collateral Account, the General Collection Account, the
Principal Collection Account, the Interest Collection Account, the Unfunded
Exposure Account and any sub-accounts thereof deemed appropriate or necessary by
the Administrative Agent or the Collateral Custodian for convenience in
administering such accounts.

 

“Account Control Agreement”: The Account Control Agreement, dated as of the date
hereof, among the Borrower, as the pledgor, the Administrative Agent and Well
Fargo Bank, N.A., as the Collateral Custodian and as the Securities
Intermediary, as the same may be amended, modified, waived, supplemented or
restated from time to time.

 

“Accrual Period”: With respect to (a) the first Payment Date, the period from
and including the Effective Date to but excluding the Determination Date
preceding the first Payment Date, and (b) any subsequent Payment Date, the
period from and including the Determination Date preceding the previous Payment
Date to but excluding the Determination Date preceding the current Payment Date
(or, in the case of the final Payment Date, to and including such Payment Date).

 

“Adjusted Borrowing Value”: For any Loan, for any date of determination, an
amount equal to the Assigned Value of such Loan at such time multiplied by the
Dollar Equivalent of the outstanding principal balance of such Loan (including
compound or PIK Interest which has accrued and is unpaid at the time such Loan
was acquired by the Borrower, but excluding any accrued or unpaid or PIK
Interest accruing at any time thereafter).

 

“Administrative Agent”: Ally Bank, in its capacity as administrative agent for
Lenders hereunder, together with its permitted successors and assigns, including
any successor appointed pursuant to Section 11.6.

 

“Administrative Expenses”: All amounts (including indemnification payments) due
or accrued and payable by the Borrower to any Person pursuant to any Transaction
Document (other than principal, interest and fees), including, but not limited
to, any third party service provider to the Borrower, any Lender, the Collateral
Administrator, the Collateral Custodian or the Securities Intermediary,
accountants, agents and counsel of any of the foregoing for fees and expenses or
any other Person in respect of any other costs, expenses, or other payments
(including indemnification payments).

 

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“Administrative Questionnaire”: An administrative questionnaire in a form
supplied by the Administrative Agent.

 

“Advance”: Each funding by the Lenders hereunder (including each Loan Advance
and each advance made for the purpose of funding the Unfunded Exposure Account
pursuant to Section 2.2(e)). The application of amounts on deposit in the
Unfunded Exposure Account to fund a Revolving Loan or Delayed Draw Loan in
accordance with Section 2.9(e) shall not be considered an “Advance”.

 

“Advance Date”: With respect to any Advance, the date on which such Advance is
made.

 

“Advance Rate”: As follows:

 

(a)            with respect to First Lien Loans for which the applicable Obligor
has Permitted EBITDA less than $10,000,000, sixty percent (60.00%);

 

(b)            with respect to First Lien Loans for which the applicable Obligor
has Permitted EBITDA greater than or equal to $10,000,000 but less than
$25,000,000, seventy percent (70.00%);

 

(c)            with respect to First Lien Loans for which the applicable Obligor
has Permitted EBITDA greater than or equal to $25,000,000 but less than
$50,000,000, seventy-two and one-half percent (72.50%);

 

(d)            with respect to First Lien Loans for which the applicable Obligor
has Permitted EBITDA greater than or equal to $50,000,000, seventy-five percent
(75.00%);

 

(e)            with respect to First Lien Loans for which the applicable Obligor
(x) has Permitted EBITDA greater than $50,000,000 and (y) has a debt rating
equal to or greater than “B-” by S&P (or the equivalent debt rating of another
Rating Agency; provided that if the applicable Obligor has a debt rating from
more than one Rating Agency, the lowest such rating shall apply) so long as at
least two current quotes for such debt rating exist from brokers acceptable to
Administrative Agent in its sole discretion, seventy five percent (75.00%);

 

(f)             with respect to First Lien Last Out Loans, sixty percent
(60.00%);

 

(g)            with respect to Second Lien Loans (including any Principal
Finance Loans that would satisfy the definition of Second Lien Loan but for the
exclusion of Principal Finance Loans from such definition), thirty-five percent
(35.00%); and

 

(h)            with respect to Principal Finance Loan (other than any Principal
Finance Loans that would satisfy the definition of Second Lien Loan but for the
exclusion of Principal Finance Loans from such definition), fifty percent
(50.00%).

 

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“Advances Outstanding”: On any day, the aggregate principal amount of all
Advances outstanding on such day, after giving effect to all repayments of
Advances and the making of new Advances on such day.

 

“Affiliate”: With respect to a Person, means any other Person that, directly or
indirectly, controls, is controlled by or is under common control with such
Person, or is a director or officer of such Person; provided that for purposes
of determining whether any Loan is an Eligible Loan or any Obligor is an
Eligible Obligor, the term Affiliate shall not include any Affiliate
relationship which may exist solely as a result of direct or indirect ownership
of, or control by, a common Financial Sponsor. For purposes of this definition,
“control,” when used with respect to any specified Person means the possession,
directly or indirectly, of the power to vote 50.01% or more of the voting
securities of such Person or to direct or cause the direction of the management
or policies of such Person, whether through the ownership of voting securities,
by contract or otherwise.

 

“Agent EBITDA Percentage”: With respect to any Loan, a percentage determined by
the Administrative Agent in its reasonable discretion at the time such Loan is
first included in the Collateral; provided that the Agent EBITDA Percentage of
any Loan for which (i) the applicable Obligor that has a debt rating equal to or
greater than “B-” by S&P (or the equivalent debt rating of another Rating
Agency; provided that if the applicable Obligor has a debt rating from more than
one Rating Agency, the lowest such rating shall apply)) or (ii) the aggregate
amount of Capped Add-Backs did not exceed the EBITDA Add-Back Cap at the time
such Loan was included in the Collateral, shall be deemed to be one hundred
percent (100%).

 

“Agented Note”: Any Loan originated as a part of a syndicated loan transaction
that has been closed (without regard to any contemporaneous or subsequent
syndication of such Loan) prior to such Loan becoming part of the Collateral.

 

“Aggregate Unfunded Exposure Amount”: On any date of determination, the Dollar
Equivalent of the sum of the Unfunded Exposure Amounts of all Loans included in
the Collateral.

 

“Aggregate Unfunded Exposure Equity Amount”: On any date of determination, the
Dollar Equivalent of the sum of the Unfunded Exposure Equity Amounts of all
Eligible Loans included in the Collateral.

 

“Agreed-Upon Procedures Report”: The meaning specified in Section 5.1(t)(vi).

 

“Agreement”: The meaning specified in the Preamble.

 

“Ally Bank”: The meaning specified in the Preamble.

 

“Applicable Collateral Value”: With respect to (a) Eligible Loans (other than
Principal Finance Loans) relating to (i) Tier 3 Obligors, eighty-seven and
one-half percent (87.50%) (ii) Tier 2 Obligors, ninety-five percent (95.00%),
and (iii) Tier 1 Obligors, one hundred percent (100.00%), and (b) Principal
Finance Loans, the Fair Market Value.

 

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“Applicable Law”: For any Person or property of such Person, all existing and
future laws, rules, regulations, statutes, treaties, codes, ordinances, permits,
certificates, orders and licenses of and interpretations by any Governmental
Authority which are applicable to such Person or property (including predatory
and abusive lending laws; laws, rules and regulations relating to licensing,
fair credit billing, fair credit reporting, equal credit opportunity, fair debt
collection practices and privacy; usury laws; truth in lending laws (including
the Federal Truth in Lending Act); and Regulation Z and Regulation B of the
Board of Governors of the Federal Reserve System), and applicable judgments,
decrees, injunctions, writs, awards or orders of any court, arbitrator or other
administrative, judicial, or quasi-judicial tribunal or agency of competent
jurisdiction.

 

“Applicable Spread”: A rate per annum equal to (a) with respect to any Advance
bearing interest at the LIBOR Rate, (i) so long as no Event of Default has
occurred and is continuing, 2.25% or (ii) if an Event of Default has occurred
and is continuing, at the election of the Administrative Agent or the Required
Lenders, 4.25% and (b) with respect to any Advance bearing interest at the Base
Rate, (i) so long as no Event of Default has occurred and is continuing, 1.25%
or (ii) if an Event of Default has occurred and is continuing, at the election
of the Administrative Agent or the Required Lenders, 3.25%.

 

“Approved Country”: United Kingdom and Canada.

 

“Approved Fund”: Any fund that is administered or managed by (a) a Lender, (b)
an Affiliate of a Lender or (c) an entity or an Affiliate of an entity that
administers or manages a Lender.

 

“Assigned Value”:

 

(a)            With respect to each Loan, as of any Measurement Date, prior to a
Value Adjustment Event as to such Loan, the Assigned Value of such Loan shall be
the lesser of (x) the Purchase Price and (y) the Applicable Collateral Value.

 

(b)            If a Value Adjustment Event with respect to such Loan occurs, the
“Assigned Value” of such Loan will be amended by multiplying the Assigned Value
determined pursuant to clause (a) above by (i) with respect to a Value
Adjustment Event pursuant to clause (a) of the definition of Value Adjustment
Event, twenty percent (20%), (ii) with respect to a Value Adjustment Event
pursuant to clause (b) of the definition of Value Adjustment Event, twenty-five
percent (25%), (iii) with respect to a Value Adjustment Event pursuant to clause
(c) of the definition of Value Adjustment Event, fifteen percent (15%) for the
first twelve (12) months following the occurrence thereof, and zero percent (0%)
thereafter. The amended Assigned Value of each Loan shall be communicated by the
Administrative Agent to the Borrower, the Collateral Manager, the Collateral
Custodian, the Collateral Administrator and the Lenders pursuant to an Assigned
Value Notice.

 

(c)            For the avoidance of doubt, (i) the Assigned Value of any Loan
that is not an Eligible Loan shall be zero percent (0%) and (ii) the percentage
of par with respect to each Loan shall be calculated in the applicable Currency.

 

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“Assigned Value Notice”: A written notice (which may in the form of an e-mail)
delivered by the Administrative Agent to the Borrower, the Collateral Manager,
the Lenders and the Collateral Custodian and the Collateral Administrator
specifying the value of a Loan determined in accordance with terms of the
definition of “Assigned Value” in this Section 1.1.

 

“Assignment of Mortgage”: An assignment of the Mortgage, notice of transfer or
equivalent instrument in recordable form sufficient under the laws of the
jurisdiction wherein the related mortgaged property is located to effect the
assignment of the Mortgage to the Administrative Agent, which assignment, notice
of transfer or equivalent instrument may be in the form of one or more blanket
assignments covering the Loans secured by mortgaged properties located in the
same jurisdiction, if permitted by Applicable Law.

 

“Availability”: As of any Measurement Date, an amount equal to the lesser of (a)
the Facility Amount minus, the amount of the Aggregate Unfunded Exposure Amount
that is not then on deposit in the Unfunded Exposure Account as of such date;
(b)(i) the product of (A) the Dollar Equivalent of the aggregate Adjusted
Borrowing Value of all Eligible Loans minus the Dollar Equivalent of an amount
equal to the Excess Concentration Amount as of such date multiplied by (B) the
Weighted Average Advance Rate, minus (ii) the amount of the Aggregate Unfunded
Exposure Equity Amount that is not then on deposit in the Unfunded Exposure
Account plus (iii) the Dollar Equivalent of the amount of Principal Collections
on deposit in the Principal Collection Account as of such date; and (c) the
Dollar Equivalent of the aggregate Adjusted Borrowing Value of all Eligible
Loans as of such date minus, the Minimum Credit Enhancement Amount minus (ii)
the amount of the Aggregate Unfunded Exposure Equity Amount that is not then on
deposit in the Unfunded Exposure Account plus (iii) the Dollar Equivalent of the
amount of Principal Collections on deposit in the Principal Collection Account
as of such date; provided, that on and after the Revolving Period End Date,
Availability shall be zero.

 

“Available Funds”: With respect to any Payment Date, all amounts on deposit in
the Collection Account.

 

“Bankruptcy Code”: The United States Bankruptcy Reform Act of 1978 (11 U.S.C. §
101, et seq.), as amended from time to time.

 

“Base Rate”: On any date, a fluctuating per annum interest rate equal to the
higher of (a) the Prime Rate or (b) the Federal Funds Rate plus 0.5%; provided
that, notwithstanding the foregoing, on any date LIBOR exceeds the higher of the
rates specified in clauses (a) and (b), the Base Rate shall be increased by such
excess for such date.

 

“Benchmark Replacement”: The sum of: (a) the alternate benchmark rate (which may
include Term SOFR) that has been selected by the Administrative Agent and the
Borrower giving due consideration to (i) any selection or recommendation of a
replacement rate or the mechanism for determining such a rate by the Relevant
Governmental Body or (ii) any evolving or then-prevailing market convention for
determining a rate of interest as a replacement to the LIBOR Rate for
Dollar-denominated syndicated credit facilities and (b) the Benchmark
Replacement Adjustment; provided that, if the Benchmark Replacement as so
determined would be less than zero, the Benchmark Replacement will be deemed to
be zero for the purposes of this Agreement.

 

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“Benchmark Replacement Adjustment”: With respect to any replacement of the LIBOR
Rate with an Unadjusted Benchmark Replacement for each applicable interest
period, the spread adjustment, or method for calculating or determining such
spread adjustment, (which may be a positive or negative value or zero) that has
been selected by the Administrative Agent and the Borrower giving due
consideration to (i) any selection or recommendation of a spread adjustment, or
method for calculating or determining such spread adjustment, for the
replacement of the LIBOR Rate with the applicable Unadjusted Benchmark
Replacement by the Relevant Governmental Body or (ii) any evolving or
then-prevailing market convention for determining a spread adjustment, or method
for calculating or determining such spread adjustment, for the replacement of
the LIBOR Rate with the applicable Unadjusted Benchmark Replacement for
Dollar-denominated syndicated credit facilities at such time.

 

“Benchmark Replacement Conforming Changes”: With respect to any Benchmark
Replacement, any technical, administrative or operational changes (including
changes to the timing and frequency of determining rates and making payments of
interest and other administrative matters) that the Administrative Agent decides
may be appropriate to reflect the adoption and implementation of such Benchmark
Replacement and to permit the administration thereof by the Administrative Agent
in a manner substantially consistent with market practice (or, if the
Administrative Agent decides that adoption of any portion of such market
practice is not administratively feasible or if the Administrative Agent
determines that no market practice for the administration of the Benchmark
Replacement exists, in such other manner of administration as the Administrative
Agent decides is reasonably necessary in connection with the administration of
this Agreement).

 

“Benchmark Replacement Date”: The earlier to occur of the following events with
respect to the LIBOR Rate:

 

(1) in the case of clause (1) or (2) of the definition of “Benchmark Transition
Event,” the later of (a) the date of the public statement or publication of
information referenced therein and (b) the date on which the administrator of
the LIBOR Rate permanently or indefinitely ceases to provide the LIBOR Rate; or

 

(2) in the case of clause (3) of the definition of “Benchmark Transition Event,”
the date of the public statement or publication of information referenced
therein.

 

“Benchmark Transition Event”: The occurrence of one or more of the following
events with respect to the LIBOR Rate:

 

(1) a public statement or publication of information by or on behalf of the
administrator of the LIBOR Rate announcing that such administrator has ceased or
will cease to provide the LIBOR Rate, permanently or indefinitely; provided
that, at the time of such statement or publication, there is no successor
administrator that will continue to provide the LIBOR Rate;

 

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(2) a public statement or publication of information by the regulatory
supervisor for the administrator of the LIBOR Rate, the U.S. Federal Reserve
System, an insolvency official with jurisdiction over the administrator for the
LIBOR Rate, a resolution authority with jurisdiction over the administrator for
the LIBOR Rate or a court or an entity with similar insolvency or resolution
authority over the administrator for the LIBOR Rate, which states that the
administrator of the LIBOR Rate has ceased or will cease to provide the LIBOR
Rate permanently or indefinitely; provided that, at the time of such statement
or publication, there is no successor administrator that will continue to
provide LIBOR; or

 

(3) a public statement or publication of information by the regulatory
supervisor for the administrator of the LIBOR Rate announcing that the LIBOR
Rate is no longer representative.

 

“Benchmark Transition Start Date”: (a) In the case of a Benchmark Transition
Event, the earlier of (i) the applicable Benchmark Replacement Date and (ii) if
such Benchmark Transition Event is a public statement or publication of
information of a prospective event, the 90th day prior to the expected date of
such event as of such public statement or publication of information (or if the
expected date of such prospective event is fewer than 90 days after such
statement or publication, the date of such statement or publication) and (b) in
the case of an Early Opt-in Election, the date specified by the Administrative
Agent or the Required Lenders, as applicable, by notice to the Borrower, the
Administrative Agent (in the case of such notice by the Required Lenders) and
the Lenders.

 

“Benchmark Unavailability Period”: If a Benchmark Transition Event and its
related Benchmark Replacement Date have occurred with respect to the LIBOR Rate
and solely to the extent that the LIBOR Rate has not been replaced with a
Benchmark Replacement, the period (x) beginning at the time that such Benchmark
Replacement Date has occurred if, at such time, no Benchmark Replacement has
replaced the LIBOR Rate for all purposes hereunder in accordance with the
Section titled “Effect of Benchmark Transition Event” and (y) ending at the time
that a Benchmark Replacement has replaced the LIBOR Rate for all purposes
hereunder pursuant to the Section titled “Effect of Benchmark Transition Event.”

 

“Beneficial Ownership Certification”: A certification regarding beneficial
ownership required by the Beneficial Ownership Regulation.

 

“Beneficial Ownership Regulation”: 31 C.F.R. § 1010.230.

 

“Borrower”: The meaning specified in the Preamble.

 

“Borrower Interest Collections”: With respect to Borrower, as of any date, an
amount equal to the Dollar Equivalent of the aggregate amount of interest and
fees received in the Collection Accounts with respect to the Loans for the
preceding twelve (12) month period, provided, that with respect to any time
period for which twelve (12) calendar months of such amounts are not available,
Borrower Interest Collections shall be determined based on annualizing such
amounts as are available for Borrower.

 

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“Borrower Interest Expense”: With respect to Borrower, as of any date, an amount
equal to the Dollar Equivalent of the amount of the aggregate amount payable
(whether or not actually paid) in interest, costs and fees pursuant to Section
2.7 during the preceding twelve (12) month period, provided, that with respect
to any time period for which twelve (12) calendar months of such amounts are not
available, Borrower Interest Expense shall be determined based on annualizing
such amounts as are available for Borrower.

 

“Borrower’s Notice”: Any (a) Funding Notice or (b) Reinvestment Notice.

 

“Borrowing Base”: As of any Measurement Date, an amount equal to the difference
of (i) the sum of (a) the Dollar Equivalent of the aggregate Adjusted Borrowing
Value of all Eligible Loans as of such date plus (b) the Dollar Equivalent of
the amount of Principal Collections on deposit in the Principal Collection
Account minus (ii) the Dollar Equivalent of an amount equal to the Excess
Concentration Amount as of such date; provided that any Loan which at any time
is no longer an Eligible Loan shall not be included in the calculation of
“Borrowing Base”.

 

“Borrowing Base Certificate”: A certificate setting forth the calculation of the
Borrowing Base and the Availability as of each Measurement Date, in the form of
Exhibit A-4, prepared by or on behalf of the Borrower.

 

“Borrowing Base Deficiency”: The Dollar Equivalent of the amount by which, on
any date of determination, (a) the Advances Outstanding exceed (b) Availability.

 

“Breakage Costs”: With respect to any Lender and to the extent requested by such
Lender in writing (which writing shall set forth in reasonable detail the basis
for requesting any such amounts), any amount or amounts as shall compensate such
Lender for any loss (excluding loss of anticipated profits), cost or expense
actually incurred by such Lender as a result of the liquidation or re-employment
of deposits or other funds required by the Lender if any payment by the Borrower
of Advances Outstanding or Interest occurs on a date other than a Payment Date,
provided, that the Breakage Costs in respect of any such payment by the Borrower
on any Payment Date shall be deemed to be zero. All Breakage Costs shall be due
and payable hereunder on each Payment Date in accordance with Section 2.7 and
Section 2.8. The determination by the applicable Lender of the amount of any
such loss, cost or expense shall be conclusive absent manifest error.

 

“Business Day”: Any day other than a Saturday, Sunday or other day on which
commercial banks are authorized to close under the laws of, or are in fact
closed in, the State of New York or the state in which the Corporate Trust
Office is located; provided that, if any determination of a Business Day shall
relate to an Advance bearing interest at the LIBOR Rate, the term “Business Day”
shall also exclude any day on which banks are not open for dealings in dollar
deposits in the London interbank market.

 

“Canadian Dollars” and “Cdn $”: Means the lawful currency of Canada.

 

“Capital Stock”: Any and all shares, interests, participations or other
equivalents (however designated) of capital stock of a corporation, any and all
similar ownership interests in a Person (other than a corporation) and any and
all warrants, rights or options to purchase any of the foregoing.

 

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“Capped Add-Backs”: Any amounts added back to the net income of an Obligor (A)
pursuant to clauses (a)(ii)(2)(d) through (a)(ii)(2)(g) of the definition of
EBITDA in the case of an EBITDA Non-Reporting Loan or (B) pursuant to
adjustments to “reported EBITDA” or other term meaning non-adjusted EBITDA in
the case of an EBITDA Reporting Loan.

 

“Cash”: Cash or legal currency of the United States of America or Canadian
Dollars as at the time shall be legal tender for payment of all public and
private debts.

 

“Cash Interest Coverage Ratio”: With respect to any Loan for any Relevant Test
Period, either (a) the meaning of “Cash Interest Coverage Ratio” or comparable
definition set forth in the Underlying Instruments for such Loan, or (b) in the
case of any Loan with respect to which the related Underlying Instruments do not
include a definition of “Cash Interest Coverage Ratio” or comparable definition,
the ratio of (i) the Dollar Equivalent of EBITDA to (ii) the Dollar Equivalent
of Cash Interest Expense of such Obligor as of the Relevant Test Period, as
calculated by the Collateral Manager (on behalf of the Borrower) in good faith;
provided that, in calculating the Cash Interest Coverage Ratio under either of
clause (a) or clause (b) above, EBITDA of the applicable Obligor for the
Relevant Test Period shall be deemed to be no greater than Permitted EBITDA, as
defined herein, for the Relevant Test Period.

 

“Cash Interest Expense”: With respect to any Obligor for any period, the amount
which, in conformity with GAAP, would be set forth opposite the caption
“interest expense” or any like caption reflected on the most recent financial
statements delivered by such Obligor to the Borrower for such period.

 

“Certificated Security”: The meaning specified in Section 8-102(a)(4) of the
UCC.

 

“Change of Control”: The occurrence of any of the following events: (a) any
change of control of the Investment Advisor (“control” being defined for
purposes of this definition as the possession, directly or indirectly, of the
power to direct or cause the direction of the management, actions and policies
of a person, whether through voting rights, ownership rights, or by contract or
otherwise), (b) the Investment Advisor ceases to be the investment advisor of
the Collateral Manager, (c) the Collateral Manager ceases to own and control, of
record and beneficially, directly or indirectly, 100.00% of the equity interests
of the Borrower; provided that, if the Collateral Manager enters into any
merger, consolidation or amalgamation with or into a Permitted BDC and the
Permitted BDC or any other successor entity formed by or surviving such merger,
consolidation or amalgamation shall be the Collateral Manager and assumes the
rights and obligations of the Collateral Manager concurrently with the
consummation of such merger, consolidation or amalgamation then a Change of
Control shall not occur.

 

“Clearing Agency”: An organization registered as a “clearing agency” pursuant to
Section 17A of the Exchange Act.

 

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“Clearing Corporation”: The meaning specified in Section 8-102(a)(5) of the UCC.

 

“Code”: The Internal Revenue Code of 1986, as amended from time to time.

 

“Collateral”: The meaning specified in Section 8.1(a).

 

“Collateral Account”: A Securities Account created and maintained on the books
and records of the Collateral Custodian (or any other party acceptable to
Administrative Agent in its sole discretion) entitled “Collateral Account” in
the name of the Borrower and subject to the prior Lien of the Administrative
Agent for the benefit of the Secured Parties.

 

“Collateral Administration Agreement”: The Collateral Administration Agreement,
dated as of the date hereof, among the Borrower and Wells Fargo Bank, N.A., as
the Collateral Administrator, as the same may be amended, modified, waived,
supplemented or restated from time to time.

 

“Collateral Administrator”: Wells Fargo Bank, N.A., not in its individual
capacity, but solely as Collateral Administrator.

 

“Collateral Administrator Termination Notice”: The meaning specified in
Section 7.15.

 

“Collateral Custodian”: Wells Fargo Bank, N.A., not in its individual capacity,
but solely as Collateral Custodian, its successor in interest pursuant to
Section 7.3 or such Person as shall have been appointed Collateral Custodian
pursuant to Section 7.5.

 

“Collateral Custodian Fee”: The fees, expenses and indemnities of the Collateral
Custodian, Collateral Administrator, and Securities Intermediary set forth as
such in the Collateral Custodian Fee Letter or as provided for in this Agreement
or the Transaction Documents.

 

“Collateral Custodian Fee Letter”: The schedule of fees dated as of September
19, 2019, among the Collateral Custodian, the Collateral Administrator, the
Securities Intermediary and the Borrower, as the same may be amended, restated,
replaced, supplemented or otherwise modified from time to time.

 

“Collateral Custodian Termination Notice”: The meaning specified in Section 7.5.

 

“Collateral Management Agreement”: The Collateral Management Agreement dated as
of the date hereof between the Collateral Manager and the Borrower.

 

“Collateral Manager”: Initially, FS Investment Corporation IV, as collateral
manager, acting pursuant to the terms of the Collateral Management Agreement;
provided that if the Collateral Manager enters into any merger, consolidation or
amalgamation with or into a Permitted BDC, the Permitted BDC or any other
successor entity formed by or surviving such merger, consolidation or
amalgamation shall be the new Collateral Manager so long as such successor
entity assumes the rights and obligations of the outgoing Collateral Manager
concurrently with the consummation of such merger, consolidation or
amalgamation.

 

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“Collateral Manager Bylaws”: The meaning specified in the Collateral Management
Agreement.

 

“Collateral Manager Standard”: The meaning specified in the Collateral
Management Agreement.

 

“Collection Account”: Collectively, the General Collection Account, the Interest
Collection Account and the Principal Collection Account.

 

“Collections”: (a) All cash collections and other cash proceeds of any Loan,
including, without limitation or duplication, any Proceeds, any Interest
Collections, Principal Collections, amendment fees, late fees, prepayment fees,
waiver fees, settlement payments, re-financing amounts, rent, like-kind
payments, recoveries, guaranty payments or other amounts received in respect
thereof (but excluding (i) any Excluded Amounts and (ii) any amounts received by
the Borrower from an Obligor following the sale of the related Loan by the
Borrower pursuant to Section 2.14 which the Borrower is required to pay to the
purchaser of such Loan) and (b) interest earnings on Permitted Investments or
otherwise in any Account.

 

“Commitment”: With respect to each Lender, the commitment of such Lender to make
Loan Advances in accordance herewith in an amount not to exceed (a) prior to the
earlier to occur of the Revolving Period End Date or the Termination Date, the
Dollar amount set forth opposite such Lender’s name on Annex B hereto or the
amount set forth as such Lender’s “Commitment” on Schedule I to the Joinder
Supplement relating to such Lender, as applicable, as such amounts may be
reduced, increased or assigned from time to time pursuant to the provisions of
this Agreement, and (b) on or after the earliest to occur of the Revolving
Period End Date, the Termination Date or the termination of the Commitment of
such Lender, zero.

 

“Connection Income Taxes” has the meaning give in Section 2.13(a).

 

“Contractual Obligation”: With respect to any Person, any provision of any
securities issued by such Person or any indenture, mortgage, deed of trust,
contract, undertaking, agreement, instrument or other document to which such
Person is a party or by which it or any of its property is bound or to which
either is subject.

 

“Corporate Trust Office”: The applicable designated corporate trust office of
the Collateral Custodian and the Collateral Administrator specified on Annex A
hereto or such other address within the United States as the Collateral
Custodian and the Collateral Administrator may designate from time to time by
notice to the Administrative Agent.

 

“Cov-Lite Loan”: (i) A Loan that does not require the Obligor to maintain
compliance with at least one of the following financial covenants during any
reporting period applicable to such Loan, whether or not any action by, or event
relating to, the Obligor has occurred: maximum total leverage, maximum senior
leverage, maximum first lien leverage, minimum fixed charge coverage, minimum
debt service coverage, minimum EBITDA, or other customary financial covenants
and (ii) in the case of a Principal Finance Loan, a Loan that does not require
the Obligor to maintain compliance with any of the foregoing and also does not
require compliance with a maximum loan to value covenant or an
over-collateralization covenant or any similar restrictions. For the avoidance
of doubt, Loans that are cross-defaulted to other debt or other obligations of
the Obligor that is pari passu or senior that contain any of the foregoing
financial covenants shall not be considered Cov-Lite Loans hereunder.

 

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“Covenant Compliance Period”: The period beginning on the Effective Date and
ending on the date on which the Commitments have been terminated and the
Obligations have been paid in full.

 

“Currency”: Dollars or Canadian Dollars.

 

“Custody Facilities”: The designated office of the Collateral Custodian where
the Required Loan Documents shall be held, which on the Effective Date shall be
at its offices located at 425 Hennepin Ave., Minneapolis, MN 55414 or such other
address within the United States as the Collateral Custodian may designate from
time to time by notice to the Administrative Agent, Borrower and Collateral
Manager.

 

“Default”: Any event that, with the giving of notice or the lapse of time, or
both, would become an Event of Default.

 

“Defaulted Loan”: Any Loan with respect to which any of the following events
have occurred and is continuing with respect to such Loan or the related Obligor
(as applicable): (a) a default in respect of any payment of principal, interest
or commitment fees under such Loan (after giving effect to all applicable cure
periods, but in no event longer than five (5) Business Days); (b) the occurrence
of an Insolvency Event with respect to the related Obligor (except in the case
obligations with respect to a DIP Loan); (c) any determination by or on behalf
of the Borrower or the Administrative Agent that such loan is on non-accrual, is
written off or is charged off, in each case, in accordance with the Collateral
Manager Standard; (d) a default under such Loan (other than a default described
in clause (a) above), together with the election by any agent or requisite
number of lenders (including the Borrower) required to take any such action to
(i) accelerate the Loan or (ii) commence to enforce any of their other rights or
remedies pursuant to the applicable Underlying Instruments; provided, that a
default described in clause (d)(ii) shall not result in such Loan becoming a
Defaulted Loan until such default has been continuing for twelve (12)
consecutive months or longer; or (e) with respect to any Principal Finance Loan,
(i) each tranche of such Principal Finance Loan or other investment or
Indebtedness that, in each case, is senior to such Principal Finance Loan, of
the Obligor of such Principal Finance Loan would be considered a Defaulted Loan
to the extent applicable, (ii) the holders of such Principal Finance Loan or
other investment or Indebtedness have not received in cash all expected payments
of interest and other payments thereon and cash flows in respect thereof, or
(iii) are currently subject to any deferral or diversion for the benefit of the
holders of any tranche or other investment or Indebtedness that rank senior to
such Principal Finance Loan pursuant to any waterfall or similar structure.

 

“Defaulting Lender”: Any Lender that (i) has failed to fund any portion of the
Advances required to be funded by it hereunder within two (2) Business Days of
the date required to be funded by it hereunder, (ii) has otherwise failed to pay
over to the Administrative Agent or any other Lender any other amount required
to be paid by it hereunder within three (3) Business Days of the date when due,
unless such amount is the subject of a good faith dispute, (iii) has notified
the Borrower, the Administrative Agent or any other Lender in writing that it
does not intend to comply with any of its funding obligations under this
Agreement or has made a public statement to the effect that it does not intend
to comply or has failed to comply with its funding obligations under this
Agreement or generally under other agreements in which it commits or is
obligated to extend credit, or (iv) has become or is insolvent or has become the
subject of a bankruptcy or insolvency proceeding, or has had a receiver,
conservator, trustee or custodian appointed for it, or has taken any action in
furtherance of, or indicating its consent to, approval of or acquiescence in any
such proceeding or appointment.

 

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“Delayed Draw Loan”: A Loan that (i) requires one or more future advances to be
made to the Obligor, (ii) specifies a maximum amount that can be borrowed on one
or more fixed borrowing dates and (iii) does not permit the re-borrowing of any
amount previously repaid by the related Obligor; provided that such loan shall
only be considered a Delayed Draw Loan for so long as any future funding
obligations remain in effect and only with respect to any portion which
constitutes a future funding obligation.

 

“Deposit Account”: The meaning specified in Section 9-102 of the UCC.

 

“Determination Date”: The last calendar day of each March, June, September and
December, with the first Determination Date occurring on December 20, 2019.

 

“DIP Loan”: Any Loan (i) with respect to which the related Obligor is a
debtor-in-possession as defined under the Bankruptcy Code, (ii) which has the
priority allowed pursuant to Section 364 of the Bankruptcy Code and (iii) the
terms of which have been approved by a court of competent jurisdiction (the
enforceability of which is not subject to any pending contested matter or
proceeding).

 

“Discretionary Sale”: The meaning specified in Section 2.14(c).

 

“Dollar Equivalent”: On any date of determination, with respect to an amount
denominated in Canadian Dollars, the amount of Dollars that would be required to
purchase such amount of Canadian Dollars based upon the spot selling rate at
which Canadian Dollars may be exchanged for Dollars on the FXC GO screen of the
Bloomberg Financial Markets System at approximately 4:00 p.m. (New York Time) on
such date. The Administrative Agent, the Collateral Custodian and the Collateral
Administrator shall not have any responsibility for any calculation of a Dollar
Equivalent amount made by or on behalf of the Borrower. For avoidance of doubt,
the Collateral Custodian and the Collateral Administrator shall not have any
responsibility to calculate any Dollar Equivalent amount pursuant to this
Agreement.

 

“Dollars”: Means, and the conventional “$” signifies, the lawful currency of the
United States.

 

“Early Opt-in Election” means the occurrence of:

 

(1) (i) a determination by the Administrative Agent or (ii) a notification by
the Required Lenders to the Administrative Agent (with a copy to the Borrower)
that the Required Lenders have determined that Dollar-denominated syndicated
credit facilities being executed at such time, or that include language similar
to that contained in this Section titled “Effect of Benchmark Transition Event,”
are being executed or amended, as applicable, to incorporate or adopt a new
benchmark interest rate to replace the LIBOR Rate, and

 

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(2) (i) the election by the Administrative Agent or (ii) the election by the
Required Lenders to declare that an Early Opt-in Election has occurred and the
provision, as applicable, by the Administrative Agent of written notice of such
election to the Borrower and the Lenders or by the Required Lenders of written
notice of such election to the Administrative Agent.

 

“EBITDA”: (a) With respect to the last four (4) fiscal quarters with respect to
any Loan, the lesser of (i) “EBITDA”, “Adjusted EBITDA” or any comparable term
underwritten and reported by the Collateral Manager, in each case, in a manner
consistent with the Collateral Manager Standard, and (ii) (1) in the case of any
Loan that the Underlying Instruments of which define “EBITDA”, “Adjusted EBITDA”
or any comparable term (any such Loan, an “EBITDA Reporting Loan”), the meaning
of “EBITDA”, “Adjusted EBITDA” or any comparable definition in the Underlying
Instruments for such Loan; and (2) in the case of any Loan that the Underlying
Instruments of which do not define “EBITDA”, “Adjusted EBITDA” or any comparable
term (any such Loan, a “EBITDA Non-Reporting Loan”), an amount, for the Obligor
of such Loan (and including the below amounts for such twelve (12) calendar
month period for any Person acquired by or merged with such Obligor) and any
parent that is obligated pursuant to the Underlying Instruments for such Loan
(determined on a consolidated basis without duplication in accordance with GAAP)
equal to net income for such period plus (to the extent deducted in determining
net income for such period) (a) interest expense, (b) income taxes,
(c) depreciation and amortization for such twelve month period, (d) non-cash
charges and organization costs, (e) extraordinary losses in accordance with
GAAP, (f) one-time, non-recurring or extraordinary expenses as determined by the
Collateral Manager in a reasonable manner and consistent with the compliance
statements and financial reporting packages provided by the Obligors and (g) any
other item not listed in clauses (a) through (f) that the Borrower or the
Collateral Manager deems to be appropriate minus (to the extent reflected in net
income for such period) (h) non-cash income and interest income; provided that
with respect to any Obligor for which four (4) fiscal quarters of economic data
are not available, EBITDA shall be determined for such Obligor based on
annualizing the economic data from the reporting periods actually available.

 

(b)       Notwithstanding the foregoing, the Administrative Agent shall notify
the Borrower as promptly as commercially reasonable (and in any event, within
five (5) Business Days of the Administrative Agent’s receipt of the items
required to be delivered pursuant to clause (xx) of the definition of “Eligible
Loan” as of the date such Loan is first included as part of the Collateral) that
the EBITDA Add-Back Cap has been exceeded with respect to such Loan and the
Administrative Agent’s determination of the Agent EBITDA Percentage with respect
to such Loan. Following any such notification, the Borrower may promptly engage
in a Substitution or Discretionary Sale of such Loan; provided that Section
2.14(e)(vii) need not be satisfied with respect to such Substitution or
Discretionary Sale. If no such notification is provided, EBITDA shall be
calculated in accordance with clause (a) above and the Agent EBITDA Percentage
with respect to such Loan shall be one hundred percent (100%).

 

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“EBITDA Add-Back Cap”: With respect to any Loan, the maximum percentage of
EBITDA (without giving effect to Capped Add-Backs) of the applicable Obligor set
forth in the table below, based on the EBITDA of such Obligor (without giving
effect to Capped Add-Backs), in each case, as of the date such Loan is first
included as part of the Collateral:

 

EBITDA of Obligor (without giving effect to any Capped Add-Backs): EBITDA
Add-Back Cap: Less than $10,000,000 15.0% of EBITDA Equal to or greater than
$10,000,000 but less than $50,000,000 25.0% of EBITDA Equal to or greater than
$50,000,000 35.0% of EBITDA

 

“Effective Date”: November 22, 2019.

 

“Effective Date Participation Interest”: An undivided 100% participation
interest granted by the Transferor to the Borrower in and to each Loan
identified on Schedule II and in which a Lien is granted therein by the Borrower
to the Administrative Agent pursuant to this Agreement.

 

“Eligible Bid”: A bid made in good faith (and acceptable as a valid bid in the
Administrative Agent’s reasonable discretion) by a bidder for all or any portion
of the Collateral in connection with a sale of the Collateral in whole or in
part pursuant to Section 9.2(c).

 

“Eligible Loan”: Each Loan (i) for which the Administrative Agent has received
the items set forth in Section 3.2(a) and the Collateral Custodian has received
or will receive the related Required Loan Documents; and (ii)  that satisfies
each of the following eligibility requirements:

 

(a)            such Loan is a First Lien Loan, First Lien Last Out Loan, Second
Lien Loan, Principal Finance Loan or, prior to the date that is sixty (60) days
after the Effective Date (or such longer period to which the Administrative
Agent may agree in its reasonable discretion), an Effective Date Participation
Interest;

 

(b)            such Loan and the Underlying Instruments related thereto, are
eligible to be sold, assigned or transferred (or, in the case of an Effective
Date Participation Interest, participated) to the Borrower, the rights to
service, administer and enforce the rights and remedies in respect of such Loan
under the applicable Underlying Instruments inure to the benefit of the holder
of such Loan or its designee (subject to the rights of any applicable agent),
and neither the sale, transfer or assignment of such Loan to the Borrower, nor
the granting of a security interest hereunder to the Administrative Agent,
violates, conflicts with or contravenes any Applicable Law or any contractual or
other restriction, limitation or encumbrance;

 

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(c)            such Loan is payable in Dollars or in Canadian Dollars and does
not permit the currency in which such Loan is payable to be changed;

 

(d)            such Loan (A) is not an Equity Security and (B) does not
explicitly provide for the conversion or exchange into an Equity Security at any
time on or after the date it is included as part of the Collateral;

 

(e)            such Loan is not subject to an offer of exchange, redemption,
conversion or tender by its Obligor, or by any other Person, for cash, equity
securities or any other type of consideration (other than a notice of prepayment
in accordance with the terms of the Underlying Instruments);

 

(f)             the Underlying Instruments with respect to such Loan provide
that no part of the proceeds of such Loan or any other extension of credit made
thereunder will be used to purchase or carry any Margin Stock or to extend
credit to others for the purpose of purchasing or carrying any such Margin
Stock;

 

(g)            such Loan, and any payment made with respect to such Loan, is not
subject to any withholding tax, fee or governmental charge unless (i) the
Obligor thereon is required under the terms of the related Underlying Instrument
to make “gross-up” payments that cover the full amount of such withholding tax,
fee or governmental charge on an after-tax basis, or (ii) the amount of any such
withholding tax, fee or governmental charge has been disclosed in writing to the
Administrative Agent;

 

(h)            such Loan is not a Defaulted Loan;

 

(i)             such Loan is not a construction loan or a project finance loan;

 

(j)             such Loan does not constitute a bond, letter of credit,
Structured Finance Obligation, Zero Coupon Obligation, Finance Lease or chattel
paper;

 

(k)            as of the date any such Loan that is a Cov-Lite Loan is first
included as part of the Collateral, the applicable Obligor (x) has EBITDA
greater than or equal to $50,000,000 at the time of funding and (y) has a debt
rating equal to or greater than “B-” by S&P or the equivalent debt rating of
another Rating Agency or other private rating reasonably acceptable to the
Administrative Agent;

 

(l)             such Loan provides for a fixed amount of principal payable on
scheduled payment dates and/or at maturity and does not by its terms provide for
earlier amortization or prepayment, in each case, at a price less than par;

 

(m)           except for Effective Date Participation Interests, such Loan is
not a Participation Interest;

 

(n)            such Loan has a remaining term to stated maturity that does not
exceed eight (8) years;

 

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(o)            such Loan pays interest in Cash no less frequently than
semi-annually, it being understood that interest on any Loan that is paid with
the proceeds of a permitted drawing under a Revolving Loan shall satisfy this
eligibility requirement;

 

(p)            the repayment of such Loan is not subject to any material
non-credit related risk, (for example, a payment on a Loan of which is expressly
contingent upon the occurrence or nonoccurrence of a catastrophe) as determined
by Administrative Agent in its sole discretion;

 

(q)            is not an obligation (other than a Revolving Loan or a Delayed
Draw Loan) pursuant to which any future advance or funding to the Obligor may be
required to be made by the Borrower;

 

(r)             the acquisition of such Loan will not cause the Borrower to be
required to register as an investment company under the 1940 Act;

 

(s)            the primary Underlying Asset for such Loan is not real property;

 

(t)             such Loan is in the form of and is treated by the related
Obligor as indebtedness of such Obligor and is not a United States real property
interest as defined under Section 897 of the Code;

 

(u)            such Loan is not an interest only security;

 

(v)            such Loan is not a letter of credit (provided this does not
exclude Revolving Loans that include a letter of credit sub facility so long as
the Borrower is not the issuer of letters of credit thereunder);

 

(w)           such Loan is Registered;

 

(x)            if such Loan is evidenced by a promissory note or other
instrument (including an assignment agreement or transfer document), such
promissory note or other instrument has been delivered to the Collateral
Custodian;

 

(y)           if such Loan is a First Lien Loan, the applicable Obligor meets
the Net Senior Leverage Ratio requirement to be a Tier 1 Obligor, Tier 2 Obligor
or Tier 3 Obligor, as applicable; provided that any portion of such Loan causing
such Loan to be in excess of the required Net Senior Leverage Ratio for a Tier 3
Obligor shall be classified as a Second Lien Loan and be subject to clause (z)
below; provided further that for the avoidance of doubt, such portion shall not
be counted toward the aggregate Adjusted Borrowing Value of those Eligible Loans
that are Second Lien Loans for the purpose of determining the Excess
Concentration Amount;

 

(z)            if such Loan is a First Lien Last Out Loan or a Second Lien Loan,
the applicable Obligor meets the Net Senior Leverage Ratio requirement to be a
Tier 1 Obligor, Tier 2 Obligor or Tier 3 Obligor, as applicable; provided that
any portion of such Loan causing such Loan to be in excess of the required Net
Total Obligor Leverage Ratio for a Tier 3 Obligor shall be deemed to have an
Assigned Value of zero percent (0%);

 

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(aa)          as of the date such Loan is first included as part of the
Collateral, if such Loan is a Second Lien Loan, the applicable Obligor’s
trailing twelve month EBITDA is greater than or equal to $20,000,000 (without
giving effect to Capped Add-Backs);

 

(bb)         as of the date such Loan is first included as part of the
Collateral, the applicable Obligor’s trailing twelve month EBITDA is equal to or
greater than $15,000,000 (without giving effect to Capped Add-Backs);

 

(cc)          such Loan, and any payment made with respect to such Loan, has not
been more than thirty (30) days past due with respect to any payment within the
preceding twelve (12) months;

 

(dd)         as of the date such Loan is first included as part of the
Collateral, such Loan is not delinquent in payment or defaulted in any other
manner that would give rise to the right of any holder of such Loan to
accelerate such Loan and no portion of such Loan has been converted into equity;

 

(ee)          such Loan and any Underlying Assets (or, with respect to
clause (ii), the acquisition thereof) (i) comply in all material respects with
all Applicable Laws and (ii) do not cause any Secured Party (in its commercially
reasonable judgment and as evidenced by a written notice from such Secured
Party) to fail to comply with any request or directive from any Governmental
Authority having jurisdiction over such Secured Party;

 

(ff)           such Loan is eligible under its Underlying Instruments (giving
effect to the provisions of Sections 9-406 and 9-408 of the UCC) to be sold to
the Borrower and to have a security interest therein granted to the
Administrative Agent, as agent for the Secured Parties;

 

(gg)         such Loan, together with the Underlying Instruments related
thereto, (i) contains provisions substantially to the effect that such Loan and
such Underlying Instruments constitute the legal, valid and binding obligation
of the related Obligor and each guarantor thereof, enforceable against such
Obligor and each such guarantor in accordance with their terms, subject to
customary bankruptcy, insolvency and equity limitations, (ii) is not subject to
any (a) litigation or dispute or (b) offset, right of rescission, counterclaim
or defense to payment, (iii) contains provisions substantially to the effect
that the Obligor’s and each guarantor’s payment obligations thereunder are
absolute and unconditional without any right of rescission, setoff, counterclaim
or defense for any reason against the Transferor, the Borrower or any assignee
and (iv) contain provisions requiring customary covenant compliance and other
reporting requirements;

 

(hh)         such Loan (1) was originated and underwritten, or purchased and
re-underwritten, by the Transferor or any of its Affiliates in accordance with
the Collateral Manager Standard and (2) is fully documented to the satisfaction
of Administrative Agent;

 

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(ii)            the Borrower has good and marketable title to, and is the sole
owner of, such Loan, and the Borrower has granted to the Administrative Agent a
valid and perfected first priority security interest in the Loan and Underlying
Instruments, for the benefit of the Secured Parties;

 

(jj)            if such Loan is a Principal Finance Loan, it is not a Cov-Lite
Loan;

 

(kk)          all consents, licenses, approvals or authorizations of, or
registrations or declarations with, any Governmental Authority or any other
Person required to be obtained, effected or given in connection with the making,
acquisition or transfer of such Loan, have been duly obtained, effected or given
and are in full force and effect, except where the failure to have such
obtained, effected or given could not reasonably be expected, individually or in
the aggregate, to have a Material Adverse Effect;

 

(ll)            such Loan requires the related Obligor to pay customary
maintenance, repair, insurance and taxes, together with all other ancillary
costs and expenses, with respect to the Underlying Assets of such Loan (to the
extent that the Collateral Manager determines in good faith and in a
commercially reasonable manner that such requirements are appropriate for a Loan
of such type);

 

(mm)        the Underlying Instruments for such Loan do not contain a
confidentiality provision that would prohibit the Administrative Agent or any
Secured Party from exercising any of their respective rights hereunder or
obtaining all necessary information with regard to such Loan, so long as the
Administrative Agent or such Secured Party, as applicable, has agreed to
maintain the confidentiality of such information in accordance with the
provisions of such Underlying Instruments;

 

(nn)         the Obligor with respect to such Loan is an Eligible Obligor;

 

(oo)         all information provided by or on behalf of the Borrower with
respect to the Loan is true, correct and complete in all material respects;
provided that neither the Borrower nor the Collateral Manager shall be
responsible for, nor have any liability with respect to, any factual information
furnished to it by any third party not affiliated with it, except to the extent
that a Responsible Officer of such Person has actual knowledge that such factual
information is inaccurate in any material respect;

 

(pp)         such Loan or any related Underlying Instrument has not been found
to be illegal or unenforceable by the decision of a court of law or a
Governmental Authority in a proceeding brought by the related Obligor, any other
party obligated with respect to such Loan, or any Governmental Authority;

 

(qq)         as of the date such Loan is first included as part of the
Collateral, there are no proceedings pending or, to the best of the Borrower’s
knowledge, threatened in writing wherein the Obligor of such Loan, any other
obligated party or any governmental agency has alleged that such Loan or the
Underlying Instrument which creates such Loan is illegal or unenforceable;

 

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(rr)           if such Loan is acquired by the Borrower from the Transferor, the
Transferor has caused its master computer records to be clearly and
unambiguously marked to indicate that such Loan has been sold to the Borrower;

 

(ss)          no selection procedure materially adverse to the interests of the
Secured Parties was utilized by the Transferor, the Collateral Manager or the
Borrower in the selection of such Loan for inclusion in the Collateral;

 

(tt)           if more than one Loan has been made to the Obligor or multiple
creditors have an interest in such Loan, then each such Loan is subject to an
intercreditor or similar agreement in form and substance satisfactory to
Collateral Manager in its reasonable discretion setting forth the rights and
each such creditors (to the extent that the Collateral Manager determines in
good faith and in a commercially reasonable manner that an intercreditor
agreement is necessary or desirable);

 

(uu)         as of the date such Loan is first included as part of the
Collateral, the value of the Underlying Assets securing the Loan (or the
enterprise value of the underlying business determined as determined in good
faith and in a commercially reasonable manner by the Collateral Manager) at the
time such loan was purchased, equals or exceeds the outstanding principal
balance of such Loan plus the aggregate outstanding balances of all other loans
of equal seniority secured by the same Underlying Assets;

 

(vv)         if such Loan is a Principal Finance Loan, the assets underlying
such Loan cannot be derived from consumer subprime loans or receivables or
non-performing loans or receivables or any loans or receivables with an
effective annual percentage rate of thirty-six percent (36%) or more;

 

(ww)        the Underlying Instruments with respect to such Loan contain a
requirement that on a going-forward basis the applicable underlying Obligor
deliver (i) any financial statements (including unaudited financial statements)
by the date that is no later than (x) sixty (60) days or (y) such later date
specified in the Underlying Instruments after the end of each fiscal quarter,
with respect to quarterly reports for the first three fiscal quarters, other
than the first fiscal quarter after the initial closing, and (ii) with respect
to annual reports, any audited financial statements by the date that is no later
than (x) one hundred fifty (150) days or (y) such later date specified in the
Underlying Instruments after the end of any fiscal year (but in any event not
later than one hundred eighty (180) days after the end of any fiscal year); and

 

(xx)           Administrative Agent has received the Borrower’s internally
approved credit/underwriting presentation (unless such credit/underwriting
presentation was not prepared or received by Borrower in connection with an
amendment or other modification to a Loan), the Required Loan Documents
described in clause (b)(i) of the definition thereof, the most recent year’s
audited financial statements with respect to the applicable Obligor (or if
audited financial statements are not available, (i) the most recent year's
quality of earnings report with respect to such Obligor, or (ii) the pro forma
financial statements with respect to such Obligor, if such Obligor is a newly
formed Person) and most recent covenant compliance certificate (including the
calculation of EBITDA), if any, required to be provided to Borrower with respect
to such Loan; provided, that, solely for the purposes of calculating
Availability and the Borrowing Base, a Loan shall not be considered an Eligible
Loan until five (5) Business Days after the Administrative Agent has received
the items required to be delivered pursuant to this clause (xx) as of the date
such Loan is first included as part of the Collateral.

 

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Notwithstanding anything to the contrary in the foregoing, upon request from
Borrower, the Administrative Agent may, in its sole and absolute discretion,
waive any one or more of the requirements set forth in this definition on a one
time basis; provided that (i) any such waiver shall not constitute a course of
dealing or any other basis for future waivers or modifications to the term
“Eligible Loan” and (ii) Administrative Agent’s consent to such waiver may be
conditioned on one or more credit enhancements or additional eligibility
criteria not set forth above.

 

“Eligible Obligor”: On any date of determination, any Obligor that:

 

(a)            is a business organization (and not a natural person) duly
organized and validly existing under the laws of its jurisdiction of
organization;

 

(b)            is not a Governmental Authority;

 

(c)            is not an Affiliate of any FS/KKR Party;

 

(d)            is organized and incorporated and domiciled in the United States
or any state thereof or an Approved Country;

 

(e)            other than with respect to any DIP Loan, is not the subject of
and, to the best of the Borrower’s knowledge is not threatened with any
proceeding which would result in, an Insolvency Event with respect to such
Obligor and, as of the date on which such Loan becomes part of the Collateral,
to the Borrower’s knowledge, such Obligor has not experienced a material adverse
change in its condition, financial or otherwise;

 

(f)             does not derive a material portion of its business from payday
lending, pawn shops, adult entertainment, marijuana related businesses,
automobile title loans, tax refund anticipation loans, credit repair services,
drug paraphernalia, fireworks distributors, tax evasion, assault weapons or
firearms manufacturing, businesses engaged in predatory lending practices or
strip mining; and

 

(g)            is not (i) a country, territory, organization, person or entity
named on an Office of Foreign Asset Control (OFAC) list; (ii) a Person that
resides or has a place of business in a country or territory named on such lists
or which is designated as a “Non-Cooperative Jurisdiction” by the Financial
Action Task Force on Money Laundering, or whose subscription funds are
transferred from or through such a jurisdiction; (iii) a “Foreign Shell Bank”
within the meaning of the USA Patriot Act, i.e., a foreign bank that does not
have a physical presence in any country and that is not affiliated with a bank
that has a physical presence and an acceptable level of regulation and
supervision; (iv) a person or entity that resides in or is organized under the
laws of a jurisdiction designated by the United States Secretary of the Treasury
under Sections 311 or 312 of the USA Patriot Act as warranting special measures
due to money laundering concerns; or (v) an Affiliate of any Person meeting any
of the criteria set forth in clauses (i) through (iv) above.

 

[FS Investment] Loan and Security Agreement

 

 -22-

 

 

“Eligible Repurchase Obligations”: Repurchase obligations with respect to any
security that is a direct obligation of, or fully guaranteed by, the United
States or any agency or instrumentality thereof the obligations of which are
backed by the full faith and credit of the United States, in either case entered
into with a depository institution or trust company (acting as principal)
described in clause (b) of the definition of Permitted Investments.

 

“Equity Security”: (i) Any equity security or any other security that is not
eligible for purchase by the Borrower as a Loan, and (ii) any security purchased
as part of a “unit” with a Loan and that itself is not eligible for purchase by
the Borrower as a Loan.

 

“ERISA”: The United States Employee Retirement Income Security Act of 1974, as
amended from time to time, and the regulations promulgated or issued thereunder.

 

“ERISA Affiliate”: (a) Any corporation that is a member of the same controlled
group of corporations (within the meaning of Section 414(b) of the Code) as the
Borrower, (b) a trade or business (whether or not incorporated) under common
control (within the meaning of Section 414(c) of the Code) with the Borrower, or
(c) for purposes of Section 302 of ERISA and Section 412 of the Code, a member
of the same affiliated service group (within the meaning of Section 414(m) of
the Code) as the Borrower.

 

“Eurodollar Disruption Event”: The occurrence of any of the following: (a) any
Lender shall have notified the Administrative Agent of a determination by such
Lender that it would be contrary to law or to the directive of any central bank
or other Governmental Authority (whether or not having the force of law) to
obtain any applicable Currency in the applicable interbank market, to fund any
Advance or (b)  any Lender shall have notified the Administrative Agent of the
inability of such Lender, as applicable, to obtain any applicable Currency in
the applicable interbank market to make, fund or maintain any Advance.

 

“Event of Default”: The meaning specified in Section 9.1.

 

“Excepted Persons”: The meaning specified in Section 12.13(a).

 

“Excess Concentration Amount”: As of any date of determination (and after giving
effect to all Eligible Loans to be purchased or sold by the Borrower on such
date), the sum of the following amounts (without duplication):

 

(a)            the excess, if any, of (i) the aggregate Adjusted Borrowing Value
of those Eligible Loans that are First Lien Loans and are obligations of the
three Obligors with the largest Obligor Exposure included in the Collateral
minus (ii) the greater of (A) $10,750,000 and (B) 7.50% of the aggregate
Adjusted Borrowing Value of all Eligible Loans in the Collateral;

 

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(b)            except with respect to the Loans described in clause (a) above,
the excess, if any, of (i) the aggregate Adjusted Borrowing Value of each
Eligible Loan of any single Obligor and its Affiliates minus (ii) the greater of
(A) $7,250,000 and (B) 5.00% of the aggregate Adjusted Borrowing Value of all
Eligible Loans in the Collateral;

 

(c)            the excess, if any, of (i) the aggregate Adjusted Borrowing Value
of those Eligible Loans with Obligors in any single S&P Industry Classification
minus (ii) (A) with respect to the S&P Industry Classification representing the
highest concentration of the Eligible Loans (determined by reference to Adjusted
Borrowing Value), the greater of (1) $28,750,000 and (2) 20.00% of the aggregate
Adjusted Borrowing Value of all Eligible Loans in the Collateral; (B) with
respect to the S&P Industry Classifications representing the second and third
highest concentration of the Eligible Loans (determined by reference to Adjusted
Borrowing Value), the greater of (1) $25,000,000 and (2) 17.50% of the aggregate
Adjusted Borrowing Value of all Eligible Loans in the Collateral; (C) with
respect to the S&P Industry Classifications representing the fourth and fifth
highest concentration of the Eligible Loans (determined by reference to Adjusted
Borrowing Value), the greater of (1) $21,500,000 and (2) 15.00% of the aggregate
Adjusted Borrowing Value of all Eligible Loans in the Collateral; and (D) with
respect to the S&P Industry Classifications other than those covered in clauses
(A), (B) and (C) hereof, the greater of (1) $18,000,000 and (2) 12.50% of the
aggregate Adjusted Borrowing Value of all Eligible Loans in the Collateral;

 

(d)            the excess, if any, of (i) the aggregate Adjusted Borrowing Value
of those Eligible Loans that are DIP Loans minus (ii) the greater of (A)
$7,250,000 and (B) 5.00% of the aggregate Adjusted Borrowing Value of all
Eligible Loans in the Collateral;

 

(e)            the excess, if any, of (i) the aggregate Adjusted Borrowing Value
of those Eligible Loans that are Revolving Loans or Delayed Draw Loans minus
(ii) the greater of (A) $14,500,000 and (B) 10.00% of the aggregate Adjusted
Borrowing Value of all Eligible Loans in the Collateral;

 

(f)             the excess, if any, of (i) the aggregate Adjusted Borrowing
Value of those Eligible Loans that are Principal Finance Loans minus (ii) the
greater of (A) $14,500,000 and (B) 10.00% of the aggregate Adjusted Borrowing
Value of all Eligible Loans in the Collateral;

 

(g)            the excess, if any, of (i) the aggregate Adjusted Borrowing Value
of those Eligible Loans that are Loan which pay interest in Cash less frequently
than quarterly, minus (ii) the greater of (A) $7,250,000 and (B) 5.00% of the
aggregate Adjusted Borrowing Value of all Eligible Loans in the Collateral;

 

(h)            the excess, if any, of (i) the aggregate Adjusted Borrowing Value
of those Eligible Loans that are PIK Loans or Partial PIK Loans minus (ii) the
greater of (A) $7,250,000 and (B) 5.00% of the aggregate Adjusted Borrowing
Value of all Eligible Loans in the Collateral;

 

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(i)             the excess, if any, of (i) the aggregate Adjusted Borrowing
Value of those Eligible Loans that are obligations of Obligors with less than
$10,000,000 in Permitted EBITDA minus (ii) the greater of (A) $28,750,000 and
(B) 20.00% of the aggregate Adjusted Borrowing Value of all Eligible Loans in
the Collateral;

 

(j)             the excess, if any, of (i) the aggregate Dollar Equivalent of
the Adjusted Borrowing Value of those Eligible Loans that are payable in
Canadian Dollars minus (ii) the greater of (A) $14,500,000 and (B) 10.00% of the
aggregate Adjusted Borrowing Value of all Eligible Loans in the Collateral;

 

(k)            as of the date such Loan is first included a part of the
Collateral, the excess, if any, of (i) the aggregate Adjusted Borrowing Value of
those Eligible Loans that are First Lien Loans and are obligations of Tier 3
Obligors included in the Collateral minus (ii) the greater of (A) $28,750,000
and (B) 20.00% of the aggregate Adjusted Borrowing Value of all Eligible Loans
in the Collateral; provided, that any excess pursuant to this clause (k) shall
be reduced by the product of such excess multiplied by the applicable Excess
Tier 3 Administrative Agent Assigned Value, if any;

 

(l)             as of the date such Loan is first included a part of the
Collateral, the excess, if any, of (i) the aggregate Adjusted Borrowing Value of
those Eligible Loans that are First Lien Last Out Loans or Second Lien Loans and
are obligations of Tier 3 Obligors included in the Collateral minus (ii) the
greater of (A) $28,750,000 and (B) 20.00% of the aggregate Adjusted Borrowing
Value of all Eligible Loans in the Collateral; provided, that any excess
pursuant to this clause (l) shall be reduced by the product of such excess
multiplied by the applicable Excess Tier 3 Administrative Agent Assigned Value,
if any;

 

(m)           the excess, if any, of (i) the aggregate Adjusted Borrowing Value
of those Eligible Loans that are Second Lien Loans (including any Principal
Finance Loans that would satisfy the definition of Second Lien Loan but for the
exclusion of Principal Finance Loans from such definition) minus (ii) the
greater of (A) $50,000,000 and (B) 35.00% of the aggregate Adjusted Borrowing
Value of all Eligible Loans in the Collateral;

 

(n)            the excess, if any, of (i) the aggregate Adjusted Borrowing Value
of those Eligible Loans that are First Lien Last Out Loans (including any
Principal Finance Loans that would satisfy the definition of First Lien Last Out
Loan but for the exclusion of Principal Finance Loans from such definition)
minus (ii) the greater of (A) $50,000,000 and (B) 35.00% of the aggregate
Adjusted Borrowing Value of all Eligible Loans in the Collateral;

 

(o)            the excess, if any, of (i) the aggregate Adjusted Borrowing Value
of those Eligible Loans that are Second Lien Loans or First Lien Last Out Loans
(including any Principal Finance Loans that would satisfy the definition of
Second Lien Loan or First Lien Last Out Loan but for the exclusion of Principal
Finance Loans from such definitions) minus (ii) the greater of (A) $75,500,000
and (B) 50.00% of the aggregate Adjusted Borrowing Value of all Eligible Loans
in the Collateral

 

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(p)            the excess, if any, of (i) the aggregate Adjusted Borrowing Value
of those Eligible Loans that are Cov-Lite Loans minus (ii) the greater of (A)
$35,750,000 and (B) 25.00% of the aggregate Adjusted Borrowing Value of all
Eligible Loans in the Collateral;

 

(q)            the excess, if any, of (i) the aggregate Adjusted Borrowing Value
of those Eligible Loans that have final maturities greater than seven (7) years
minus (ii) the greater of (A) $14,500,000 and (B) 10.00% of the aggregate
Adjusted Borrowing Value of all Eligible Loans in the Collateral; and

 

(r)             the excess, if any, of (i) the aggregate Adjusted Borrowing
Value of those Eligible Loans that are obligations of Obligors principally
engaged in gaming businesses (including internet gambling companies) minus (ii)
the greater of (A) $7,250,000 and (B) 5.00% of the aggregate Adjusted Borrowing
Value of all Eligible Loans in the Collateral.

 

“Excess Tier 3 Administrative Agent Assigned Value”: With respect to any Loan
(or any portion thereof), the value (expressed as a percentage of par) of such
Loan (or portion thereof) as determined by the Administrative Agent (and
notified in writing to the Borrower) in its sole discretion on each Measurement
Date for the amount exceeding the threshold set forth in clause (k) or (l) of
the definition of Excess Concentration Amount, as applicable.

 

“Exchange Act”: The United States Securities Exchange Act of 1934, as amended,
and the rules and regulations promulgated thereunder.

 

“Excluded Amounts”: Any amount received in the Collection Account with respect
to any Loan included as part of the Collateral, which amount is attributable to
(i) the reimbursement by the related Obligor of payment by the Borrower or
Transferor of any Tax, fee or other charge imposed by any Governmental Authority
on such Loan or on any Underlying Assets, (ii) the reimbursement by the related
Obligor of payment by the Borrower or Transferor of other out-of-pocket
expenses, (iii) any payments or reimbursements related to indemnification
obligations, (iv) any escrows relating to Taxes, insurance and other amounts in
connection with Loans which are held in an escrow account for the benefit of the
Obligor and the secured party pursuant to escrow arrangements under Underlying
Instruments, (v) any amount deposited into the Collection Account in error,
provided, except with respect to the amounts described in clauses (v) of this
definition, that such amounts shall be Excluded Amounts only to the extent that
such amounts (x) are in excess of the principal and interest then due in respect
of such Loan, and (y) were required to be paid by the related Obligor pursuant
to a specific provision of the Underlying Instruments with respect to such Loan.

 

“Excluded Taxes”: The meaning specified in Section 2.13(e).

 

“Exposure Amount Shortfall”: The meaning specified in Section 2.2(g).

 

“Facility Amount”: As of any date, an amount equal to the lesser of (a)
$200,000,000 and (b) the aggregate principal amount of the Commitments provided
by the Administrative Agent and the Lenders as of such date; provided that the
Facility amount may be increased pursuant to Section 2.18; provided that on or
after the earlier to occur of the Revolving Period End Date or the Termination
Date, the Facility Amount shall mean the Advances Outstanding.

 

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“Fair Market Value”: With respect to any Principal Finance Loan, an amount
(expressed as a percentage of par) equal to the marked-to-market value of such
Loan; provided that the Fair Market Value of any Loan determined to be equal to
or greater than ninety-five percent (95.0%) in accordance with the foregoing
shall be deemed to be one hundred percent (100%); provided, further, that the
Fair Market Value of any such Loan which is determined to be less than ninety
percent (90.0%) shall be deemed to be as set forth below:

 

Marked-to-Market Value (as a percentage of par): Fair Market Value: ≤ 90.0% but
> 80.0% 90.0% ≤ 80.0% but > 70.0% 80.0% ≤ 70.0% but > 60.0% 70.0% ≤ 60.0% but >
50.0% 60.0% ≤ 50.0% but > 40.0% 50.0% ≤ 40.0% but > 30.0% 40.0% ≤ 30.0% but >
20.0% 30.0% ≤ 20.0% but > 10.0% 20.0% ≤ 10.0% but > 0.0% 10.0%

 

“FATCA”: Sections 1471 through 1474 of the Code, as in effect on the Effective
Date (or any amended or successor version that is substantively comparable), any
current or future regulations or official interpretations thereof (including any
Revenue Rulings, Revenue Procedure, Notice or similar guidance issued by the IRS
thereunder as a precondition to relief or exemption from Taxes under such
provisions) and any agreements entered into pursuant to Section 1471(b)(1) of
the Code and any fiscal or regulatory legislation, rules or practices adopted
pursuant to any intergovernmental agreement between the United States and
another jurisdiction facilitating the implementation thereof (or any law,
regulation or official interpretation implementing such an intergovernmental
agreement).

 

“FDIC”: The Federal Deposit Insurance Corporation, and any successor thereto.

 

“Federal Funds Rate”: For any period, a fluctuating interest per annum rate
equal, for each day during such period, to the weighted average of the overnight
federal funds rates as in Federal Reserve Board Statistical Release H.15(519) or
any successor or substitute publication selected by the Administrative Agent
(or, if such day is not a Business Day, for the next preceding Business Day),
or, if for any reason such rate is not available on any day, the rate
determined, in the sole discretion of the Administrative Agent, to be the rate
at which overnight federal funds are being offered in the national federal funds
market at 9:00 a.m. (New York City Time) on such day.

 

“Federal Reserve Bank of New York’s Website” means the website of the Federal
Reserve Bank of New York at http://www.newyorkfed.org, or any successor source.

 

[FS Investment] Loan and Security Agreement

 

 -27-

 

 

“Fee Letter”: Individually and collectively, (i) that certain Fee Letter, dated
as of November 22, 2019, between the Administrative Agent and Borrower and (ii)
each additional Fee Letter executed between any Lender and Borrower, in each
case, as amended, modified, waived, supplemented, restated or replaced from time
to time.

 

“Finance Lease”: Any transaction in which the obligations of a lessee to pay
rent or other amounts under a lease are on a triple net basis and are required
to be classified and accounted for as a capital lease on the balance sheet of
such lessee under generally accepted accounting principles in the United States.
A Finance Lease shall not include obligations structured to comply with foreign
law or religious restrictions, including, but not limited to, Islamic Shari’ah.

 

“Financial Asset”: The meaning specified in Section 8-102(a)(9) of the UCC.

 

“Financial Sponsor”: Any Person, including any Subsidiary of such Person, whose
principal business activity is acquiring, holding, and selling equity or
preferred equity investments (including controlling interests) in otherwise
unrelated companies that each are distinct legal entities with separate
management, books and records and bank accounts, whose operations are not
integrated with one another and whose financial condition and creditworthiness
are independent of the other companies so owned by such Person.

 

“First Lien Last Out Loan”: A Loan (other than a Principal Finance Loan) that
would otherwise be a First Lien Loan except that at any time prior to and/or
after an event of default under the related loan agreement of the related
Obligor, any portion of such Loan will be repaid after one or more classes of
loans issued by the same Obligor have been paid in full in accordance with a
specific waterfall of payments or other priority of payments; provided, that a
First Lien Last Out Loan may include a Loan to an Obligor that also has a
separate working capital loan so long as (A) the amount of such Loan does not
exceed an amount equal to the applicable Obligor’s EBITDA, (B) such working
capital loan is not secured by any assets other than current assets (as
determined in accordance with GAAP), and (C) if an event of default occurs with
respect to such First Lien Last Out Loan, the Borrower has a right to purchase
such working capital loan at par and on other terms reasonably acceptable to
Administrative Agent; provided further that the Administrative Agent may, in its
sole discretion, designate an Eligible Loan that would otherwise constitute a
First Lien Last Out Loan as a First Lien Loan.

 

“First Lien Loan”: A Loan (other than a Principal Finance Loan) (i) that is
secured by a pledge of collateral, which security interest is validly perfected
and first priority under Applicable Law (subject to liens permitted under the
applicable credit agreement that are reasonable and customary for similar loans
(provided that such permitted liens do not secure indebtedness for borrowed
money), and liens accorded priority by law in favor of the United States or any
State or agency) (except as otherwise provided in this definition), (ii) for
which the Collateral Manager determines in good faith that the value or the
enterprise value of the related Obligor (as determined by Collateral Manager in
accordance with a methodology acceptable to Administrative Agent) of the
collateral securing the Loan on the date such Loan is first included as part of
the Collateral or on the date that any Value Adjustment Event occurs equals or
exceeds the outstanding principal balance of the Loan plus the aggregate
outstanding balances of all other loans of equal or higher seniority secured by
the same collateral, (iii) that is not (and cannot by its terms become)
subordinate in right of payment to any obligation of the Obligor in any
bankruptcy, reorganization, arrangement, insolvency, moratorium or liquidation
proceedings and (iv) that is not secured solely or primarily by the Capital
Stock of its Obligor or any of such Obligor’s Affiliates; provided, that a First
Lien Loan may include a Loan to an Obligor that also has a separate working
capital loan so long as (A) the amount of such Loan does not exceed an amount
equal to the applicable Obligor’s EBITDA, (B) such working capital loan is not
secured by any assets other than current assets (as determined in accordance
with GAAP) and (C) if an event of default occurs with respect to such First Lien
Loan, the Borrower has a right to purchase such working capital loan at par and
on other terms reasonably acceptable to Administrative Agent. For the avoidance
of doubt, a First Lien Last Out Loan shall not constitute a First Lien Loan
unless the Administrative Agent, in its sole discretion, designates such
Eligible Loan that would otherwise constitute a First Lien Last Out Loan as a
First Lien Loan in the related approval notice.

 

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“Fitch”: Fitch, Inc. or any successor thereto.

 

“Foreign Lender”: A Lender that is not a U.S. Tax Person.

 

“FS/KKR Parties”: The Borrower, the Transferor and the Collateral Manager.

 

“Funding Date”: In the case of any Loan Advance, the proposed Business Day on
which a Loan Advance is to be made after the receipt by the Administrative
Agent, the Collateral Custodian and Lenders of a Funding Notice, subject to the
required notice provisions of and together with the other required deliveries in
accordance with Section 2.2.

 

“Funding Notice”: A notice in the form of Exhibit A-1 requesting an Advance,
including the items required by Section 2.2.

 

“GAAP”: Generally accepted accounting principles as in effect from time to time
in the United States.

 

“General Collection Account”: A Securities Account created and maintained on the
books and records of the Collateral Custodian (or any other party acceptable to
Administrative Agent in its sole discretion) entitled “General Collection
Account” in the name of the Borrower and subject to the prior Lien of the
Administrative Agent for the benefit of the Secured Parties.

 

“General Intangible”: The meaning specified in Section 9-102(a)(42) of the UCC.

 

“Governing Documents”: (a) With respect to any corporation, the certificate or
articles of incorporation and the bylaws (or equivalent or comparable
constitutive documents with respect to any non-US. jurisdiction), (b) with
respect to any limited liability company, the certificate or articles of
formation or organization and operating agreement and (c) with respect to any
partnership, joint venture, trust or other form of business entity, the
partnership, joint venture or other applicable agreement of formation or
organization and, if applicable, any agreement, instrument, filing or notice
with respect thereto filed in connection with its formation or organization with
the applicable Governmental Authority in the jurisdiction of its formation or
organization and, if applicable, any certificate or articles of formation or
organization of such entity.

 

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“Governmental Authority”: With respect to any Person, any nation or government,
any state or other political subdivision thereof, any central bank (or similar
monetary or regulatory authority) thereof, any body or entity exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government and any court or arbitrator having jurisdiction over
such Person (including any supra-national body exercising such powers or
functions, such as the European Union or the European Central Bank).

 

“Guarantee Obligation”: As to any Person (the “guaranteeing person”), any
obligation of (a) the guaranteeing person or (b) another Person (including any
bank under any letter of credit) to induce the creation of which the
guaranteeing person has issued a reimbursement, counterindemnity or similar
obligation, in either case guaranteeing or in effect guaranteeing any
Indebtedness (the “primary obligations”), of any other third Person (the
“primary obligor”) in any manner, whether directly or indirectly, including any
obligation of the guaranteeing person, whether or not contingent, (i) to
purchase any such primary obligation or any Property constituting direct or
indirect security therefor, (ii) to advance or supply funds (1)  for the
purchase or payment of any such primary obligation or (2) to maintain working
capital or equity capital of the primary obligor or otherwise to maintain the
net worth or solvency of the primary obligor, (iii) to purchase Property,
securities or services primarily for the purpose of assuring the owner of any
such primary obligation of the ability of the primary obligor to make payment of
such primary obligation or (iv) otherwise to assure or hold harmless the owner
of any such primary obligation against loss in respect thereof; provided,
however, that the term “Guarantee Obligation” shall not include endorsements of
instruments for deposit or collection in the ordinary course of business. The
terms “Guarantee” and “Guaranteed” used as a verb shall have a correlative
meaning. The amount of any Guarantee Obligation of any guaranteeing person shall
be deemed to be the lower of (a) an amount equal to the stated or determinable
amount of the primary obligation in respect of which such Guarantee Obligation
is made and (b) the maximum amount for which such guaranteeing person may be
liable pursuant to the terms of the instrument embodying such Guarantee
Obligation, unless such primary obligation and the maximum amount for which such
guaranteeing person may be liable are not stated or determinable, in which case
the amount of such Guarantee Obligation shall be such guaranteeing person’s
maximum reasonably anticipated liability in respect thereof as determined by the
Borrower in good faith.

 

“Highest Required Investment Category”: (i) With respect to ratings assigned by
Moody’s, “Aa2” or “P-1” for one month instruments, “Aa2” and “P-1” for three
month instruments, “Aa3” and “P-1” for six month instruments and “Aa2” and “P-1”
for instruments with a term in excess of six months, (ii) with respect to rating
assigned by S&P, “A-1” for short-term instruments and “A” for long-term
instruments, and (iii) with respect to rating assigned by Fitch (if such
investment is rated by Fitch), “F-1+” for short-term instruments and “AAA” for
long-term instruments.

 

“Increased Commitment”: The meaning specified in Section 2.18.

 

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“Increased Costs”: Any amounts required to be paid by the Borrower to an
Indemnified Party pursuant to Section 2.12.

 

“Indebtedness”: With respect to any Person at any date without duplication,
(a) all indebtedness of such Person for borrowed money (whether by loan or the
issuance and sale of debt securities) or for the deferred purchase price of
Property or services (other than current trade liabilities incurred in the
ordinary course of business and payable in accordance with customary practices),
(b) any other indebtedness of such Person which is evidenced by a note, bond,
debenture or similar instrument, (c) all obligations of such Person in respect
of letters of credit, acceptances or similar instruments issued or created for
the account of such Person, (d) all liabilities secured by (or for which the
holder of such obligations has an existing right, contingent or otherwise, to be
secured by) any Lien on any Property owned by such Person even though such
Person has not assumed or otherwise become liable for the payment thereof, and
(e) all Guarantee Obligations of such Person in respect of obligations of the
kind referred to in clauses (a) through (d) above. The amount of any
Indebtedness under clause (d) shall be equal to the lesser of (A) the stated
amount of the relevant obligations and (B) the fair market value of the Property
subject to the relevant Lien. The amount of any Indebtedness of any Person shall
include the Indebtedness of any other entity (including any partnership in which
such Person is a general partner) to the extent such Person is liable therefor
as a result of such Person’s ownership interest in or other relationship with
such entity, except to the extent the terms of such Indebtedness expressly
provide that such Person is not liable therefor.

 

“Indemnified Amounts”: The meaning specified in Section 10.1(a).

 

“Indemnified Parties”: The meaning specified in Section 10.1(a).

 

“Indorsement”: The meaning specified in Section 8-102(a)(11) of the UCC, and
“Indorsed” has a corresponding meaning.

 

“Ineligible Assignee”: Any private investment company, investment firm,
investment partnership, private equity fund, Person that is primarily engaged in
the business of private direct lending, business development company, mezzanine
fund, private debt fund, hedge fund, or other private equity investment vehicle
or any Person that is not organized under the laws of the United States of
America, any state thereof or the District of Columbia, in each case, which
Person is in direct competition with the Borrower, provided, that no Approved
Fund shall be an Ineligible Assignee.

 

“Insolvency Event”: With respect to a specified Person, (a) the filing of a
decree or order for relief by a court having jurisdiction over such Person or
any substantial part of its property in an involuntary case under any applicable
Insolvency Law now or hereafter in effect, or appointing a receiver, liquidator,
assignee, custodian, trustee, sequestrator or similar official for such Person
or for any substantial part of its property, or ordering the winding-up or
liquidation of such Person’s affairs, and such decree, order or appointment
shall remain unstayed and in effect for a period of sixty (60) consecutive days,
(b) the commencement by such Person of a voluntary case under any applicable
Insolvency Law now or hereafter in effect, or the consent by such Person to the
entry of an order for relief in an involuntary case under any such law, (c) the
consent by such Person to the appointment of or taking possession by a receiver,
liquidator, assignee, custodian, trustee, sequestrator or similar official for
such Person or for any substantial part of its property, or the making by such
Person of any general assignment for the benefit of creditors, or (d) the
failure by such Person generally to pay its debts as such debts become due, or
the taking of action by such Person in furtherance of any of the foregoing.

 

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“Insolvency Laws”: The Bankruptcy Code and all other applicable liquidation,
conservatorship, bankruptcy, moratorium, rearrangement, receivership,
insolvency, reorganization, suspension of payments, or similar debtor relief
laws from time to time in effect affecting the rights of creditors generally.

 

“Insolvency Proceeding”: Any case, action or proceeding before any court or
other Governmental Authority relating to any Insolvency Event.

 

“Instrument”: The meaning specified in Section 9-102(a)(47) of the UCC.

 

“Insurance Policy”: With respect to any Loan, an insurance certificate
evidencing insurance covering liability and physical damages to, or loss of, the
related Underlying Assets.

 

“Interest”: For each Accrual Period, the sum of the amounts determined (with
respect to each day during such Accrual Period) in accordance with the following
formula:

 

 

IR x P x  1   D

  

where:

 

IR= the Interest Rate applicable on such day;

 

P= the Advances Outstanding on such day; and

 

D= 360 days (or, to the extent the Interest Rate is the Base Rate, 365 or 366
days, as applicable).

 

provided that (i) no provision of this Agreement shall require the payment or
permit the collection of Interest in excess of the maximum permitted by
Applicable Law and (ii) Interest shall not be considered paid by any
distribution if at any time such distribution is rescinded or must otherwise be
returned for any reason.

 

“Interest Collection Account”: Collectively, (i) a Securities Account created
and maintained on the books and records of the Collateral Custodian (or any
other party acceptable to Administrative Agent in its sole discretion) entitled
“USD Interest Collection Account” in the name of the Borrower and subject to the
prior Lien of the Administrative Agent for the benefit of the Secured Parties
and (ii) i) a Securities Account created and maintained on the books and records
of the Collateral Custodian (or any other party acceptable to Administrative
Agent in its sole discretion) entitled “Canadian Dollar Interest Collection
Account” in the name of the Borrower and subject to the prior Lien of the
Administrative Agent for the benefit of the Secured Parties.

 

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“Interest Collections”: All payments of interest and fees on or received in
respect of Loans and Permitted Investments, including (a) any payments of
accrued interest received on the sale of Loans or Permitted Investments, (b) all
payments of principal (including principal prepayments) on Permitted Investments
purchased with the proceeds described in this definition and (c) origination,
agency, structuring, management or other up-front fees, unused line,
termination, make whole, prepayment and other fees in respect of the Loans;
provided that Interest Collections shall not include (x) Sale Proceeds
representing accrued interest that are applied toward payment for accrued
interest on the purchase of a Loan (including in connection with a Substitution)
and (y) interest received in respect of a Loan (including in connection with any
sale thereof), which interest was purchased with Principal Collections.

 

“Interest Rate”: (a) The LIBOR Rate plus (b) the Applicable Spread; provided
that, upon and during the occurrence of a Eurodollar Disruption Event, “Interest
Rate” shall mean the Base Rate plus the Applicable Spread. Accrued and unpaid
interest on Advances shall be payable on each Payment Date.

 

“Investment”: With respect to any Person, any direct or indirect loan, advance
or investment by such Person in any other Person, whether by means of share
purchase, capital contribution, loan or otherwise, excluding the acquisition of
Loans and the acquisition of Equity Securities otherwise permitted by the terms
hereof which are related to such Loans.

 

“Investment Advisor”: FS/KKR Advisor, LLC.

 

“Investment Advisory Agreement”: Collectively, the Investment Advisory and
Administrative Services Agreement, dated as of April 9, 2018, by and among the
Investment Advisor, the Collateral Manager.

 

“Investment Property”: The meaning specified in Section 9-102(a)(49) of the UCC.

 

“IRS”: The United States Internal Revenue Service.

 

“Joinder Supplement”: An agreement among the Borrower, a Lender and the
Administrative Agent in the form of Exhibit H to this Agreement (appropriately
completed) delivered in connection with a Person becoming a Lender hereunder
after the Effective Date.

 

“Lender”: The meaning specified in the Preamble, including collectively, each
financial institution (i) listed on Annex B as having Commitments or (ii) which
may from time to time become a Lender hereunder by executing and delivering a
Joinder Supplement to the Administrative Agent and the Borrower (and for
purposes of Section 2.13 of this Agreement any successor, assignee or
participant).

 

“LIBOR Rate”: For any day (and with respect to each Advance, for any day during
the applicable interest period), the greater of (i) zero percent (0.00%) and
(ii) (x) the rate per annum appearing on Reuters Screen LIBOR01 Page (or any
successor or substitute page) as the London interbank offered rate for deposits
in Dollars at approximately 11:00 a.m. London time, for such day, provided, if
such day is not a Business Day, the immediately preceding Business Day, for a
one-month maturity; and (y) if no rate specified in clause (x) of this
definition so appears on Reuters Screen LIBOR01 Page (or any successor or
substitute page), the interest rate per annum at which Dollar deposits for a
one-month maturity would be offered by major financial institutions reasonably
satisfactory to the Administrative Agent in the London interbank market at
approximately 11:00 a.m. London time, for such day.

 

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“Lien”: Any mortgage, lien, pledge, charge, right, claim, security interest or
encumbrance of any kind of or on any Person’s assets or properties in favor of
any other Person.

 

“Loan”: Any commercial loan or note which is originated or acquired by the
Transferor or any of its Affiliates or which the Borrower acquires from a third
party in the ordinary course of its business or an Effective Date Participation
Interest owned by the Borrower.

 

“Loan Advance”: The meaning specified in Section 2.2(a).

 

“Loan Checklist”: An electronic or hard copy, as applicable, of a checklist
delivered by or on behalf of the Borrower to the Collateral Custodian, for each
Loan, of all Required Loan Documents to be included within the respective Loan
File, which shall specify whether such document is an original or a copy.

 

“Loan File”: With respect to each Loan, a file containing (a) each of the
documents and items as set forth on the Loan Checklist with respect to such Loan
and (b) duly executed originals and copies of any other relevant records
relating to such Loans and the Underlying Assets pertaining thereto.

 

“Loan List”: That certain list of Loans attached hereto as Schedule II, as such
Schedule shall be deemed to be updated from time to time by reference to the
list of Loans set forth on the most recently delivered Borrowing Base
Certificate.

 

“Margin Stock”: “Margin Stock” as defined under Regulation U.

 

“Material Adverse Effect”: With respect to any event or circumstance, a material
adverse effect on (a) the business, assets, financial condition, operations,
performance or properties of the Borrower or the Collateral Manager, both
individually or taken as a whole, (b) the validity, enforceability or
collectability of this Agreement or any other Transaction Document or the
validity, enforceability or collectability of the Loans generally or any
material portion of the Loans, (c) the rights and remedies of the Administrative
Agent, the Lenders and the Secured Parties with respect to matters arising under
this Agreement or any other Transaction Document, (d) the ability of each of the
Borrower or the Collateral Manager to perform its obligations under any
Transaction Document to which it is a party, or (e) the status, existence,
perfection, priority or enforceability of the Administrative Agent’s or the
other Secured Parties’ lien on any material portion of the Collateral. 

 

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“Material Modification”: Any amendment or waiver of, or modification or
supplement to (it being agreed and understood that a release document or similar
instrument executed or delivered in connection with a disposition that is
otherwise permitted under the Underlying Instrument shall not constitute an
amendment or waiver of, or modification or supplement to such Underlying
Instrument), an Underlying Instrument governing a Loan executed or effected on
or after the date on which the Borrower acquired such Loan that:

 

(a)            reduces or waives any or all of the principal amount of such
Loan;

 

(b)            extends the final maturity date or any other due date for payment
of outstanding amounts of such Loan by more than thirty (30) days;

 

(c)            waives one or more interest payments by more than five percent
(5%) or permits any interest due in cash to be deferred or capitalized and added
to the principal amount of such Loan (other than any deferral or capitalization
already allowed by the terms of its Underlying Instruments);

 

(d)            reduces the amount of interest due with respect to such Loan
(other than due to automatic changes in grid pricing existing at the time such
Eligible Loan is acquired by the Borrower);

 

(e)            contractually or structurally subordinates such Loan by operation
of a priority of payments, turnover provisions, the transfer of assets in order
to limit recourse to the related Obligor or the granting of Liens (other than
Permitted Liens) on any of the Underlying Assets securing such Loan;

 

(f)             substitutes, alters or releases (other than as permitted by such
Underlying Instruments) the Underlying Assets securing such Loan, and each such
substitution, alteration or release, as determined in the reasonable discretion
of the Administrative Agent, materially and adversely affects the value of such
Loan;

 

(g)            amends, waives, forbears, supplements or otherwise modifies in
any way the definition of “Net Senior Leverage Ratio”, “Net Total Obligor
Leverage Ratio” or “Cash Interest Coverage Ratio” (or any respective comparable
definitions in its Underlying Instruments) or the definition of any component
thereof in a manner that, in the sole discretion of the Administrative Agent, is
materially adverse to the Administrative Agent or any Lender; or

 

(h)            with respect to a Principal Finance Loan, results in a material
(as determined by the Administrative Agent in its reasonable discretion) change
to or grants material (as determined by the Administrative Agent in its
reasonable discretion) relief from the borrowing base or any related definition.

 

“Measurement Date”: Each of (i) the Effective Date; (ii) the date of any
Borrower’s Notice; (iii) with respect to any Loan, the earlier to occur of (a)
the date that the Collateral Manager has actual knowledge of the occurrence of
any Value Adjustment Event or (b) the date that the Assigned Value of any Loan
is adjusted; (iv) unless such date is two (2) or fewer days prior to the next
Payment Date, the Business Day prior to the date any Principal Collections are
to be released pursuant to Section 2.7(b); (v) the date on which any Loan
included in the latest calculation of the Borrowing Base fails to meet one or
more of the criteria listed in the definition of “Eligible Loan” (other than any
criteria thereof waived by the Administrative Agent on or prior to the date of
acquisition of such Loan by the Borrower); (vi) the date on or prior to each
Reinvestment, Discretionary Sale or Substitution pursuant to Section 2.14 and
Section 3.2, as applicable; (vii) each Reporting Date; and (viii) so long as
there has not been a Measurement Date within the last five (5) Business Days,
each other date requested by the Administrative Agent with at least five (5)
Business Days advance notice; provided that if a Measurement Date otherwise
occurs pursuant to clauses (ii) through (vii) following any such request, but
prior to such requested date, such request for an additional Measurement Date
shall be deemed to be withdrawn.

 

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“Minimum Credit Enhancement Amount”: As of any date, an amount equal to the
Dollar Equivalent of the sum of the Adjusted Borrowing Values of all Loans owing
by the three Obligors which have the greatest Obligor Exposure.

 

“Minimum Credit Enhancement Amount Test”: As of any date, the test that is
satisfied if the Dollar Equivalent of the aggregate Adjusted Borrowing Value of
all Eligible Loans as of such date plus the Dollar Equivalent of the amount of
Principal Collections on deposit in the Principal Collection Account as of such
date minus the Advances Outstanding is equal to or greater than the Dollar
Equivalent of the Minimum Credit Enhancement Amount.

 

“Moody’s”: Moody’s Investors Service, Inc., and any successor thereto.

 

“Mortgage”: The mortgage, deed of trust or other instrument creating a Lien on
an interest in real property securing a Loan, including the assignment of leases
and rents related thereto.

 

“Multiemployer Plan”: A “multiemployer plan” as defined in Section 4001(a)(3) of
ERISA that is or was at any time during the current year or the preceding five
(5) years contributed to by the Borrower or any ERISA Affiliate on behalf of its
employees.

 

“Net Senior Leverage Ratio”: With respect to any Loan for any Relevant Test
Period, either (a) the meaning of “Net Senior Leverage Ratio” or comparable
definition set forth in the Underlying Instruments for such Loan, or (b) in the
case of any Loan with respect to which the related Underlying Instruments do not
include a definition of “Net Senior Leverage Ratio” or comparable definition,
the ratio of (i) the “total indebtedness” (as defined in the Underlying
Instruments or comparable definition thereof, including such Loan) of the
applicable Obligor as of the date of determination, excluding any junior
indebtedness and any unsecured indebtedness of such Obligor or non-recourse
indebtedness of such Obligor secured solely by the real property and related
improvements and fixtures of such Obligor as of such date, minus the
Unrestricted Cash of such Obligor as of such date to (ii) the Dollar Equivalent
of EBITDA of such Obligor with respect to the applicable Relevant Test Period,
as calculated by the Borrower in good faith; provided that, in calculating the
Net Senior Leverage Ratio under either of clause (a) or clause (b) above, EBITDA
of the applicable Obligor for the Relevant Test Period shall be deemed to be no
greater than Permitted EBITDA, as defined herein, for the Relevant Test Period.

 

“Net Total Obligor Leverage Ratio”: With respect to any Loan for any Relevant
Test Period, either (a) the meaning of “Net Total Obligor Leverage Ratio” or
comparable definition set forth in the Underlying Instruments for such Loan, or
(b) in the case of any Loan with respect to which the related Underlying
Instruments do not include a definition of “Net Total Obligor Leverage Ratio” or
comparable definition, the ratio of (i) the Dollar Equivalent of the “total
indebtedness” (as defined in the Underlying Instruments or comparable definition
thereof, including such Loan) of the applicable Obligor as of the date of
determination, minus the Dollar Equivalent of Unrestricted Cash of such Obligor
as of such date to (ii) the Dollar Equivalent of EBITDA of such Obligor with
respect to the applicable Relevant Test Period, as calculated by the Borrower in
good faith; provided that, in calculating the Net Total Obligor Leverage Ratio
under either of clause (a) or clause (b) above, EBITDA of the applicable Obligor
for the Relevant Test Period shall be deemed to be no greater than Permitted
EBITDA, as defined herein, for the Relevant Test Period.

 

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“Non-Excluded Taxes”: The meaning specified in Section 2.13(a).

 

“Non-Usage Fee”: A fee payable quarterly in arrears for each Accrual Period
equal to:

 

(a)            during the first three (3) months following the Effective Date,
zero; and

 

(b)            thereafter, the sum of the following:

 

(i)          for each day during such Accrual Period that the Advances
Outstanding on such day are less than or equal to the product of twenty-five
percent (25.00%) multiplied by the Facility Amount on such day, the sum of the
products for each such day during such Accrual Period of (A) one divided by 360,
(B) 0.85% and (C) the Unused Facility Amount as of each such day; plus

 

(ii)         for each day during such Accrual Period that the Advances
Outstanding on such day are greater than the product of twenty-five percent
(25.00%) multiplied by the Facility Amount on such day, but less than or equal
to the product of fifty percent (50.00%) multiplied by the Facility Amount on
such day, the sum of the products for each such day during such Accrual Period
of (A) one divided by 360, (B) 0.60% and (C) the Unused Facility Amount as of
each such day; plus

 

(iii)        for each day during such Accrual Period that the Advances
Outstanding on such day are greater than the product of fifty (50.00%)
multiplied by the Facility Amount on such day multiplied by the Facility Amount
on such day, the sum of the products for each such day during such Accrual
Period of (A) one divided by 360, (B) 0.50% and (C) the Unused Facility Amount
as of each such day.

 

“Note”: The meaning specified in Section 2.1.

 

“Noteless Loan”: A Loan with respect to which the Underlying Instruments do not
require the Obligor to execute and deliver, and the Obligor has not executed and
delivered to the Borrower, a promissory note evidencing any indebtedness created
under such Loan.

 

“Notice of Exclusive Control”: The meaning specified in the Account Control
Agreement.

 

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“Obligations”: The unpaid principal amount of, and interest (including interest
accruing after the maturity of the Advances and interest accruing after the
filing of any petition in bankruptcy, or the commencement of any insolvency,
reorganization or like proceeding, relating to the Borrower, whether or not a
claim for post-filing or post-petition interest is allowed in such proceeding)
on the Advances and all other obligations and liabilities of the Borrower to the
Secured Parties, whether direct or indirect, absolute or contingent, due or to
become due, or now existing or hereafter incurred, which may arise under, or out
of or in connection with any Transaction Document, and any other document to
which the Borrower is a party made, delivered or given in connection therewith
or herewith, whether on account of principal, interest, reimbursement
obligations, fees, indemnities, costs, expenses (including all fees and
disbursements of counsel to the Administrative Agent, the Collateral Custodian
and the Securities Intermediary or to the Lenders that are required to be paid
by the Borrower pursuant to the terms of the Transaction Documents) or
otherwise.

 

“Obligor”: With respect to any Loan, any Person or Persons obligated to make
payments pursuant to or with respect to such Loan, including any guarantor
thereof. For purposes of determining whether any Loan is made to an Eligible
Obligor, all Loans included as part of the Collateral or to be transferred to
the Collateral, the Obligor of which is an Affiliate of another Obligor, shall
be aggregated with all Loans of such Affiliate Obligor; for example, if
Corporation A is an Affiliate of Corporation B, and the sum of the Adjusted
Borrowing Values of all of Corporation A’s Loans included as part of the
Collateral constitutes 10.00% of the aggregate Adjusted Borrowing Value for all
Loans and the sum of the Adjusted Borrowing Value of all of Corporation B’s
Loans included as part of the Collateral constitutes 10.00% of the aggregate
Adjusted Borrowing Value of all Loans, the Obligor concentration for Corporation
A and Corporation B would each be 20.00%.

 

“Obligor Exposure”: With respect to any Obligor, the aggregate Adjusted
Borrowing Value of all Loans in respect of which such Obligor is the related
Obligor.

 

“Officer’s Certificate”: A certificate signed by a Responsible Officer of the
Person providing the applicable certification, as the case may be.

 

“Opinion of Counsel”: A written opinion of counsel, which opinion and counsel
are acceptable to the Administrative Agent in its reasonable discretion,
provided that Clifford Chance US LLP shall be an acceptable counsel for purposes
of delivering any Opinion of Counsel hereunder.

 

“Other Connection Taxes” has the meaning given in Section 2.13(a).

 

“Other Taxes”: The meaning specified in Section 2.13(b).

 

“Outstanding Balance”: With respect to any Loan as of any date of determination,
the Dollar Equivalent of the outstanding principal balance of any advances or
funded loans made by the Borrower to the related Obligor pursuant to the related
Underlying Instruments as of such date of determination (exclusive of any
interest and PIK Interest).

 

“Partial PIK Loan”: Any Loan that required the Obligor to pay only a portion of
the accrued and unpaid interest in Cash on a current basis, the remainder of
which is or can be deferred and paid at a later date; provided that the portion
of such Loan that is accruing interest that is required to be paid in Cash
pursuant to the terms of the related Underlying Instruments at an interest rate
of, (i) if such Loan is subject to a floating rate, not less than the LIBOR Rate
plus 4.00% or (ii) if such Loan is subject to a fixed rate, not less than 6.00%,
shall not be considered a Partial PIK Loan.

 

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“Participation Interest”: A participation interest in a loan or other obligation
that would, at the time of acquisition or the Borrower’s commitment to acquire
the same, constitute a Loan.

 

“Payment Date”: The 20th day of each April, July, October and January, or, if
such day is not a Business Day, the next succeeding Business Day, commencing
January 20, 2020.

 

“Payment Date Report”: A certificate setting forth, among other things, the
application of payments to be made on the next Payment Date pursuant to Section
2.7 or 2.8 hereof (as applicable), the currency calculations set forth in
Section 5.1(q), a calculation of the financial covenants set forth in Section
5.2(n) hereof, and a reasonably detailed summary of the Obligors and their
respective financial results and capital structure in connection with the
applicable Underlying Instruments, together with the back-up financial and
covenant compliance statements of the applicable Obligors received by the
Borrower or the Collateral Manager with respect thereto, in the form of
Exhibit A-6, prepared by or on behalf of the Borrower.

 

“Payment Duties”: The meaning specified in Section 7.2(b)(iv).

 

“Pension Plan”: The meaning specified in Section 4.1(w).

 

“Permitted BDC” means each of FS KKR Capital Corp. (f/k/a FS Investment
Corporation), FS Investment Corporation II, FS Investment Corporation III and
Corporate Capital Trust II.

 

“Permitted EBITDA”: With respect to any Loan, EBITDA multiplied by the Agent
EBITDA Percentage.

 

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“Permitted Investments”: Negotiable instruments or securities or other
investments that (i) except in the case of demand or time deposits, investments
in money market funds and Eligible Repurchase Obligations, are represented by
instruments in registered form or ownership of which is represented by book
entries by a Clearing Agency or by a Federal Reserve Bank in favor of depository
institutions eligible to have an account with such Federal Reserve Bank who hold
such investments on behalf of their customers, (ii) as of any date of
determination, mature by their terms on or prior to the Business Day preceding
the next Payment Date unless such Permitted Investments are issued by the
Collateral Custodian in its capacity as a banking institution, in which event
such Permitted Investments may mature on such Payment Date, (iii) are in the
form of and are treated as indebtedness of the related Obligor for U.S. federal
income tax purposes and are not a United States real property interest as
defined under section 897 of the Code, (iv) are not subject to any withholding
tax unless the Obligor thereon is required under the terms of the related
Underlying Instrument to make “gross-up” payments that cover the full amount of
such withholding tax on an after-tax basis, and (v) evidence:

 

(a)            direct obligations of, and obligations fully guaranteed as to
full and timely payment by, the United States (or by any agency thereof to the
extent such obligations are backed by the full faith and credit of the United
States);

 

(b)            demand deposits, time deposits or certificates of deposit of
depository institutions or trust companies incorporated under the laws of the
United States or any state thereof and subject to supervision and examination by
federal or state banking or depository institution authorities; provided that at
the time of the Borrower’s investment or contractual commitment to invest
therein, the commercial paper, if any, and short-term unsecured debt obligations
(other than such obligation whose rating is based on the credit of a Person
other than such institution or trust company) of such depository institution or
trust company shall have a credit rating from each Rating Agency in the Highest
Required Investment Category granted by such Rating Agency;

 

(c)            commercial paper, or other short term obligations, having, at the
time of the Borrower’s investment or contractual commitment to invest therein, a
rating in the Highest Required Investment Category granted by each Rating
Agency;

 

(d)            demand deposits, time deposits or certificates of deposit that
are fully insured by the FDIC and either have a rating on their certificates of
deposit or short-term deposits from Moody’s and S&P of “P-1” and “A-1”,
respectively, and if rated by Fitch, from Fitch of “F-1+”;

 

(e)            notes that are payable on demand or bankers’ acceptances issued
by any depository institution or trust company referred to in clause (b) above;

 

(f)             investments in taxable money market funds or other regulated
investment companies having, at the time of the Borrower’s investment or
contractual commitment to invest therein, a rating of the Highest Required
Investment Category from at least two Rating Agencies and from each Rating
Agency that rates such investments;

 

(g)            time deposits (having maturities of not more than 90 days) by an
entity the commercial paper of which has, at the time of the Borrower’s
investment or contractual commitment to invest therein, a rating of the Highest
Required Investment Category granted by each Rating Agency; or

 

(h)            Eligible Repurchase Obligations with a rating acceptable to the
Rating Agencies, which in the case of S&P and Moody’s, shall be “A-1” and in the
case of Fitch shall be “F-1+”.

 

The Collateral Custodian or the Administrative Agent may, pursuant to the
direction of the Collateral Manager or the Administrative Agent, as applicable,
purchase or sell to itself or an Affiliate, as principal or agent, the Permitted
Investments described above. Permitted Investments may include those investments
in which the Collateral Custodian or any of its affiliates provides services and
receives reasonable compensation.

 

“Permitted Liens”: Any of the following as to which no enforcement, collection,
execution, levy or foreclosure proceeding shall have been commenced: (a) Liens
for Taxes if such Taxes shall not at the time be due and payable or if a Person
shall currently be contesting the validity thereof in good faith by appropriate
proceedings and with respect to which reserves in accordance with GAAP have been
provided on the books of such Person, (b) Liens imposed by law, such as
materialmen’s, warehousemen’s, mechanics’, carriers’, workmen’s and repairmen’s
Liens and other similar Liens, arising by operation of law in the ordinary
course of business for sums that are not overdue or are being contested in good
faith, (c) with respect to any Underlying Assets, Liens permitted under the
related Underlying Instruments, (d) as to agented Loans, Liens in favor of the
agent on behalf of all of the lenders with respect to such Loan, (e) Liens
granted pursuant to or by the Transaction Documents and (f) Liens in favor of
the Collateral Custodian and permitted under the Account Control Agreement.

 

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“Person”: An individual, partnership, corporation, limited liability company,
joint stock company, trust (including a statutory or business trust),
unincorporated association, sole proprietorship, joint venture, government (or
any agency or political subdivision thereof) or other entity.

 

“PIK Interest”: Interest accrued on a Loan that is added to the principal amount
of such Loan instead of being paid as it accrues, provided, that the interest of
any Loan that is paid with the proceeds of a permitted drawing on a Revolving
Loan shall not constitute PIK Interest.

 

“PIK Loan”: A loan that by its terms permits the deferral or capitalization of
payment of accrued and unpaid interest.

 

“Platform”: Any electronic system, including Intralinks®, ClearPar® and any
other internet or extranet-based site, whether such electronic system is owned,
operated or hosted by the Administrative Agent or any of their respective
Related Parties or any other Person, providing for access to data protected by
passcodes or other security system.

 

“Pledge Agreement”: The Pledge Agreement, dated as of the Effective Date, made
by the Transferor in favor of the Administrative Agent, for the benefit of
itself and the Lenders, pledging all of the equity interests of Borrower, as
amended, modified, waived, supplemented, restated or replaced from time to time.

 

“Prime Rate”: The rate announced by Ally Bank from time to time as its prime
rate in the United States, such rate to change as and when such designated rate
changes. The Prime Rate is not intended to be the lowest rate of interest
charged by Ally Bank or any other specified financial institution in connection
with extensions of credit to debtors.

 

“Principal Collection Account”: Collectively, (i) a Securities Account created
and maintained on the books and records of the Collateral Custodian (or any
other party acceptable to Administrative Agent in its sole discretion) entitled
“USD Principal Collection Account” in the name of the Borrower and subject to
the prior Lien of the Administrative Agent for the benefit of the Secured
Parties and (ii) a Securities Account created and maintained on the books and
records of the Collateral Custodian (or any other party acceptable to
Administrative Agent in its sole discretion) entitled “Canadian Dollar Principal
Collection Account” in the name of the Borrower and subject to the prior Lien of
the Administrative Agent for the benefit of the Secured Parties.

 

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“Principal Collections”: All amounts received by the Borrower or the Collateral
Custodian that are not Interest Collections or Excluded Amounts to the extent
received in cash by or on behalf of the Borrower or the Collateral Custodian.

 

“Principal Finance Loan”: Any Loan, (i) the repayment of which is primarily
dependent upon cash flows generated from the creation, or the liquidation, of an
underlying asset or pool of assets or other investments, (ii) the Collateral
Manager and the Administrative Agent reasonably agree that the designation of
such Loan as Principal Finance Loan is appropriate, including that such Loan is
not a Structured Finance Obligation, and (iii) and would satisfy the definition
of First Lien Loan, First Lien Last Out Loan or Second Lien Loan (in each case,
but for the exclusion of Principal Finance Loans from such definition); provided
that, notwithstanding anything to the contrary in this Agreement, traditional
asset-based or cash flow loans made directly or indirectly to an operating
company, including, without limitation, loans with a borrowing base consisting
of receivables and/or inventory, shall not be deemed to be Principal Finance
Loans.

 

“Pro Rata Share”: With respect to a Lender, the percentage obtained by dividing
the Commitment of such Lender (as determined pursuant to the definition of
Commitment) by the aggregate Commitments of all the Lenders (as determined
pursuant to the definition of Commitment).

 

“Proceeds”: With respect to any Collateral, all property that is receivable or
received when such Collateral is collected, sold, liquidated, foreclosed,
exchanged, or otherwise disposed of, whether such disposition is voluntary or
involuntary, and includes all rights to payment with respect to any insurance
relating to such Collateral, net of all out-of-pocket expenses incurred in
connection with any such collection, sale, liquidation, foreclosure, exchange or
disposal.

 

“Property”: Any right or interest in or to property of any kind whatsoever,
whether real, personal or mixed and whether tangible or intangible, including
Capital Stock.

 

“Public Lenders”: The meaning specified in Section 12.2(d).

 

“Purchase Price”: With respect to any Loan, an amount (expressed as a percentage
of par) equal to (i) the purchase price (or, if different principal amounts of
such Loan were purchased at different purchase prices, the weighted average of
such purchase prices) paid by the Transferor or the Borrower (as applicable) for
such Loan (exclusive of any interest, PIK Interest and original issue discount)
divided by (ii) the principal balance of the portion of such Loan purchased by
the Borrower outstanding as of the date of such purchase (exclusive of any
interest, PIK Interest and original issue discount); provided that the Purchase
Price of any Loan determined to be equal to or greater than ninety-five percent
(95.0%) in accordance with the foregoing calculation shall be deemed to be one
hundred percent (100%).

 

“Qualified Institution”: A depository institution or trust company organized
under the laws of the United States of America or any one of the States thereof
or the District of Columbia (or any domestic branch of a foreign bank),
(i)(a) that has either (1) a long-term unsecured debt rating of “A” or better by
S&P and “A2” or better by Moody’s or (2) a short-term unsecured debt rating or
certificate of deposit rating of “A-1” or better by S&P or “P-1” or better by
Moody’s, (b) the parent corporation of which has either (1) a long-term
unsecured debt rating of “A” or better by S&P and “A2” or better by Moody’s or
(2) a short-term unsecured debt rating or certificate of deposit rating of “A-1”
or better by S&P and “P-1” or better by Moody’s or (c) is otherwise acceptable
to the Administrative Agent and (ii) the deposits of which are insured by the
FDIC.

 

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“Rating Agencies”: Each of S&P, Fitch and Moody’s.

 

“Rating Criteria”: Criteria satisfied as of any date with respect to any Lender
if the short-term debt, deposit or similar obligations of such Lender are rated
at least “P-3” by Moody’s (or an equivalent rating by a rating agency rating
such short-term debt, deposit or similar obligations of such Person) or, if no
such rating has been issued by Moody’s (or such other applicable rating agency),
the long-term debt of such Person is rated at least “A3” by Moody’s (or an
equivalent rating by a rating agency rating such long term debt obligations of
such Person). If any Lender at any time fails to satisfy the Rating Criteria,
such Person shall promptly (but in any event within two (2) Business Days of
such Person receiving notice or otherwise becoming aware of such failure) notify
the Borrower, the Collateral Manager and the Administrative Agent thereof.

 

“Register”: The meaning specified in Section 12.16(b).

 

“Registered”: With respect to any registration-required obligation within the
meaning of Section 163(f)(2) of the Code, a debt obligation that is in
registered form within the meaning of Section 5f.103-1(c) of the Treasury
Regulations.

 

“Regulation U”: Regulation U of the Board of Governors of the Federal Reserve
System, 12 C.F.R. §221, or any successor regulation.

 

“Reinvestment”: The meaning specified in Section 2.14(a)(i).

 

“Reinvestment Notice”: Each notice required to be delivered by the Borrower in
respect of any Reinvestment of Principal Collections pursuant to Section 3.2(b)
in the form of Exhibit A-3.

 

“Related Parties”: With respect to any Person, such Person’s Affiliates and the
partners, directors, officers, employees, agents and advisors of such Person and
of such Person’s Affiliates.

 

“Release Date”: The meaning specified in Section 2.14(d).

 

“Relevant Governmental Body” means the Federal Reserve Board and/or the Federal
Reserve Bank of New York, or a committee officially endorsed or convened by the
Federal Reserve Board and/or the Federal Reserve Bank of New York or any
successor thereto.

 

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“Relevant Test Period”: With respect to any Loan, the relevant test period for
the calculation of Net Senior Leverage Ratio or Cash Interest Coverage Ratio, as
applicable, for such Loan in accordance with the related Underlying Instruments
or, if no such period is provided for therein, (i) for Obligors delivering
monthly financing statements, each period of the last twelve (12) consecutive
reported calendar months, and (ii) for Obligors delivering quarterly financing
statements, each period of the last four consecutive reported fiscal quarters of
the principal Obligor on such Loan; provided that with respect to any Loan for
which the relevant test period is not provided for in the related Underlying
Instruments, if an Obligor is a newly-formed entity as to which twelve (12)
consecutive calendar months have not yet elapsed, “Relevant Test Period” shall
initially include the period from the date of formation of such Obligor to the
most recently ended month or fiscal quarter (as the case may be), with
applicable amounts in such period annualized for purposes of such calculations,
and shall subsequently include each period of the last twelve (12) consecutive
reported calendar months or four (4) consecutive reported fiscal quarters (as
the case may be) of such Obligor.

 

“Repayment Notice”: Each notice required to be delivered by the Borrower in
respect of any repayment of Advances Outstanding, in the form of Exhibit A-2.

 

“Reportable Event”: A reportable event within the meaning of Section 4043 of
ERISA, other than those events as to which the 30-day notice period referred to
in Section 4043(c) of ERISA has been waived.

 

“Reporting Date”: The 20th day of each calendar month or, if such day is not a
Business Day, the next succeeding Business Day, with the first Reporting Date
occurring on December 20, 2019, unless a Payment Date Report is required to be
delivered that month.

 

“Required Funding Amount”: If (i) (A) no Event of Default has occurred and is
continuing, and (B) the Revolving Period End Date has not occurred, in each case
as of the date of determination and after giving effect to any withdrawal from
the Unfunded Exposure Account on such date of determination, the Unfunded
Exposure Equity Amount, and (ii) (A) an Event of Default has occurred and
continuing, or (B) the Revolving Period End Date has occurred, in either case as
of the date of determination and after giving effect to any withdrawal from the
Unfunded Exposure Account on such date of determination, the Unfunded Exposure
Amount.

 

“Required Lenders”: (a) The Administrative Agent and (b) the Lenders
representing an aggregate of more than 50.00% of (i) prior to the earlier to
occur of the Revolving Period End Date or the Termination Date, the aggregate
Commitments of the Lenders then in effect and (ii) thereafter, the Advances
Outstanding; provided; that (A) if two (2) or more Lenders each represent 20.00%
or more of (i) prior to the earlier to occur of the Revolving Period End Date or
the Termination Date, the aggregate Commitments of the Lenders then in effect
and (ii) thereafter, the Advances Outstanding, then “Required Lenders” shall
also include at least two (2) such Lenders, and (B) the Commitment of, and the
portion of any Advances Outstanding, as applicable, held or deemed held by, any
Defaulting Lender shall be excluded for purposes of making a determination of
Required Lenders. For purposes of determining the number of Lenders pursuant to
this definition, groups of Lenders that are Affiliates shall be treated as one
(1) Lender.

 

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“Required Loan Documents”: For each Loan, originals or where indicated, copies
(including electronic copies) of the following documents or instruments, all as
specified on the related Loan Checklist:

 

(a)                (i) other than in the case of a Noteless Loan or an Effective
Date Participation Interest, (x) the original or, if accompanied by an original
“lost note” affidavit and indemnity, a copy of, the underlying promissory note,
endorsed by the Borrower (that may be in the form of an allonge or note power
attached thereto) either in blank or to the Administrative Agent as required
under the related Underlying Instruments (and evidencing an unbroken chain of
endorsements from each prior holder thereof evidenced in the chain of
endorsements either in blank or to the Administrative Agent), with any
endorsement to the Administrative Agent to be in the following form: “Ally Bank,
as Administrative Agent for the Secured Parties” and an undated transfer or
assignment document or instrument relating to such Loan, signed by the Borrower,
as assignor, and the administrative agent (only in the event such administrative
agent is an Affiliate of the Borrower) but not dated and not specifying an
assignee, and delivered to the Collateral Custodian, and (y) a copy of each
transfer document or instrument relating to such Loan (including, until the
settlement date specified therein, a commercially standard loan trade ticket
that obligates the Borrower to settle the purchase of such Loan on a specific
date) evidencing the assignment of such Loan to the Borrower and an undated
transfer or assignment document or instrument relating to such Loan, signed by
the Borrower, as assignor, and the administrative agent (only in the event such
administrative agent is an Affiliate of the Borrower) but not dated and not
specifying an assignee, and delivered to the Collateral Custodian, (ii) in the
case of a Noteless Loan (other than an Effective Date Participation Interest) a
copy of each transfer document or instrument relating to such Noteless Loan
evidencing the assignment of such Noteless Loan to the Borrower and an undated
transfer or assignment document or instrument relating to such Noteless Loan,
signed by the Borrower, as assignor, and the administrative agent (only in the
event such administrative agent is an Affiliate of the Borrower) but not dated
and not specifying an assignee, and delivered to the Collateral Custodian, or
(iii) for each Effective Date Participation Interest, a fully executed master
participation agreement, in form and substance reasonably satisfactory to the
Administrative Agent, which duly effects and evidences each such Participation
Interest and evidence of payment or waiver of any fees associated with assigning
any such Loan;

 

(b)               originals or copies (including electronic copies) of each of
the following (i) to the extent applicable to the related Loan; any related loan
agreement, credit agreement, security agreement (if separate from any Mortgage),
subordination agreement and intercreditor agreement or similar instruments, and
(ii) to the extent applicable to the related Loan and only to the extent such
document is in the possession of the Borrower, any note purchase agreement, sale
and servicing or collateral management agreement, Mortgage, acquisition
agreement, guarantee, Insurance Policy, assumption or substitution agreement or
similar material operative document, in each case together with any amendment or
modification thereto, as set forth on the Loan Checklist;

 

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(c)                if any Loan is secured by a Mortgage and such document is in
Borrower’s possession, in each case as set forth in the Loan Checklist:

  

(i)                other than with respect to an Agented Note, either (i) the
original Mortgage, the original assignment of leases and rents, if any, and the
originals of all intervening assignments, if any, of the Mortgage and
assignments of leases and rents with evidence of recording thereon, (ii) copies
(including electronic copies) thereof certified by closing counsel or by a title
company or escrow company to be true and complete copies thereof where the
originals have been transmitted for recording until such time as the originals
are returned by the public recording office; provided that, solely for purposes
of the Review Criteria, the Collateral Custodian shall have no duty to ascertain
whether any certification set forth in this subsection (c)(i) has been received,
or (iii) copies certified by the public recording offices (including electronic
copies) where such documents were recorded to be true and complete copies
thereof in those instances where the public recording offices retain the
original or where the original recorded documents are lost; and

 

(ii)               other than with respect to any Agented Note, to the extent
the Borrower is the sole lender under the Underlying Instruments, an Assignment
of Mortgage and/or any other material recorded security documents (including any
assignment of leases and rents) in recordable form, executed by the Borrower or
the prior holder of record, in blank or to the Administrative Agent (and
evidencing an unbroken chain of assignments from the prior holder of record to
the Administrative Agent), with any assignment to the Administrative Agent to be
in the following form: “Ally Bank, as Administrative Agent for the Secured
Parties”;

 

(d)               with respect to any Loan originated by the Transferor and with
respect to which the Transferor or an Affiliate thereof acts as administrative
agent (or in a comparable capacity), either (i) copies of the UCC-1 financing
statements, if any, and any related continuation statements, each showing the
Obligor as debtor and the Transferor or the relevant agent thereunder as secured
party and each with evidence of filing thereon, or (ii) copies (including
electronic copies) of any such financing statements in instances where the
original financing statements have been sent to the appropriate public filing
office for filing, in each case as set forth in the Loan Checklist.

 

“Required Reports”: Collectively, the Borrowing Base Certificate, the Payment
Date Report, financial statements of each Obligor, Borrower, Transferor and
Collateral Manager required to be delivered under the Transaction Documents
(including pursuant to Section 5.1(s) and 6.8(c) hereof), the annual statements
as to compliance and the annual independent public accountant’s report.

 

“Responsible Officer”: With respect to any Person, any duly authorized officer
of such Person with direct responsibility for the administration of this
Agreement and also, with respect to a particular matter, any other duly
authorized officer of such Person to whom such matter is referred because of
such officer’s knowledge of and familiarity with the particular subject.

 

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“Restricted Payment”: (i) Any dividend or other distribution, direct or
indirect, on account of any class of equity interests of the Borrower now or
hereafter outstanding, except a dividend paid solely in interests of that class
of equity interests or in any junior class of equity interests of the Borrower;
(ii) any redemption, retirement, sinking fund or similar payment, purchase or
other acquisition for value, direct or indirect, of any class of equity
interests of the Borrower now or hereafter outstanding; and (iii) any payment
made to redeem, purchase, repurchase or retire, or to obtain the surrender of,
any outstanding warrants, options or other rights to acquire equity interests of
the Borrower now or hereafter outstanding.

  

“Review Criteria”: The meaning specified in Section 7.2(b)(i).

 

“Revolving Loan”: Any Loan (other than a Delayed Draw Loan) that is a senior
secured obligation (including funded and unfunded portions of revolving credit
lines, unfunded commitments under specific facilities, letter of credit
facilities and other similar loans and investments) that under the Underlying
Instruments relating thereto may require one or more future advances to be made
to the Obligor by the Borrower and which provides that such borrowed money may
be repaid and reborrowed from time to time; provided that any such Loan will be
a Revolving Loan only until all commitments by the Borrower to make advances to
the Obligor thereof expire, or are terminated, or are irrevocably reduced to
zero.

 

“Revolving Period”: The period commencing on the Effective Date and ending on
the day preceding the earlier to occur of the Revolving Period End Date or the
Termination Date.

 

“Revolving Period End Date”: The earliest to occur of (a) the Scheduled
Revolving Period End Date or (b) the date of the declaration of the Revolving
Period End Date pursuant to Section 9.2(a).

 

“S&P”: Standard & Poor’s, a division of The McGraw-Hill Companies, Inc., and any
successor thereto.

 

“S&P Industry Classification”: The industry classifications set forth in
Schedule V hereto, as such industry classifications shall be updated with the
consent of the Borrower and the Administrative Agent if S&P publishes revised
industry classifications.

 

“Sale Agreement”: The Sale and Contribution Agreement, dated as of November 22,
2019, between the Transferor and the Borrower, as amended, modified, waived,
supplemented, restated or replaced from time to time.

 

“Sale Proceeds”: With respect to any Loan, all proceeds received as a result of
the sale of such Loan, net of all out-of-pocket expenses of the Borrower, the
Collateral Manager and the Collateral Custodian incurred in connection with any
such sale.

 

“Scheduled Payment”: Each scheduled payment of principal and/or interest
required to be made by an Obligor on the related Loan, as adjusted pursuant to
the terms of the related Underlying Instruments, if applicable.

 

“Scheduled Revolving Period End Date”:  November 22, 2022.

 

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“Second Lien Loan”: Any Eligible Loan (other than a Principal Finance Loan) (i)
that does not satisfy all of the requirements set forth in the definition of
“First Lien Loan” or “First Lien Last Out Loan”, (ii) that is secured by a
pledge of collateral, which security interest is validly perfected and second
priority under Applicable Law (subject to liens permitted under the applicable
credit agreement that are reasonable and customary for similar loans, and liens
accorded priority by law in favor of the United States or any State or agency
provided such liens do not directly secure indebtedness for borrowed money)
(except as otherwise provided in this definition), (iii) for which the
Collateral Manager determines in good faith that the value or the enterprise
value of the related Obligor (as determined by Collateral Manager in accordance
with a methodology acceptable to Administrative Agent) of the collateral
securing the Loan on the date such Loan is first included as part of the
Collateral or on the date that any Value Adjustment Event occurs equals or
exceeds the outstanding principal balance of the Loan plus the aggregate
outstanding balances of all other loans of equal or higher seniority secured by
the same collateral, (iv) that is not (and cannot by its terms become)
subordinate in right of payment to any obligation for borrowed money of the
Obligor (excluding customary terms applicable to a second lien lender under
customary intercreditor provisions, including such as after an event of default
in connection with a first priority lien or with respect to the liquidation of
the Obligor or certain specified collateral for such Loan), and (v) that is not
secured solely or primarily by the Capital Stock of its Obligor or any of such
Obligor’s Affiliates.

 

“Section 2.13 Certificate”: The meaning specified in Section 2.13(e).

 

“Secured Party”: (i) Each Lender, (ii) the Administrative Agent, (iii) the
Collateral Custodian, (iv) the Securities Intermediary and (v) the Collateral
Administrator.

 

“Securities Account”: The meaning specified in Section 8-501(a) of the UCC.

 

“Securities Act”: The U.S. Securities Act of 1933, as amended, and the rules and
regulations promulgated thereunder.

 

“Securities Intermediary”: (i) A Clearing Corporation; or (ii) a Person,
including a bank or broker, that in the ordinary course of its business
maintains Securities Accounts for others and is acting in that capacity. The
initial Securities Intermediary under the Account Control Agreement shall be the
Collateral Custodian.

 

“Security Certificate”: The meaning specified in Section 8-102(a)(16) of the
UCC.

 

“Security Entitlement”: The meaning specified in Section 8-102(a)(17) of the
UCC.

 

“Senior Collateral Manager Fee”: The meaning specified in the Collateral
Management Agreement.

 

“SOFR” with respect to any day means the secured overnight financing rate
published for such day by the Federal Reserve Bank of New York, as the
administrator of the benchmark, (or a successor administrator) on the Federal
Reserve Bank of New York’s Website.

 

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“Solvent”: As to any Person at any time, having a state of affairs such that all
of the following conditions are met: (a) the fair value of the property of such
Person is greater than the amount of such Person’s liabilities (including
disputed, contingent and unliquidated liabilities) as such value is established
and liabilities evaluated for purposes of Section 101(32) of the Bankruptcy
Code; (b) the present fair saleable value of the property of such Person in an
orderly liquidation of such Person is not less than the amount that will be
required to pay the probable liability of such Person on its debts and other
liabilities as they become absolute and matured; (c) such Person is able to
realize upon its property and pay its debts and other liabilities (including
disputed, contingent and unliquidated liabilities) as they mature in the normal
course of business; (d) such Person does not intend to, and does not believe
that it will, incur debts or liabilities beyond such Person’s ability to pay as
such debts and liabilities mature; and (e) such Person is not engaged in a
business or a transaction, and does not propose to engage in a business or a
transaction, for which such Person’s property assets would constitute
unreasonably small capital.

 

“Special Member”: The meaning specified in Section 4.1(t)(xxvi).

 

“Structured Finance Obligation”: Any obligation secured directly, by reference
to, or representing ownership of, a pool or receivables or other Financial
Assets of any Obligor that is a single purpose bankruptcy remote special purpose
entity established to finance such Financial Assets, including collateralized
debt obligations and mortgage-backed securities, including (but not limited to)
collateral debt obligations, collateral loan obligations, asset backed
securities and commercial mortgage backed securities or any resecuritization
security.

 

“Subordinated Collateral Manager Fee”: The meaning specified in the Collateral
Management Agreement.

 

“Subsidiary”: As to any Person, a corporation, partnership or other entity of
which shares of stock or other ownership interests having ordinary voting power
(other than stock or such other ownership interests having such power only by
reason of the happening of a contingency) to elect a majority of the board of
directors or other managers of such corporation, partnership or other entity are
at the time owned, or the management of which is otherwise controlled, directly
or indirectly, through one or more intermediaries, or both, by such Person.

 

“Substitution”: The meaning specified in Section 2.14(b).

 

“Syndicate Communications”: Collectively, any notice, demand, communication,
information, document or other material provided by or on behalf of any Obligor
pursuant to any Transaction Document or the transactions contemplated therein
which is distributed to the Administrative Agent and each Lender by means of
electronic communications pursuant to Article XII, including through the
Platform.

 

“Taxes”: The meaning specified in Section 2.13(a).

 

“Term SOFR” means the forward-looking term rate based on SOFR that has been
selected or recommended by the Relevant Governmental Body.

 

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“Termination Date”: The earliest of (a) the date is two (2) years after the
Revolving Period End Date or (b) the date of the declaration of the Termination
Date or the date of the automatic occurrence of the Termination Date pursuant to
Section 9.2(a).

 

“Third Party Sale Agreement”: A sale agreement between the Borrower and a third
party seller in form and substance reasonably acceptable to Administrative
Agent.

 

“Tier 1 Obligor”: (a) With respect to First Lien Loans, Obligors for which the
Net Senior Leverage Ratio of the applicable Obligor with respect to such First
Lien Loan is less than 4.75 to 1.00, and (b) with respect to First Lien Last Out
Loans and Second Lien Loans, Obligors for which the Net Total Obligor Leverage
Ratio of the applicable Obligor with respect to such First Lien Last Out Loan
and Second Lien Loan is less than 5.75 to 1.00.

 

“Tier 2 Obligor”: (a) With respect to First Lien Loans, Obligors for which the
Net Senior Leverage Ratio of the applicable Obligor with respect to such First
Lien Loan is less than 5.75 to 1.00, and (b) with respect to First Lien Last Out
Loans and Second Lien Loans, Obligors for which the Net Total Obligor Leverage
Ratio of the applicable Obligor with respect to such First Lien Last Out Loan
and Second Lien Loan is less than 6.75 to 1.00.

 

“Tier 3 Obligor”: (a) With respect to First Lien Loans, Obligors for which the
Net Senior Leverage Ratio of the applicable Obligor with respect to such First
Lien Loan is less than 6.75 to 1.00, and (b) with respect to First Lien Last Out
Loans and Second Lien Loans, Obligors for which the Net Total Obligor Leverage
Ratio of the applicable Obligor with respect to such First Lien Last Out Loan
and Second Lien Loan is less than 7.75 to 1.00.

 

“Total Interest Coverage Ratio”: With respect to Borrower, for the trailing
twelve month period then ending, the ratio of (i) Borrower Interest Collections
during such period minus all Senior Collateral Manager Fees and Subordinated
Collateral Manager Fees payable by Borrower during such period to (ii) Borrower
Interest Expense for such period.

 

“Transaction”: The meaning specified in Section 3.2.

 

“Transaction Documents”: This Agreement, the Sale Agreement, any Third Party
Sale Agreement, the Account Control Agreement, the Pledge Agreement, the Fee
Letter, the Collateral Management Agreement, the Collateral Administration
Agreement, each Note, any Joinder Supplement, any Transferee Letter and the
Collateral Custodian Fee Letter.

 

“Transferee Letter”: The meaning specified in Section 12.16.

 

“Transferor”: Initially, FS Investment Corporation IV, as seller of Loans to the
Borrower; provided that if the Transferor enters into any merger, consolidation
or amalgamation with or into a Permitted BDC, the Permitted BDC or any other
successor entity formed by or surviving such merger, consolidation or
amalgamation shall be the new Transferor so long as such successor entity
assumes the rights and obligations of the outgoing Transferor concurrently with
the consummation of such merger, consolidation or amalgamation.

 

“UCC”: The Uniform Commercial Code as from time to time in effect in the
applicable jurisdiction or jurisdictions.

 

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“Unadjusted Benchmark Replacement” means the Benchmark Replacement excluding the
Benchmark Replacement Adjustment.

 

“Uncertificated Security”: The meaning specified in Section 8-102(a)(l8) of the
UCC.

 

“Underlying Assets”: With respect to a Loan, any property or other assets
designated and pledged as collateral to secure repayment of such Loan, including
to the extent provided for in the relevant Underlying Instruments, a pledge of
the stock, membership or other ownership interests in the related Obligor and
all Proceeds from any sale or other disposition of such property or other
assets.

 

“Underlying Instruments”: The loan agreement, credit agreement, indenture or
other agreement pursuant to which a Loan or Permitted Investment has been issued
or created and each other agreement that governs the terms of or secures the
obligations represented by such Loan or Permitted Investment or of which the
holders of such Loan or Permitted Investment are the beneficiaries.

 

“Unfunded Exposure Account”: A Securities Account created and maintained on the
books and records of the Collateral Custodian (or any other party acceptable to
Administrative Agent in its sole discretion) entitled “Unfunded Exposure
Account” in the name of the Borrower and subject to the prior Lien of the
Administrative Agent for the benefit of the Secured Parties.

 

“Unfunded Exposure Amount”: On any date of determination, with respect to any
Loan, the aggregate amount (without duplication) of all (i) the Dollar
Equivalent of unfunded commitments (which shall include all unfunded revolver
commitments and unfunded portions of delayed draw term loans) and (ii) the
Dollar Equivalent of all standby or contingent commitments associated with such
Loan.

 

“Unfunded Exposure Equity Amount”: On any date of determination, with respect to
any Loan, an amount equal to the product of (i) the Unfunded Exposure Amount
with respect to such Loan and (ii) one (1) minus the Advance Rate applicable to
such Loan if such Loan is an Eligible Loan.

 

“Unfunded Exposure Shortfall”: The meaning specified in Section 2.9(e)(iii).

 

“United States” or “U.S.”: The United States of America.

 

“Unrestricted Cash”: The meaning of “Unrestricted Cash” or any comparable
definition in the Underlying Instruments for each Loan, and in any case that
“Unrestricted Cash” or such comparable definition is not defined in such
Underlying Instruments, all cash available for use for general corporate
purposes and not held in any reserve account or legally or contractually
restricted for any particular purposes or subject to any lien (other than
blanket liens permitted under or granted in accordance with such Underlying
Instruments), as reflected on the most recent financial statements of the
relevant Obligor that have been delivered to the Borrower.

 

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“Unused Facility Amount”: At any time, (a) the Facility Amount minus (b) the
Advances Outstanding at such time.

 

“USA Patriot Act”: The Uniting and Strengthening America by Providing
Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001,
Public Law 107-56.

 

“U.S. Tax Person”: A “United States person” within the meaning of Section
7701(a)(30) of the Code.

 

“Value Adjustment Event”: With respect to any Loan, the occurrence of any one or
more of the following events after the related Funding Date:

 

(a)               the failure to deliver (i) with respect to quarterly reports
required to be delivered by the Obligor by the terms of the Underlying
Instruments, any financial statements (including unaudited financial statements)
to the Administrative Agent by the date that is no later than sixty (60) days
after the end of each fiscal quarter, and (ii) with respect to annual reports
required to be delivered by the Obligor by the terms of the Underlying
Instruments, any audited financial statements to the Administrative Agent by the
date that is no later than one hundred fifty (150) days after the end of any
fiscal year;

 

(b)               a default described in clause (d)(ii) of “Defaulted Loan” that
has occurred and been continuing for less than twelve (12) months; or

 

(c)               the occurrence of a Material Modification with respect to such
Loan.

 

Notwithstanding the foregoing, if the circumstances giving rise to a Value
Adjustment Event are cured, as determined by the Administrative Agent in its
sole discretion, the Borrower may request that the Administrative Agent deem
(which determination shall be made in Administrative Agent’s reasonable
judgment) that such Value Adjustment Event shall no longer be in effect for the
subsequent Accrual Period after such Value Adjustment Event has been cured.

 

“Warranty Loan”: Any Loan (a) that fails to satisfy any criteria set forth in
clauses (ii)(f), (ii)(r), (ii)(s), (ii)(gg), or (ii)(nn) (but only for failure
to satisfy clause (f) and (g) of the definition of “Eligible Obligor”) of the
definition of “Eligible Loan” as of any date (except with respect to any such
criteria that is explicitly stated to apply with respect solely to the date of
acquisition of such Loan) or (b) with respect to which the Borrower has failed
to deliver the Required Loan Documents described in Section 3.2(i) within the
time periods set forth therein.

 

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“Weighted Average Advance Rate”: As of any date of determination with respect to
all Eligible Loans included in the Borrowing Base, the amount obtained by (x)
summing the products obtained by multiplying:

  

The Advance Rate at such time applicable to each such Eligible Loan X The sum of
(i) the Dollar Equivalent of the aggregate Adjusted Borrowing Value of such
Eligible Loan minus (ii) the Dollar Equivalent of an amount equal to the Excess
Concentration Amount attributable to such Eligible Loan

  

and dividing such sum by (y) the sum of (i) the Dollar Equivalent of the
aggregate Adjusted Borrowing Value all Eligible Loan minus (ii) the Dollar
Equivalent of an amount equal to the Excess Concentration Amount as of such
date; provided that if the Borrowing Base contains fifteen (15) Eligible Loans
or fewer, the Weighted Average Advance Rate shall not exceed 55.00%; provided,
further, that for the purpose of determining the number of Eligible Loans for
the purpose of the foregoing proviso, all Eligible Loans to a single Obligor
shall be treated as one Eligible Loan.

 

“Withdrawal Conditions”: The meaning specified in Section 2.9(e)(i).

 

“Withholding Agent”: Any FS/KKR Party and the Administrative Agent, or the
Collateral Custodian to the extent required by Applicable Law.

 

“Zero Coupon Obligation”: A debt obligation that does not bear interest for all
or part of the period that it is outstanding or that provides for periodic
payments in cash less frequently than semi-annually or that pays interest only
at its stated maturity.

 

Section 1.2           Other Terms.

 

All accounting terms used but not specifically defined herein shall be construed
in accordance with GAAP. All terms used in Article 9 of the UCC in the State of
New York, and used but not specifically defined herein, are used herein as
defined therein.

 

Section 1.3           Computation of Time Periods.

 

Unless otherwise stated in this Agreement, in the computation of a period of
time from a specified date to a later specified date, the word “from” means
“from and including” and the words “to” and “until” each mean “to but
excluding.”

 

Section 1.4           Interpretation.

 

In each Transaction Document, unless a contrary intention appears:

 

(a)                the singular number includes the plural number and vice
versa;

 

(b)               reference to any Person includes such Person’s successors and
assigns but, if applicable, only if such successors and assigns are permitted by
the Transaction Documents;

 

(c)                reference to any gender includes each other gender;

 

(d)               reference to day or days without further qualification means
calendar days;

 

(e)                reference to any time means New York, New York time;

 

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(f)                reference to any agreement (including any Transaction
Document), document or instrument means such agreement, document or instrument
as amended, modified, waived, supplemented, restated or replaced and in effect
from time to time in accordance with the terms thereof and, if applicable, the
terms of the other Transaction Documents, and reference to any promissory note
includes any promissory note that is an extension or renewal thereof or a
substitute or replacement therefor;

 

(g)               reference to any Applicable Law means such Applicable Law as
amended, modified, codified, replaced or reenacted, in whole or in part, and in
effect from time to time, including rules and regulations promulgated thereunder
and reference to any Section or other provision of any Applicable Law means that
provision of such Applicable Law from time to time in effect and constituting
the substantive amendment, modification, codification, replacement or
reenactment of such Section or other provision;

 

(h)               reference to any delivery or transfer to the Collateral
Custodian with respect to the Collateral in this Agreement means delivery or
transfer to the Collateral Custodian for the benefit of the Administrative Agent
on behalf of the Secured Parties;

 

(i)                 for the purposes of calculating the Borrowing Base
(including whether any Borrowing Base Deficiency exists), the Excess
Concentration Amount, the Minimum Credit Enhancement Amount (including whether
the Minimum Credit Enhancement Amount Test is satisfied), and for the purposes
of any other calculation required hereunder, the effect of the acquisition or
disposition of Loans and Permitted Investments shall be calculated on a
settlement date basis;

 

(j)                 all calculations performed by the Administrative Agent
hereunder or under any Transaction Document shall be binding on the parties
hereto and shall be deemed to be accurate, absent manifest error;

 

(k)               “including” means “including without limitation”;

 

(l)                 multiple Loans of the same type to a single Obligor shall be
treated as a single Loan.

 

Section 1.5           Calculation of Borrowing Base. In connection with amounts
to be calculated for purposes of determining the Borrowing Base and generally
preparing the Borrowing Base Certificate, all amounts shall be expressed in
Dollars.

 

ARTICLE II

THE NOTES

 

Section 2.1           The Notes.

 

On the terms and conditions hereinafter set forth, the Borrower shall deliver
(i) on the Effective Date, to each Lender requesting a Note at the applicable
address set forth on Annex A to this Agreement, and (ii) on the effective date
of any Joinder Supplement, to each additional Lender requesting a Note, at the
address set forth in the applicable Joinder Supplement, a duly executed
promissory note in substantially the form of Exhibit B (each a “Note”), dated as
of the date of this Agreement, each in a face amount equal to the applicable
Lender’s Commitment as of the Effective Date or the effective date of any
Joinder Supplement, as applicable, and otherwise duly completed. Each Note shall
evidence obligations in an amount equal, at any time, to the Advances
Outstanding by such Lender under the applicable Note on such day.

 

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Section 2.2           Procedures for Advances by the Lenders.

 

(a)               Subject to the limitations set forth in this Section 2.2, the
Borrower may, during the Revolving Period, request the Lenders to make advances
of funds (each, a “Loan Advance”) under the Notes by delivering to the
Administrative Agent the information and documents set forth in this Section 2.2
at the applicable times provided herein. Upon receipt of such information and
documents, the Administrative Agent will provide notification to the Lenders
with respect thereto.

 

(b)               With respect to Advances, no later than 12:00 p.m. (New York
City Time) one (1) Business Day (or such shorter period as permitted by
Administrative Agent in its sole discretion, but not later than 12:00 p.m. (New
York City Time) on the date of the proposed Funding Date) prior to the proposed
Funding Date, the Borrower shall deliver:

 

(i)                to the Administrative Agent a wire disbursement and
authorization form, to the extent not previously delivered; and

 

(ii)              to the Administrative Agent and the Collateral Custodian a
duly completed Funding Notice (including a duly completed Borrowing Base
Certificate updated to the date such Advance is requested and giving pro forma
effect to the Advance requested and the use of the proceeds thereof) which shall
(a) specify the desired amount of such Advance, which amount shall not cause the
Advances Outstanding to exceed the Availability and must be at least equal to
$500,000 (or, in the case of any Advance to be applied to fund any draw under a
Revolving Loan or Delayed Draw Loan, such lesser amount as may be required to
fund such draw), to be allocated to each Lender in accordance with its Pro Rata
Share, (b) specify the proposed Funding Date of such Advance, (c) specify the
Loan(s) to be financed on such Funding Date (including the appropriate Obligor,
Outstanding Balance, Assigned Value and Purchase Price for each Loan) and, with
respect to any Revolving Loan or Delayed Draw Loan, the amount to be deposited
in the Unfunded Exposure Account in connection with the acquisition of such
Loan(s) pursuant to Section 2.9(e), (d) include a calculation showing that, on a
pro-forma basis, Borrower is in compliance with the Minimum Credit Enhancement
Amount Test, and (e) include a representation that all conditions precedent for
an Advance described in Article III hereof have been met. Each Funding Notice
shall be irrevocable. If any Funding Notice is received by the Administrative
Agent after 12:00 p.m. (New York City Time) or on a day that is not a Business
Day, such Funding Notice shall be deemed to be received by the Administrative
Agent at 9:00 a.m. (New York City Time) on the next Business Day.

 

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(c)                On the proposed Funding Date, subject to the limitations set
forth in this Section 2.2 and upon satisfaction of the applicable conditions set
forth in Article III:

 

(i)                each Lender shall make available to the Administrative Agent
in same day funds, by no later than 12:00 p.m. (New York City Time), an amount
equal to such Lender’s Pro Rata Share, of the least of (A) the amount requested
by the Borrower for such Advance, (B) the aggregate unused Commitments then in
effect and (C) the maximum amount that, after taking into account the proposed
use of the proceeds of such Advance, could be advanced to the Borrower hereunder
without causing the Advances Outstanding to exceed the Availability;

 

(ii)               upon receipt of the amounts described in clause (i), the
Administrative Agent shall promptly fund such amounts by wire transfer to the
account designated by Borrower in the applicable Funding Notice given pursuant
to this Section 2.2; and

 

(iii)              notwithstanding clauses (i) and (ii) of this Section 2.2(c)
with respect to the funding of the initial Advance hereunder on the Effective
Date (if any), the Lenders and the Administrative Agent may, at the option of
the Borrower, net any fees and reimbursable expenses owing to it on the
Effective Date (as set forth in the executed closing statement) from the amount
funded by the Lenders to the Administrative Agent pursuant to clause (i) and/or
the amount of such Advance funded by the Administrative Agent to the Borrower
pursuant to clause (ii).

 

(d)               On each Funding Date, the obligation of each Lender to remit
its Pro Rata Share of any Loan Advance shall be several from that of each other
Lender and the failure of any Lender to so make such amount available to the
Borrower shall not relieve any other Lender of its obligation hereunder.
Notwithstanding anything to the contrary herein, no Lender shall be obligated to
make any Loan Advance on or after the earlier to occur of the Revolving Period
End Date or the Termination Date.

 

(e)               Notwithstanding anything to the contrary herein, upon the
occurrence of the earlier of (i) an Event of Default or (ii) the Revolving
Period End Date, if the amount on deposit in the Unfunded Exposure Account is
less than the Aggregate Unfunded Exposure Amount, the Administrative Agent (x)
may, in the case of the occurrence and during the continuance of an Event of
Default or (y) shall in the case of the occurrence of the Revolving Period End
Date, on behalf of the Borrower, request an Advance in the amount of such
shortfall (the “Exposure Amount Shortfall”). Following receipt of such request,
the Lenders shall fund such Exposure Amount Shortfall in accordance with Section
2.2(b), notwithstanding anything to the contrary herein (including the
Borrower’s failure to satisfy any of the conditions precedent set forth in
Section 3.2), except that no Lender shall make any Advance to the extent that,
after giving effect to such Advance, the Advances Outstanding would exceed the
Availability.

 

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Section 2.3           Principal Repayments.

 

(a)                The Borrower shall be entitled at its option, at any time, to
repay the Advances Outstanding (i) the Borrower shall give prior written notice
of such repayment in the form of Exhibit A-2 to the Administrative Agent by at
least (A) 12:00 p.m. (New York City Time) on the date of such repayment and (ii)
any repayment of Advances Outstanding (other than with respect to repayments of
Advances Outstanding made by the Borrower to reduce a Borrowing Base Deficiency
to zero) shall be in a minimum amount of $500,000 and in integral multiples of
$100,000 in excess thereof (other than any such partial repayment of Advances
Outstanding which is funded (A) solely with proceeds from the repayment of a
Revolving Loan or (B) solely with amounts otherwise distributable to the
Borrower under Section 2.7(a)(17), Section 2.7(b)(5) or Section 2.8(11)). In
connection with any such repayment of Advances Outstanding, the Borrower shall
deliver to the Administrative Agent (with a copy to the Collateral Custodian) by
1:00 p.m. (New York City Time) (1) instructions to repay such Advances
Outstanding and (2) funds sufficient to repay such Advances Outstanding together
with all accrued Interest and any Breakage Costs, but only to the extent such
accrued Interest and/or Breakage Costs are requested with such repayment by the
applicable Lender; provided that, the Advances Outstanding will not be repaid
unless sufficient funds have been remitted to pay all such amounts in the
succeeding sentence in full. The Administrative Agent shall apply amounts
received from the Borrower pursuant to this Section 2.3(a) to the pro rata
repayment of the Advances Outstanding, to the payment of accrued Interest on the
amount of the Advances Outstanding to be repaid and to the payment of any
Breakage Costs. Any amount so repaid may, subject to the terms and conditions
hereof, be reborrowed during the Revolving Period. Any Repayment Notice relating
to any repayment pursuant to this Section 2.3(a) shall be irrevocable. Upon
receipt of any notice or instructions from the Borrower pursuant to this Section
2.3(a), the Administrative Agent will provide notification to the Lenders with
respect thereto.

  

(b)               Unless sooner prepaid pursuant to the terms hereof, the
Advances Outstanding shall be repaid in full on the Termination Date or on such
later date as is agreed to in writing by the Borrower, the Administrative Agent
and each of the Lenders.

 

Section 2.4           Determination of Interest.

 

The Administrative Agent shall calculate and determine the Interest (including
unpaid Interest related thereto, if any, due and payable on a prior Payment Date
and the LIBOR Rate) to be paid by the Borrower on each Payment Date for the
related Accrual Period and shall advise the Borrower and the Collateral
Administrator thereof on the third Business Day prior to such Payment Date.

 

Section 2.5           Notations on Notes.

 

Each Lender is hereby authorized to enter on a schedule attached to the Note
with respect to such Lender, as applicable, a notation (which may be computer
generated) or to otherwise record in its internal books and records or computer
system with respect to each Advance under the Note made by the applicable Lender
of (a) the date and principal amount thereof and (b) each payment and repayment
of principal thereof. Any such recordation shall, absent manifest error,
constitute prima facie evidence of the Advances Outstanding, as applicable,
under each Note. The failure of any Lender to make any such notation on the
schedule attached to the applicable Note shall not limit or otherwise affect the
obligation of the Borrower to repay the Advances in accordance with the terms
set forth herein.

 

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Section 2.6           Reduction of Borrowing Base Deficiency.

 

Any Borrowing Base Deficiency may be reduced to zero by the Borrower taking one
or more of the following actions which, after giving effect thereto, cause the
aggregate Advances Outstanding to not exceed Availability at such time:

 

(i)                posting cash collateral in Dollars to the Principal
Collection Account;

 

(ii)               repaying Advances Outstanding in accordance with Section
2.3(a); and

 

(iii)               posting additional Eligible Loans as Collateral.

 

Section 2.7            Settlement Procedures.

 

(a)                Interest Collections. On each Payment Date, so long as no
Event of Default has occurred and is continuing, the Borrower shall direct the
Collateral Custodian (which direction shall be deemed given upon receipt by the
Collateral Custodian of the related Payment Date Report) to pay pursuant to the
latest Payment Date Report (and the Collateral Custodian shall make payment from
the Interest Collection Account to the extent of Available Funds, in reliance on
the information set forth in such Payment Date Report) to the following Persons,
the following amounts in the following order of priority:

 

(1)               to the Borrower (or, at the Borrower’s election and with prior
written notice to the Administrative Agent, to its direct or indirect equity
holders), in respect of Taxes (but excluding all Taxes imposed on net income),
registration and filing fees then due and owing by the Borrower (or its direct
and indirect equity holders) that are attributable solely to the operations of
the Borrower; provided that amounts payable with respect to Taxes, registration
and filing fees pursuant to this clause (1) during any one year shall not,
individually or in the aggregate, exceed 4.00% of the Borrower’s taxable income
for such year;

 

(2)               first, to the Collateral Custodian, the Collateral
Administrator and the Securities Intermediary, pro rata, in an amount equal to
any accrued and unpaid Collateral Custodian Fees, and second, to the Collateral
Manager, in an amount equal to all reasonable and necessary out-of-pocket costs
and expenses of the Collateral Manager incurred in connection with any sale of
Collateral, not to exceed $75,000 in the aggregate during any calendar year;

 

(3)               to pay regular scheduled payments, any fees and reasonable and
necessary expenses incurred under any hedge agreement, not to exceed $75,000 in
the aggregate per calendar year and, during the Revolving Period, to the payment
of any hedge breakage or termination costs owed by the Borrower not to exceed
$75,000 in the aggregate per calendar year;

 

(4)               [reserved];

 

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(5)              to the Collateral Manager, first, to pay any accrued and unpaid
Senior Collateral Manager Fees, and, second, to pay all documented fees and
expenses of the Collateral Manager (including reasonable attorney’s fees, costs
and expenses), in each case in an aggregate amount with respect to such
documented fees and expenses in any rolling 12-month period not to exceed
$75,000;

 

(6)              to the Administrative Agent, in an amount equal to any accrued
and unpaid fees, expenses and indemnities set forth in the Transaction
Documents;

 

(7)              to the Administrative Agent to be distributed pro rata to each
Lender, in an amount equal to (a) any accrued and unpaid Interest with respect
to Advances made by such Lender, (b) any accrued and unpaid Non-Usage Fee (such
Non-Usage Fee to be allocated based on the unused Commitment of each Lender) and
(c) any accrued and unpaid Breakage Costs;

 

(8)              [reserved];

 

(9)              if a Borrowing Base Deficiency exists, to the Administrative
Agent to be distributed pro rata to each Lender to repay Advances, in an amount
necessary to reduce the Borrowing Base Deficiency to zero;

 

(10)            to the Collateral Manager to pay out-of-pocket costs and
expenses of the Collateral Manager not paid pursuant to clause (2) above;

 

(11)            to Administrative Agent, to be distributed to the affected
Lenders, any amounts accrued and unpaid in respect of Increased Costs and Taxes;

 

(12)           to the Administrative Agent, to be distributed to the
Administrative Agent and each applicable Lender, to pay all other Administrative
Expenses of the Administrative Agent and the Lenders, as applicable;

 

(13)           (a) during the Revolving Period, to fund the Unfunded Exposure
Account in an amount necessary to cause all amounts in the Unfunded Exposure
Account to equal the Aggregate Unfunded Exposure Equity Amount, or (b) after the
Revolving Period, to fund the Unfunded Exposure Account in an amount necessary
to cause the amounts in the Unfunded Exposure Account to equal the Aggregate
Unfunded Exposure Amount;

 

(14)            to the Administrative Agent to be distributed to the
Administrative Agent, any applicable Lender, the Collateral Custodian, the
Collateral Administrator, the Indemnified Parties, or the Secured Parties, as
applicable, all other amounts then due and owing, including any unpaid
Administrative Expenses, any amounts accrued and unpaid under the Fee Letter,
Increased Costs, Taxes, indemnities, but other than the principal of Advances
Outstanding, then due under this Agreement;

 

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(15)            to the Collateral Manager, to pay any accrued and unpaid
Subordinated Collateral Manager Fees;

 

(16)            during the Revolving Period, to be distributed at the discretion
of the Collateral Manager (i) to the Principal Collection Account to be used
with respect to any Reinvestment of Principal Collections and the acquisition of
Loans as permitted by this Agreement, (ii) to repaying the Advances Outstanding
or (iii) to reimburse the Collateral Manager for any unreimbursed amounts paid
by the Collateral Manager on the Borrower’s behalf pursuant to this Agreement,
to the extent not otherwise reimbursed hereunder; and

 

(17)           any remaining amounts shall be distributed to the Borrower or any
nominee thereof, which amounts may be used by the Borrower to make Restricted
Payments or for any other purpose permitted hereunder.

 

(b)               Principal Collections. On each Payment Date, so long as no
Event of Default has occurred and is continuing, the Borrower shall direct
(which direction shall be deemed given upon receipt by the Collateral Custodian
of the related Payment Date Report) the Collateral Custodian to pay pursuant to
the latest Payment Date Report (and the Collateral Custodian shall make payment
from the Principal Collection Account to the extent of Available Funds, in
reliance on the information set forth in such Payment Date Report) to the
following Persons, the following amounts in the following order of priority:

 

(1)              to the extent not paid pursuant to Section 2.7(a), to the
applicable Person, in the order of priority set forth in Section 2.7(a), such
amounts payable pursuant to clauses (1) through (14) thereof;

 

(2)              during the Revolving Period, to the Principal Collection
Account, to be distributed at the discretion of the Borrower (i) to be used with
respect to any Reinvestment of Principal Collections and the acquisition of
Loans as permitted by this Agreement or (ii) to repaying the Advances
Outstanding;

 

(3)              to the extent not paid pursuant to Section 2.7(a), to the
applicable Person, in the order of priority set forth in Section 2.7(a), such
amounts payable pursuant to clauses (15) through (16) thereof;

 

(4)              after the Revolving Period End Date, to the Administrative
Agent to be distributed pro rata to the Lenders to repay the Advances until paid
in full; and

 

(5)              any remaining amounts shall be distributed to the Borrower or
any nominee thereof.

 

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Section 2.8           Alternate Settlement Procedures.

 

On each Business Day (a) following the occurrence of and during the continuation
of an Event of Default or (b) following the declaration of the occurrence, or
the deemed occurrence, as applicable, of the Termination Date pursuant to
Section 9.2(a), the Borrower (or, after delivery of a Notice of Exclusive
Control, the Administrative Agent) shall direct (which direction shall be deemed
given upon receipt by the Collateral Custodian of the related Payment Date
Report) the Collateral Custodian to pay pursuant to the latest Payment Date
Report or such other direction as may be timely given by Administrative Agent
(and the Collateral Custodian shall make payment from the Collection Account to
the extent of Available Funds, in reliance on the information set forth in such
Payment Date Report or such other direction) to the following Persons, the
following amounts in the following order of priority:

 

(1)              to the Borrower, in respect of Taxes (but excluding all Taxes
imposed on net income), registration and filing fees then due and owing by the
Borrower (or its direct and indirect equity holders) that are attributable
solely to the operations of the Borrower; provided that amounts payable with
respect to Taxes, registration and filing fees pursuant to this clause (1)
during any one year shall not, individually or in the aggregate, exceed 4.00% of
the Borrower’s taxable income for such year, as computed for purposes of the New
York City unincorporated business tax;

 

(2)               first, to the Collateral Custodian, the Collateral
Administrator and the Securities Intermediary pro, rata, in an amount equal to
any accrued and unpaid Collateral Custodian Fees, and second, to the Collateral
Manager, in an amount equal to all reasonable and necessary out-of-pocket costs
and expenses of the Collateral Manager incurred in connection with any sale of
Collateral, not to exceed $75,000 in the aggregate during any calendar year;

 

(3)              to pay regular scheduled payments, any fees and reasonable and
necessary expenses incurred under any hedge agreement, not to exceed $75,000 in
the aggregate per calendar year and, during the Revolving Period, to the payment
of any hedge breakage or termination costs owed by the Borrower not to exceed
$75,000 in the aggregate per calendar year;

 

(4)              to the Collateral Manager, first, to pay any accrued and unpaid
Senior Collateral Manager Fees and, second, to pay all documented fees and
expenses of the Collateral Manager (including reasonable attorney’s fees, costs
and expenses), in each case in an aggregate amount with respect to such
documented fees and expenses in any rolling 12-month period not to exceed
$75,000;

 

(5)              to the Administrative Agent, in an amount equal to any accrued
and unpaid fees, expenses and indemnities set forth in the Transaction
Documents;

 

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(6)               to the Administrative Agent to be distributed pro rata to each
Lender, in an amount equal to any accrued and unpaid Non-Usage Fee (such
Non-Usage Fee to be allocated based on the unused Commitment of each Lender),
and (c) any accrued and unpaid Breakage Costs;

 

(7)              any accrued and unpaid Interest with respect to Advances made
by such Lender;

 

(8)              to the Administrative Agent to be distributed pro rata to the
Lenders to repay the principal on the Advances Outstanding of such Lenders;

 

(9)              to the Administrative Agent to be distributed to the
Administrative Agent, any applicable Lender, the Collateral Custodian, the
Securities Intermediary, the Collateral Administrator, the Indemnified Parties,
or the Secured Parties, as applicable, all other fees and amounts, including any
unpaid Administrative Expenses, any amounts accrued and unpaid under the Fee
Letter, Breakage Costs, Increased Costs, Taxes, and indemnities, but other than
the principal of Advances Outstanding, then due under this Agreement;

 

(10)            to the Collateral Manager, to pay any accrued and unpaid
Subordinated Collateral Manager Fees; and

 

(11)            to the extent the Obligations have been paid in full, any
remaining amounts shall be distributed to the Borrower or any nominee thereof.

 

Section 2.9           Collections and Allocations.

 

(a)                Collections. The Borrower shall promptly identify any
Collections received as being on account of Interest Collections or Principal
Collections and shall transfer, or cause to be transferred, all Collections
received directly by it to the appropriate Account within two (2) Business Days
(or, with respect to any Effective Date Participation Interest and in the case
of any such Collections received prior to the date that is sixty (60) days after
the Effective Date, within ten (10) Business Days) after such Collections are
received in accordance with Section 5.1(f). Upon the transfer of Collections to
the relevant Account, the Borrower shall segregate Principal Collections and
Interest Collections and transfer the same in accordance with Section 5.1(f). On
each Reporting Date, the Collateral Manager (on behalf of the Borrower) shall
further include a statement in the Borrowing Base Certificate delivered pursuant
to Section 5.1(t) as to the amount and type (whether Principal Collections,
Interest Collections or other Collections) of all Collections received since the
prior Reporting Date, all Principal Collections and Interest Collections on
deposit as of such Reporting Date and a detailed aging of each Loan.

 

(b)               Excluded Amounts. The Borrower may withdraw from the
Collection Account any deposits thereto constituting Excluded Amounts, provided
that the Borrower shall, concurrently with such withdrawal, deliver to the
Administrative Agent and each Lender a report setting forth the calculation of
such Excluded Amounts in form and substance reasonably satisfactory to the
Administrative Agent.

 

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(c)                Initial Deposits. On the Funding Date with respect to any
Loan, the Borrower will deposit into the Collection Account all Collections, if
any, received on or before such Funding Date in respect of Loans being
transferred to and included as part of the Collateral on such date.

 

(d)               Investment of Funds. Until the occurrence of an Event of
Default, to the extent there are uninvested amounts deposited in the Collection
Account, all such amounts shall be invested in Permitted Investments selected by
the Borrower on each Payment Date (or pursuant to standing instructions provided
by the Borrower); provided that, from and after the occurrence of an Event of
Default, to the extent there are uninvested amounts in the Collection Account,
all such amounts may be invested in Permitted Investments selected by the
Administrative Agent (which may be standing instructions). All earnings (net of
losses and investment expenses) thereon shall be retained or deposited into the
applicable Collection Account and shall be applied on each Payment Date pursuant
to the provisions of Section 2.7 and Section 2.8 (as applicable).

 

(e)                Unfunded Exposure Account.

 

(i)                The Borrower shall not acquire any Delayed Draw Loan or
Revolving Loan unless, in each case, immediately after giving effect to such
acquisition or issuance, the Borrower shall deposit an amount equal to the
Required Funding Amount with respect to such Delayed Draw Loan or Revolving
Loan, as applicable, into the Unfunded Exposure Account. Subject to the
satisfaction of the Withdrawal Conditions, amounts on deposit in the Unfunded
Exposure Account may be withdrawn by the Borrower (x) to fund any draw requests
of the relevant Obligors under any Revolving Loan or Delayed Draw Loan or (y) to
make a deposit into the Principal Collections Account. Any such withdrawal will
be subject to the following conditions (the “Withdrawal Conditions”):

 

(1)              after giving effect to any such withdrawal under clause (x)
above, no Borrowing Base Deficiency exists; and

 

(2)              after giving effect to any such withdrawal under clause (x) or
(y) above, the aggregate amount on deposit in the Unfunded Exposure Account is
equal to or greater than the aggregate Required Funding Amount with respect to
all Loans included in the Collateral.

 

(ii)               Any draw request made by an Obligor under a Revolving Loan or
Delayed Draw Loan, along with wiring instructions for the applicable Obligor,
shall be forwarded by the Borrower to the Collateral Custodian (with a copy to
the Administrative Agent and the Collateral Administrator) along with an
instruction to the Collateral Custodian to withdraw the applicable amount from
the Unfunded Exposure Account and a certification that the conditions to fund
such draw are satisfied, and the Collateral Custodian shall fund such draw
request in accordance with such instructions from the Borrower.

 

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(iii)              If the Borrower shall receive any Principal Collections from
an Obligor with respect to a Revolving Loan and, as of the date of such receipt
(and after taking into account such repayment), the aggregate amount on deposit
in the Unfunded Exposure Account is less than the aggregate Required Funding
Amount with respect to all Loans included in the Collateral (the amount of such
shortfall, in each case, the “Unfunded Exposure Shortfall”), the Collateral
Custodian shall deposit into the Unfunded Exposure Account an amount of such
Principal Collections equal to the lesser of (a) the aggregate amount of such
Principal Collections and (b) the Unfunded Exposure Shortfall as directed by the
Borrower (or Collateral Manager on its behalf).

 

Section 2.10        Payments, Computations, Etc.

 

(a)                Unless otherwise expressly provided herein, all amounts to be
paid or deposited by the Borrower to the Administrative Agent or the other
Secured Parties hereunder shall be paid or deposited in accordance with the
terms hereof no later than 1:00 p.m. (New York City Time) on the day when due in
lawful money of the United States in immediately available funds and any amount
not received before such time shall be deemed received on the next Business Day.
The Borrower shall, to the extent permitted by law, pay to the Secured Parties
interest on all amounts not paid or deposited when due hereunder at the Interest
Rate applicable during an Event of Default, payable on demand; provided that
such interest rate shall not at any time exceed the maximum rate permitted by
Applicable Law. Such interest shall be for the account of the applicable Secured
Party. All computations of interest and other fees hereunder shall be made on
the basis of a year consisting of 360 days (other than calculations with respect
to the Base Rate, which shall be based on a year consisting of 365 or 366 days)
for the actual number of days elapsed.

 

(b)               Whenever any payment hereunder shall be stated to be due on a
day other than a Business Day, such payment shall be made on the next succeeding
Business Day, and such extension of time shall in such case be included in the
computation of the payment of Interest or any fee payable hereunder, as the case
may be. To the extent that Available Funds are insufficient on any Payment Date
to satisfy the full amount of any Increased Costs pursuant to Section 2.12, such
unpaid amounts shall remain due and owing and shall accrue interest at the
Interest Rate until repaid in full.

 

(c)                If any Advance requested by the Borrower is not effectuated
as a result of the Borrower’s actions or failure to fulfill any condition under
Section 3.2 applicable to the Borrower, as the case may be, on the date
specified therefor, the Borrower shall indemnify the applicable Lender against
any reasonable loss, cost or expense incurred by the applicable Lender,
including any loss, cost or expense incurred by reason of the liquidation or
reemployment of deposits or other funds acquired by the applicable Lender to
fund or maintain such Advance.

 

(d)               If at any time after the Effective Date, the Advances
Outstanding hereunder are not allocated among the Lenders in accordance with
their respective Pro Rata Shares, the Lenders agree to make such purchases and
sales of interests in the Advances Outstanding between themselves so that each
Lender is then holding its relevant Pro Rata Share of Advances Outstanding based
on their Commitments at such time (such purchases and sales shall be arranged
through the Administrative Agent and each Lender hereby agrees to execute such
further instruments and documents, if any, as the Administrative Agent may
reasonably request in connection therewith), with all subsequent extensions of
credit under this Agreement to be made in accordance with the respective Pro
Rata Shares, of the Lenders from time to time party to this Agreement as
provided herein.

 

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(e)                In the event the Collateral Custodian receives instructions
from the Collateral Manager or the Borrower which conflict with any instruction
received by the Administrative Agent, the Collateral Custodian shall rely on and
follow the instructions given by the Administrative Agent.

 

Section 2.11         Fees.

 

(a)                The Collateral Custodian, Collateral Administrator and
Securities Intermediary shall be entitled to receive the Collateral Custodian
Fee in accordance with Sections 2.7(a)(2), 2.7(b)(1) and 2.8(2), as applicable.

 

Section 2.12         Increased Costs; Capital Adequacy; Illegality.

 

(a)                If either (i) the introduction of or any change (including
any change by way of imposition or increase of reserve requirements) in or in
the interpretation of any Applicable Law or (ii) the compliance by an
Indemnified Party with any guideline or request from any central bank or other
Governmental Authority (whether or not having the force of law), shall
(a) subject an Indemnified Party to any Tax or increased Tax of any kind
whatsoever (other than (A) Non-Excluded Taxes that are covered under Section
2.13(a), (B) Excluded Taxes to the extent described in clauses (B), (C) or (D)
of the definition of Non-Excluded Taxes, and (C) Connection Income Taxes) with
respect to this Agreement or change the basis of taxation of payments to the
Lender in respect thereof with respect to its interest in the Collateral, or any
right or obligation to make Advances hereunder, or on any payment made
hereunder, (b) impose, modify or deem applicable any reserve requirement
(including any reserve requirement imposed by the Board of Governors of the
Federal Reserve System, but excluding any reserve requirement, if any, included
in the determination of Interest), special deposit or similar requirement
against assets of, deposits with or for the amount of, or credit extended by,
any Indemnified Party or (c) impose any other condition affecting the ownership
interest in the Collateral conveyed to the Secured Parties hereunder or any
Indemnified Party’s rights hereunder or under any other Transaction Document,
the result of which is to increase the cost to any Indemnified Party or to
reduce the amount of any sum received or receivable by an Indemnified Party
under this Agreement or under any other Transaction Document, and in each case
such Indemnified Party has made a similar determination with respect to other
facilities similarly situated other than for the reason of identifiable legal
differences between such facilities, then on the Payment Date following demand
by such Indemnified Party (which demand shall be accompanied by a statement
setting forth the basis for such demand), and in any case the Borrower shall pay
directly to such Indemnified Party such additional amount or amounts as will
compensate such Indemnified Party for such additional or increased cost incurred
or such reduction suffered.

 

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(b)               If either (i) the introduction of or any change in or in the
interpretation of any law, guideline, rule, regulation, directive or request or
(ii) compliance by any Indemnified Party with any law, guideline, rule,
regulation, directive or request from any central bank or other Governmental
Authority or agency (whether or not having the force of law), including
compliance by an Indemnified Party with any request or directive regarding
capital adequacy has or would have the effect of reducing the rate of return on
the capital of any Indemnified Party as a consequence of its obligations
hereunder or arising in connection herewith to a level below that which any such
Indemnified Party could have achieved but for such introduction, change or
compliance (taking into consideration the policies of such Indemnified Party
with respect to capital adequacy) by an amount deemed by such Indemnified Party
to be material, and in each case such Indemnified Party has made a similar
determination with respect to other facilities similarly situated other than for
the reason of identifiable legal differences between such facilities, then from
time to time, on the Payment Date following demand by such Indemnified Party
(which demand shall be accompanied by a statement setting forth the basis for
such demand), the Borrower shall pay directly to such Indemnified Party such
additional amount or amounts as will compensate such Indemnified Party for such
reduction; provided that notwithstanding anything in this Section 2.12(b) to the
contrary, (x) the Dodd-Frank Wall Street Reform and Consumer Protection Act and
all requests, rules, guidelines or directives thereunder or issued in connection
therewith and (y) all requests, rules, guidelines or directives promulgated by
the Bank for International Settlements, the Basel Committee on Banking
Supervision (or any successor or similar authority) or the United States or
foreign regulatory authorities, in each case pursuant to Basel III, shall in
each case be deemed to be a “change in law” for the purposes of clause (i)
above, regardless of the date enacted, adopted or issued. If the issuance of any
amendment or supplement to Interpretation No. 46 or to Statement of Financial
Accounting Standards No. 140 by the Financial Accounting Standards Board or any
other change in accounting standards, including GAAP, or the issuance of any
other pronouncement, release or interpretation, causes or requires the
consolidation of all or a portion of the assets and liabilities of the
Transferor, the Borrower or any Secured Party with the assets and liabilities of
the Administrative Agent or any Lender or shall otherwise impose any loss, cost,
expense, reduction of return on capital or other loss, such event shall
constitute a circumstance on which such Indemnified Party may base a claim for
reimbursement under this Section 2.12.

 

(c)                If as a result of any event or circumstance similar to those
described in clause (a) or (b) of this Section 2.12, any Indemnified Party is
required to compensate a bank or other financial institution providing liquidity
support, credit enhancement or other similar support to such Indemnified Party
in connection with this Agreement or the funding or maintenance of Advances
hereunder (under other facilities similarly situated other than for the reason
of identifiable legal differences between such facilities), then within
twenty-two (22) days after demand by such Indemnified Party, the Borrower shall
pay to such Indemnified Party such additional amount or amounts as may be
necessary to reimburse such Indemnified Party for any amounts payable or paid by
it.

 

(d)               In determining any amount provided for in this Section 2.12,
the Indemnified Party may use any reasonable averaging and attribution methods.
Any Indemnified Party making a claim under this Section 2.12 shall submit to the
Borrower a written description as to such additional or increased cost or
reduction and the calculation thereof, which written description shall be
conclusive absent manifest error.

 

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(e)                If a Eurodollar Disruption Event as described in clause (a)
of the definition of “Eurodollar Disruption Event” with respect to any Lender
occurred, such Lender shall in turn so notify the Borrower, whereupon all
Advances Outstanding of the affected Lender in respect of which Interest accrues
at the LIBOR Rate shall immediately be converted into Advances Outstanding in
respect of which Interest accrues at the Base Rate.

 

(f)                Failure or delay on the part of any Indemnified Party to
demand compensation pursuant to this Section 2.12 shall not constitute a waiver
of such Indemnified Party’s right to demand or receive such compensation.
Notwithstanding anything to the contrary in this Section 2.12, the Borrower
shall not be required to compensate an Indemnified Party pursuant to this
Section 2.12 for any amounts incurred more than six (6) months prior to the date
that such Indemnified Party notifies the Borrower of such Indemnified Party’s
intention to claim compensation therefor; provided that, if the circumstances
giving rise to such claim have a retroactive effect, then such six (6) month
period shall be extended to include the period of such retroactive effect.

 

(g)               Each Lender agrees that it will take such commercially
reasonable actions as the Borrower may reasonably request that will avoid the
need to pay, or reduce the amount of, any increased amounts referred to in this
Section 2.12 or Section 2.13; provided that no Lender shall be obligated to take
any actions that would, in the reasonable opinion of such Lender, be
disadvantageous to such Lender. In no event will Borrower be responsible for
increased amounts referred to in this Section 2.12 which relates to any other
entities to which any Lender provides financing.

 

Section 2.13         Taxes.

 

(a)                Any and all payments by or on behalf of the Borrower under or
in respect of this Agreement or any other Transaction Documents to which the
Borrower is a party shall be made free and clear of, and without deduction or
withholding for or on account of, any and all present or future taxes, levies,
imposts, deductions, charges or withholdings, and all liabilities (including
penalties, interest and additions to tax) with respect thereto, whether now or
hereafter imposed, levied, collected, withheld or assessed by any taxation
authority or other Governmental Authority (collectively, “Taxes”), unless
required by law. If any Withholding Agent shall be required under any applicable
requirement of law to deduct or withhold any Taxes from or in respect of any sum
payable under or in respect of this Agreement or any of the other Transaction
Documents to any Secured Party (including for purposes of Section 2.12 and this
Section 2.13, any assignee, successor, or participant), (i) then the applicable
Withholding Agent shall make all such deductions and withholdings in respect of
Taxes, (ii) such Withholding Agent shall pay the full amount deducted or
withheld in respect of Taxes to the relevant taxation authority or other
Governmental Authority in accordance with any requirement of law, and (iii) to
the extent such Taxes are Non-Excluded Taxes, the sum payable by Borrower shall
be increased as may be necessary so that after such Withholding Agent has made
all required deductions and withholdings of Non-Excluded Taxes (including
deductions and withholdings of Non-Excluded Taxes applicable to additional
amounts payable under this Section 2.13(a)) such Secured Party receives on the
date on which the related payment is due an amount equal to the sum it would
have received had no such deductions or withholdings been made. For purposes of
this Agreement “Non-Excluded Taxes” are Taxes other than (A) Taxes that are
imposed as a result of a present or former connection between such Secured Party
and the jurisdiction imposing such Taxes or any political subdivision thereof,
unless such Taxes are imposed solely as a result of such Secured Party having
executed, delivered or performed its obligations or received payments under, or
enforced, this Agreement or any of the other Transaction Documents (“Other
Connection Taxes”), including Other Connection Taxes that are imposed on a
Secured Party’s net income (and franchise taxes imposed in lieu thereof and
branch profits taxes) by the jurisdiction under the laws of which such Secured
Party is organized (or, in the case of any Lender, where its applicable lending
office located in) (“Connection Income Taxes”) , (B) Taxes imposed under FATCA,
(C) any U.S. federal withholding tax that is imposed on amounts payable to such
person at the time such person becomes a party hereto (or designates a new
lending office), except to the extent that such person (or its assignor, if any)
was entitled, at the time of designation of a new lending office (or
assignment), to receive additional amounts from the Borrower with respect to
such withholding tax pursuant to this Section 2.13(a) or (D) Taxes attributable
to such person’s failure or inability to comply with Section 2.13(e).

 

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(b)               In addition, Borrower hereby agrees to pay any present or
future stamp, recording, documentary, excise, property or value-added taxes, or
similar taxes, charges or levies that arise from any payment made under or in
respect of this Agreement or any other Transaction Document or from the
execution, delivery or registration of, any performance under, from the receipt
or perfection of a security interest under, or otherwise with respect to, this
Agreement or any other Transaction Document other than in connection with an
assignment, transfer or sale of a Participation Interest (collectively, “Other
Taxes”).

 

(c)                Borrower hereby agrees to indemnify each Secured Party for,
and to hold it harmless against, the full amount of Non-Excluded Taxes and Other
Taxes, and the full amount of Non-Excluded Taxes of any kind imposed by any
jurisdiction on amounts payable under this Section 2.13(c) imposed on or paid by
such Secured Party and any liability (including penalties, additions to
Non-Excluded Taxes, interest and reasonable expenses) arising therefrom or with
respect thereto. The indemnity by Borrower provided for in this Section 2.13(c)
shall apply and be made whether or not the Non-Excluded Taxes or Other Taxes for
which indemnification hereunder is sought have been correctly or legally
asserted. Amounts payable by the Borrower under the indemnity set forth in this
Section 2.13(c) shall be paid within ten (10) days from the date on which the
applicable Secured Party makes written demand therefor; provided, that the
Borrower shall not be obligated to make a payment pursuant to this Section
2.13(c) in respect of penalties, additions to Tax, interest and expenses
attributable to any Taxes or Other Taxes, if (i) such penalties, additions to
Tax, interest and reasonable expenses are attributable to the failure of the
Secured Party to pay to the relevant Governmental Authority amounts received by
it from the Borrower in respect of Non-Excluded Taxes and Other Taxes within
thirty (30) calendar days after receipt of such amount from the Borrower or (ii)
such penalties, additions to Tax, interest and reasonable expenses are
attributable to the gross negligence or willful misconduct of the Secured Party.

 

(d)               Within thirty (30) days after the date of any payment of
Taxes, Borrower (or any Person making such payment on behalf of Borrower) shall
furnish to the applicable Secured Party for its own account a certified copy of
the original official receipt evidencing payment thereof or other evidence of
such payment reasonably satisfactory to the applicable Secured Party.

 

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(e)                Each Secured Party (including any assignee, successor or
participant) shall deliver or cause to be delivered to Borrower whichever of the
following is applicable:

 

(i)                in the case of a Secured Party that is not a U.S. Tax Person,
a complete and executed (x) IRS Form W-8BEN or W-8BEN-E in which such Secured
Party claims the benefits of a tax treaty with the United States providing for a
zero or reduced rate of withholding (or any successor forms thereto), including
all appropriate attachments or (y) IRS Form W-8ECI (or any successor forms
thereto) or (z) a complete and executed IRS Form W-8BEN or W-8BEN-E (or any
successor forms thereto) and a certificate substantially in the form of Exhibit
I (a “Section 2.13 Certificate”); or

 

(ii)                in the case of a Secured Party that is a U.S. Tax Person, a
complete and executed IRS Form W-9 (or any successor forms thereto); or

 

(iii)               in the case of a Secured Party that (A) is not the
beneficial owner, and (B) is not a U.S. Tax Person, (x)(i) a complete and
executed IRS Form W-8IMY (or any successor forms thereto) (including all
required documents and attachments) and (ii) a Section 2.13 Certificate, and
(y) without duplication, the documents that would be provided by each such
beneficial owner pursuant to this Section 2.13(e) if such beneficial owner were
a Secured Party, provided, however, that no such documents will be required with
respect to a beneficial owner to the extent the actual Secured Party is
determined to be in compliance with the requirements for certification on behalf
of its beneficial owner as may be provided in applicable U.S. Treasury
regulations, or the requirements of this clause (iii) are otherwise determined
to be unnecessary, all such determinations under this clause (iii) to be made in
the sole discretion of Borrower, provided, however, that the Secured Party shall
be provided an opportunity to establish such compliance as reasonable.

 

Each Secured Party agrees that if any form or certification it previously
delivered expires or becomes obsolete or inaccurate in any respect, it shall
update such form or certification or promptly notify the Borrower in writing of
its legal inability to do so. If the Secured Party provides a form pursuant to
clauses (i) through (iii) above and the form provided by the Secured Party at
the time such Secured Party first becomes a party to this Agreement or, with
respect to a grant of a participation, the effective date thereof, indicates a
United States interest withholding tax rate in excess of zero, withholding tax
at such rate shall be treated as Taxes other than “Non-Excluded Taxes”
(“Excluded Taxes”) and shall not qualify as Non-Excluded Taxes unless and until
such Secured Party provides the appropriate form certifying that a lesser rate
applies, whereupon withholding tax at such lesser rate shall be considered
Excluded Taxes solely for the periods governed by such form.

 

(f)                [Reserved].

 

(g)               Without prejudice to the survival of any other agreement of
the Borrower hereunder, the agreements and obligations of the Borrower contained
in this Section 2.13 shall survive the termination of this Agreement and the
other Transaction Documents. Nothing contained in Section 2.12 or this
Section 2.13 shall require any Secured Party to make available any of its tax
returns or any other information that it deems to be confidential or
proprietary.

 

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(h)               If a payment made to a Lender under or in respect of this
Agreement or any other Transaction Documents would be subject to U.S. Federal
withholding tax imposed pursuant to FATCA if such Lender were to fail to comply
with the applicable reporting requirements of FATCA (including those contained
in Sections 1471(b) or 1472(b) of the Code, as applicable), such Lender shall
provide to the Administrative Agent and the Borrower, at the time or times
prescribed by law and as reasonably requested by the Administrative Agent or the
Borrower, such documentation prescribed by applicable law (including as
prescribed by Section 1471(b)(3)(C)(i) of the Code) and such additional
documentation reasonably requested by the Administrative Agent or the Borrower
as may be necessary for the Administrative Agent or the Borrower to comply with
their obligations under FATCA and to determine whether such Lender has complied
with such Lender’s obligations under FATCA and the amount, if any, to deduct and
withhold from such payment. Thereafter, each such Lender shall provide
additional documentation (i) to the extent documentation previously provided has
become inaccurate or invalid or has otherwise ceased to be effective or (ii) as
reasonably requested by the Administrative Agent or the Borrower. Solely for
purposes of this paragraph (h), “FATCA” shall include any amendments made to
FATCA after the date of this Agreement.

 

(i)                 If any Secured Party determines, in its good faith judgment,
that it has received or realized a refund (including electing to apply an amount
that would otherwise have been refunded as a credit against other liability for
Taxes) of any Taxes or Other Taxes as to which it has been indemnified by the
Borrower or with respect to which the Borrower has paid additional amounts
pursuant to this Section 2.13 or any reduction of its Tax liabilities or
otherwise recovered any amount that is attributable to any deduction or
withholding or payment of Taxes with respect to which the Borrower has paid any
additional amounts pursuant to this Section 2.13, it shall pay to the Borrower
an amount equal to such refund (but only to the extent of indemnity payments
made, or additional amounts paid, by the Borrower under this Section 2.13 with
respect to the Taxes or Other Taxes giving rise to such refund), net of all
reasonable out-of-pocket expenses of such Secured Party, as the case may be, and
without interest (other than any interest paid by the relevant Governmental
Authority with respect to such refund), provided that the Borrower, upon the
request of such Secured Party, agrees to repay the amount paid over to the
Borrower (plus any penalties, interest or other charges imposed by the relevant
Governmental Authority) to such Secured Party in the event such Secured Party is
required to repay such refund to such Governmental Authority. This paragraph
shall not be construed to require such Secured Party to make available its tax
returns (or any other information relating to its taxes that it deems
confidential) to the Borrower or any other Person.

 

Section 2.14         Reinvestment; Discretionary Sales, Substitutions and
Repurchases of Loans.

 

(a)                Reinvestment. On the terms and conditions hereinafter set
forth as certified in writing to the Administrative Agent, Collateral
Administrator and the Collateral Custodian, on any date prior to the Termination
Date, and without limiting the provisions of Section 2.7(a) on each Payment
Date, the Borrower may withdraw funds on deposit in the Principal Collection
Account for the following purposes:

 

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(i)                to reinvest such funds in Loans to be pledged hereunder (a
“Reinvestment”), so long as (1) all applicable conditions precedent set forth in
Section 3.2 have been satisfied, (2) each Loan acquired by the Borrower in
connection with such reinvestment shall be an Eligible Loan, (3) no Event of
Default has occurred and is continuing and, immediately after giving effect to
such Reinvestment, no Default or Event of Default shall have occurred, and (4)
immediately after giving effect to such Reinvestment, there shall not exist a
Borrowing Base Deficiency; provided that, notwithstanding anything to the
contrary set forth in Section 3.2, in the event a Borrowing Base Deficiency
shall have existed immediately prior to giving effect to such Reinvestment, the
Borrower may effect a Reinvestment so long as, immediately after giving effect
to such Reinvestment and any other sale or transfer or other action taken in
accordance with Section 2.6 substantially contemporaneous therewith, (x) the
Borrowing Base Deficiency is reduced to zero ($0) or (y) such Reinvestment is
otherwise approved by the Administrative Agent in its sole discretion and the
Assigned Value of any Loan acquired in connection with such Reinvestment shall
be set by the Administrative Agent in its sole discretion; or

 

(ii)                to make payments in respect of the Advances Outstanding at
such time in accordance with and subject to the terms of Section 2.3.

 

Upon the satisfaction of the applicable conditions set forth in Section 2.14(a)
(as certified by the Borrower to the Administrative Agent, Collateral
Administrator and the Collateral Custodian), the Collateral Custodian will
release funds from the Principal Collection Account to the Borrower in an amount
not to exceed the lesser of (A) the amount requested by the Borrower and (B) the
amount on deposit in the Principal Collection Account on such day.

 

(b)               Substitutions. The Borrower may, subject to clauses (e) and
(f) below, replace any Loan with another Loan (each such sale and reinvestment,
a “Substitution”) so long as (i) no Event of Default has occurred and is
continuing and, immediately after giving effect to such Substitution, no Default
or Event of Default shall have occurred, (ii) each substitute Loan acquired by
the Borrower in connection with a Substitution shall be an Eligible Loan, (iii)
all applicable conditions precedent set forth in Section 3.2 have been satisfied
with respect to each Loan to be acquired by the Borrower in connection with such
Substitution and (iv) immediately after giving effect to such Substitution,
there shall not exist a Borrowing Base Deficiency; provided that,
notwithstanding anything to the contrary set forth in Section 3.2, in the event
a Borrowing Base Deficiency shall have existed immediately prior to giving
effect to such Substitution, the Borrower may effect a Substitution so long as,
immediately after giving effect to such Substitution and any other sale or
transfer or other action taken in accordance with Section 2.6 substantially
contemporaneous therewith, (x) the Borrowing Base Deficiency is reduced to zero
($0) or (y) such Substitution is otherwise approved by the Administrative Agent
in its sole discretion and the Assigned Value of any Loan acquired in connection
with such Substitution shall be set by the Administrative Agent in its sole
discretion.

 

(c)                Discretionary Sales. During the Revolving Period, upon notice
by the Borrower, unless waived by Administrative Agent, (with a copy to the
Collateral Custodian and the Collateral Administrator), the Borrower shall be
permitted, subject to clauses (e) and (f) below, to sell Loans (or portions
thereof, each, a “Discretionary Sale”) so long as (i) no Event of Default has
occurred and is continuing and, immediately after giving effect to such
Discretionary Sale, no Default or Event of Default shall have occurred,
(ii) notwithstanding anything set forth below in Section 2.14¸ immediately after
giving effect to such Discretionary Sale, (A) there shall not exist a Borrowing
Base Deficiency (or immediately after giving effect to such Discretionary Sale
and any other sale or transfer or other action taken in accordance with Section
2.6 substantially contemporaneous therewith, (x) the Borrowing Base Deficiency
is reduced to zero ($0), (y) such Discretionary Sale is on terms and conditions
that are reasonable and that would be available on an arms-length basis with
third parties, or (z) such Discretionary Sale is otherwise approved by the
Administrative Agent in its sole discretion), and (B) the Advances Outstanding
as of such date shall not exceed the Availability, and (iii) the net cash price
received pursuant to the sale of such Loan is greater than such Loan’s Adjusted
Borrowing Value.

 

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(d)               Repurchase or Substitution of Warranty Loans. Not later than
five (5) Business Days following the earlier of (i) knowledge by the Borrower or
the Collateral Manager that any Loan constitutes a Warranty Loan or (ii) receipt
by the Borrower from the Administrative Agent of written notice thereof, the
Borrower shall either:

 

(i)                make a deposit to the Collection Account in immediately
available funds in an amount equal to (A) the outstanding principal balance of
the related Loan as of the date of the repurchase, multiplied by (B) the
Purchase Price, plus, only with respect to the repurchase of Warranty Loans, any
expenses or fees with respect to such Loan; provided that the Administrative
Agent shall have the right to determine whether the amount so deposited is
sufficient to satisfy the foregoing requirements; or

 

(ii)                substitute for such Warranty Loan a substitute Eligible
Loan, provided that all requirements with respect to Substitutions set forth in
this Section 2.14 are satisfied.

 

Upon receipt of written certification from the Borrower certifying to the
confirmation of the deposit of the amounts set forth in Section 2.14(d)(i) into
the Collection Account or the delivery by the Borrower of a substitute Eligible
Loan for each Warranty Loan (the date of such confirmation or delivery, the
“Release Date”), such Warranty Loan and related Underlying Assets shall be
removed from the Collateral and, as applicable, the substitute Eligible Loan and
related Underlying Assets shall be included in the Collateral. On the Release
Date of each Warranty Loan, the Collateral Custodian, for the benefit of the
Secured Parties, shall automatically and without further action be deemed to
release to the Borrower, without recourse, representation or warranty, all the
right, title and interest and any Lien of the Administrative Agent, for the
benefit of the Secured Parties in, to and under the Warranty Loan and any
related Underlying Assets and all future monies due or to become due with
respect thereto.

 

(e)                Conditions to Sales, Substitutions and Repurchases. Any
Discretionary Sale or sale pursuant to a Substitution effected pursuant to this
Section 2.14 shall be subject to the satisfaction of the following conditions:

 

(i)                the Borrower shall deliver a Borrowing Base Certificate to
the Administrative Agent (with a copy to Collateral Custodian and the Collateral
Administrator) that gives effect to the contemplation of a Discretionary Sale or
sale pursuant to a Substitution;

 

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(ii)                the Borrower shall deliver a list of all Loans to be sold or
substituted to the Administrative Agent (with a copy to Collateral Custodian and
the Collateral Administrator);

 

(iii)                the Borrower shall notify the Administrative Agent and
Collateral Custodian of any amount to be deposited into the Collection Account
in connection with any sale or substitution;

 

(iv)              as certified in writing to the Administrative Agent (with a
copy to Collateral Custodian and the Collateral Administrator) by the Borrower,
the representations and warranties contained in Section 4.1 and 4.2 hereof shall
continue to be true and correct in all material respects (except for such
representations and warranties as are qualified by materiality, a Material
Adverse Effect or any similar qualifier, which representations and warranties
shall be true in all respects, and except for those representations and
warranties made as of a specific date which are true, correct, and complete as
of such date) following any sale or substitution, except to the extent any such
representation or warranty relates to an earlier date,

 

(v)               any repayment of Advances Outstanding in connection with any
sale or substitution of Loans hereunder shall comply with the requirements set
forth in Section 2.3;

 

(vi)              as certified in writing to the Administrative Agent by the
Borrower, any Discretionary Sale or sale in connection with a Substitution shall
be made by the Collateral Manager (on behalf of the Borrower) to an unaffiliated
third party purchaser or to the Transferor or any Affiliate in a transaction (1)
reflecting arms-length market terms and (2) in which the Borrower makes no
representations, warranties or covenants and provides no indemnification for the
benefit of any other party to such sale (other than that the Borrower has good
title thereto, free and clear of all Liens and has the right to sell the related
Loan);

 

(vii)              the Borrower shall pay an amount equal to all Breakage Costs
and other accrued and unpaid costs and expenses (including reasonable legal
fees) of the Administrative Agent, the Lenders, the Collateral Administrator and
the Collateral Custodian in connection with any such sale, substitution or
repurchase (including, but not limited to, expenses incurred in connection with
the release of the Lien of the Administrative Agent on behalf of the Secured
Parties and any other party having an interest in the Loan in connection with
such sale, substitution or repurchase);

 

(viii)             notwithstanding anything to the contrary, so long as no Event
of Default has occurred and is continuing and, immediately after giving effect
to such thereto, no Default or Event of Default shall have occurred the Borrower
may dispose of any Loan or asset with an Assigned Value equal to zero percent
(0%) through a Discretionary Sale, Substitution or otherwise without satisfying
any of the foregoing.

 

(f)                [Reserved].

 

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(g)               Notices to Lenders. The Administrative Agent shall provide the
Lenders with copies of any notices and, if requested by the Lenders, other
materials received by the Administrative Agent pursuant to this Section 2.14 in
connection with any sale, substitution, or repurchase of Loans. The Borrower (or
Collateral Manager, on its behalf) shall deliver an Officer’s Certificate to the
Collateral Custodian, on which it may conclusively rely, to the effect that all
conditions precedent to such sale, substitution or repurchase of Loans, as the
case may be, have been satisfied.

 

Section 2.15         Assignment of the Sale Agreement.

 

The Borrower hereby assigns to the Administrative Agent, for the ratable benefit
of the Secured Parties hereunder, all of the Borrower’s right, title and
interest in and to, but none of its obligations under, the Sale Agreement, any
Third Party Sale Agreement and any UCC financing statements filed under or in
connection therewith to secure the prompt, complete and indefeasible payment and
performance in full when due, whether by lapse of time, acceleration or
otherwise, of the Obligations of the Borrower arising in connection with this
Agreement and each other Transaction Document, whether now or hereafter
existing, due or to become due, direct or indirect, absolute or contingent. In
furtherance and not in limitation of the foregoing, the Borrower hereby assigns
to the Administrative Agent for the benefit of the Secured Parties its right to
indemnification under the Sale Agreement and any Third Party Sale Agreement. The
Borrower confirms that, following the occurrence and during the continuation of
an Event of Default, the Administrative Agent, on behalf of the Secured Parties,
shall have the right to enforce the Borrower’s rights and remedies under the
Sale Agreement, any Third Party Sale Agreement and any UCC financing statements
filed under or in connection therewith for the benefit of the Secured Parties.

 

Section 2.16         Defaulting Lenders.

 

(a)                Notwithstanding anything to the contrary contained in this
Agreement, if any Lender becomes a Defaulting Lender, then, until such time as
that Lender is no longer a Defaulting Lender, to the extent permitted by
Applicable Law:

 

(i)                That Defaulting Lender’s right to approve or disapprove any
amendment, waiver or consent with respect to this Agreement shall be restricted
as set forth in Section 12.1.

 

(ii)               Any payment of principal, interest, fees or other amounts
received by the Administrative Agent for the account of that Defaulting Lender
(whether voluntary or mandatory, at maturity, or otherwise), shall be applied at
such time or times as may be determined by the Administrative Agent as follows:
first, to the payment of any amounts owing by that Defaulting Lender to the
Administrative Agent hereunder; second, as the Borrower may request (so long as
no Default or Event of Default exists), to the funding of any Advance in respect
of which that Defaulting Lender has failed to fund its portion thereof as
required by this Agreement, as determined by the Administrative Agent; third, if
so determined by the Administrative Agent and the Borrower, to be held in a
non-interest bearing deposit account and released in order to satisfy
obligations of that Defaulting Lender to fund Advances under this Agreement;
fourth, to the payment of any amounts owing to the Lenders, as a result of any
judgment of a court of competent jurisdiction obtained by any Lender against
that Defaulting Lender as a result of that Defaulting Lender’s breach of its
obligations under this Agreement; fifth, so long as no Default or Event of
Default exists, to the payment of any amounts owing to the Borrower as a result
of any judgment of a court of competent jurisdiction obtained by such Borrower
against that Defaulting Lender as a result of that Defaulting Lender’s breach of
its obligations under this Agreement; and sixth, to that Defaulting Lender or as
otherwise directed by a court of competent jurisdiction; provided that if such
payment is a payment of the principal amount of any Advances in respect of which
that Defaulting Lender has not fully funded its appropriate share, such payment
shall be applied solely to pay the Advances of all non-Defaulting Lenders on a
pro rata basis prior to being applied to the payment of any Advances of that
Defaulting Lender. Any payments, prepayments or other amounts paid or payable to
a Defaulting Lender that are applied (or held) to pay amounts owed by a
Defaulting Lender or to post cash collateral pursuant to this Section 2.16 shall
be deemed paid to and redirected by that Defaulting Lender, and each Lender
irrevocably consents hereto.

 

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(b)               If the Borrower and the Administrative Agent agree in writing
that a Defaulting Lender should no longer be deemed to be a Defaulting Lender,
the Administrative Agent will so notify the parties hereto, whereupon as of the
effective date specified in such notice and subject to any conditions set forth
therein (which may include arrangements with respect to any cash collateral),
that Lender will, to the extent applicable, purchase at par that portion of
Advances Outstanding of the other Lenders or take such other actions as the
Administrative Agent may determine to be necessary to cause the Advances to be
held on a pro rata basis by the Lenders in accordance with their Pro Rata
Shares, whereupon that Lender will cease to be a Defaulting Lender; provided
that no adjustments will be made retroactively with respect to fees accrued or
payments made by or on behalf of the Borrowers while that Lender was a
Defaulting Lender; and provided, further, that except to the extent otherwise
expressly agreed by the affected parties, no change hereunder from Defaulting
Lender to Lender will constitute a waiver or release of any claim of any party
hereunder arising from that Lender’s having been a Defaulting Lender.

 

Section 2.17         Mitigation Obligations; Replacement of Lenders.

 

(a)                Designation of a Different Lending Office. If any Lender
requests compensation under Section 2.12, or requires the Borrower to pay any
additional amount to any Lender or any Governmental Authority for the account of
any Lender pursuant to Section 2.13, then such Lender shall (at the request of
the Borrower) use reasonable efforts to designate a different lending office for
funding or booking its Advances hereunder or assign its rights and obligations
hereunder to another of its offices, branches or affiliates, if, in the
judgement of such Lender, such designation or assignment (i) would eliminate or
reduce amounts payable pursuant to Section 2.12 or Section 2.13, as the case may
be, in the future and (ii) would not otherwise be disadvantageous to such
Lender. Upon receipt of such estimate, the Borrower may approve the proposed
designation or assignment, in which case the Lender shall use reasonable efforts
to effect the same. The Borrower hereby agrees to pay all reasonable costs and
expenses incurred by any Lender in connection with any such approved designation
or assignment.

 

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(b)               Replacement of Lenders. If any Lender requests compensation
under Section 2.12, or if the Borrower is required to pay any additional amount
to any Lender or any Governmental Authority for the account of any Lender
pursuant to Section 2.13, or if any Lender is a Defaulting Lender hereunder, or
if any Lender does not consent to any amendment or modification (including in
the form of a consent or waiver) to the definitions described in Section
12.1(d), (e) or (g) which is approved by the Borrower, the Administrative Agent
and the Required Lenders, then the Borrower may, at its sole expense and effort,
upon notice to such Lender and the Administrative Agent, require such Lender to
assign and delegate, without recourse (in accordance with and subject to the
restrictions contained in, and consents required by, Section 12.16), all of its
interests, rights and obligations under this Agreement and the Transaction
Documents to an assignee that shall assume such obligations (which assignee may
be another Lender, if a Lender accepts such assignment); provided that:

 

(i)                such Lender shall have received payment of an amount equal to
the outstanding principal of its Advances, accrued interest thereon, accrued
fees and all other amounts payable to it hereunder from the assignee (to the
extent of such outstanding principal and accrued interest and fees) or the
Borrower (in the case of all other amounts);

 

(ii)               in the case of any such assignment resulting from a claim for
compensation under Section 2.12 or payments required to be made pursuant to
Section 2.13, such assignment will result in a reduction in such compensation or
payments thereafter; and

 

(iii)              such assignment does not conflict with Applicable Law.

 

A Lender shall not be required to make any such assignment or delegation if,
prior thereto, as a result of a waiver by such Lender or otherwise, the
circumstances entitling the Borrower to require such assignment and delegation
cease to apply.

 

Section 2.18         Increase of Commitment; Facility Amount.

 

(a)                At any time during the Revolving Period, provided that no
Event of Default has occurred and is continuing, the Commitment for any Lender
may be increased in connection with a corresponding increase in the Facility
Amount upon the written request of the Borrower with the prior written consent
of the Administrative Agent and such Lender (and with notice to the Collateral
Custodian) (an “Increased Commitment”); provided that, (i) following such
Increased Commitment, the Facility Amount shall not exceed $250,000,000, and
(ii) any Increased Commitment shall be in a minimum amount of $25,000,000.
Except for upfront fees payable to Lenders providing any Increased Commitment,
any such Increased Commitment shall be on the same terms (including the pricing
and maturity date) as, and pursuant to the documentation applicable to, the
Commitments provided pursuant to the Agreement as of the Effective Date. Prior
to the effectiveness of any such Increased Commitment, the Borrower shall, if
requested, execute and deliver to the applicable Lender a revised Note in an
aggregate face amount equal to the revised Commitment. The Borrower confirms
that each Lender, in its sole and absolute discretion, without regard to the
value or performance of the Loan or any other factor, may elect not to increase
its Commitment. Upon such increase, Annex B hereto shall be deemed to be revised
to reflect such increase in such Lender’s Commitment.

 

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(b)               The Borrower may, with the written consent of the
Administrative Agent, add additional Persons as Lenders (with notice to the
Collateral Custodian). Each additional Lender shall become a party hereto by
executing and delivering to the Administrative Agent and the Borrower a Joinder
Supplement and a Transferee Letter.

 

Section 2.19        Termination or Reduction of Commitments.

 

(a)                Optional. The Borrower may, upon notice to the Administrative
Agent, terminate the unused portion of the Commitments, or from time to time
reduce the unused Commitments; provided that (a) each such notice shall be in
writing and must be received by the Administrative Agent at least three (3)
Business Days prior to the effective date of such termination or reduction, and
shall be irrevocable, (b) any such partial reduction shall be in an aggregate
amount of $25,000,000 or a larger multiple of $5,000,000 (unless the aggregate
amount of unused Commitments is less than $25,000,000, in which case such
partial reduction shall be for an amount equal to the aggregate amount of unused
Commitments then outstanding), and (c) the Borrower shall not terminate or
reduce the Commitments if, after giving effect thereto and to any concurrent
prepayments hereunder, the total Advances Outstanding would exceed the total
Commitments. Unless previously terminated, the Commitments shall automatically
terminate on the earlier to occur of the Revolving Period End Date or the
Termination Date.

 

(b)               Application of Commitment Reductions. The Administrative Agent
will promptly notify the Lenders of any termination or reduction of the
Commitments pursuant to this Section. Upon any reduction of unused Commitments,
the Commitment of each Lender shall be reduced by such Lender’s ratable share of
the amount of such reduction.

 

ARTICLE III

CONDITIONS TO THE EFFECTIVE DATE AND ADVANCES

 

Section 3.1            Conditions to Effective Date.

 

No Lender, the Administrative Agent, the Collateral Administrator or the
Collateral Custodian shall be obligated to take, fulfill or perform any other
action hereunder, until the following conditions have been satisfied, in the
sole discretion of, or waived in writing, by the Administrative Agent:

 

(a)                This Agreement and the other Transaction Documents shall have
been duly executed by, and delivered to, the parties thereto, and the
Administrative Agent shall have received such other documents, instruments,
agreements and legal opinions as the Administrative Agent shall reasonably
request in connection with the transactions contemplated by this Agreement;

 

(b)               The Administrative Agent shall have received satisfactory
evidence that the Borrower, the Transferor and the Collateral Manager have
obtained all required consents and approvals of all Persons to the execution,
delivery and performance of this Agreement and the consummation of the
transactions contemplated hereby or thereby;

 

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(c)                The Borrower and the Collateral Manager shall each have
delivered to the Administrative Agent a certification in the form of Exhibit D,
and such certification shall, with respect to the Collateral Manager, include a
representation that the Collateral Manager has neither incurred nor suffered to
exist any Indebtedness as of the Effective Date except as disclosed to the
Administrative Agent;

 

(d)               The Borrower and the Collateral Manager shall each have
delivered to the Administrative Agent a certificate as to whether such entity is
Solvent in the form of Exhibit C;

 

(e)                The Borrower and Collateral Manager shall have delivered to
the Administrative Agent certification that no Default or Event of Default has
occurred and is continuing;

 

(f)                The Administrative Agent shall have received the executed
legal opinion or opinions of Clifford Chance US LLP, counsel to the FS/KKR
Parties, covering (A) authority, (B) enforceability of this Agreement and the
other Transaction Documents, (C) true sale and non-consolidation matters, (D)
UCC, perfection and other closing matters and (E) certain tax matters; in each
case, in form and substance acceptable to the Administrative Agent in its
reasonable discretion;

 

(g)               The Borrower and the Administrative Agent shall have executed
the Fee Letter, and the Borrower shall have paid all fees due and unpaid under
the Fee Letter;

 

(h)               The Borrower, the Collateral Custodian and the Collateral
Administrator shall have executed the Collateral Custodian Fee Letter, and the
Borrower shall have paid all fees due and unpaid under the Collateral Custodian
Fee Letter;

 

(i)                 Each applicable Lender shall have received a duly executed
copy of its Note (to the extent such Note has been requested), in a principal
amount equal to the Commitment of the Lender;

 

(j)                 The Administrative Agent shall have received a secretary’s
certificate of each FS/KKR Party (i) that includes a copy of the resolutions, in
form and substance reasonably satisfactory to the Administrative Agent, of the
board of directors, manager(s) or member(s) of such FS/KKR Party, as applicable,
authorizing (A) the execution, delivery and performance of this Agreement and
the other Transaction Documents to which it is a party, and (B) the borrowings
contemplated hereunder, and a certification that such resolutions have not been
amended, modified, revoked or rescinded, (ii) that includes a copy of the
Governing Documents of such FS/KKR Party and a certification that, except as
disclosed therein, there has not been any amendment, modification or supplement
to such Governing Documents, (iii) that includes a certification as to the
incumbency and signature of the officers of such FS/KKR Party executing any
Transaction Document and (iv) that includes certificates dated as of a recent
date from the Secretary of State or other appropriate authority, evidencing the
good standing of such FS/KKR Party (A) in the jurisdiction of its organization
and (B) in each other jurisdiction where its ownership, lease or operation of
Property or the conduct of its business requires it to qualify as a foreign
Person except, as to this subclause (B), where the failure to so qualify could
not be reasonably expected to have a Material Adverse Effect, which certificate
shall be in form and substance satisfactory to the Administrative Agent and
shall be executed by a corporate secretary or Responsible Officer of such FS/KKR
Party;

 

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(k)               The Administrative Agent shall have received the results of a
recent search by a Person satisfactory to the Administrative Agent, of the UCC,
judgment and tax lien filings which may have been filed with respect to personal
property of each FS/KKR Party, and bankruptcy and pending lawsuits with respect
to the FS/KKR Parties and the results of such search shall be satisfactory to
the Administrative Agent;

 

(l)                 The Administrative Agent shall have received (i) all
documentation and other information requested by such Administrative Agent in
its sole discretion and/or required by regulatory authorities with respect to
the Borrower and the Collateral Manager under applicable “know your customer”
and anti-money laundering rules and regulations, including the USA Patriot Act,
and (ii) a Beneficial Ownership Certification with respect to the Borrower, in
each case, in form and substance reasonably satisfactory to the Administrative
Agent;

 

(m)              The results of the due diligence procedures, as carried out by
the Administrative Agent, are satisfactory to the Administrative Agent, in its
reasonable discretion; and

 

(n)               The representations and warranties contained in Section 4.1
and Section 4.2 are true and correct in all respects on and as of the Effective
Date (other than any representation and warranty that is expressly made as of
another specific date which were true, correct, and complete as of such date);
and

 

(o)               The Administrative Agent shall have received an assignment of
the Collateral Manager Agreement between the Borrower and the Collateral
Manager, and in form and substance acceptable to the Administrative Agent;

 

(p)               All corporate and other proceedings, and all documents,
instruments and other legal matters in connection with the transactions
contemplated by this Agreement and the other Transaction Documents shall be
reasonably satisfactory in form and substance to the Administrative Agent, and
the Administrative Agent shall have received such other documents and legal
opinions in respect of any aspect or consequence of the transactions
contemplated hereby or thereby as it shall reasonably request.

 

Section 3.2            Conditions Precedent to All Advances and Acquisitions of
Loans.

 

Each Loan Advance under this Agreement, each Reinvestment of Principal
Collections pursuant to Section 2.14(a)(i) and each acquisition of Loans in
connection with a Substitution pursuant to Section 2.14(b) (each, a
“Transaction”) shall be subject to the further conditions precedent that:

 

(a)                With respect to any Loan Advance, the Collateral Manager on
Borrower’s behalf shall have delivered to the Administrative Agent (with a copy
to the Collateral Custodian and the Collateral Administrator), by not later than
the deadline set forth in Section 2.2(b) (or such shorter period as may be
agreed to by the Administrative Agent and each Lender), a Funding Notice in the
form of Exhibit A-1 and a Borrowing Base Certificate with respect to each Loan
proposed to be acquired by the Borrower in connection with such Transaction.

 

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(b)               With respect to any Reinvestment of Principal Collections
permitted by Section 2.14(a)(i) and each acquisition of Loans in connection with
a Substitution pursuant to Section 2.14(b), the Collateral Manager on Borrower’s
behalf shall have delivered to the Administrative Agent (with a copy to the
Collateral Custodian and the Collateral Administrator), no later than 12:00 p.m.
(New York City Time) on the date of such reinvestment, a Reinvestment Notice in
the form of Exhibit A-3 and a Borrowing Base Certificate, executed by Collateral
Manager and on Borrower’s behalf.

 

(c)                On the date of such Transaction the following shall be true
and correct, and the Borrower and the Collateral Manager shall have certified in
the related Borrower’s Notice that all conditions precedent to the requested
Transaction have been satisfied and shall thereby be deemed to have certified
that:

 

(i)                The representations and warranties contained in Section 4.1
and Section 4.2 are true and correct in all material respects (except for such
representations and warranties as are qualified by materiality, a Material
Adverse Effect or any similar qualifier, which representations and warranties
shall be true in all respects) on and as of such day as though made on and as of
such day and shall be deemed to have been made on such day (other than any
representation and warranty that is expressly made as of another specific date
which were true, correct, and complete as of such date);

 

(ii)                No event has occurred and is continuing, or would result
from such Transaction or from the application of proceeds thereof, that
constitutes a Default or Event of Default;

 

(iii)              On and as of such day, immediately after giving effect to
such Transaction, the Advances Outstanding does not exceed the Availability (or,
to the extent permitted under Section 2.14, that any existing Borrowing Base
Deficiency is reduced); and

 

(iv)              No Applicable Law shall prohibit or enjoin the making of such
Advance by any Lender or the proposed acquisition of Loans.

 

(d)               (i) With respect to any Loan Advance under this Agreement or
any Reinvestment of Principal Collections pursuant to Section 2.14(a)(i), the
Revolving Period End Date shall not have occurred and (ii) with respect to any
Transaction, the Termination Date shall not have occurred;

 

(e)                [Reserved];

 

(f)                The Borrower and Collateral Manager shall have delivered to
the Administrative Agent (and, if applicable, to Collateral Custodian and the
Collateral Administrator) all reports required to be delivered as of the date of
such Transaction including all deliveries required by Section 2.2;

 

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(g)               The Borrower shall have paid all fees then required to be paid
and, without duplication of Section 2.11, shall have reimbursed the Lenders, the
Collateral Custodian, the Collateral Administrator and the Administrative Agent
for all fees, costs and expenses then required to be paid in connection with the
closing of the transactions contemplated hereunder and under the other
Transaction Documents, including the reasonable attorney fees and any other
legal and document preparation costs incurred by the Lenders, the Collateral
Custodian, the Collateral Administrator and the Administrative Agent;

 

(h)               [Reserved];

 

(i)                 In connection with each Loan Advance, unless otherwise
waived by the Administrative Agent in its sole discretion, (i) the Borrower (or
the Collateral Manager on its behalf) shall have delivered to the Collateral
Custodian (with a copy to the Administrative Agent and the Collateral
Administrator), no later than 11:00 a.m. (New York City Time) on the Advance
Date, (a) a Loan Checklist with respect to each Loan proposed to be pledged as
Collateral by the Borrower in connection with such Transaction together with the
Required Loan Documents described in clause (b)(i) of the definition thereof,
(b) in the case of a Noteless Loan (other than an Effective Date Participation
Interest), a copy of each transfer document or instrument relating to such
Noteless Loan evidencing the assignment of such Noteless Loan to the Borrower
and an undated transfer or assignment document or instrument relating to such
Noteless Loan, signed by the Borrower, as assignor, and the administrative agent
(only in the event such administrative agent is an Affiliate of the Borrower)
but not dated and not specifying an assignee and (c) for each Effective Date
Participation Interest, a fully executed master participation agreement, in form
and substance reasonably satisfactory to the Administrative Agent, which duly
effects and evidences each such Participation Interest and evidence of payment
or waiver of any fees associated with assigning any such Loan and (ii) within
three (3) Business Days following any related Advance Date with respect to any
Loan, the Borrower shall deliver all other Required Loan Documents with respect
to each Loan pledged as Collateral by the Borrower in connection with such
Transaction;

 

(j)                The Borrower shall have delivered to the Administrative Agent
an Officer’s Certificate (which may be part of the applicable Borrower’s Notice)
in form and substance reasonably satisfactory to the Administrative Agent
certifying that each of the foregoing conditions precedent has been satisfied
(other than such conditions precedent (i) subject to the judgment or
satisfaction of the Administrative Agent or any Lender or (ii) otherwise
waived); and

 

(k)               The Borrower is in compliance with the Minimum Credit
Enhancement Amount Test as evidenced by a Borrowing Base Certificate.

 

Section 3.3           Custodianship; Transfer of Loans and Permitted
Investments.

 

(a)                The Collateral Custodian shall hold all Certificated
Securities and Instruments delivered to it as Collateral in accordance with the
terms hereof in physical form at the Custody Facilities or at such other
location identified to the Administrative Agent and the Borrower. Any successor
Collateral Custodian shall be a state or national bank or trust company which is
not an Affiliate of the Borrower and which is a Qualified Institution.

 

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(b)               Each time that the Borrower (or the Collateral Manager on
behalf of the Borrower) shall direct or cause the acquisition of any Loan or
Permitted Investment, the Borrower shall (or the Collateral Manager on behalf of
the Borrower), if such Permitted Investment or, in the case of a Loan, the
related promissory note or (with respect to a Noteless Loan) assignment
documentation has not already been delivered to the Collateral Custodian in
accordance with the requirements set forth in clause (a) of the definition of
“Required Loan Documents”, cause the delivery of such Permitted Investment or,
in the case of a Loan, the related promissory note or (with respect to a
Noteless Loan) assignment documentation in accordance with the requirements set
forth in clause (a) of the definition of “Required Loan Documents” to the
Collateral Custodian at the Custody Facilities.

 

(c)                The Borrower (or the Collateral Manager on behalf of the
Borrower) shall direct that the Collateral Custodian cause all Collateral
acquired by the Borrower that constitutes Financial Assets to be credited to the
Collateral Account, and shall cause all Loans and Permitted Investments acquired
by the Borrower to be delivered to the Collateral Custodian or the Collateral
Custodian, as applicable, by one of the following means (and shall take any and
all other actions necessary to create and perfect in favor of the Administrative
Agent a valid security interest in each Loan and Permitted Investment, which
security interest shall be senior to that of any other creditor of the Borrower
(whether now existing or hereafter acquired) (other than pursuant to Permitted
Liens)):

 

(i)                in the case of an Instrument or a Certificated Security
represented by a Security Certificate in registered form by having it Indorsed
to the Collateral Custodian or in blank by an effective Indorsement or
registered in the name of the Administrative Agent and by (A) delivering such
Instrument to the Collateral Custodian or delivering such Security Certificate
to the Collateral Custodian at the Custody Facilities (or at such other location
identified to the Administrative Agent and the Borrower) and (B) causing the
Collateral Custodian to maintain (on behalf of the Administrative Agent)
continuous possession of such Instrument or Security Certificate at the Custody
Facilities (or at such other location identified to the Administrative Agent and
the Borrower);

 

(ii)                in the case of an Uncertificated Security, by (A) causing
the Administrative Agent to become the registered owner of such Uncertificated
Security and (B) causing such registration to remain effective;

 

(iii)              in the case of any Security Entitlement, by causing each such
Security Entitlement to be credited to a Securities Account in the name of the
Borrower pursuant to the Account Control Agreement; and

 

(iv)              in the case of General Intangibles (including any Loan or
Permitted Investment not evidenced by an Instrument) by filing, maintaining and
continuing the effectiveness of, a financing statement naming the Borrower as
debtor and the Administrative Agent as secured party and describing the Loan or
Permitted Investment (as the case may be) as the collateral at the filing office
of the Secretary of State of the State of Delaware (it being understood that a
UCC financing statement describing the collateral as “all assets of the
Borrower” or words of similar effect will be deemed to satisfy the requirements
of this clause (iv) in the case of any General Intangibles to be delivered by
the Borrower).

 

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(d)               The security interest of the Administrative Agent in any
Collateral disposed of in a transaction permitted by this Agreement shall,
immediately and without further action on the part of the Administrative Agent,
be released and the Collateral Custodian shall immediately release such
Collateral to, or as directed by, the Borrower.

 

ARTICLE IV

REPRESENTATIONS AND WARRANTIES

 

Section 4.1           Representations and Warranties of the Borrower.

 

The Borrower represents and warrants as follows as of the Effective Date, each
Funding Date, and as of each other date provided under this Agreement or the
other Transaction Documents on which such representations and warranties are
required to be (or deemed to be) made:

 

(a)                Organization and Good Standing. The Borrower has been duly
organized, and is validly existing as a limited liability company in good
standing, under the laws of the State of Delaware, with all requisite limited
liability company power and authority to own or lease its properties and conduct
its business as such business is presently conducted, and had at all relevant
times, and now has all necessary power, authority and legal right to acquire,
own and sell the Collateral.

 

(b)               Due Qualification. The Borrower is (i) duly qualified to do
business and is in good standing as a limited liability company in its
jurisdiction of formation, and (ii) has obtained all necessary qualifications,
licenses and approvals, in all jurisdictions in which the ownership or lease of
property or the conduct of its business requires such qualifications, licenses
or approvals, except where the failure to be so qualified, licensed or approved
could not reasonably be expected to have a Material Adverse Effect.

 

(c)                Power and Authority; Due Authorization; Execution and
Delivery. The Borrower (i) has all necessary limited liability company power,
authority and legal right to (a) execute and deliver each Transaction Document
to which it is a party, and (b) carry out the terms of the Transaction Documents
to which it is a party, and (ii) has duly authorized by all necessary limited
liability company action, the execution, delivery and performance of each
Transaction Document to which it is a party and the transfer and assignment of
an ownership and security interest in the Collateral on the terms and conditions
herein provided. This Agreement and each other Transaction Document to which the
Borrower is a party have been duly executed and delivered by the Borrower.

 

(d)               Binding Obligation. Each Transaction Document to which the
Borrower is a party constitutes a legal, valid and binding obligation of the
Borrower enforceable against the Borrower in accordance with its respective
terms, except as such enforceability may be limited by Insolvency Laws and by
general principles of equity.

 

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(e)                No Violation. The consummation of the transactions
contemplated by each Transaction Document to which it is a party and the
fulfillment of the terms thereof will not (i) conflict with, result in any
breach of any of the terms and provisions of, or constitute (with or without
notice or lapse of time or both) a default under, the Governing Documents of the
Borrower or any Contractual Obligation of the Borrower, (ii) result in the
creation or imposition of any Lien (other than Permitted Liens) upon any of the
Borrower’s properties pursuant to the terms of any such Contractual Obligation,
or (iii) violate any Applicable Law.

 

(f)                Agreements. The Borrower is not a party to any agreement or
instrument or subject to any corporate restriction that has resulted or could
reasonably be expected to result in a Material Adverse Effect. The Borrower is
not a party to or otherwise subject or has any of its property that is subject
to any indenture or other agreement or instrument evidencing Indebtedness of the
Borrower, or any other agreement or instrument where a default could reasonably
be expected to result in a Material Adverse Effect.

 

(g)               No Proceedings. (i) As of the Effective Date, there is no
litigation, proceeding or investigation pending or, to the knowledge of the
Borrower, threatened against the Borrower, before any Governmental Authority and
as of any date thereafter, and, (ii) as of any date thereafter, there is no
litigation, proceeding or investigation pending or, to the knowledge of the
Borrower, threatened against the Borrower, before any Governmental Authority
(x) asserting the invalidity of any Transaction Document to which the Borrower
is a party, (y) seeking to prevent the consummation of any of the transactions
contemplated by any Transaction Document to which the Borrower is a party or
(z) that could reasonably be expected to have Material Adverse Effect.

 

(h)               All Consents Required. All approvals, authorizations,
consents, orders, licenses, filings or other actions of any Person or of any
Governmental Authority (if any) required for the due execution, delivery and
performance by the Borrower of each Transaction Document to which the Borrower
is a party have been obtained, except where the failure to obtain such approval,
authorization, consent, order, license, filing or other action could not
reasonably be expected to have a Material Adverse Effect.

 

(i)                 [Reserved].

 

(j)                 Solvency. The Borrower is not the subject of any Insolvency
Proceedings or Insolvency Event. The transactions under the Transaction
Documents to which the Borrower is a party do not and will not render the
Borrower not Solvent.

 

(k)               Taxes.

 

(i)                The Borrower is and has always been treated as a disregarded
entity of Transferor for U.S. federal income tax purposes and no election has
been filed by the Borrower to be treated as a corporation for U.S. federal
income tax purposes. The Borrower will, unless otherwise required by applicable
law, treat the Advances and Notes as indebtedness for U.S. federal income tax
purposes.

 

(ii)                Each of the Borrower, the Transferor has timely filed or
caused to be timely filed (taking into account valid extensions of the time for
filing) all material Tax returns required to be filed by it and has timely paid
all material Taxes due, except Taxes that are being contested in good faith by
appropriate proceedings and for which it has set aside on its books adequate
reserves in accordance with GAAP.

 

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(l)                 Exchange Act Compliance; Regulations T, U and X. None of the
transactions contemplated herein or in the other Transaction Documents
(including the use of the proceeds from the transfer of the Collateral) will
violate or result in a violation of Section 7 of the Exchange Act, or any
regulations issued pursuant thereto, including Regulations T, U and X of the
Board of Governors of the Federal Reserve System, 12 C.F.R., Chapter II. The
Borrower does not own or intend to carry or purchase, and no proceeds from the
Advances will be used to carry or purchase, any “margin stock” within the
meaning of Regulation U or to extend “purpose credit” within the meaning of
Regulation U.

 

(m)             Security Interest.

 

(i)            This Agreement creates a valid and continuing security interest
(as defined in the UCC as in effect from time to time in the State of New York)
in the Collateral in favor of the Administrative Agent, on behalf of the Secured
Parties, which security interest is validly perfected under Article 9 of the UCC
and is prior to all other Liens other than Permitted Liens, and is enforceable
as such against creditors of and purchasers from the Borrower;

 

(ii)           This Agreement constitutes a security agreement within the
meaning of Section 9-102(a)(73) of the UCC as in effect from time to time in the
State of New York.

 

(iii)          the Collateral is comprised of “instruments”, “general
intangibles”, “certificated securities”, “security entitlements”,
“uncertificated securities”, “deposit accounts”, “securities accounts”,
“investment property” and “proceeds” (each as defined in the applicable UCC) and
such other categories of collateral under the applicable UCC as to which the
Borrower has complied with its obligations under Section 4.1(m)(i);

 

(iv)          with respect to Collateral that constitutes Deposit Accounts:

 

(1)               the Borrower has taken all steps necessary to enable the
Administrative Agent to obtain “control” (within the meaning of the UCC as in
effect from time-to-time in the State of New York) with respect to each such
Account; and

 

(2)               such Accounts are not in the name of any Person other than the
Borrower, subject to the Lien of the Administrative Agent. The Borrower has not
instructed the depository bank of any Account to comply with the instructions of
any Person other than the Administrative Agent; provided that, until the
Administrative Agent delivers a Notice of Exclusive Control, the Borrower and
the Collateral Manager may cause cash in such Accounts to be invested in
Permitted Investments, and the proceeds thereof to be distributed in accordance
with this Agreement.

 

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(v)           with respect to Collateral that constitutes Security Entitlements:

 

(1)               all of such Security Entitlements have been credited to an
Account that is a Securities Account and the securities intermediary for each
such Securities Account has agreed to treat all assets credited to such Account
as Financial Assets within the meaning of the UCC as in effect from time-to-time
in the State of New York;

 

(2)               the Borrower has taken all steps necessary to enable the
Administrative Agent to obtain “control” (within the meaning of the UCC as in
effect from time-to-time in the State of New York) with respect to each Account
that is a Securities Account; and

 

(3)               the Accounts that are Securities Accounts are not in the name
of any Person other than the Borrower, subject to the Lien of the Administrative
Agent. The Borrower has not instructed the securities intermediary of any
Account that is a Securities Account to comply with the entitlement order of any
Person other than the Administrative Agent; provided that, until the
Administrative Agent delivers a Notice of Exclusive Control, the Borrower and
the Collateral Manager may cause cash in the Accounts that are Securities
Accounts to be invested in Permitted Investments, and the proceeds thereof to be
distributed in accordance with this Agreement.

 

(vi)          all Accounts (other than the Collateral Account) constitute
“deposit accounts” as defined in Section 9-102 of the UCC as in effect from
time-to-time in the State of New York and the Collateral Account constitutes a
“securities account” as defined in the Section 8-501(a) of the UCC as in effect
from time-to-time in the State of New York;

 

(vii)         the Borrower owns and has good and marketable title to the
Collateral free and clear of any Lien of any Person (other than Permitted
Liens);

 

(viii)        the Borrower has received all consents and approvals required by
the terms of any Loan to the granting of a security interest in the Loans
hereunder to the Administrative Agent, on behalf of the Secured Parties;

 

(ix)           the Borrower has taken all necessary steps to authorize the
Administrative Agent to file all appropriate financing statements in the proper
filing office in the appropriate jurisdictions under Applicable Law in order to
perfect the security interest in that portion of the Collateral in which a
security interest may be perfected by filing pursuant to Article 9 of the UCC as
in effect in the Borrower’s jurisdiction of organization;

 

(x)            upon the delivery to the Collateral Custodian of all Collateral
constituting “instruments” and “certificated securities” (as defined in the UCC
as in effect from time to time in the jurisdiction where the Collateral
Custodian’s Custody Facilities is located), the crediting of all Collateral that
constitutes Financial Assets (as defined in the UCC as in effect from time to
time in the State of New York) to an Account and the filing of the financing
statements described in this Section 4.1(m) in the jurisdiction in which the
Borrower is located, such security interest shall be a valid and first priority
(subject to Permitted Liens) perfected security interest in that portion of the
Collateral in which a security interest may be created under Article 9 of the
UCC as in effect from time to time in the State of New York;

 

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(xi)           other than Permitted Liens, the Borrower has not pledged,
assigned, sold, granted a security interest in or otherwise conveyed any of the
Collateral. The Borrower has not authorized the filing of and is not aware of
any financing statements against the Borrower that include a description of any
collateral included in the Collateral other than any financing statement (A)
relating to the security interest granted to the Borrower under the Sale
Agreement or any Third Party Sale Agreement, as applicable, or (B) that has been
terminated and/or fully and validly assigned to the Administrative Agent on or
prior to the date hereof. There are no judgments or tax lien filings against the
Borrower;

 

(xii)          all original executed copies of each underlying promissory note
that constitute or evidence each Loan have been or, subject to the delivery
requirements contained herein, will be delivered to the Collateral Custodian;

 

(xiii)         none of the underlying promissory notes that constitute or
evidence the Loans has any marks or notations indicating that they have been
pledged, assigned or otherwise conveyed to any Person other than the
Administrative Agent on behalf of the Secured Parties;

 

(xiv)         with respect to Collateral that constitutes a “certificated
security,” such certificated security has been delivered to the Collateral
Custodian on behalf of the Administrative Agent and, if in registered form, has
been specially Indorsed to the Collateral Custodian or in blank by an effective
Indorsement or has been registered in the name of the Administrative Agent upon
original issue or registration of transfer by the Borrower of such certificated
security; and

 

(xv)          with respect to Collateral that constitutes an Uncertificated
Security, the Borrower has caused the Administrative Agent to gain “control” of
such Collateral pursuant to Section 8-106(c) of the UCC and such control remains
effective.

 

(n)               Reports Accurate. All information, exhibits, financial
statements, documents, books, records or reports relating to the Borrower
furnished or to be furnished by or on behalf of the Borrower to the
Administrative Agent, the Collateral Custodian, the Collateral Administrator or
any Lender by any FS/KKR Party in connection with this Agreement are true,
complete and correct in all material respects when taken as a whole (or, (A) in
the case of general economic data, industry information or information, or if
not prepared by or under the direction of the Borrower, true and correct in all
material respects as of the date furnished, when taken as a whole to the
knowledge of the Borrower after reasonable inquiry or (B) in the case of any
projections and forward-looking information, such has been prepared in good
faith and is reasonable in light of information available to Borrower at the
relevant time after reasonable inquiry).

 

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(o)               Location of Offices. The Borrower’s location (within the
meaning of Article 9 of the UCC) is, and at all times has been, the State of
Delaware. Except as set forth on Schedule I hereto, the Borrower has not changed
its name (whether by amendment of its certificate of formation, by
reorganization or otherwise) or its jurisdiction of organization and has not
changed its location within the four (4) months preceding the Effective Date, in
each case other than any change of name or other corporate change for which
notice has been duly provided pursuant to Section 5.1(o)(vii).

 

(p)               Legal Name. Each FS/KKR Party’s exact legal name is, and,
except as specified on Schedule I hereto, at all times has been the name as set
forth on Schedule I hereto.

 

(q)               Sale Agreement. The Sale Agreement is the only agreement
pursuant to which the Borrower purchases Collateral from the Transferor.

 

(r)                 Value Given. The Borrower has given reasonably equivalent
value to the Transferor or the applicable third party seller of each Loan in
consideration for the transfer to the Borrower of each Loan, and no such
transfer has been made for or on account of an antecedent debt, and no such
transfer is or may be voidable or subject to avoidance under any section of the
Bankruptcy Code.

 

(s)                Accounting. The Borrower accounts for the transfers to it of
interests in Collateral as sales of such Collateral for financial accounting
purposes and for legal purposes on its books, records and financial statements,
in each case consistent with GAAP and with the requirements set forth herein.

 

(t)                 Special Purpose Entity. The Borrower has not and shall not:

 

(i)            engage in any business or activity other than the purchase,
receipt and management of Collateral, the transfer and pledge of Collateral
pursuant to the terms of the Transaction Documents, the sale of Collateral as
permitted hereunder, the entry into and the performance under the Transaction
Documents and such other activities as are incidental thereto;

 

(ii)           acquire or own any assets other than (a) the Collateral or
(b) incidental property as may be necessary for the operation of the Borrower
and the performance of its obligations under the Transaction Documents;

 

(iii)          merge into or consolidate with any Person or dissolve, terminate
or liquidate in whole or in part, transfer or otherwise dispose of all or
substantially all of its assets (other than in accordance with the provisions
hereof), without in each case first obtaining the prior written consent of the
Administrative Agent, or except as permitted by this Agreement, change its legal
structure, or jurisdiction of formation;

 

(iv)          fail to preserve its existence as an entity duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
organization or formation, amend, modify, terminate or fail to comply with the
provisions of its partnership agreement except as otherwise permitted pursuant
to Section 5.2(h), or fail to observe limited liability company formalities;

 

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(v)           form, acquire or own any Subsidiary, own any equity interest in
any other entity (other than any Equity Security received in exchange for a
defaulted Loan or portion thereof in connection with an insolvency, bankruptcy,
reorganization, debt restructuring or workout of the Obligor thereof), or make
any Investment in any Person (other than Permitted Investments) without the
prior written consent of the Administrative Agent;

 

(vi)          commingle its assets with the assets of any of its Affiliates, or
of any other Person;

 

(vii)         incur any Indebtedness, secured or unsecured, direct or contingent
(including guaranteeing any obligation), other than Indebtedness to the Secured
Parties hereunder or in conjunction with a repayment of all Advances owed to the
Lenders and a termination of all the Commitments;

 

(viii)        fail to pay its debts and liabilities from its assets as the same
shall become due;

 

(ix)           fail to maintain its records, books of account and bank accounts
separate and apart from those of any other Person;

 

(x)            enter into any contract or agreement with any Person, except
(a) the Transaction Documents and (b) other contracts or agreements that are
upon terms and conditions that are commercially reasonable and that would be
available on an arms-length basis with third parties other than such Person;

 

(xi)           seek its dissolution or winding up in whole or in part;

 

(xii)          fail to correct any known misunderstandings regarding the
separate identity of the Borrower, the Transferor or any other Person;

 

(xiii)         except as provided in this Agreement, guarantee, become obligated
for, or hold itself out to be responsible for the debt of another Person;

 

(xiv)         fail either to hold itself out to the public as a legal entity
separate and distinct from any other Person or to conduct its business solely in
its own name in order not (a) to mislead others as to the identity of the Person
with which such other party is transacting business, or (b) to suggest that it
is responsible for the debts of any third party (including any of its principals
or Affiliates);

 

(xv)          fail to maintain adequate capital for the normal obligations
reasonably foreseeable in a business of its size and character and in light of
its contemplated business operations;

 

(xvi)         [Reserved];

 

(xvii)        except as may be required or permitted by the Code and regulations
or other applicable state or local tax law, hold itself out as or be considered
as a department or division of (a) any of its principals or Affiliates, (b) any
Affiliate of a principal or (c) any other Person;

 

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(xviii)       fail to maintain separate financial statements, showing its assets
and liabilities separate and apart from those of any other Person and not have
its assets listed on any financial statement of any other Person; provided,
however, that the Borrower’s assets may be included in a consolidated financial
statement of its Affiliate provided that (a) appropriate notation shall be made
on such consolidated financial statements to indicate the separateness of the
Borrower from such Affiliate and to indicate that the Borrower’s assets and
credit are not available to satisfy the debts and other obligations of such
Affiliate or any other Person and (b) such assets shall also be listed on the
Borrower’s own separate balance sheet;

 

(xix)          fail to pay its own liabilities and expenses only out of its own
funds;

 

(xx)           fail to maintain a sufficient number of employees, if any, in
light of its contemplated business operations or to pay the salaries of its own
employees, if any;

 

(xxi)          acquire the obligations of or securities issued by its Affiliates
or members, it being understood that this clause (xxi) shall not prevent the
Borrower from acquiring Loans from the Transferor;

 

(xxii)         guarantee any obligation of any person, including an Affiliate;

 

(xxiii)        fail to allocate fairly and reasonably any overhead expenses that
are shared with an Affiliate, including paying for office space and services
performed by any employee of an Affiliate;

 

(xxiv)        fail to use separate invoices and checks bearing its own name;

 

(xxv)         pledge its assets for the benefit of any other Person, other than
with respect to payment of the indebtedness to the Secured Parties hereunder;

 

(xxvi)        other than prior to the Effective Date. (A) fail at any time to
have at least one (1) independent member (the “Special Member”) which shall be a
natural Person approved by Administrative Agent in its sole discretion, which
member must, in each such instance, be a Person who has prior experience as an
independent director, independent manager or independent member with at least
three years of employment experience and who is provided by CT Corporation,
Corporation Service Company, Global Securitization Services, National Registered
Agents, Inc., Wilmington Trust Company, Stewart Management Company, Lord
Securities Corporation or, if none of those companies is then providing
professional Special Members, another nationally recognized company reasonably
approved by the Lenders, in each case that is not an Affiliate of the Borrower
and that provides professional Special Members and other corporate services in
the ordinary course of its business, and which individual is duly appointed as a
Special Member and is not, and has never been, and will not while serving as
Special Member be, any of the following: (w) a member, partner, equityholder,
manager, director, officer or employee of the Borrower or any of its
equityholders or Affiliates (other than as a Special Member of the Borrower or
any of its equityholders or Affiliates that is required by a creditor to be a
single purpose bankruptcy remote entity); (x) a creditor, supplier or service
provider (including provider of professional services) to the Borrower or any of
its equityholders or Affiliates (other than a nationally recognized company that
routinely provides professional Special Members and other corporate services to
the Borrower or any of its equityholders or Affiliates in the ordinary course of
business); (y) a family member of any such member, partner, equityholder,
manager, director, officer, employee, creditor, supplier or service provider; or
(z) a Person that controls (whether directly, indirectly or otherwise) any of
(w), (x) or (y) above; provided that the Borrower shall have ten (10) Business
Days to replace any Special Member with a person approved by Administrative
Agent in its sole discretion upon the death, resignation or incapacitation of
the current Special Member; or (B) fail to ensure that all limited liability
company action relating to the selection, maintenance or replacement of the
Special Member during the Covenant Compliance Period shall require the written
consent of the Administrative Agent. A natural person who otherwise satisfies
the foregoing definition and satisfies subparagraph (w) by reason of being the
Special Member of a “special purpose entity” affiliated with the Borrower shall
be qualified to serve as a Special Member of the Borrower, provided that the
fees that such individual earns from serving as Special Member of affiliates of
the Borrower in any given year constitute in the aggregate less than five
percent (5.00%) of such individual’s annual income for that year;

 

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(xxvii)       fail to provide that the unanimous consent of all members
(including the consent of the Borrower’s Special Member) is required for the
Borrower to (a) institute proceedings to be adjudicated bankrupt or insolvent,
(b) institute or consent to the institution of bankruptcy or insolvency
proceedings against it, (c) file a petition seeking or consent to reorganization
or relief under any applicable federal or state law relating to bankruptcy or
insolvency, (d) seek or consent to the appointment of a receiver, liquidator,
assignee, trustee, sequestrator, custodian or any similar official for the
Borrower, (e) make any assignment for the benefit of the Borrower’s creditors,
(f) admit in writing its inability to pay its debts generally as they become
due, or (g) take any action in furtherance of any of the foregoing; or

 

(xxviii)      fail to file its own tax returns separate from those of any other
Person, except to the extent that the Borrower is treated as a “disregarded
entity” for tax purposes and is not required to file tax returns under
applicable law, and pay any taxes required to be paid under applicable law.

 

(u)               Beneficial Ownership Certification. As of the Effective Date,
the information included in the Beneficial Ownership Certification is true and
correct in all material respects.

 

(v)               Investment Company Act. The Borrower is not required to
register as an “investment company” under the 1940 Act, and is not “controlled
by” an entity required to register as an “investment company” under the 1940
Act.

 

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(w)              ERISA. The Borrower does not maintain, nor are any employees of
the Borrower permitted to participate in, an “employee pension benefit plan,” as
such term is defined in Section 3 of ERISA which is subject to Title IV of ERISA
(a “Pension Plan”).

 

(x)               Compliance with Law. The Borrower has complied in all respects
with all Applicable Law to which it may be subject, and no item of Collateral
contravenes any Applicable Law, in each case, except for instances of
non-compliance or contravention that could not reasonably be expected to have a
Material Adverse Effect.

 

(y)               No Material Adverse Effect. Except as previously disclosed to
the Administrative Agent, no event, change or condition has occurred that has
had, or could reasonably be expected to have, a Material Adverse Effect on any
FS/KKR Party since the last Reporting Date.

 

(z)                Amendments. No Loan has been amended, modified or waived
since the Effective Date or the related Funding Date, as the case may be, except
for amendments, modifications or waivers, if any, to such Loan otherwise
permitted under Section 6.4(a) and in accordance with the Collateral Manager
Standard.

 

(aa)             Full Payment. As of the date of the Borrower’s acquisition
thereof, the Borrower has no knowledge of any fact which would reasonably lead
it to expect that any Loan will not be repaid by the relevant Obligor in full.

 

(bb)             [Reserved].

 

(cc)              USA Patriot Act. Neither the Borrower nor any Affiliate of the
Borrower is (i) a country, territory, organization, person or entity named on an
Office of Foreign Asset Control (OFAC) list; (ii) a Person that resides or has a
place of business in a country or territory named on such lists or which is
designated as a “Non-Cooperative Jurisdiction” by the Financial Action Task
Force on Money Laundering, or whose subscription funds are transferred from or
through such a jurisdiction; (iii) a “Foreign Shell Bank” within the meaning of
the USA Patriot Act, i.e., a foreign bank that does not have a physical presence
in any country and that is not affiliated with a bank that has a physical
presence and an acceptable level of regulation and supervision; or (iv) a person
or entity that resides in or is organized under the laws of a jurisdiction
designated by the United States Secretary of the Treasury under Sections 311 or
312 of the USA Patriot Act as warranting special measures due to money
laundering concerns.

  

The representations and warranties in Section 4.1(m) shall survive the
termination of this Agreement and such representations and warranties may not be
waived by any party hereto without the consent of the Administrative Agent.

  

Section 4.2           Representations and Warranties of the Borrower Relating to
the Agreement and the Collateral.

 

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The Borrower represents and warrants as follows as of the Effective Date, each
Funding Date, and as of each other date provided under this Agreement or the
other Transaction Documents on which such representations and warranties are
required to be (or deemed to be) made:

 

(a)                Eligibility of Collateral. The Borrower has conducted such
due diligence and other review as it considered necessary with respect to the
Loans set forth on the Loan List. As of the Effective Date and each Funding
Date, (i) the Loan List and the information contained in each Funding Notice
delivered pursuant to Section 2.2, is an accurate and complete listing of all
Loans included in the Collateral as of the related Funding Date and the
information contained therein with respect to the identity of such Loans and the
amounts owing thereunder is true, correct and complete as of the related Funding
Date, (ii) each such Loan included in the Borrowing Base is an Eligible Loan,
(iii) each Loan included in the Collateral is free and clear of any Lien of any
Person (other than Permitted Liens) and in compliance with all Applicable Laws
and (iv) with respect to each Loan included in the Collateral, all consents,
licenses, approvals or authorizations of or registrations or declarations of any
Governmental Authority or any Person required to be obtained, effected or given
by the Borrower in connection with the transfer of an ownership interest or
security interest in such Collateral to the Administrative Agent as agent for
the benefit of the Secured Parties have been duly obtained, effected or given
and are in full force and effect.

 

(b)               No Fraud. Each Loan was originated without any fraud or
material misrepresentation by the Borrower or its Affiliates or to the knowledge
of the Borrower or its Affiliates, of the related Obligors.

 

Section 4.3           [Reserved].

 

Section 4.4           Representations and Warranties of the Collateral
Custodian.

 

The Collateral Custodian represents and warrants as follows:

 

(a)                Organization; Power and Authority. It is a duly organized and
validly existing national banking association in good standing under the laws of
the United States. It has full corporate power, authority and legal right to
execute, deliver and perform its obligations as Collateral Custodian under this
Agreement.

 

(b)               Due Authorization. The execution and delivery of this
Agreement and the consummation of the transactions provided for herein have been
duly authorized by all necessary association action on its part, either in its
individual capacity or as Collateral Custodian as the case may be.

 

(c)                No Conflict. The execution and delivery of this Agreement,
the performance of the transactions contemplated hereby and the fulfillment of
the terms hereof will not conflict with, result in any breach of its articles of
incorporation or bylaws or any of the material terms and provisions of, or
constitute (with or without notice or lapse of time or both) a default under any
indenture, contract, agreement, mortgage, deed of trust, or other instrument to
which the Collateral Custodian is a party or by which it or any of its property
is bound.

 

(d)               No Violation. The execution and delivery of this Agreement,
the performance of the Transactions contemplated hereby to be performed by it
and the fulfillment of the terms hereof applicable to it will not conflict with
or violate, in any material respect, any Applicable Law as to the Collateral
Custodian. 

 

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(e)              All Consents Required. All approvals, authorizations, consents,
orders or other actions of any Person or Governmental Authority applicable to
the Collateral Custodian required in connection with the execution and delivery
of this Agreement, the performance by the Collateral Custodian of the
transactions contemplated hereby and the fulfillment by the Collateral Custodian
of the terms hereof have been obtained.

 

(f)        Validity, Etc. The Agreement constitutes the legal, valid and binding
obligation of the Collateral Custodian, enforceable against the Collateral
Custodian in accordance with its terms, except as such enforceability may be
limited by applicable Insolvency Laws and general principles of equity (whether
considered in a suit at law or in equity).

 

Section 4.5      [Reserved].

 

ARTICLE V

GENERAL COVENANTS

 

Section 5.1       Affirmative Covenants of the Borrower.

 

During the Covenant Compliance Period:

 

(a)       Compliance with Laws. The Borrower will comply in all material
respects with all Applicable Laws, including those with respect to the
Collateral or any part thereof, except for instances of non-compliance that
could not reasonably be expected to have a Material Adverse Effect.

 

(b)       Preservation of Company Existence. The Borrower will (i) preserve and
maintain its company existence, rights, franchises and privileges in the
jurisdiction of its formation, (ii) qualify and remain qualified in good
standing (to the extent such concept exists in such jurisdiction) as a limited
liability company in each jurisdiction where the failure to preserve and
maintain such existence, rights, franchises, privileges and qualification has
had, or could reasonably be expected to have, a Material Adverse Effect and
(iii) maintain the Governing Documents of the Borrower in full force and effect
and shall not amend the same without the prior written consent of the
Administrative Agent except as permitted under Section 5.2(h).

 

(c)       Performance and Compliance with Collateral. The Borrower will, at its
expense, timely and fully perform and comply (or cause the Transferor or any
third party seller to perform and comply pursuant to the Sale Agreement or any
Third Party Sale Agreement, as applicable) with all provisions, covenants and
other promises required to be observed by it under the Collateral, the
Transaction Documents and all other agreements related to such Collateral.

 

(d)       Keeping of Records and Books of Account; Inspection Rights.

 

(i)        The Borrower will keep proper books of record and account in which
full, true and correct entries in conformity with GAAP and all requirements of
law are made of all dealings and transactions in relation to its business and
activities. The Borrower, the Transferor and the Collateral Manager will permit
representatives and agents of the Administrative Agent or the Collateral
Administrator to visit and inspect any of its properties or the properties of
its Affiliates, to examine it and its Affiliates corporate, financial and
operating records relating to the Collateral, the Eligible Loans, and make
copies of the Required Loan Documents, and to discuss its affairs, finances and
accounts with its directors and officers (provided, that (i) representatives of
such Person may be present at any such discussion and (ii) any third party’s
confidential information subject to a confidentiality agreement with a FS/KKR
Party that prohibits the disclosure of such third party’s information to
Administrative Agent may be redacted from the information provided to
Administrative Agent pursuant to this Section 5.1(d), all at the expense of the
Borrower and at such reasonable times during normal business hours and as often
as may be reasonably desired, upon reasonable (and in any event not less than
two (2) Business Days’) advance written notice from Administrative Agent to such
Person; provided, that when an Event of Default exists the Administrative Agent
(or any representative or agent thereof) may do any of the foregoing at any time
and without advance notice (other than discussions with auditors and other third
parties, for which reasonable prior notice shall still be required); provided,
further, that so long as no Event of Default shall have occurred and be
continuing (at which time no limits shall apply), (x) no more than two (2) such
inspections or audits shall be conducted in any one year and (y) the Borrower
shall not be obligated to reimburse Administrative Agent for more than one (1)
inspection or audit in any calendar year.

 

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(ii)       In connection with the foregoing paragraph, Administrative Agent
(through any of its officers, employees, or agents) shall have the right, from
time to time hereafter (i) at any time that an Event of Default has occurred and
is continuing and following delivery of notice of acceleration of the
Obligations hereunder, but solely after a failure of the Collateral Manager to
make any such notifications or communications within 10 Business Days of
Administrative Agent’s written demand therefor, to the extent the Borrower has
such right under the applicable Underlying Instruments, to communicate directly
with any and all of the Borrower’s account debtors and Obligors to verify the
existence and terms thereof; provided that the Administrative Agent has given
the Borrower prior notice of its intention to do so; and (ii) from time to time,
upon reasonable advance notice, to audit the Collateral, or any portion thereof,
in order to verify any FS/KKR Party’s financial condition or the amount,
quality, value, condition of, or any other matter relating to, the Collateral;
and each of Transferor and the Borrower shall, and shall cause the Collateral
Manager to permit any designated representative of Administrative Agent to visit
and inspect any of the properties of Transferor, the Borrower or the Collateral
Manager, as applicable, to inspect and to discuss their respective finances and
any of their respective properties and Collateral, during normal business hours.
The Borrower shall reimburse Administrative Agent for any expense incurred in
the exercise of the foregoing provisions. Audit fees and other charges for the
inspections contemplated in this Section 5.1(d) shall be as follows: (a) a fee
of $1,000.00 per day, per auditor, plus reasonable and documented out-of-pocket
expenses for each field audit of Transferor, the Borrower or any other FS/KKR
Party or Person performed by personnel employed by Administrative Agent, and (b)
the reasonable and documented out-of-pocket charges and expenses paid or
incurred by Administrative Agent if it elects to employ the services of one or
more third Persons to perform field audits of Transferor, Borrower, any other
FS/KKR Party or the Collateral Manager or to appraise the Collateral, or any
portion thereof; provided, that so long as no Event of Default shall have
occurred and be continuing, (x) the Borrower shall not be obligated to reimburse
Administrative Agent for more than one (1) field audit or appraisal of the
Collateral, in either case, in any calendar year and (y) no more than two (2)
such field audits and appraisals shall be conducted in any one year. For
purposes of clarity, any Lender or its designated representatives having
requested to attend in the case of physical inspections may, at such Lender’s
expense, accompany Administrative Agent in the case of such physical
inspections.

 

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(e)       Protection of Interest in Collateral. With respect to the Collateral
acquired by the Borrower, the Borrower will (i) acquire such Collateral pursuant
to and in accordance with the terms of the Sale Agreement or directly from a
third party pursuant to a Third Party Sale Agreement and (ii) at the Borrower’s
expense, take all action necessary to perfect, protect and more fully evidence
the Borrower’s ownership of such Collateral free and clear of any Lien,
including (a) with respect to the Loans and that portion of the Collateral in
which a security interest may be perfected by filing and maintaining (at the
Borrower’s expense), effective financing statements against the Obligor in all
necessary or appropriate filing offices, (including any amendments thereto or
assignments thereof) and filing continuation statements, amendments or
assignments with respect thereto in such filing offices, (including any
amendments thereto or assignments thereof) and (b) executing or causing to be
executed such other instruments or notices as may be necessary or appropriate.

 

(f)        Deposit of Collections.

 

(i)        The Borrower shall, or cause the Collateral Manager to, instruct each
Obligor or relevant administrative agent, as applicable, to deliver all
Collections in respect of the Collateral to the General Collection Account.

 

(ii)       The Borrower shall, within two (2) Business Days after receipt
thereof, direct the Collateral Custodian to transfer from the General Collection
Account (A) all Collections received by it in respect of the Collateral
attributable to Interest Collections to the Interest Collection Account, (B)
other than as provided in clause (C), all Collections received by it in respect
of the Collateral attributable to Principal Collections to the Principal
Collection Account and (C) to the extent provided in Section 2.9(e), Collections
to the Unfunded Exposure Account.

 

(g)       Special Purpose Entity. The Borrower shall be in compliance with the
special purpose entity requirements set forth in Section 4.1(t).

 

(h)       Collateral Manager Standard. The Borrower will (i) ensure that the
Collateral Manager acts in compliance with the Collateral Manager Standard in
all material respects and (ii) maintain an investment strategy consistent with
the terms of the Transaction Documents.

 

(i)        Events of Default. Promptly following the Borrower’s knowledge or
notice of the occurrence of any Event of Default or Default, the Borrower will
provide the Administrative Agent, the Collateral Custodian and the Collateral
Administrator with written notice of the occurrence of such Event of Default or
Default of which the Borrower has knowledge or has received notice. In addition,
such notice will include a written statement of a Responsible Officer of the
Borrower setting forth the details of such event and the action that the
Borrower proposes to take with respect thereto. The Administrative Agent will
provide each Lender with a copy of any such notice promptly upon receipt
thereof.

 

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(j)        Obligations. Each FS/KKR Party shall pay its respective Indebtedness
and other obligations promptly and in accordance with their terms and pay and
discharge promptly when due all lawful claims for labor, materials and supplies
or otherwise that, if unpaid, might give rise to a Lien upon the Collateral or
any part thereof.

 

(k)       Taxes.

 

(i)       The Borrower will at all times continue to be treated as a disregarded
entity of the Transferor for U.S. federal income tax purposes. The Borrower is
and has always been treated as a disregarded entity of Transferor for U.S.
federal income tax purposes and no election has been filed or will be filed in
the future by the Borrower to be treated as a corporation for U.S. federal
income tax purposes. The Borrower will, unless otherwise required by applicable
law, treat the Advances and Notes as indebtedness for U.S. federal income tax
purposes.

 

(ii)      The Borrower will at all times continue to be owned by the Transferor.

 

(iii)     The Transferor will, unless otherwise required by applicable law,
treat the Advances and Notes as indebtedness for U.S. federal income tax
purposes.

 

(iv)    Each of the Borrower and the Transferor will timely file or cause to be
timely filed (taking into account valid extensions of the time for filing) all
material Tax returns required to be filed by it and will timely pay all material
Taxes due (including all Taxes on the income and gain or the Borrower and the
Transferor), except Taxes that are being contested in good faith by appropriate
proceedings and for which it has set aside on its books adequate reserves in
accordance with GAAP.

 

(l)        Use of Proceeds. The Borrower will use the proceeds of the Advances
only to acquire Loans or fund unfunded commitments with respect to Loans, to
make distributions to its members in accordance with the terms hereof or to pay
related expenses (including expenses payable hereunder) and for such other
purposes as are necessary or incidental to the foregoing.

 

(m)       Obligor Notification Forms. The Administrative Agent may, in its
discretion after the occurrence of an Event of Default, send notification forms
giving each relevant administrative agent or Obligor, as applicable, notice of
the Secured Parties’ interest in the Collateral and the obligation to make
payments as directed by the Administrative Agent.

 

(n)       Adverse Claims. The Borrower will not (i) create, or participate in
the creation of, any Liens on any of the Accounts or (ii) permit to exist, any
Liens on any of the Accounts, in each case, other than the Lien created by this
Agreement and Permitted Liens.

 

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(o)       Notices. The Borrower will furnish each of the following documents to
the Collateral Administrator and the Administrative Agent, which shall forward
copies of the same to the Lenders:

 

(i)       Income Tax Liability. Within ten (10) Business Days after the receipt
of revenue agent reports or other written proposals, determinations or
assessments of the IRS or any other taxing authority which propose, determine or
otherwise set forth positive adjustments to the Tax liability of, or assess or
propose the collection of Taxes required to have been withheld by, the Borrower
which equal or exceed $100,000 in the aggregate, telephonic or facsimile notice
(confirmed in writing within five (5) Business Days) specifying the nature of
the items giving rise to such adjustments and the amounts thereof;

 

(ii)      Auditors’ Management Letters. Promptly after the receipt thereof, any
auditors’ management letters are received by the Borrower;

 

(iii)     Representations and Warranties. Promptly after receiving knowledge or
notice of the same, the Borrower shall notify the Administrative Agent if any
representation or warranty set forth in Section 4.1 or Section 4.2 was incorrect
in any material respect (except for such representations and warranties as are
qualified by materiality, a Material Adverse Effect or any similar qualifier,
which representations and warranties shall have been incorrect in any respect)
at the time it was given or deemed to have been given and at the same time
deliver to the Administrative Agent a written notice setting forth in reasonable
detail the nature of such facts and circumstances. In particular, but without
limiting the foregoing, the Borrower shall notify the Administrative Agent in
the manner set forth in the preceding sentence before any Funding Date of any
facts or circumstances within the knowledge of the Borrower which would render
any of the said representations and warranties untrue in any material respect
(except for such representations and warranties as are qualified by materiality,
a Material Adverse Effect or any similar qualifier, which representations and
warranties would be rendered untrue in any respect) as of such Funding Date;

 

(iv)     ERISA. Promptly after receiving notice of any Reportable Event with
respect to the Borrower (or any ERISA Affiliate thereof), a copy of such notice;

 

(v)      Proceedings. As soon as possible and in any event within two (2)
Business Days after an executive officer of the Borrower or the Transferor
receives notice or obtains knowledge thereof or at the request of the
Administrative Agent, notice of any settlement of, material judgment (including
a material judgment with respect to the liability phase of a bifurcated trial)
in or commencement of any material labor controversy, material litigation,
material action, material suit or material proceeding before any court or
governmental department, commission, board, bureau, agency or instrumentality,
domestic or foreign, affecting the Collateral, the Transaction Documents, the
Secured Parties’ interest in the Collateral, or any FS/KKR Party or any of its
Affiliates; provided that notwithstanding the foregoing, any settlement,
judgment, labor controversy, litigation, action, suit or proceeding affecting
the Collateral, the Transaction Documents, the Secured Parties’ interest in the
Collateral, or the Borrower in excess of $500,000, the Transferor in excess of
$2,000,000 (or, following any merger, consolidation or amalgamation with or into
a Permitted BDC which results in the Transferor having net assets in excess of
$1,000,000,000, $5,000,000) shall be deemed to be material for purposes of this
Section 5.1(o);

 

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(vi)     Notice of Certain Events. Promptly upon becoming aware thereof (and in
any event within two (2) Business Days), notice of (1) any Event of Default, (2)
any Value Adjustment Event, (3) any other event or circumstance that could
reasonably be expected to have a Material Adverse Effect, (4) any event or
circumstance whereby any Loan which was included in the latest calculation of
the Borrowing Base as an Eligible Loan shall fail to meet one or more of the
criteria (other than criteria waived by the Administrative Agent on or prior to
the related Funding Date in respect of such Loan) listed in the definition of
“Eligible Loan”, or (5) any amendment to the Governing Documents of the
Transferor if such amendment materially and adversely effects the interests of
the Administrative Agent and the Lenders, as determined in the reasonable
judgement of the Collateral Manager (on behalf of the Borrower);

 

(vii)    Corporate Changes. As soon as possible and in any event within five (5)
Business Days after the effective date thereof, notice of any change in the
name, jurisdiction of organization, corporate structure, tax characterization or
location of records of the Borrower; provided that the Borrower agrees not to
effect or permit any change referred to in the preceding sentence unless all
filings have been made under the UCC or otherwise that are required in order for
the Administrative Agent to continue at all times following such change to have
a valid, legal and perfected security interest in all the Collateral; and

 

(viii)   Accounting Changes. As soon as possible and in any event within two (2)
Business Days after the effective date thereof, notice of any material change in
the accounting policies of the Borrower relating to loan accounting or revenue
recognition.

 

(p)       Contest Recharacterization. The Borrower shall in good faith contest
any attempt to recharacterize the treatment of the Loans as property of the
bankruptcy estate of the Transferor.

 

(q)       Payment Date Reporting.

 

(i)       The Borrower shall deliver (or shall cause to be delivered) a Payment
Date Report, for the previous quarter ending as of the applicable Determination
Date, and delivered to the Administrative Agent, the Collateral Administrator
and Collateral Custodian not later than 3:00 p.m. (New York City Time) on the
Business Day preceding the related Payment Date. Each such Payment Date Report
shall contain instructions to the Collateral Custodian to withdraw funds on the
related Payment Date from the applicable Collection Account and pay or transfer
amounts set forth in such report in the manner specified, and in accordance with
the priorities established, in Section 2.7 or Section 2.8, as applicable.

 

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(ii)       Each Payment Date Report shall include a calculation of Availability,
the aggregate outstanding principal balance of the Advances, the Aggregate
Unfunded Exposure Amount, and the Borrowing Base.

 

(iii)      If and to the extent the Collateral Manager may be required to
calculate or to report in a Payment Date Report or other accounting hereunder,
the Dollar Equivalent of any amount, including the outstanding principal amount
of an Eligible Loan, the Advances, the Borrowing Base or other such calculation
or amount involving Canadian Dollars, it shall use (A) the Dollar Equivalent
identified in or the (B) Assigned Value provided in, as the case may be, the
collateral database compiled and delivered (or caused to be compiled and
delivered) to the Collateral Manager by the Collateral Administrator under the
Collateral Administration Agreement for the related collection or reporting
period or other such amount as is identified in such calculation or such report
by the Collateral Manager; provided that nothing herein shall impose a duty upon
the Collateral Administrator under this Agreement or the Collateral
Administration Agreement to determine the Dollar Equivalent or the Assigned
Value of any Eligible Loan.

 

(iv)     In preparing the Payment Date Report and other information and
statements required hereunder, the Collateral Administrator shall provide the
Collateral Manager with such information and data maintained pursuant to the
terms of the Collateral Administration Agreement to assist the Collateral
Manager in preparing the Payment Date Report and to the extent required under
the terms of the Collateral Administration Agreement. The Collateral
Administrator shall have the rights, protections and immunities provided to it
in the Collateral Administration Agreement.

 

(r)       [Reserved].

 

(s)       Financial Statements. The Borrower shall furnish to the Administrative
Agent for distribution to each Lender:

 

(i)       as soon as available, but in any event within 120 days after the end
of each fiscal year of Transferor, a copy of the audited consolidated balance
sheet of Transferor and the Borrower and the unaudited consolidated balance
sheet of the Borrower and the Transferor, in each case, as at the end of such
year and the related statements of income and retained earnings and of cash
flows for such year, setting forth in each case in comparative form the figures
for the previous year, and, in the case of financial statements of Transferor,
reported on without a “going concern” or like qualification or exception, or
qualification arising out of the scope of the audit, by an independent certified
public accountants of nationally recognized standing;

 

(ii)      as soon as available, but in any event not later than seventy-five
(75) days after the end of each of the first three quarterly periods of each
fiscal year of Transferor, the unaudited consolidated balance sheet of the
Borrower and the Transferor as at the end of such quarter and the related
unaudited statements of income and retained earnings and of cash flows of the
Borrower and the Transferor for such quarter and the portion of the fiscal year
through the end of such quarter, setting forth in each case in comparative form
the figures for the previous year, certified by a Responsible Officer as being
fairly stated in all material respects (subject to normal year-end audit
adjustments);

 

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(iii)     all such financial statements shall be complete and correct in all
material respects and shall be prepared in reasonable detail and in accordance
with GAAP applied consistently throughout the periods reflected therein and with
prior periods (except as approved by such accountants or officer, as the case
may be, and disclosed therein).

 

(t)       Certificates; Other Information. The Borrower shall furnish to the
Administrative Agent for distribution to each Lender:

 

(i)       concurrently with the delivery of the financial statements of the
Borrower and the Transferor referred to in Section 5.1(s)(i), a certificate of
the independent certified public accountants firm reporting on such financial
statements stating that in making the examination necessary therefor no
knowledge was obtained of any Default or Event of Default, except as specified
in such certificate;

 

(ii)      concurrently with the delivery of the financial statements referred to
in Sections 5.1(s)(i) and 5.1(s)(ii), a fully and properly completed certificate
in the form of Exhibit K, certified on behalf of the Borrower by a Responsible
Officer of the Borrower;

 

(iii)     on each Measurement Date, a Borrowing Base Certificate showing the
Borrowing Base and the Availability as of such date (including, with respect to
any Principal Finance Loan, the Fair Market Value), and a calculation of the
Borrower’s Total Interest Coverage Ratio to the extent tested pursuant to
Section 5.2(n), certified as complete and correct by a Responsible Officer;

 

(iv)     within five (5) Business Days following its effective date, a copy of
any material amendment, restatement, supplement, waiver or other modification to
any Underlying Instrument of any Eligible Loan, together with any documentation
prepared by the Borrower or the Collateral Manager in connection with such
document;

 

(v)      within five (5) Business Days after the same are filed, copies of all
financial statements, filings and reports which the Borrower or Transferor may
make to, or file with, the Securities and Exchange Commission or any successor
or analogous Governmental Authority;

 

(vi)     within 120 days after the end of each fiscal year of Transferor, a
report covering such fiscal year of a firm of independent certified public
accountants of nationally recognized standing (or any other party identified by
the Administrative Agent) to the effect that such accountants (or such other
party) have applied certain agreed-upon procedures (the “Agreed-Upon Procedures
Report”) (a copy of which procedures are attached hereto as Schedule IV, it
being understood that Transferor and the Administrative Agent may provide an
updated Schedule IV reflecting any further amendments to such Schedule IV on or
prior to the last day of the first fiscal year of Transferor to end following
the Effective Date), a copy of which shall replace the then existing Schedule
IV) to certain documents and records relating to the Collateral and the FS/KKR
Parties, compared the information contained in the Borrowing Base Certificates
(including the Borrowing Base Certificates delivered pursuant to Section 5.1(q))
delivered during the period covered by such Agreed-Upon Procedures Report with
such documents and records and that no matters came to the attention of such
accountants (or such other party) that caused them to believe that (A) the
information and the calculations included in such Borrowing Base Certificates
were not determined or performed in accordance with the provisions of this
Agreement, except for such exceptions as such accountants (or such other party)
shall believe to be immaterial and such other exceptions as shall be set forth
in such statement, or (B) an Event of Default occurred during the applicable
reporting period;

 

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(vii)    promptly, (A) such information, documents, records or reports
reasonably available to it respecting the Collateral or the condition or
operations, financial or otherwise, of the Borrower or the Collateral Manager as
the Administrative Agent or any Lender may from time to time reasonably request
in order to protect the interests of the Administrative Agent or Secured Parties
under or as contemplated by this Agreement or the other Transaction Documents,
and (B) such additional financial and other information as any Lender may from
time to time reasonably request; and

 

(viii)   within ninety (90) days after the end of each fiscal year, a static
pool report in the form of Exhibit A-7 shall be provided to Administrative
Agent.

 

(u)       Further Assurances. The Borrower will execute any and all further
documents, financing statements, agreements and instruments, and take all
further action (including filing UCC and other financing statements, agreements
or instruments) that may be required under applicable law, or that the
Administrative Agent may reasonably request, in order to effectuate the
transactions contemplated by the Transaction Documents and in order to grant,
preserve, protect, perfect or more fully evidence the validity and first
priority (subject to Permitted Liens) of the security interests and Liens
created or intended to be created hereby. Such security interests and Liens will
be created hereunder and the Borrower shall deliver or cause to be delivered to
the Administrative Agent all such instruments and documents (including legal
opinions and lien searches) as it shall reasonably request to evidence
compliance with this Section 5.1(u). The Borrower agrees to provide such
evidence as the Administrative Agent shall reasonably request as to the
perfection and priority status of each such security interest and Lien.

 

(v)       Non-Consolidation. The Borrower shall at all times act in a manner
such that each of the assumptions made by Clifford Chance US LLP in their
opinion delivered pursuant to Section 3.1(f) is true and accurate in all
material respects. The Borrower shall at all times observe and be in compliance
in all material respects with all covenants and requirements in the Governing
Documents of the Borrower.

 

(w)       Know Your Customer Laws. The Borrower will furnish to the
Administrative Agent promptly, from time to time, information and documentation
requested by Administrative Agent or any Lender for the purpose of compliance
with “know your customer” laws, including the Beneficial Ownership Regulation.

 

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(x)       Other. The Borrower will furnish to the Administrative Agent promptly,
from time to time, such other information, documents, records or reports
reasonably available to it respecting the Collateral or the condition or
operations, financial or otherwise, of the Collateral Manager or the Borrower as
the Administrative Agent or any Lender may from time to time reasonably request
in order to protect the interests of the Administrative Agent or the other
Secured Parties under or as contemplated by this Agreement.

 

Section 5.2       Negative Covenants of the Borrower.

 

During the Covenant Compliance Period:

 

(a)       Other Business. The Borrower will not (i) engage in any business other
than (A) entering into and performing its obligations under the Transaction
Documents and other activities contemplated by the Transaction Documents, (B)
the acquisition, ownership and management of the Collateral and (C) the sale of
Loans as permitted hereunder, (ii) incur any Indebtedness, obligation, liability
or contingent obligation of any kind other than pursuant to this Agreement, or
(iii) form any Subsidiary or make any Investment in any other Person except as
permitted hereunder.

 

(b)       Collateral Not to be Evidenced by Instruments. The Borrower will take
no action to cause any Loan that is not, as of the Effective Date or the related
Funding Date, as the case may be, evidenced by an Instrument, to be so evidenced
except in connection with the enforcement or collection of such Loan or unless
such Instrument is immediately delivered to the Collateral Custodian, together
with an Indorsement in blank, as collateral security for such Loan.

 

(c)       Security Interests. Except as otherwise permitted herein and in
respect of any Discretionary Sale, Substitution or sale of a Warranty Loan, the
Borrower will not sell, pledge, assign or transfer to any other Person, or
grant, create, incur, assume or suffer to exist any Lien (other than the
security interest granted to the Administrative Agent, on behalf of the Secured
Parties, pursuant to this Agreement or Permitted Liens) on any Collateral,
whether now existing or hereafter transferred hereunder, or any interest
therein. The Borrower will promptly notify the Administrative Agent of the
existence of any Lien (other than the security interest granted to the
Administrative Agent, on behalf of the Secured Parties, pursuant to this
Agreement or Permitted Liens) on any Collateral and the Borrower shall defend
the right, title and interest of the Administrative Agent, as agent for the
Secured Parties in, to and under the Collateral against all claims of third
parties (other than Permitted Liens).

 

(d)       Mergers, Acquisitions, Sales, etc. The Borrower will not be a party to
any merger or consolidation, or purchase or otherwise acquire any of the assets
or any stock of any class of, or any partnership or joint venture interest in,
any other Person, or sell, transfer, convey or lease any of its assets, or sell
or assign with or without recourse any Collateral or any interest therein (other
than as permitted pursuant to this Agreement, the Sale Agreement or any Third
Party Sale Agreement).

 

(e)       Restricted Payments. The Borrower shall not make any Restricted
Payments other than distributions of amounts paid to it in accordance with
Sections 2.7 and 2.8.

 

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(f)       Change of Location of Underlying Instruments. The Borrower shall not,
without the prior consent of the Administrative Agent, consent to the Collateral
Custodian moving any Certificated Securities or Instruments from the Collateral
Custodian’s Custody Facilities on the Effective Date, unless the Borrower has
given at least thirty (30) days’ written notice to the Administrative Agent and
has taken all actions required under the UCC of each relevant jurisdiction in
order to ensure that the Secured Parties’ first priority perfected security
interest continues in effect.

 

(g)       ERISA Matters. Except as would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect, the Borrower will not
(i) engage or permit any ERISA Affiliate to engage in any transaction that is a
prohibited transaction within the meaning of Section 406 of ERISA or Section
4975 of the Code for which an exemption is not available or has not previously
been obtained from the U.S. Department of Labor, (ii) knowingly permit to exist
any accumulated funding deficiency, as defined in Section 302(a) of ERISA and
Section 412(a) of the Code, or funding deficiency with respect to any Pension
Plan of an ERISA Affiliate, if any, other than a Multiemployer Plan, (iii) fail
to make or knowingly permit any ERISA Affiliate to fail to make, any payments to
a Multiemployer Plan that the Borrower or any ERISA Affiliate may be required to
make under the agreement relating to such Multiemployer Plan or any law
pertaining thereto, (iv) terminate any Pension Plan of an ERISA Affiliate, if
any, or (v) knowingly permit to exist any occurrence of any Reportable Event
with respect to a Pension Plan of an ERISA Affiliate, if any.

 

(h)       Operating Agreement. The Borrower will not amend, modify, waive or
terminate any provision of its operating agreement in any matter that is
materially adverse to the Lenders or otherwise prohibited under this Agreement
without the prior written consent of the Administrative Agent.

 

(i)       Changes in Payment Instructions to Obligors. The Borrower will not
make any change, or permit the Collateral Manager to make any change, in its
instructions to any relevant administrative agent or Obligor, as applicable,
regarding payments to be made with respect to the Collateral to the Collection
Account, unless the Administrative Agent has consented to such change.

 

(j)       Extension or Amendment of Collateral. The Borrower will not, except as
otherwise permitted in Section 2(d)(i) of the Collateral Management Agreement,
extend, amend or otherwise modify the terms of any Loan. Without limiting the
foregoing, the Borrower shall not may waive, modify or otherwise vary any
provision of an item of Collateral (including, but not limited to, any Loan) in
any manner contrary to the Collateral Manager Standard and without the approval
of Administrative Agent in its sole discretion, provided, that if Administrative
Agent does not provide its approval for any such waiver or modification,
Borrower shall have the option, subject to Sections 2.14(d) and (e), to
repurchase such item of Collateral immediately prior to the effectiveness of
such modification for an amount equal to the amount calculated in clause (i) of
the definition of “Borrowing Base” with respect to such Collateral and provided,
further, that if Borrower does not elect to repurchase such item of Collateral
pursuant to this Section 5.2(j), the Assigned Value with respect to such
Collateral shall be zero.

 

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(k)       Fiscal Year. The Borrower shall not change its fiscal year or method
of accounting without providing the Administrative Agent with prior written
notice (i) providing a detailed explanation of such changes and (ii) including
pro forma financial statements demonstrating the impact of such change.

 

(l)        Change of Control. The Borrower shall not enter into any transaction
or agreement which results or, upon consummation, would result, in a Change of
Control.

 

(m)      Ownership. The Borrower shall not have any direct owners other than the
Transferor.

 

(n)       Financial Covenants.

 

(i)       Minimum Interest Coverage Ratio. As of the end of any fiscal month,
beginning with the month ending twelve (12) months after the Effective Date or,
if earlier, the fiscal quarter end the following test was first passed, Borrower
shall not permit its Total Interest Coverage Ratio to be less than 1.50 to 1.00.

 

(o)       Eligible Loans. The Borrower shall not permit any of the three largest
Eligible Loans (measured in terms of the Adjusted Borrowing Value of such
Eligible Loan) included in the calculation of the Borrowing Base to be (i) First
Lien Last Out Loans, (ii) Second Lien Loans or (iii) Loans for which the related
Obligor has Permitted EBITDA of less than $15,000,000.

 

(p)       Collateral Administration Agreement.

 

(i)       The Borrower shall not (A) permit the Collateral Administration
Agreement to be modified, amended, or terminated, or (B) waive any material
duties or obligations of the Collateral Administrator (or any of its permitted
assigns) thereunder, in each case, in a manner that adversely affects any
Secured Party without the prior written consent of the Administrative Agent.

 

(ii)     Other than a collateral assignment in favor of the Administrative
Agent, the Borrower shall not permit either of the Collateral Administration
Agreement to be assigned (except to an Affiliate of Wells Fargo Bank, N.A.).

 

(q)       Collateral Management Agreement. The Borrower shall not (A) permit the
Collateral Management Agreement to be modified, amended, or terminated, or (B)
waive any material duties or obligations of the Collateral Manager (or any of
its permitted assigns) thereunder, in each case, in a manner that adversely
affects any Secured Party without the prior written consent of the
Administrative Agent.

 

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Section 5.3      [Reserved].

 

Section 5.4      [Reserved].

 

Section 5.5      Affirmative Covenants of the Collateral Custodian.

 

During the Covenant Compliance Period:

 

(a)       Compliance with Law. The Collateral Custodian will comply in all
material respects with all Applicable Law.

 

(b)       Preservation of Existence. The Collateral Custodian will preserve and
maintain its existence, rights, franchises and privileges in the jurisdiction of
its formation and qualify and remain qualified in good standing in each
jurisdiction where failure to preserve and maintain such existence, rights,
franchises, privileges and qualification has had, or could reasonably be
expected to have, a Material Adverse Effect.

 

(c)       Location of Underlying Instruments. Subject to Section 7.8, the
Underlying Instruments shall remain at all times in the possession of the
Collateral Custodian at the Custody Facilities unless notice of a different
address is given in accordance with the terms hereof or unless the
Administrative Agent agrees to allow certain Underlying Instruments to be
released to the Collateral Manager on a temporary basis in accordance with the
terms hereof, except as such Underlying Instruments may be released pursuant to
this Agreement.

 

Section 5.6       Negative Covenants of the Collateral Custodian.

 

During the Covenant Compliance Period:

 

(a)       Underlying Instruments. The Collateral Custodian will not dispose of
any documents constituting the Underlying Instruments in any manner that is
inconsistent with the performance of its obligations as the Collateral Custodian
pursuant to this Agreement and will not dispose of any Collateral except as
contemplated by this Agreement.

 

(b)       No Changes to Collateral Custodian Fee. The Collateral Custodian will
not make any changes to the Collateral Custodian Fee set forth in the Collateral
Custodian Fee Letter without the prior written approval of the Administrative
Agent and the Borrower.

 

Section 5.7       Affirmative Covenants of the Collateral Administrator.

 

During the Covenant Compliance Period:

 

(a)       Compliance with Law. The Collateral Administrator will comply in all
material respects with all Applicable Law.

 

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(b)       Preservation of Existence. The Collateral Administrator will preserve
and maintain its existence, rights, franchises and privileges in the
jurisdiction of its formation and qualify and remain qualified in good standing
in each jurisdiction where failure to preserve and maintain such existence,
rights, franchises, privileges and qualification has had, or could reasonably be
expected to have, a Material Adverse Effect.

 

Section 5.8       Negative Covenants of the Collateral Administrator.

 

During the Covenant Compliance Period:

 

(a)       No Changes to Collateral Administration Agreement. The Collateral
Administrator will not permit the Collateral Administration Agreement to be
modified, amended, or terminated in a manner that materially adversely affects
any Secured Party without the prior written consent of the Administrative Agent.

 

ARTICLE VI

COLLATERAL ADMINISTRATION

 

Section 6.1       Accounts.

 

Each of the parties hereto hereby agrees that the Collateral Account shall be
deemed to be a Securities Account, together with any additional subaccounts as
the Collateral Custodian may determine from time to time are necessary for
administrative convenience. Each of the parties hereto hereby agrees that with
respect to the Collateral Account, (A) the cash and other property (subject to
Section 2(d)(v) of the Collateral Management Agreement with respect to any
property other than investment property, as defined in Section 9-102(a)(49) of
the UCC) is to be treated as a Financial Asset and (B) the jurisdiction
governing the Account, all Cash and other Financial Assets credited to the
Account and the securities intermediary’s jurisdiction (within the meaning of
Section 9-304(b) of the UCC) shall, in each case, be the State of New York. In
no event may any Financial Asset held in the Collateral Account be registered in
the name of, payable to the order of, or specially Indorsed to, the Borrower,
unless such Financial Asset has also been Indorsed in blank or to the Collateral
Custodian. In addition, for Canadian Dollars, the Collateral Custodian shall
establish the Canadian Dollar Principal Collection Account and Canadian Dollar
Interest Collection Account. Any amounts received by the Collateral Custodian
that are denominated in Canadian Dollars shall be deposited by the Collateral
Custodian into the Canadian Dollar Principal Collection Account or Canadian
Dollar Interest Collection Account, as applicable.

 

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Section 6.2       [Reserved].

 

Section 6.3       [Reserved].

 

Section 6.4       [Reserved].

 

Section 6.5       [Reserved].

 

Section 6.6       [Reserved].

 

Section 6.7       [Reserved].

 

Section 6.8       Reports.

 

(a)       Borrower’s Notice. On each Funding Date and on the date of each
Reinvestment of Principal Collections pursuant to Section 2.14(a)(i) or
acquisition by the Borrower of Loans in connection with a Substitution pursuant
to Section 2.14(b), the Borrower (or the initial Collateral Manager on its
behalf) will provide the applicable Borrower’s Notice and a Borrowing Base
Certificate, each updated as of such date, to the Administrative Agent (with a
copy to the Collateral Custodian and the Collateral Administrator).

 

(b)       Tax Returns. Upon demand by the Administrative Agent, the initial
Collateral Manager shall deliver copies of all foreign, federal, state and local
income tax returns and reports filed by the Borrower and the initial Collateral
Manager, or in which the Borrower or the Collateral Manager was included.

 

(c)       Obligor Financial Statements; Other Reports. The Collateral Manager
will deliver to the Administrative Agent (with a copy to the Collateral
Custodian and the Collateral Administrator), to the extent received by the
Borrower or the Collateral Manager pursuant to the Underlying Instruments, the
complete financial reporting package with respect to each Obligor and with
respect to each Loan for such Obligor (including any financial statements,
management discussion and analysis, executed covenant compliance certificates
and related covenant calculations with respect to such Obligor and with respect
to each Loan for such Obligor) provided to the Borrower or the Collateral
Manager for the periods required by the Underlying Instruments, which delivery
shall be made within five (5) Business Days after receipt by the Borrower or the
Collateral Manager as specified in the Underlying Instruments. Upon demand by
the Administrative Agent or any Lender, the Collateral Manager will provide such
other information reasonably available to it as the Administrative Agent or such
Lender may reasonably request with respect to any Obligor.

 

(d)       Amendments to Loans. The Collateral Manager will furnish via
electronic communication pursuant to procedures approved by the Administrative
Agent, to the Administrative Agent, a copy of any material amendment,
restatement, supplement, waiver or other modification to the Underlying
Instruments of any Loan (along with any internal documents prepared by the
Collateral Manager and provided to its credit committee in connection with such
amendment, restatement, supplement, waiver or other modification) within ten
(10) Business Days of the effectiveness of such amendment, restatement,
supplement, waiver or other modification.

 

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Section 6.9       [Reserved].

 

Section 6.10     [Reserved].

 

Section 6.11     [Reserved].

 

Section 6.12     [Reserved].

 

ARTICLE VII

THE COLLATERAL CUSTODIAN AND COLLATERAL ADMINISTRATOR

 

Section 7.1     Designation of Collateral Custodian.

 

(a)       Initial Collateral Custodian. The role of Collateral Custodian with
respect to the Underlying Instruments relating to the Permitted Investments
shall be conducted by the Person designated as Collateral Custodian hereunder
from time to time in accordance with this Section 7.1. Until the Administrative
Agent shall give to Wells Fargo Bank, N.A. a Collateral Custodian Termination
Notice, Wells Fargo Bank, N.A. is hereby appointed as, and hereby accepts such
appointment and agrees to perform the duties and obligations of, Collateral
Custodian pursuant to the terms hereof.

 

(b)       Successor Collateral Custodian. Upon the Collateral Custodian’s
receipt of a Collateral Custodian Termination Notice from the Administrative
Agent of the designation of a successor Collateral Custodian pursuant to the
provisions of Section 7.5, the Collateral Custodian agrees that it will
terminate its activities as Collateral Custodian hereunder.

 

Section 7.2      Duties of Collateral Custodian.

 

(a)       Appointment. Each of the Borrower and the Administrative Agent hereby
designate and appoint the Collateral Custodian to act as its agent and hereby
authorizes the Collateral Custodian to take such actions on its behalf and to
exercise such powers and perform such duties as are expressly granted to the
Collateral Custodian by this Agreement. The Collateral Custodian hereby accepts
such agency appointment to act as Collateral Custodian pursuant to the terms of
this Agreement, until its resignation or removal as Collateral Custodian
pursuant to the terms hereof.

 

(b)       Duties. On or before the initial Funding Date, and until its removal
pursuant to Section 7.5, the Collateral Custodian shall perform, on behalf of
the Administrative Agent and the Secured Parties, the following duties and
obligations:

 

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(i)       The Collateral Custodian shall take and retain custody of the Required
Loan Documents delivered by the Borrower pursuant to the definition of “Eligible
Loan” in accordance with the terms and conditions of this Agreement, all for the
benefit of the Secured Parties and subject to the Lien thereon in favor of the
Administrative Agent, as agent for the Secured Parties. Within five (5) Business
Days of its receipt of any Required Loan Documents and the Loan Checklist (the
“Review Period”), the Collateral Custodian shall review the Required Loan
Documents delivered to it to confirm that (A) if the files delivered per the
following sentence indicate that any document must contain an original
signature, each such document appears to bear the original signature, or if the
file indicates that such document may contain a copy of a signature, that such
copies appear to bear an original or a reproduction of such signature and (B)
based on a review of the applicable note, the related initial Loan balance when
entered into or obtained by the Borrower, Loan identification number and Obligor
name with respect to such Loan is referenced on the related Loan Checklist and
is not a duplicate Loan (such items (A) through (B) collectively, the “Review
Criteria”). In order to facilitate the foregoing review by the Collateral
Custodian, in connection with each delivery of Required Loan Documents hereunder
to the Collateral Custodian, the Collateral Manager shall provide to the
Collateral Custodian an electronic file (in EXCEL or a comparable format
acceptable to the Collateral Custodian) listing Loan Identification Number, name
of Obligor, and initial Loan balance and the related Loan Checklist per file
that contains a list of all Required Loan Documents and whether they require
original signatures, the Loan identification number and the name of the Obligor
and the initial Loan balance when entered into or obtained by the Borrower with
respect to each related Loan. If, at the conclusion of such review, the
Collateral Custodian shall determine that any Review Criteria are not satisfied,
the Collateral Custodian shall within one (1) Business Day notify the Borrower,
the Administrative Agent and the Collateral Manager of such determination and
provide the Collateral Manager and the Borrower with a list of the non-complying
Loans and the applicable Review Criteria that they fail to satisfy. The
Collateral Manager shall have ten (10) Business Days to correct any
non-compliance with any Review Criteria as stated in part (2) of the preceding
sentence. After the Review Period, the Collateral Custodian shall execute and
deliver to the Collateral Manager and the Administrative Agent a certification
substantially in the form attached hereto as Exhibit J, including an attached
exception report. In addition, if requested in writing in the form of Exhibit E
by the Collateral Manager and approved by the Administrative Agent within ten
(10) Business Days of the Collateral Custodian’s delivery of such report, the
Collateral Custodian shall return the Required Loan Documents for any Loan which
fails to satisfy a Review Criteria to the Borrower. Other than the foregoing,
the Collateral Custodian shall not have any responsibility for reviewing any
Underlying Instruments. Notwithstanding anything herein to the contrary, the
Collateral Custodian’s obligation to review the Required Loan Documents shall be
limited to the Review Criteria.

 

(ii)      In taking and retaining custody of the Underlying Instruments with
respect to the Permitted Investments and the Required Loan Documents, the
Collateral Custodian shall be deemed to be acting as the agent of the Secured
Parties; provided that the Collateral Custodian makes no representations as to
the existence, perfection or priority of any Lien on the Underlying Instruments
or the instruments therein; and provided further that the Collateral Custodian’s
duties as agent shall be limited to those expressly contemplated herein.

 

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(iii)       All Required Loan Documents that are originals or copies shall be
kept in fire resistant vaults, rooms or cabinets at the Custody Facilities (or
such other location identified to the Administrative Agent and Borrower). All
such Required Loan Documents that are originals or copies shall be placed
together with an appropriate identifying label and maintained in such a manner
so as to permit retrieval and access. All such Required Loan Documents that are
originals or copies shall be clearly segregated from any other documents or
instruments maintained by the Collateral Custodian. All such Required Loan
Documents that are delivered to the Collateral Custodian in electronic format
shall be saved onto disks and/or onto the Collateral Custodian’s secure computer
system, and maintained in a manner so as to permit retrieval and access. The
Collateral Custodian shall segregate the Required Loan Documents on its
inventory system and will not commingle the physical Required Loan Documents
with any other files of the Collateral Custodian.

 

(iv)      The Collateral Custodian shall make payments in accordance with
Section 2.7 and Section 2.8 (the “Payment Duties”).

 

(v)        On each Reporting Date, the Collateral Custodian shall provide a
written report to the Administrative Agent, the Borrower, and the Collateral
Manager (in a form acceptable to the Administrative Agent) identifying each Loan
for which it holds Required Loan Documents, the non-complying Loans and the
applicable Review Criteria that any non-complying Loan fails to satisfy.

 

(vi)       The Collateral Custodian shall provide a written daily report to the
Administrative Agent and the Collateral Manager of (x) all deposits to and
withdrawals from the Accounts for such Business Day and the outstanding balance
as of the end of such Business Day, and (y) a report of settled trades for such
Business Day.

 

(vii)       Notwithstanding any provision to the contrary elsewhere in the
Transaction Documents, the Collateral Custodian shall not have any fiduciary
relationship with any party hereto or any Secured Party in its capacity as such,
and no implied covenants, functions, obligations or responsibilities shall be
read into this Agreement, the other Transaction Documents or otherwise exist
against the Collateral Custodian. Without limiting the generality of the
foregoing, it is hereby expressly agreed and stipulated by the other parties
hereto that the Collateral Custodian shall not be required to exercise any
discretion hereunder and shall have no investment or management responsibility.
The Collateral Custodian shall not be deemed to assume any obligations or
liabilities of the Borrower or Collateral Manager hereunder or under any other
Transaction Document.

 

(viii)       The Administrative Agent may direct the Collateral Custodian to
take any action incidental to its duties hereunder. With respect to other
actions which are incidental to the actions specifically delegated to the
Collateral Custodian hereunder, the Collateral Custodian shall not be required
to take any such incidental action hereunder, but shall be required to act or to
refrain from acting (and shall be fully protected in acting or refraining from
acting) upon the direction of the Administrative Agent; provided that, the
Collateral Custodian shall not be required to take any action hereunder at the
request of the Administrative Agent or otherwise if the taking of such action,
in the reasonable determination of the Collateral Custodian, (x) shall be in
violation of any Applicable Law or contrary to any provisions of this Agreement
or (y) shall expose the Collateral Custodian to liability hereunder or otherwise
(unless it has received indemnity which it reasonably deems to be satisfactory
with respect thereto). In the event the Collateral Custodian requests the
consent of the Administrative Agent and the Collateral Custodian does not
receive a consent (either positive or negative) from the Administrative Agent
within 10 Business Days of its receipt of such request, then the Administrative
Agent shall be deemed to have declined to consent to the relevant action.

 

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(ix)       The Collateral Custodian shall not be liable for any action taken,
suffered or omitted by it in accordance with the request or direction of any
Secured Party, to the extent that this Agreement provides such Secured Party the
right to so direct the Collateral Custodian. The Collateral Custodian shall not
be deemed to have notice or knowledge of any matter hereunder, including an
Event of Default, unless a Responsible Officer of the Collateral Custodian has
actual knowledge of such matter or written notice thereof is received by the
Collateral Custodian.

 

(x)      The parties acknowledge that in accordance with the Customer
‎Identification Program ‎‎(CIP) requirements under the USA PATRIOT Act and its
‎implementing regulations, the ‎Collateral Custodian in order to help fight the
‎funding of terrorism and money laundering ‎is required to obtain, verify and
record ‎information that identifies each person or legal ‎entity that
establishes a relationship ‎or opens an account with the Collateral Custodian.
‎The Borrower hereby agrees that ‎it shall provide the Collateral Custodian with
such ‎information as it may request ‎including but not limited to the Borrower’s
name, physical ‎address, tax ‎identification number and other information that
will help the Collateral ‎Custodian ‎to identify and verify the Borrower’s
identity such as organizational documents, ‎‎certificate of good standing,
license to do business, or other pertinent identifying ‎‎information.‎

 

Section 7.3       Merger or Consolidation.

 

Any Person (i) into which the Collateral Custodian may be merged or
consolidated, (ii) that may result from any merger or consolidation to which the
Collateral Custodian shall be a party, or (iii) that may succeed to the
properties and assets of the Collateral Custodian substantially as a whole,
which Person in any of the foregoing cases executes an agreement of assumption
to perform every obligation of the Collateral Custodian hereunder, shall be the
successor to the Collateral Custodian under this Agreement without further act
of any of the parties to this Agreement.

 

Section 7.4       Collateral Custodian Compensation.

 

As compensation for its collateral custodian activities hereunder, the
Collateral Custodian shall be entitled to a Collateral Custodian Fee pursuant to
the provision of Section 2.7(a)(2), Section 2.7(b)(1) or Section 2.8(2), as
applicable. The Collateral Custodian’s entitlement to receive the Collateral
Custodian Fee shall cease on the earlier to occur of: (i) its removal as
Collateral Custodian pursuant to Section 7.5 or (ii) the termination of this
Agreement. 

 

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Section 7.5       Collateral Custodian Removal.

 

The Collateral Custodian may be removed, with or without cause, by the
Administrative Agent by notice given in writing to the Collateral Custodian (the
“Collateral Custodian Termination Notice”); provided that notwithstanding its
receipt of a Collateral Custodian Termination Notice, the Collateral Custodian
shall continue to act in such capacity until a successor Collateral Custodian
has been appointed, has agreed to act as Collateral Custodian hereunder, and has
received all Underlying Instruments held by the previous Collateral Custodian.

 

Section 7.6       Limitation on Liability.

 

(a)       The Collateral Custodian may conclusively rely on and shall be fully
protected in acting upon any certificate, instrument, opinion, notice, letter,
telegram or other document delivered to it and that in good faith it reasonably
believes to be genuine and that has been signed by the proper party or parties.
The Collateral Custodian may rely conclusively on and shall be fully protected
in acting upon (a) the written instructions of any designated officer of the
Administrative Agent or, prior to the occurrence of an Event of Default, the
Collateral Manager or (b) the verbal instructions of the Administrative Agent
or, prior to the occurrence of an Event of Default, the Collateral Manager.

 

(b)       The Collateral Custodian may consult counsel satisfactory to it and
the advice or opinion of such counsel shall be full and complete authorization
and protection in respect of any action taken, suffered or omitted by it
hereunder in good faith and in accordance with the advice or opinion of such
counsel.

 

(c)       The Collateral Custodian shall not be liable for any error of
judgment, or for any act done or step taken or omitted by it, in good faith, or
for any mistakes of fact or law, or for anything that it may do or refrain from
doing in connection herewith except, notwithstanding anything to the contrary
contained herein, in the case of its willful misconduct, bad faith or grossly
negligent performance or omission of its duties and in the case of its grossly
negligent performance of its Payment Duties and in the case of its grossly
negligent performance of its duties in taking and retaining custody of the
Underlying Instruments or Required Loan Documents. Under no circumstances will
the Collateral Custodian be liable for indirect, special, punitive,
consequential or incidental damages, such as loss of use, revenue or profit.

 

(d)       The Collateral Custodian makes no warranty or representation and shall
have no responsibility (except as expressly set forth in this Agreement) as to
the content, enforceability, completeness, validity, sufficiency, value,
genuineness, ownership or transferability of the Collateral, and will not be
required to and will not make any representations as to the validity or value
(except as expressly set forth in this Agreement) of any of the Collateral. The
Collateral Custodian shall not be obligated to take any legal action hereunder
that might in its judgment be contrary to Applicable Law or involve any expense
or liability unless it has been furnished with an indemnity reasonably
satisfactory to it.

 

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(e)       The Collateral Custodian shall have no duties or responsibilities
except such duties and responsibilities as are specifically set forth in this
Agreement and no covenants or obligations shall be implied in this Agreement
against the Collateral Custodian.

 

(f)       The Collateral Custodian shall not be required to expend or risk its
own funds in the performance of its duties hereunder.

 

(g)       It is expressly agreed and acknowledged that the Collateral Custodian
is not guaranteeing performance of or assuming any liability for the obligations
of the other parties hereto or any parties to the Collateral.

 

(h)       The Collateral Custodian may assume the genuineness of any such
Required Loan Document it may receive and the genuineness and due authority of
any signatures appearing thereon, and shall be entitled to assume that each
Required Loan Document it may receive is what it purports to be. If an original
“security” or “instrument” as defined in Section 8-102 and Section 9-102(a)(47)
of the UCC, respectively, is or shall be or become available with respect to any
Collateral to be held by the Collateral Custodian under this Agreement, it shall
be the sole responsibility of the Borrower to make or cause delivery thereof to
the Collateral Custodian, and the Collateral Custodian shall not be under any
obligation at any time to determine whether any such original security or
instrument has been or is required to be issued or made available in respect of
any Collateral or to compel or cause delivery thereof to the Collateral
Custodian. Without prejudice to the generality of the foregoing, the Collateral
Custodian shall be without liability to the Borrower, Collateral Manager, the
Administrative Agent or any other Person for any damage or loss resulting from
or caused by events or circumstances beyond the Collateral Custodian’s
reasonable control, including nationalization, expropriation, currency
restrictions, the interruption, disruption or suspension of the normal
procedures and practices of any securities market, power, mechanical,
communications or other technological failures or interruptions, computer
viruses or the like, fires, floods, earthquakes or other natural disasters,
civil and military disturbance, acts of war or terrorism, riots, revolution,
acts of God, work stoppages, strikes, national disasters of any kind, or other
similar events or acts; errors by the Borrower, the Collateral Manager or the
Administrative Agent (including any Responsible Officer of any thereof) in its
instructions to the Collateral Custodian; or changes in applicable law,
regulation or orders.

 

(i)       It is expressly acknowledged by the parties hereto that application
and ‎performance by the ‎Collateral Custodian of its various duties hereunder
(including, without ‎limitation, ‎recalculations to be performed in respect of
the matters contemplated hereby) ‎shall be based ‎upon, and in reliance upon
data information and notice provided to it by the ‎Collateral Manager, the
‎Administrative Agent, the Borrower and/or any related bank agent obligor or
‎similar party, ‎and the Collateral Custodian shall have no responsibility for
the accuracy of ‎any such ‎information or data provided to it by such person and
shall be entitled to update ‎its records ‎‎(as it may deem necessary or
appropriate).‎

 

(j)       In the event that (i) the Borrower, Collateral Manager, the
Administrative Agent, Lenders, the Collateral Administrator or Collateral
Custodian shall be served by a third party with any type of levy, attachment,
writ or court order with respect to any Loan or Required Loan Document or (ii) a
third party shall institute any court proceeding by which any Required Loan
Document shall be required to be delivered otherwise than in accordance with the
provisions of this Agreement, the party receiving such service shall promptly
deliver or cause to be delivered to the other parties to this Agreement copies
of all court papers, orders, documents and other materials concerning such
proceedings. The Collateral Custodian shall, to the extent permitted by law,
continue to hold and maintain all the Required Loan Documents that are the
subject of such proceedings pending a final, nonappealable order of a court of
competent jurisdiction permitting or directing disposition thereof. Upon final
determination of such court, the Collateral Custodian shall dispose of such
Required Loan Documents as directed by the Administrative Agent, which shall
give a direction consistent with such determination. Expenses of the Collateral
Custodian incurred as a result of such proceedings shall be borne by the
Borrower.

 

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(k)       In case any reasonable question arises as to its duties hereunder, the
Collateral Custodian may, in the absence of a continuing of an Event of Default
or the occurrence of the Termination Date, request instructions from the
Collateral Manager and during the existence of an Event of Default or following
the occurrence of the Termination Date, request instructions from the
Administrative Agent, and shall be entitled at all times to refrain from taking
any action unless it has received instructions from the Collateral Manager or
the Administrative Agent, as applicable. The Collateral Custodian shall in all
events have no liability, risk or cost for any action taken pursuant to and in
compliance with the instruction of the Administrative Agent.

 

(l)       Without limiting the generality of any terms of this section, the
Collateral Custodian shall have no liability for any failure, inability or
unwillingness on the part of the Collateral Manager, the Administrative Agent,
any agent or the Borrower to provide accurate and complete information on a
timely basis to the Collateral Custodian, or otherwise on the part of any such
party to comply with the terms of this Agreement, and shall have no liability
for any inaccuracy or error in the performance or observance on the Collateral
Custodian’s part of any of its duties hereunder that is caused by or results
from any such inaccurate, incomplete or untimely information received by it, or
other failure on the part of any such other party to comply with the terms
hereof.

 

(m)      The Collateral Custodian shall not be deemed to have knowledge or
notice of any matter unless actually known to a Responsible Officer of the
Collateral Custodian.

 

(n)       The Collateral Custodian may exercise any of its rights or powers
hereunder or perform any of its duties hereunder, including with respect to any
foreign exchange transaction, either directly or, by or through agents or
attorneys, and the Collateral Custodian shall not be responsible for any
misconduct or negligence on the part of any agent or attorney appointed
hereunder with due care by it. Neither the Collateral Custodian nor any of its
affiliates, directors, officers, shareholders, agents or employees will be
liable to the Collateral Manager, Borrower or any other Person, except by reason
of acts or omissions by the Collateral Custodian constituting bad faith, willful
misfeasance, gross negligence or reckless disregard of the Collateral
Custodian’s duties hereunder. The Collateral Custodian shall in no event have
any liability for the actions or omissions of the Borrower, the Collateral
Manager, the Administrative Agent, 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 Borrower, the Collateral Manager, the Administrative
Agent, or another Person except to the extent that such inaccuracies or errors
are caused by the Collateral Custodian’s own bad faith, willful misfeasance,
gross negligence or reckless disregard of its duties hereunder.

 

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(o)       It is understood and agreed that any foreign exchange transaction
effected by the Collateral Custodian acting at the direction of the
Administrative Agent, the Borrower or the Collateral Manager may be entered with
Wells Fargo Bank, N.A. or its affiliates acting as principal or otherwise
through customary banking channels. The Collateral Custodian shall be entitled
at all times to comply with any legal or regulatory requirements applicable to
currency or foreign exchange transactions. Each party hereto acknowledges that
the Collateral Custodian or any affiliates of the Collateral Custodian involved
in any such foreign exchange transactions may make a margin or banking income
from foreign exchange transactions entered into pursuant to this section for
which they shall not be required to account to the Borrower, the Administrative
Agent or the Collateral Manager. All risk and expense incident to such
conversion is the responsibility of the Borrower, the Administrative Agent or
the Collateral Manager. Neither the Collateral Custodian nor the Collateral
Administrator, shall have (x) responsibility for fluctuations in exchange rates
affecting any collections or conversion thereof and (y) to the extent it
complies with the instructions provided by the respective party, liability for
any losses incurred or resulting from the rates obtained in such foreign
exchange transactions.

 

Section 7.7       Resignation of the Collateral Custodian.

 

The Collateral Custodian shall not resign from the obligations and duties hereby
imposed on it except upon (a) ninety (90) days written notice to the Borrower,
Collateral Manager, Administrative Agent and each Lender, or (b) the Collateral
Custodian’s determination that (i) the performance of its duties hereunder is or
becomes impermissible under Applicable Law and (ii) there is no reasonable
action that the Collateral Custodian could take to make the performance of its
duties hereunder permissible under Applicable Law. Any such determination
permitting the resignation of the Collateral Custodian shall be evidenced as to
clause (i) above by an Opinion of Counsel to such effect delivered to the
Administrative Agent. No such resignation shall become effective until a
successor Collateral Custodian shall have assumed the responsibilities and
obligations of the Collateral Custodian hereunder. In the case of a resignation
of the Collateral Custodian, if no successor custodian shall have been appointed
and an instrument of acceptance by a successor custodian shall not have been
delivered to the Collateral Custodian within ninety (90) days after the giving
of such notice of resignation, the Collateral Custodian may petition any court
of competent jurisdiction for the appointment of a successor custodian.

 

Section 7.8       Release of Documents.

 

(a)       Release for Servicing. From time to time and as appropriate for the
enforcement or servicing of any of the Collateral, the Collateral Custodian is
hereby authorized (unless and until such authorization is revoked by the
Administrative Agent) to, and shall, upon written receipt from the Collateral
Manager of a request for release of documents and receipt in the form annexed
hereto as Exhibit E, release to the Borrower within two (2) Business Days of
receipt of such request, the related Required Loan Documents or the documents
set forth in such request and receipt to the Borrower. All documents so released
to the Borrower shall be held by the Borrower in trust for the benefit of the
Administrative Agent on behalf of the Secured Parties, in accordance with the
terms of this Agreement. The Borrower shall return to the Collateral Custodian
the Required Loan Documents or other such documents (i) promptly upon the
request of the Administrative Agent, or (ii) when the Borrower’s need therefor
in connection with such enforcement or servicing no longer exists, unless the
Loan shall be liquidated or sold, in which case, upon receipt of an additional
request for release of documents and receipt certifying such liquidation or sale
from the Borrower to the Collateral Custodian in the form annexed hereto as
Exhibit E, the Collateral Manager’s request and receipt submitted pursuant to
the first sentence of this subsection shall be released by the Collateral
Custodian to the Borrower.

 

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(b)       Release for Payment. Upon receipt by the Collateral Custodian of the
Collateral Manager’s request for release of documents and receipt in the form
annexed hereto as Exhibit E (which certification shall include a statement to
the effect that all amounts received in connection with such payment or
repurchase have been credited to the Collection Account as provided in this
Agreement), the Collateral Custodian shall promptly release the related Required
Loan Documents to the Borrower.

 

(c)       Limitation on Release. During the occurrence and continuance of an
Event of Default, the foregoing provision with respect to the release to the
Borrower of the Required Loan Documents and documents by the Collateral
Custodian upon request by the Collateral Manager shall be operative only to the
extent that the Administrative Agent have consented to such release. Promptly
after delivery to the Collateral Custodian of any request for release of
documents, the Collateral Manager shall provide notice of the same to the
Administrative Agent.

 

(d)       Shipment of Required Loan Documents. Written instructions as to the
method of shipment and shipper(s) the Collateral Custodian is directed to
utilize in connection with the transmission of Required Loan Documents in the
performance of the Collateral Custodian’s duties hereunder shall be delivered by
the Borrower, the Collateral Manager or the Administrative Agent to the
Collateral Custodian prior to any shipment of any Underlying Instruments
hereunder. The Collateral Manager shall arrange for the provision of such
services at the cost and expense of the Borrower (or, at the Collateral
Custodian’s option, the Borrower shall reimburse the Collateral Custodian for
all reasonable and documented costs and expenses of the Collateral Custodian
consistent with such instructions) and shall maintain such insurance against
loss or damage to the Underlying Instruments as the Collateral Manager deems
appropriate.

 

Section 7.9       Return of Required Loan Documents.

 

The Borrower may, with the prior written consent of the Administrative Agent
(such consent not to be unreasonably withheld), require that the Collateral
Custodian return each Required Loan Document (as applicable), respectively (a)
delivered to the Collateral Custodian in error, (b) as to which the lien on the
Underlying Asset has been so released pursuant to Section 8.2, (c) that has been
the subject of a Discretionary Sale or Substitution pursuant to Section 2.14 or
(d) that is required to be redelivered to the Borrower in connection with the
termination of this Agreement, in each case by submitting to the Collateral
Custodian and the Administrative Agent a written request in the form of Exhibit
E hereto (signed by both the Borrower and the Administrative Agent) specifying
the Collateral to be so returned and reciting that the conditions to such
release have been met (and specifying the Section or Sections of this Agreement
being relied upon for such release). The Collateral Custodian shall upon its
receipt of each such request for return executed by the Borrower and the
Administrative Agent promptly, but in any event within two (2) Business Days,
return the Underlying Instruments so requested to the Borrower.

 

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Section 7.10     Access to Certain Documentation and Information Regarding the
Collateral; Audits.

 

(a)       The Collateral Manager, the Borrower and the Collateral Custodian
shall, at the Borrower’s expense, provide to the Administrative Agent access to
the Underlying Instruments and all other documentation regarding the Collateral
including in such cases where the Administrative Agent is required in connection
with the enforcement of the rights or interests of the Secured Parties, or by
applicable statutes or regulations, to review such documentation, such access
being afforded without charge but only (i) upon two (2) Business Days’ prior
written request, (ii) during normal business hours and (iii) subject to the
Collateral Manager’s and Collateral Custodian’s normal security and
confidentiality procedures; provided that the Administrative Agent may, and
shall upon request of any Lender, permit each Lender to be included on any such
review, and shall use commercially reasonable efforts to schedule any review on
a day when Lenders desiring to participate in such review may be included. From
time to time at the discretion of the Administrative Agent, the Administrative
Agent may review the Collateral Manager’s collection and administration of the
Collateral in order to assess compliance by the Collateral Manager with ARTICLE
VI and may conduct an audit of the Collateral, and Underlying Instruments in
conjunction with such a review. Such review shall be reasonable in scope and
shall be completed in a reasonable period of time. The fees and expenses of the
Collateral Custodian incurred under this Section 7.10 shall be borne by the
Borrower; provided that so long as no Event of Default has occurred and is
continuing, the Borrower shall be responsible for all costs and expenses for
only one such visit per fiscal year.

 

(b)       Without limiting the foregoing provisions of Section 7.10(a), from
time to time on request of the Administrative Agent, the Collateral Custodian
shall permit certified public accountants or other independent auditors
acceptable to the Administrative Agent to conduct a review of the Underlying
Instruments and all other documentation regarding the Collateral. Up to two such
reviews per fiscal year shall be at the expense of the Borrower and additional
reviews in a fiscal year shall be at the expense of the requesting Lender(s);
provided that, after the occurrence and during the continuance of an Event of
Default, any such reviews, regardless of frequency, shall be at the expense of
the Borrower.

 

Section 7.11     Designation of Collateral Administrator.

 

(a)       Initial Collateral Administrator. The role of Collateral Administrator
with respect to the Underlying Instruments shall be conducted by the Person
designated as Collateral Administrator hereunder from time to time in accordance
with this Section 7.11. Until the Administrative Agent shall give to Wells Fargo
Bank, N.A. a Collateral Administrator Termination Notice, Wells Fargo Bank, N.A.
is hereby appointed as, and hereby accepts such appointment and agrees to
perform the duties and obligations of, Collateral Administrator pursuant to the
terms hereof and the Collateral Administration Agreement.

 

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(b)       Successor Collateral Administrator. Upon the Collateral
Administrator’s receipt of a Collateral Administrator Termination Notice from
the Administrative Agent of the designation of a successor Collateral
Administrator pursuant to the provisions of Section 7.15, the Collateral
Administrator agrees that it will terminate its activities as Collateral
Administrator hereunder.

 

Section 7.12     Appointment of Collateral Administrator.

 

Each of the Borrower and the Administrative Agent hereby designate and appoint
the Collateral Administrator to act as its agent and hereby authorizes the
Collateral Administrator to take such actions on its behalf and to exercise such
powers and perform such duties as are expressly granted to the Collateral
Administrator by this Agreement. The Collateral Administrator hereby accepts
such agency appointment to act as Collateral Administrator pursuant to the terms
of this Agreement, until its resignation or removal as Collateral Administrator
pursuant to the terms hereof.

 

Section 7.13     Merger or Consolidation.

 

Any Person (i) into which the Collateral Custodian or Collateral Administrator
may be merged or consolidated, (ii) that may result from any merger or
consolidation to which the Collateral Custodian or Collateral Administrator
shall be a party, or (iii) that may succeed to the properties and assets of the
Collateral Custodian or Collateral Administrator substantially as a whole, which
Person in any of the foregoing cases executes an agreement of assumption to
perform every obligation of Collateral Custodian or Collateral Administrator
hereunder, shall be the successor to the Collateral Custodian or Collateral
Administrator under this Agreement without further act of any of the parties to
this Agreement.

 

Section 7.14     Reserved.

 

Section 7.15     Collateral Administrator Removal.

 

The Collateral Administrator may be removed, with or without cause, by the
Administrative Agent (with the Borrower’s consent, which consent is not to be
unreasonably withheld, delayed or conditioned) by notice given in writing to the
Collateral Administrator (the “Collateral Administrator Termination Notice”);
provided that notwithstanding its receipt of a Collateral Administrator
Termination Notice, the Collateral Administrator shall continue to act in such
capacity until a successor Collateral Administrator has been appointed and has
agreed to act as Collateral Administrator hereunder.

 

Section 7.16     Limitation on Liability.

 

(a)       The Collateral Administrator may conclusively rely on and shall be
fully protected in acting upon any certificate, instrument, opinion, notice,
letter, telegram or other document delivered to it and that in good faith it
reasonably believes to be genuine and that has been signed by the proper party
or parties. The Collateral Administrator may rely conclusively on and shall be
fully protected in acting upon (a) the written instructions of any designated
officer of the Administrative Agent or (b) the verbal instructions of the
Administrative Agent.

 

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(b)       The Collateral Administrator may consult counsel satisfactory to it
and the advice or opinion of such counsel shall be full and complete
authorization and protection in respect of any action taken, suffered or omitted
by it hereunder in good faith and in accordance with the advice or opinion of
such counsel.

 

(c)       The Collateral Administrator shall not be liable for any error of
judgment, or for any act done or step taken or omitted by it, in good faith, or
for any mistakes of fact or law, or for anything that it may do or refrain from
doing in connection herewith except, notwithstanding anything to the contrary
contained herein, in the case of its willful misconduct, or grossly negligent
performance or omission of its duties.

 

(d)       The Collateral Administrator makes no warranty or representation and
shall have no responsibility (except as expressly set forth in this Agreement)
as to the content, enforceability, completeness, validity, sufficiency, value,
genuineness, ownership or transferability of the Collateral, and will not be
required to and will not make any representations as to the validity or value
(except as expressly set forth in this Agreement) of any of the Collateral. The
Collateral Administrator shall not be obligated to take any legal action
hereunder that might in its judgment involve any expense or liability unless it
has been furnished with an indemnity reasonably satisfactory to it.

 

(e)       The Collateral Administrator shall have no duties or responsibilities
except such duties and responsibilities as are specifically set forth in this
Agreement and the Collateral Administration Agreement and no covenants or
obligations shall be implied in this Agreement against the Collateral
Administrator.

 

(f)       The Collateral Administrator shall not be required to expend or risk
its own funds in the performance of its duties hereunder.

 

(g)       It is expressly agreed and acknowledged that the Collateral
Administrator is not guaranteeing performance of or assuming any liability for
the obligations of the other parties hereto or any parties to the Collateral.

 

(h)       The Collateral Administrator shall have no obligation to supervise,
verify, monitor or administer the performance of the Collateral Manager or the
Borrower and shall have no liability for any action taken or omitted by the
Collateral Manager (including any successor to the Collateral Manager or the
Borrower. The Collateral Administrator may act through its agents, attorneys and
custodians in performing any of its duties and obligations under this Agreement,
it being understood by the parties hereto that the Collateral Administrator will
be liable for any acts or omissions of any such agents, attorneys or custodians
acting for and on behalf of the Collateral Administrator. Neither the Collateral
Administrator nor any of its officers, directors, employees or agents shall be
liable, directly or indirectly, for any damages or expenses arising out of the
services performed under this Agreement other than damages or expenses that
result from the gross negligence or willful misconduct of it or them or the
failure to perform materially in accordance with this Agreement.

 

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(i)        In addition to those set forth herein, the Collateral Administrator
shall be entitled to each of the rights, protections, immunities and indemnities
set forth in the Collateral Administration Agreement.

 

Section 7.17     Resignation of the Collateral Administrator.

 

(a)       The Collateral Administrator shall not resign from the obligations and
duties hereby imposed on it except upon (a) ninety (90) days written notice to
the Borrower, Collateral Manager, Administrative Agent and each Lender, or (b)
the Collateral Administrator’s determination that (i) the performance of its
duties hereunder is or becomes impermissible under Applicable Law and (ii) there
is no reasonable action that the Collateral Administrator could take to make the
performance of its duties hereunder permissible under Applicable Law. Any such
determination permitting the resignation of the Collateral Administrator shall
be evidenced as to clause (i) above by an Opinion of Counsel to such effect
delivered to the Administrative Agent. No such resignation shall become
effective until a successor Collateral Administrator shall have assumed the
responsibilities and obligations of the Collateral Administrator hereunder. Upon
the resignation of the Collateral Administrator, the Administrative Agent shall
appoint a successor Collateral Administrator and if it does not do so within
thirty (30) days of the Collateral Administrator’s resignation, the Borrower may
so appoint the successor and if it does not do so within sixty (60) days of the
Collateral Administrator’s resignation, Collateral Administrator may petition a
court of competent jurisdiction for the appointment of a successor.

 

(b)       Upon ninety (90) days prior written notice to the Borrower, Collateral
Manager, Administrative Agent and each Lender, the Collateral Administrator will
have the right to assign its obligations hereunder with the prior written
consent of the Administrative Agent and the Borrower, which consents shall not
be unreasonably withheld, provided, that such assignment must be to a Person
that is a nationally reputable Collateral Administrator with experience
providing services of the type that Collateral Administrator is obligated to
provide hereunder and with respect to loans of the type represented by the
Loans. In addition, the Collateral Administrator may execute any of its duties
under this Agreement by or through agents; provided that the Collateral
Administrator shall remain primarily liable for the due performance of its
duties hereunder.

 

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ARTICLE VIII

SECURITY INTEREST

 

Section 8.1       Grant of Security Interest.

 

(a)       This Agreement constitutes a security agreement and the Advances
effected hereby constitute secured loans by the applicable Lenders to the
Borrower under Applicable Law. For such purpose, the Borrower hereby transfers,
conveys, assigns and grants as of the Effective Date to the Administrative
Agent, as agent for the Secured Parties, a lien and continuing security interest
in all of the Borrower’s right, title and interest in, to and under (in each
case, whether now owned or existing, or hereafter acquired or arising) all
Accounts, General Intangibles, Instruments and Investment Property and any and
all other property of any type or nature owned by it (the “Collateral”),
including but not limited to:

 

(i)        all Loans, Permitted Investments and Equity Securities, all payments
thereon or with respect thereto and all contracts to purchase, commitment
letters, confirmations and due bills relating to any Loans, Permitted
Investments or Equity Securities;

 

(ii)       the Accounts and all Cash and Financial Assets credited thereto and
all income from the investment of funds therein;

 

(iii)      all Transaction Documents to which the Borrower is a party;

 

(iv)      all funds delivered to the Collateral Custodian (directly or through a
bailee);

 

(v)       all Collections, rights in Underlying Assets and Underlying
Instruments, Insurance Policies, all Required Loan Documents and related records
and assets; and

 

(vi)      all accounts, accessions, profits, income benefits, proceeds,
substitutions and replacements, whether voluntary or involuntary, of and to any
of the property of the Borrower described in the preceding clauses;

 

in each case, whether now existing or hereafter arising or acquired by the
Borrower, and wherever the same may be located, to secure the prompt, complete
and indefeasible payment and performance in full when due, whether by lapse of
time, acceleration or otherwise, of the Obligations of the Borrower arising in
connection with this Agreement and each other Transaction Document, whether now
or hereafter existing, due or to become due, direct or indirect, or absolute or
contingent, including all Obligations. Notwithstanding any of the other
provisions set forth in this Agreement, this Agreement shall not constitute a
grant of a security interest in (A) any Excluded Amounts, (B) any amounts
received by the Borrower from an Obligor following the sale of the related Loan
by the Borrower pursuant to Section 2.14 which the Borrower is required to pay
to the purchaser of such Loan, and (C) any property to the extent that such
grant of a security interest is prohibited by any Applicable Law not in effect
as of the date hereof or requires a consent not obtained of any Governmental
Authority pursuant to such Applicable Law, provided that (x) immediately at such
time as the prohibition shall no longer be applicable, such security interest
shall attached immediately to such assets and (y) the Collateral includes any
Proceeds of any such assets. The powers conferred on the Administrative Agent
and the other Secured Parties hereunder are solely to protect the Administrative
Agent’s and the other Secured Parties’ interests in the Collateral and shall not
impose any duty upon the Administrative Agent or any Secured Party to exercise
any such powers. Each of the Administrative Agent and each Secured Party shall
be accountable only for amounts that it actually receives as a result of the
exercise of such powers, and neither they nor any of their officers, directors,
employees or agents shall be responsible to the Borrower for any act or failure
to act hereunder, except for its own gross negligence or willful misconduct. If
the Borrower fails to perform or comply with any of its agreements contained
herein, the Administrative Agent, at its option, but without any obligation to
do so, may itself perform or comply, or otherwise cause performance or
compliance, with such agreement. The expenses of the Administrative Agent
incurred in connection with such performance or compliance, together with
interest thereon at the rate per annum applicable to Advances, shall be payable
by the Borrower to the Administrative Agent on demand and shall constitute
Obligations secured hereby.

 

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(b)       The grant of a security interest under this Section 8.1 does not
constitute and is not intended to result in a creation or an assumption by the
Administrative Agent or any of the other Secured Parties of any obligation of
the Borrower or any other Person in connection with any or all of the Collateral
or under any agreement or instrument relating thereto. Anything herein to the
contrary notwithstanding, (i) the Borrower shall remain liable under any
applicable Collateral to the extent set forth therein to perform all of its
duties and obligations thereunder to the same extent as if this Agreement had
not been executed, (ii) the exercise by the Administrative Agent, as agent for
the Secured Parties, of any of its rights in the Collateral shall not release
the Borrower from any of its duties or obligations under any applicable
Collateral, and (iii) none of the Administrative Agent or any other Secured
Party shall have any obligations or liability under the Collateral by reason of
this Agreement, nor shall the Administrative Agent or any other Secured Party be
obligated to perform any of the obligations or duties of the Borrower thereunder
or to take any action to collect or enforce any claim for payment assigned
hereunder.

 

(c)       Notwithstanding anything to the contrary, the Borrower, the Collateral
Manager, the Administrative Agent, the Collateral Custodian, the Collateral
Administrator and each Lender hereby agree to treat, and to cause each of their
respective Affiliates to treat, each Note as indebtedness for purposes of United
States federal and state income tax or state franchise tax to the extent
permitted by Applicable Law and shall file its tax returns or reports, or cause
its Affiliates to file such tax returns or reports, in a manner consistent with
such treatment.

 

Section 8.2       Release of Lien on Collateral.

 

The Lien created pursuant to this Agreement shall be automatically released with
upon the occurrence of the following: (i) any Collateral expires by its terms
and all amounts in respect thereof have been paid in full by the related Obligor
and deposited in the Collection Account, (ii) such Loan has been the subject of
a Discretionary Sale, Substitution or a sale of a Warranty Loan pursuant to
Section 2.14 or (iii) this Agreement terminates in accordance with Section 12.6.
In connection with any sale of such Collateral, the Administrative Agent, as
agent for the Secured Parties, will after the deposit by the Collateral Manager
of the Proceeds of such sale into the Collection Account, at the sole expense of
the Borrower, execute and deliver to the Borrower any assignments, bills of
sale, termination statements and any other releases and instruments as the
Borrower may reasonably request in order to effect the release and transfer of
such Collateral; provided that, the Administrative Agent, as agent for the
Secured Parties, will make no representation or warranty, express or implied,
with respect to any such Collateral in connection with such sale or transfer and
assignment. Nothing in this section shall diminish the Borrower’s or the
Collateral Manager’s obligations pursuant to Section 2(e) of the Collateral
Management Agreement with respect to the Proceeds of any such sale.

 

Section 8.3       Remedies.

 

Upon the occurrence of an Event of Default, the Administrative Agent and Secured
Parties shall have, with respect to the Collateral granted pursuant to Section
8.1, and in addition to all other rights and remedies available to the
Administrative Agent and Secured Parties under this Agreement or other
Applicable Law, all rights and remedies set forth in Section 9.2.

 

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Section 8.4       Waiver of Certain Laws.

 

The Borrower agrees, to the full extent that it may lawfully so agree, that
neither it nor anyone claiming through or under it will set up, claim or seek to
take advantage of any appraisement, valuation, stay, extension or redemption law
now or hereafter in force in any locality where any Collateral may be situated
in order to prevent, hinder or delay the enforcement or foreclosure of this
Agreement, or the absolute sale of any of the Collateral or any part thereof, or
the final and absolute putting into possession thereof, immediately after such
sale, of the purchasers thereof, and the Borrower, for itself and all who may at
any time claim through or under it, hereby waives, to the full extent that it
may be lawful so to do, the benefit of all such laws, and any and all right to
have any of the properties or assets constituting the Collateral marshaled upon
any such sale, and agrees that the Administrative Agent or any court having
jurisdiction to foreclose the security interests granted in this Agreement may
sell the Collateral as an entirety or in such parcels as the Administrative
Agent or such court may determine.

 

Section 8.5       Power of Attorney.

 

The Borrower hereby irrevocably appoints the Administrative Agent its true and
lawful attorney (with full power of substitution) in its name, place and stead
and at the Borrower’s expense, in connection with the enforcement of the rights
and remedies provided for (and subject to the terms and conditions set forth) in
this Agreement during the continuance of an Event of Default, including the
following powers: (a) to give any necessary receipts or acquittance for amounts
collected or received hereunder, (b) to make all necessary transfers of the
Collateral in connection with any such sale or other disposition made pursuant
hereto, (c) to execute and deliver for value all necessary or appropriate bills
of sale, assignments and other instruments in connection with any such sale or
other disposition, the Borrower hereby ratifying and confirming all that such
attorney (or any substitute) shall lawfully do hereunder and pursuant hereto,
and (d) to sign any agreements, orders or other documents in order to enforce
any and all right hereunder or pursuant to any Transaction Document, including,
without limitation, Section 9 of the Collateral Management Agreement.
Nevertheless, if so requested by the Administrative Agent, the Borrower shall
ratify and confirm any such sale or other disposition by executing and
delivering to the Administrative Agent or such purchaser all proper bills of
sale, assignments, releases and other instruments as may be designated in any
such request.

 

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ARTICLE IX

EVENTS OF DEFAULT

 

Section 9.1       Events of Default.

 

The following events shall be Events of Default (“Events of Default”) hereunder:

 

(a)       any failure by the Borrower to pay any principal when due (including
on the Termination Date);

 

(b)       any failure by the Borrower to pay all accrued and unpaid Interest and
Non-Usage Fees on any Payment Date and such failure shall continue unremedied
for a period of three (3) Business Days; provided only that if such failure to
pay is due to administrative error or omission, such failure to pay shall
constitute an Event of Default if not cured within three (3) Business Days after
the agent responsible for such error or omission receives written notice or has
actual knowledge of such error or omission and so notifies the Borrower, or the
Borrower or the Transferor has actual knowledge of such administrative error or
omission; or

 

(c)       the Borrower fails to make any payments not addressed by Section
9.1(a) through (b) or when due under the Transaction Documents and the same
continues unremedied for a period of thirty (30) days after the earlier to occur
of (i) the date on which written notice of such failure shall have been given to
the Borrower and (ii) the date on which the Borrower acquires knowledge thereof;
or

 

(d)       the failure on the part of the Borrower to observe or perform the
covenants set forth in Sections 5.1(a), 5.1(b), 5.1(e), 5.1(f), 5.1(g), 5.1(h),
5.1(k), 5.1(n), 5.1(p), 5.1(v) or 5.2; provided, that with respect to a failure
on the part of the Borrower to observe or perform the covenant set forth in
Section 5.1(n)(ii), such failure shall not be an Event of Default hereunder if,
(i) such Lien is released within five (5) Business Days after the earlier to
occur of (x) the date on which written notice of such failure requiring the same
to be remedied shall have been given to the Borrower and (y) the date on which
the Borrower acquires knowledge thereof, or (ii) a reserve has been established
for such Lien in accordance with GAAP and such Lien is being diligently
contested in good faith by the Borrower (except to the extent that the amount
secure by such Lien exceeds $500,000); or

 

(e)       the failure on the part of the Collateral Manager to (i) to make any
payment, transfer or deposit into the Collection Account as required by this
Agreement or the Collateral Management Agreement, which failure continues
unremedied for a period of three (3) Business Days, (ii) make any payment when
due (after giving effect to any related grace period) with respect to any
recourse debt or other obligations, which debt or other obligations are in
excess of $2,000,000 in the aggregate, or the occurrence of any event or
condition that has resulted in the acceleration of such recourse debt or other
obligations, whether or not waived, (iii) to deliver on behalf of the Borrower
any Required Reports hereunder on or before the date occurring two (2) Business
Days after the date such report is required to be made or given, as the case may
be, under the terms of this Agreement, or (iv) duly observe or perform in any
material respect any material covenants or agreements of the Collateral Manager
(other than those specifically addressed by a separate Event of Default) set
forth in any Transaction Document to which the Collateral Manager is a party
(including any material delegation of the Collateral Manager’s duties) and the
same continues unremedied for a period of ten (10) days after the earlier to
occur of (x) the date on which written notice of such failure requiring the same
to be remedied shall have been given to the Collateral Manager and (y) the date
on which the Collateral Manager acquires knowledge thereof; or

 

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(f)        any failure on the part of any FS/KKR Party duly to observe or
perform in any material respect any other covenants or agreements of such FS/KKR
Party (other than those specifically addressed by a separate Event of Default),
as applicable, set forth in this Agreement or the other Transaction Documents to
which such FS/KKR Party is a party and the same continues unremedied for a
period of thirty (30) days (if such failure can be remedied) after the earlier
to occur of (i) the date on which written notice of such failure requiring the
same to be remedied shall have been given to the applicable FS/KKR Party and
(ii) the date on which the applicable FS/KKR Party acquires knowledge thereof;
or

 

(g)       the occurrence of an Insolvency Event relating to the Borrower or the
Collateral Manager; or

 

(h)       the occurrence of a Change of Control; or

 

(i)        the Collateral Manager Bylaws shall fail to be in full force and
effect or shall have been amended in a manner that materially and adversely
effects the interests of the Administrative Agent and the Lenders, as determined
in the reasonable judgement of the Collateral Manager, without the prior written
consent of the Administrative Agent (for the avoidance of doubt, it shall not be
an Event of Default if the Collateral Manager Bylaws cease to be in full force
and effect as a result of the Collateral Manager entering into a merger,
consolidation or amalgamation with or into a Permitted BDC so long as the
constitutional documents of such Permitted BDC or any other successor entity
formed by or surviving such merger, consolidation or amalgamation shall not
prejudice the interests of the Administrative Agent and the Lenders in a manner
that is adverse and material to such interests);

 

(j)        the rendering of one or more final judgments, decrees or orders by a
court or arbitrator of competent jurisdiction against any FS/KKR Party for the
payment of money in excess individually or in the aggregate of $1,000,000 (in
the case of the Borrower), the lesser of (x) three percent 3% of the net asset
value of such Person or (y) $5,000,000 (in the case of the Collateral Manager),
and the Borrower, the Collateral Manager or the Transferor, as applicable, shall
not have within thirty (30) days either (i) discharged or provided for the
discharge of any such judgment, decree or order in accordance with its terms or
(ii) perfected a timely appeal of such judgment, decree or order and cause the
execution of same to be stayed during the pendency of the appeal; or

 

(k)       the Borrower shall assign or attempt to assign any of its rights,
obligations or duties under this Agreement without the prior written consent of
the Administrative Agent (such consent to be provided) in the sole and absolute
discretion of the Administrative Agent; or

 

(l)        failure to pay, on the Termination Date, the outstanding principal of
all Advances Outstanding, and all Interest and all fees accrued and unpaid
thereon together with all other Obligations; or

 

(m)      [reserved]; or

 

(n)       the Borrower shall fail to qualify as a bankruptcy-remote entity based
upon the criteria set forth in Section 4.1(t), such that Clifford Chance US LLP
or another law firm reasonably acceptable to the Administrative Agent could no
longer render a customary non-consolidation opinion with respect thereto; or

 

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(o)       any Transaction Document, or any material portion of a Lien granted
thereunder, shall (except in accordance with its terms), in whole or in part,
terminate, cease to be effective or cease to be the legally valid, binding and
enforceable obligation of any FS/KKR Party party thereto, or

 

(p)       any FS/KKR Party shall, directly or indirectly, contest in any manner
the effectiveness, validity, binding nature or enforceability of any Transaction
Document or any lien or security interest thereunder; or

 

(q)       any security interest securing any obligation under any Transaction
Document shall, in whole or in part, cease to be a first priority perfected
security interest (subject only to the Permitted Liens described in clauses (a),
(d) or (f) of the definition of “Permitted Liens”) except as otherwise expressly
permitted to be released in accordance with the applicable Transaction Document;
or

 

(r)        the existence of a Borrowing Base Deficiency which continues
unremedied for three (3) Business Days; or

 

(s)       the Borrower or the Collateral Manager shall become required to
register as an “investment company” within the meaning of the 1940 Act; or

 

(t)        the IRS or any other Governmental Authority shall file notice of a
lien pursuant to Section 6323 of the Code with regard to any assets of the
Borrower, or the Pension Benefit Guaranty Corporation shall file notice of a
lien pursuant to Section 4068 of ERISA with regard to any assets of the Borrower
and such lien shall not have been released within five (5) Business Days, unless
in each case, a reserve has been established therefor in accordance with GAAP
and such lien is being diligently contested in good faith by the Borrower
(except to the extent that the amount secure by such lien exceeds $500,000); or

 

(u)       any representation, warranty or certification made by any FS/KKR Party
in any Transaction Document or in any certificate delivered pursuant to any
Transaction Document shall prove to have been incorrect in any material respect
when made or deemed made (except for such representations and warranties as are
qualified by materiality, a Material Adverse Effect or any similar qualifier,
which representations and warranties shall be true in all respects) and the same
continues unremedied for a period of thirty (30) days (if such failure can be
remedied) after the earlier to occur of (i) the date on which written notice of
such failure requiring the same to be remedied shall have been given to such
FS/KKR Party and (ii) the date on which such FS/KKR Party acquires knowledge
thereof; or

 

(v)       [reserved]; or

 

(w)       [reserved]; or

 

(x)       the Collateral Manager agrees to or otherwise permits to occur any
change in the Collateral Manager Standard or its investment strategy as
identified in Section 5.1(h)(ii) that could, individually or in the aggregate,
reasonably be expected to adversely affect the interests of Administrative Agent
or any Lender without the prior written consent of the Administrative Agent;
provided that no consent shall be required from the Administrative Agent in
connection with any change mandated by Applicable Law or a Governmental
Authority as evidenced by an Opinion of Counsel to that effect delivered to the
Administrative Agent; or

 

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(y)       a failure of the Investment Advisor to maintain at least
$1,000,000,000 of assets under management (measured on the last day of any
fiscal quarter of Collateral Manager and measured, for purposes of this
Agreement, to include all assets of the Investment Advisor); or

 

(z)       any of the following events occur with respect to the Collateral
Manager:

 

(i)       a finding by any court or governmental body of competent jurisdiction
in a final, non-appealable judgment, or an admission by it in a settlement of
any lawsuit, that it has committed fraud, willful misconduct, or a material
violation of applicable securities laws, in each case which has a material
adverse effect on the business of Collateral Manager;

 

(ii)         a conviction of, or plea of guilty or nolo contendere by the senior
officers of the Collateral Manager in respect of a felony in connection with any
activity of any FS/KKR Party or any of its Subsidiaries or Affiliates; or

 

(iii)        the Administrative Agent otherwise has the right to direct that
actions of the Collateral Manager pursuant to Section 9 of the Collateral
Management Agreement; or

 

(aa) (i)(A) the Investment Advisory Agreement is modified or amended, or (B) any
material duties or obligations of the Investment Advisor (or any of its
permitted assigns) thereunder are waived, in either case, in a manner that
materially adversely affects any Secured Party without the prior written consent
of the Administrative Agent, (ii) the Investment Advisory Agreement is assigned,
or any material duties or obligations of the Investment Advisor (or any of its
permitted assigns) thereunder are waived, without giving the Administrative
Agent at least ten (10) Business Days prior written notice, or (iii) any party
to the Investment Advisory Agreement shall be in material breach of any of its
representations, warranties, agreements and/or covenants thereunder, except as a
result of insufficient funds being available to make any payments pursuant to
Section 2.7.

 

Section 9.2       Remedies.

 

(a)       Upon the occurrence of an Event of Default, the Administrative Agent
may, or, at the direction of the Required Lenders shall, by notice to the
Borrower (with a copy to the Collateral Custodian and Collateral Administrator,
it being agreed that the failure to give such notice shall not impair the rights
of the Administrative Agent or the Lenders hereunder), declare (i) the
Termination Date to have occurred and the Notes and all other Obligations to be
immediately due and payable in full (without presentment, demand, protest or
notice of any kind all of which are hereby waived by the Borrower) or (ii) the
Revolving Period End Date to have occurred; provided that in the case of any
event involving the Borrower described in Section 9.1(g), the Notes and all
other Obligations shall be immediately due and payable in full (without
presentment, demand, notice of any kind, all of which are hereby expressly,
waived by the Borrower) and the Termination Date shall be deemed to have
occurred automatically upon the occurrence of any such event. The Administrative
Agent shall forward a copy of any notice delivered to the Borrower pursuant to
this Section 9.2(a) to the Lenders.

 

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(b)       On and after the declaration or occurrence of the Termination Date,
the Administrative Agent, for the benefit of the Secured Parties, shall have, in
addition to all other rights and remedies under this Agreement or otherwise, all
other rights and remedies provided under the UCC of each applicable jurisdiction
and other Applicable Laws, which rights shall be cumulative. The Borrower hereby
agrees that it will, at the Borrower’s expense and at the direction of the
Administrative Agent, forthwith, (i) assemble all or any part of the Loans as
directed by the Administrative Agent and make the same available to the
Administrative Agent at a place to be designated by the Administrative Agent and
(ii) subject to the limitations set forth in Section 9.2(c), without notice
except as specified below, sell the Loans or any part thereof upon such terms,
in such lots, to such buyers, and according to such other instructions as the
Administrative Agent may deem commercially reasonable; provided that,
notwithstanding anything to the contrary set forth herein, the Administrative
Agent will not cause or direct the sale of any Loans or other Collateral on and
after the declaration or occurrence of the Termination Date unless either (i)
the Administrative Agent determines that the anticipated proceeds of a sale or
liquidation of all or any portion of the Collateral (after deducting the
reasonable expenses of such sale or liquidation) would be sufficient to
discharge in full the Obligations (or in the case of a sale of less than all of
the Collateral, an amount sufficient to discharge the amount of the Obligations
attributable to such portion of the Collateral); or (ii) the Required Lenders
direct such sale and liquidation. The Borrower agrees that, to the extent notice
of sale shall be required by law, ten (10) days’ notice to the Borrower of any
sale hereunder shall constitute reasonable notification. All cash Proceeds
received by the Administrative Agent in respect of any sale of, collection from,
or other realization upon, all or any part of the Loans (after payment of any
amounts incurred in connection with such sale) shall be deposited into the
Collection Account and to be applied pursuant to Section 2.8. The occurrence of
a Termination Date as defined in clauses (a) through (c), inclusive, of the
definition of “Termination Date” shall constitute a Termination Date for the
purposes of this Section 9.2.

 

(c)       (i) If the Administrative Agent elects, subject to clause (b) above,
to sell the Collateral in whole, but not in part, at a public or private sale,
the Borrower may exercise its right of first refusal to repurchase the
Collateral, in whole but not in part, prior to such sale at a purchase price
that is not less than the amount of the Obligations as of the date of such
proposed sale. The Borrower’s right of first refusal shall terminate not later
than 4:00 p.m. (New York City Time) on the tenth Business Day following the
Business Day on which the Borrower receives notice of the Administrative Agent’s
election to sell such Collateral, such notice to attach copies of all Eligible
Bids received by the Administrative Agent in respect of such Collateral.

 

(ii)          If the Borrower elects not to exercise its right of first refusal
as provided in clause (i) above, the Administrative Agent shall sell such
Collateral or portion thereof for a purchase price equal to the highest of the
Eligible Bids then received. Any determination of the highest Eligible Bid shall
only consider bids for the same parcels of the Collateral.

 

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(iii)         It is understood that the Borrower may submit its bid for the
Collateral as a combined bid with the bids of other members of a group of
bidders, and shall have the right to find bidders to bid on the Collateral or
any portion thereof.

 

(iv)        It is understood that the Borrower’s right of first refusal shall
apply to each proposed sale of the same parcel of the Collateral.

 

(d)       Notwithstanding anything to the contrary contained herein, the
exercise by the Administrative Agent or the Secured Parties of their rights
hereunder, shall not release the Transferor or the Borrower from any of their
duties or responsibilities with respect to the Collateral except to the extent
expressly provided herein. The Secured Parties, the Administrative Agent, the
Collateral Administrator, the Collateral Custodian shall not have any obligation
or liability with respect to any Collateral, other than to use reasonable care
in the custody and preservation of collateral in such party’s possession, nor
shall any of them be obligated to perform any of the obligations of the Borrower
or the Transferor hereunder.

 

ARTICLE X

INDEMNIFICATION

 

Section 10.1     Indemnities by the Borrower.

 

(a)       Without limiting any other rights that any such Person may have
hereunder or under Applicable Law, the Borrower hereby agrees to indemnify the
Administrative Agent, the Collateral Custodian, the Collateral Administrator,
the Securities Intermediary, the Secured Parties, the Lenders and each of their
respective assigns and directors, officers, employees, agents and advisors
(collectively, the “Indemnified Parties”), forthwith on demand, from and against
any and all damages, losses, claims, liabilities and related costs and expenses,
including reasonable attorneys’ fees and disbursements (limited to one primary
counsel and such other local or special counsel as may be necessary) (all of the
foregoing being collectively referred to as the “Indemnified Amounts”) awarded
against or incurred by such Indemnified Party and other non-monetary damages of
any such Indemnified Party or any of them arising out of or as a result of this
Agreement or having an interest in the Collateral or in respect of any Loan
included in the Collateral, excluding, however, any Indemnified Amounts to the
extent resulting from gross negligence or willful misconduct on the part of any
Indemnified Party. If the Borrower has made any indemnity payment pursuant to
this Section 10.1 and Section 10.3 and such payment fully indemnified the
recipient thereof and the recipient thereafter collects any payments from others
in respect of such Indemnified Amounts then, the recipient shall repay to the
Borrower an amount equal to the amount it has collected from others in respect
of such indemnified amounts. Without limiting the foregoing, the Borrower shall
indemnify each Indemnified Party for Indemnified Amounts (except to the extent
resulting from gross negligence or willful misconduct on the part of such
Indemnified Party) relating to or resulting from:

 

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(i)       any representation or warranty made or deemed made by the Borrower,
the Collateral Manager or any of their respective officers under or in
connection with this Agreement or any other Transaction Document, which shall
have been false or incorrect in any material respect when made or deemed made or
delivered;

 

(ii)      the failure of any Loan acquired on the Effective Date to be an
Eligible Loan as of the Effective Date and the failure of any Loan acquired
after the Effective Date to be an Eligible Loan on the related Funding Date;

 

(iii)     the failure by the Borrower or the Collateral Manager to comply with
any term, provision or covenant contained in this Agreement or any agreement
executed in connection with this Agreement, or with any Applicable Law, with
respect to any Collateral or the nonconformity of any Collateral with any such
Applicable Law;

 

(iv)    the failure to vest and maintain vested in the Administrative Agent, as
agent for the Secured Parties, an undivided interest in the Collateral, together
with all Collections, free and clear of any Lien (other than a Permitted Lien)
whether existing at the time of any Advance or at any time thereafter;

 

(v)     [reserved];

 

(vi)     the failure to file, or any delay in filing, financing statements,
continuation statements or other similar instruments or documents under the UCC
of any applicable jurisdiction or other Applicable Law with respect to any
Collateral, whether at the time of any Advance or at any subsequent time;

 

(vii)   any dispute, claim, offset or defense (other than the discharge in
bankruptcy of the Obligor) of the Obligor to the payment with respect to any
Collateral (including a defense based on the Collateral not being a legal, valid
and binding obligation of such Obligor enforceable against it in accordance with
its terms), or any other claim resulting from the sale of the merchandise or
services related to such Collateral or the furnishing or failure to furnish such
merchandise or services;

 

(viii)       any failure of any FS/KKR Party to perform its duties or
obligations in accordance with the provisions of this Agreement or any of the
other Transaction Documents to which it is a party or any failure by any FS/KKR
Party or any Affiliate thereof to perform its respective duties under any
Collateral;

 

(ix)     any inability to obtain any judgment in, or utilize the court or other
adjudication system of, any state in which an Obligor may be located as a result
of the failure of the Borrower or the Transferor to qualify to do business or
file any notice or business activity report or any similar report;

 

(x)     any action taken by the Borrower or the Collateral Manager in the
enforcement or collection of any Collateral in breach of the servicing and
administration standards set forth in Article VI of this Agreement;

 

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(xi)    any products liability claim or personal injury or property damage suit
or other similar or related claim or action of whatever sort arising out of or
in connection with the Underlying Assets or services that are the subject of any
Collateral;

 

(xii)    the failure by the Borrower to pay when due any Taxes for which the
Borrower is liable, including sales, excise or personal property taxes payable
in connection with the Collateral;

 

(xiii)   any repayment by the Administrative Agent or another Secured Party of
any amount previously distributed in repayment of Advances Outstanding or
payment of Interest or any other amount due hereunder, in each case, which
amount the Administrative Agent or another Secured Party believes in good faith
is required to be repaid;

 

(xiv)   except with respect to funds held in the Collection Account, the
commingling of Collections on the Collateral at any time with other funds;

 

(xv)    any investigation, litigation or proceeding related to this Agreement or
the use of proceeds of Advances or the security interest in the Collateral;

 

(xvi)   any failure by the Borrower to give reasonably equivalent value to the
Transferor or to the applicable third party transferor, in consideration for the
transfer by the Transferor or such third party to the Borrower of any item of
Collateral or any attempt by any Person to void or otherwise avoid any such
transfer under any statutory provision or common law or equitable action,
including any provision of the Bankruptcy Code;

 

(xvii)  the use of the proceeds of any Advance in a manner other than as
provided in this Agreement and the Sale Agreement or any Third Party Sale
Agreement;

 

(xviii) the failure of the Borrower or any of its agents or representatives to
remit to the Collateral Manager or the Administrative Agent, Collections on the
Collateral remitted to the Borrower, the Collateral Manager or any such agent or
representative as provided in this Agreement; or

 

(xix)   the failure of the Collateral Manager to satisfy its obligations under
Section 4(a) of the Collateral Management Agreement.

 

(b)       Any amounts subject to the indemnification provisions of this Section
10.1 shall be paid by the Borrower to the Indemnified Party on the Payment Date
following such Person’s demand therefor, accompanied by a reasonably detailed
description in writing of the related damage, loss, claim, liability and related
costs and expenses.

 

(c)       If for any reason the indemnification provided above in this Section
10.1 is unavailable to the Indemnified Party or is insufficient to hold an
Indemnified Party harmless, then the Borrower shall contribute to the amount
paid or payable by such Indemnified Party as a result of such loss, claim,
damage or liability in such proportion as is appropriate to reflect not only the
relative benefits received by such Indemnified Party on the one hand and the
Borrower on the other hand but also the relative fault of such Indemnified Party
as well as any other relevant equitable considerations; provided that the
Borrower shall not be required to contribute in respect of any Indemnified
Amounts excluded in Section 10.1(a).

 

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(d)       The obligations of the Borrower under this Section 10.1 shall survive
the resignation or removal of the Administrative Agent, the Collateral Manager,
the Collateral Custodian, the Securities Intermediary or the Collateral
Administrator and the termination of this Agreement.

 

Section 10.2     [Reserved].

 

Section 10.3     After-Tax Basis.

 

Indemnification under Section 10.1, Section 2.12, and Section 12.9 shall be on
an after-Tax basis to the extent not applicable to Taxes other than any Taxes
that represent losses, claims, damages, etc. arising from any non-Tax claim.

 

ARTICLE XI

THE ADMINISTRATIVE AGENT

 

Section 11.1 Appointment.

 

Each Secured Party hereby appoints and authorizes the Administrative Agent as
its agent and bailee for purposes of perfection pursuant to the applicable UCC
and hereby further authorizes the Administrative Agent to appoint additional
agents and bailees (including the Collateral Custodian) to act on its behalf and
for the benefit of each of the Secured Parties. Each Secured Party further
authorizes the Administrative Agent to take such action as agent on its behalf
and to exercise such powers under this Agreement and the other Transaction
Documents as are delegated to the Administrative Agent by the terms hereof and
thereof, together with such powers as are reasonably incidental thereto. In
furtherance, and without limiting the generality, of the foregoing, each Secured
Party hereby appoints the Administrative Agent as its agent to execute and
deliver all further instruments and documents, and take all further action that
the Administrative Agent may deem necessary or appropriate or that a Secured
Party may reasonably request in order to perfect, protect or more fully evidence
the security interests granted by the Borrower hereunder, or to enable any of
them to exercise or enforce any of their respective rights hereunder, including
the execution by the Administrative Agent as secured party/assignee of such
financing or continuation statements, or amendments thereto or assignments
thereof, relative to all or any of the Collateral now existing or hereafter
arising, and such other instruments or notices, as may be necessary or
appropriate for the purposes stated hereinabove. The Lenders may direct the
Administrative Agent to take any such incidental action hereunder. With respect
to other actions which are incidental to the actions specifically delegated to
the Administrative Agent hereunder, the Administrative Agent shall not be
required to take any such incidental action hereunder, but shall be required to
act or to refrain from acting (and shall be fully protected in acting or
refraining from acting) upon the direction of the Lenders; provided that the
Administrative Agent shall not be required to take any action hereunder if the
taking of such action, in the reasonable determination of the Administrative
Agent, shall be in violation of any Applicable Law or contrary to any provision
of this Agreement or shall expose the Administrative Agent to liability
hereunder or otherwise. In the event the Administrative Agent requests the
consent of a Lender pursuant to the foregoing provisions and the Administrative
Agent does not receive a consent (either positive or negative) from such Person
within ten (10) Business Days of such Person’s receipt of such request, then
such Lender shall be deemed to have declined to consent to the relevant action.

 

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The Administrative Agent shall also act as the “collateral agent” under the
Transaction Documents, and each of the Lenders hereby irrevocably appoints and
authorizes the Administrative Agent to act as the agent of such Lender for
purposes of acquiring, holding and enforcing any and all Liens on Collateral
granted by any of the FS/KKR Parties to secure any of the Obligations, together
with such powers and discretion as are reasonably incidental thereto. In this
connection, the Administrative Agent, as “collateral agent” and any co-agents,
sub-agents and attorneys-in-fact appointed by the Administrative Agent pursuant
to this Article XI for purposes of holding or enforcing any Lien on the
Collateral (or any portion thereof) granted under the Transaction Documents, or
for exercising any rights and remedies thereunder at the direction of the
Administrative Agent, shall be entitled to the benefits of all provisions of
this Article XI and Articles X and XII (as though such co-agents, sub-agents and
attorneys-in-fact were the “collateral agent” under the Transaction Documents)
as if set forth in full herein with respect thereto.

 

Section 11.2     Standard of Care; Exculpatory Provisions.

 

(a)       The Administrative Agent shall exercise such rights and powers vested
in it by this Agreement and the other Transaction Documents, and use the same
degree of care and skill in their exercise as a prudent person would exercise or
use under the circumstances in the conduct of such person’s own affairs.

 

(b)       The Administrative Agent shall not have any duties or obligations
except those expressly set forth herein and in the other Transaction Documents.
Without limiting the generality of the foregoing, the Administrative Agent:

 

(i)       shall not be subject to any fiduciary or other implied duties,
regardless of whether a Default has occurred and is continuing;

 

(ii)      shall not have any duty to take any discretionary action or exercise
any discretionary powers, except discretionary rights and powers expressly
contemplated hereby or by the other Transaction Documents that the
Administrative Agent is required to exercise as directed in writing by the
Required Lenders (or such other number or percentage of the Lenders as shall be
expressly provided for herein or in the other Transaction Documents), provided
that the Administrative Agent shall not be required to take any action that, in
its opinion or the opinion of its counsel, may expose the Administrative Agent
to liability or that is contrary to any Transaction Document or Applicable Law;
and

 

(iii)    shall not, except as expressly set forth herein and in the other
Transaction Documents, have any duty to disclose, and shall not be liable for
the failure to disclose, any information relating to the Borrower or any of its
Affiliates that is communicated to or obtained by the Person serving as the
Administrative Agent or any of its Affiliates in any capacity.

 

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(c)       The Administrative Agent shall not be liable for any action taken or
not taken by it (i) with the consent or at the request of the Required Lenders
(or such other number or percentage of the Lenders as shall be necessary, or as
the Administrative Agent shall believe in good faith shall be necessary) or (ii)
in the absence of its own gross negligence or willful misconduct as determined
by a court of competent jurisdiction by final nonappealable judgment. The
Administrative Agent shall be deemed not to have knowledge of any Default unless
and until notice describing such Default is given to the Administrative Agent by
the Collateral Manager, the Borrower or a Lender.

 

(d)       The Administrative Agent shall not be responsible for or have any duty
to ascertain or inquire into (i) any statement, warranty or representation made
in or in connection with this Agreement or any other Transaction Document, (ii)
the contents of any certificate, report or other document delivered hereunder or
thereunder or in connection herewith or therewith, (iii) the performance or
observance of any of the covenants, agreements or other terms or conditions set
forth herein or therein or the occurrence of any Default, (iv) the validity,
enforceability, effectiveness or genuineness of this Agreement, any other
Transaction Document or any other agreement, instrument or document or (v) the
satisfaction of any condition set forth in Article III or elsewhere herein,
other than to confirm receipt of items expressly required to be delivered to the
Administrative Agent.

 

Section 11.3     Administrative Agent’s Reliance, Etc.

 

Neither the Administrative Agent nor any of its Related Parties shall be liable
for any action taken or omitted to be taken by it or them as Administrative
Agent under or in connection with this Agreement or any of the other Transaction
Documents, except for its or their own gross negligence or willful misconduct.
Without limiting the foregoing, the Administrative Agent: (i) may consult with
legal counsel (including counsel for any FS/KKR Party with the consent of such
counsel), independent public accountants and other experts selected by it and
shall not be liable for any action taken or omitted to be taken in good faith by
it in accordance with the advice of such counsel, accountants or experts; (ii)
makes no warranty or representation and shall not be responsible for any
statements, warranties or representations made by any other Person in or in
connection with this Agreement; (iii) shall not have any duty to ascertain or to
inquire as to the performance or observance of any of the terms, covenants or
conditions of this Agreement or any of the other Transaction Documents on the
part of any FS/KKR Party or to inspect the property (including the books and
records) of any FS/KKR Party; (iv) shall not be responsible for the due
execution, legality, validity, enforceability, genuineness, sufficiency or value
of this Agreement, any of the other Transaction Documents or any other
instrument or document furnished pursuant hereto or thereto; (v) may rely upon
and shall incur no liability under or in respect of this Agreement or any of the
other Transaction Documents by acting upon any notice (including notice by
telephone), consent, certificate or other instrument or writing (which may be by
facsimile) believed by it to be genuine and signed or sent by the proper party
or parties, or upon any statement made to it orally or by telephone and believed
by it to have been made by the proper Person. In determining compliance with any
condition hereunder to the making of an Advance, that by its terms must be
fulfilled to the satisfaction of a Lender, the Administrative Agent may presume
that such condition is satisfactory to such Lender unless the Administrative
Agent shall have received notice to the contrary from such Lender prior to the
making of such Advance.

 

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Section 11.4    Credit Decision with Respect to the Administrative Agent.

 

Each Lender acknowledges that it has, independently and without reliance upon
the Administrative Agent, or any of the Administrative Agent’s Affiliates, and
based upon such documents and information as it has deemed appropriate, made its
own evaluation and decision to enter into this Agreement and the other
Transaction Documents to which it is a party. Each Lender also acknowledges that
it will, independently and without reliance upon the Administrative Agent, or
any of the Administrative Agent’s Affiliates, and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
decisions in taking or not taking action under this Agreement and the other
Transaction Documents to which it is a party.

 

Section 11.5     Indemnification of the Administrative Agent.

 

Each Lender agrees to indemnify the Administrative Agent (to the extent not
reimbursed by the Borrower), ratably in accordance with its Pro Rata Share from
and against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements of any kind or
nature whatsoever which may be imposed on, incurred by, or asserted against the
Administrative Agent in any way relating to or arising out of this Agreement or
any of the other Transaction Documents, or any action taken or omitted by the
Administrative Agent hereunder or thereunder; provided that, the Lenders shall
not be liable for any portion of such liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements resulting
from the Administrative Agent’s gross negligence or willful misconduct. The
payment of amounts under this Section 11.5 shall be on an after-Tax basis.
Without limitation of the foregoing, each Lender agrees to reimburse the
Administrative Agent, ratably in accordance with its Pro Rata Share promptly
upon demand for any out-of-pocket expenses (including counsel fees) incurred by
the Administrative Agent in connection with the administration, modification,
amendment or enforcement (whether through negotiations, legal proceedings or
otherwise) of, or legal advice in respect of rights or responsibilities under,
this Agreement and the other Transaction Documents, to the extent that such
expenses are incurred in the interests of or otherwise in respect of the Lenders
hereunder and/or thereunder and to the extent that the Administrative Agent is
not reimbursed for such expenses by the Borrower.

 

Section 11.6     Successor Administrative Agent.

 

The Administrative Agent may resign as Administrative Agent upon thirty (30)
days’ notice to the Lenders. If the Administrative Agent resigns under this
Agreement, the Required Lenders shall appoint from among the Lenders a successor
administrative agent for the Lenders, with the approval of the Borrower at all
times other than during the existence of a Default or an Event of Default (which
approval of the Borrower shall not be unreasonably withheld, conditioned or
delayed). Upon the acceptance of its appointment as successor administrative
agent hereunder, the Person acting as such successor administrative agent shall
succeed to all the rights, powers and duties of the retiring Administrative
Agent and the term “Administrative Agent” means such successor administrative
agent and the retiring Administrative Agent’s appointment, powers and duties as
Administrative Agent shall be terminated. After any retiring Administrative
Agent’s resignation or removal hereunder as Administrative Agent, the provisions
of this ARTICLE XI and Sections 12.9 and 12.11 shall continue to inure to its
benefit as to any actions taken or omitted to be taken by it while it was
Administrative Agent under this Agreement.

 

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Section 11.7     Delegation of Duties.

 

The Administrative Agent may perform any and all of its duties and exercise its
rights and powers hereunder or under any other Transaction Document by or
through any one or more sub-agents appointed by the Administrative Agent. The
Administrative Agent and any such sub-agent may perform any and all of its
duties and exercise its rights and powers by or through their respective Related
Parties. The exculpatory provisions of this Article shall apply to any such
sub-agent and to the Related Parties of the Administrative Agent and any such
sub-agent, and shall apply to their respective activities in connection with the
syndication of the credit facility as well as activities as Administrative
Agent.

 

Section 11.8     Payments by the Administrative Agent.

 

Unless specifically allocated to a specific Lender pursuant to the terms of this
Agreement, all amounts received by the Administrative Agent on behalf of the
Lenders shall be paid by the Administrative Agent to the Lenders in accordance
with their respective Pro Rata Shares in the applicable Advances Outstanding, or
if there are no Advances Outstanding in accordance with their most recent
Commitments, on the Business Day received by the Administrative Agent, unless
such amounts are received after 12:00 noon (New York City Time) on such Business
Day, in which case the Administrative Agent shall use its reasonable efforts to
pay such amounts to each Lender on such Business Day, but, in any event, shall
pay such amounts to such Lender not later than the following Business Day. The
Administrative Agent shall pay amounts owing to each Lender in accordance with
the written instructions delivered by each such Lender to the Administrative
Agent.

 

Section 11.9 Collateral Matters.

 

Each of the Lenders irrevocably authorize the Administrative Agent, at its
option and in its discretion:

 

(a)       to release any Lien on any Collateral granted to or held by the
Administrative Agent, for the ratable benefit of the Secured Parties, under any
Transaction Document (i) upon the termination of the Commitment and payment in
full of all Obligations (other than contingent indemnification obligations),
(ii) that is sold or to be sold as part of or in connection with any sale
permitted hereunder or under any other Transaction Document, or (iii) if
approved, authorized or ratified in writing in accordance with Section 12.1; and

 

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(b)       to subordinate or release any Lien on any Collateral granted to or
held by the Administrative Agent under any Transaction Document to the holder of
any other Lien on the Collateral.

 

Upon request by the Administrative Agent at any time, the Required Lenders will
confirm in writing the Administrative Agent’s authority to release or
subordinate its interest in particular types or items of property pursuant to
this Section 11.9. In each case as specified in this Section 11.9, the
Administrative Agent will, at the Borrower’s expense, execute and deliver to the
applicable FS/KKR Party such documents as such FS/KKR Party may reasonably
request to evidence the release of such item of Collateral from the assignment
and security interest granted under the Transaction Documents or to subordinate
its interest in such item, in each case in accordance with the terms of the
Transaction Documents and this Section 11.9.

 

ARTICLE XII

MISCELLANEOUS

 

Section 12.1     Amendments and Waivers.

 

Except as provided in this Section 12.1, no amendment, waiver or other
modification of any provision of this Agreement shall be effective without the
written agreement of the Borrower, the Administrative Agent and the Required
Lenders; provided, that no amendment, waiver or consent shall:

 

(a)       increase the Commitment of any Lender or the amount of Advances of any
Lender, in any case, without the written consent of such Lender;

 

(b)       waive, extend or postpone any date fixed by this Agreement or any
other Transaction Document for any payment or mandatory prepayment of principal,
interest, fees or other amounts due to the Lenders (or any of them) or any
scheduled or mandatory reduction of the Commitments hereunder or under any other
Transaction Document without the written consent of each Lender directly and
adversely affected thereby;

 

(c)       reduce the principal of, or the rate of interest specified herein on,
any Advance or Obligation, or any fees or other amounts payable hereunder or
under any other Transaction Document without the written consent of each Lender
directly and adversely affected thereby;

 

(d)       change Section 2.7, 2.8 or any related definitions or provisions in a
manner that would alter the order of application of proceeds or would alter the
pro rata sharing of payments required thereby, in each case, without the written
consent of each Lender directly and adversely affected thereby;

 

(e)       change any provision of this Section or reduce the percentages
specified in the definition of “Required Lenders” or any other provision hereof
specifying the number or percentage of Lenders required to amend, waive or
otherwise modify any rights hereunder or make any determination or grant any
consent hereunder, without the written consent of each Lender directly affected
thereby;

 

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(f)       consent to the assignment or transfer by any FS/KKR Party of such
FS/KKR Party’s rights and obligations under any Transaction Document to which it
is a party (except as expressly permitted hereunder), in each case, without the
written consent of each Lender;

 

(g)       make any modification to the definition of (i) “Borrowing Base”,
“Availability”, “Advance Rate”, “Adjusted Borrowing Value”, “Dollar Equivalent”
or “Excess Concentration Amount”, in each case, which would have a material
adverse effect on the calculation of the Borrowing Base or the Availability or
(ii) “Eligible Loan” in a manner that would reduce or make less restrictive the
requirements for a Loan to be an Eligible Loan, in either case without the
written consent of each Lender;

 

(h)       release all or substantially all of the Collateral or release any
Transaction Document (other than as specifically permitted or contemplated in
this Agreement or the applicable Transaction Document) without the written
consent of each Lender; or

 

(i)       provide for any additional duties or obligations to be performed by
the Collateral Custodian or the Collateral Administrator or modify the rights of
the Collateral Custodian or the Collateral Administrator hereunder in any manner
materially adverse to the Collateral Custodian or the Collateral Administrator
without the written consent of the Collateral Custodian or the Collateral
Administrator;

 

provided further, that (i) any amendment of the Agreement that is solely for the
purpose of adding a Lender or waiving, extending or postponing any fee to the
Administrative Agent may be effected without the written consent of any Lender
and, at any time that an Event of Default has occurred and is continuing, the
Borrower, (ii) no such amendment, waiver or modification materially adversely
affecting the rights or obligations of the Collateral Custodian or the
Collateral Administrator shall be effective without the written agreement of
such Person, (iii) no amendment, waiver or consent shall, unless in writing and
signed by the Administrative Agent, affect the rights or duties of the
Administrative Agent under this Agreement or any other Transaction Document,
(iv) any amendment of the Agreement that a Lender is advised by its legal or
financial advisors to be necessary or desirable in order to avoid the
consolidation of the Borrower with such Lender for accounting purposes may be
effected without the written consent of the Borrower or any other Lender and (v)
the Administrative Agent and the Borrower shall be permitted to amend any
provision of the Transaction Documents (and such amendment shall become
effective without any further action or consent of any other party to any
Transaction Document) if the Administrative Agent and the Borrower shall have
jointly identified a facial error or any error or omission of a technical or
immaterial nature in any such provision. Notwithstanding anything to the
contrary herein, no Defaulting Lender shall have any right to approve or
disapprove any amendment, waiver or consent hereunder, except that the
Commitment of such Lender may not be increased or extended without the consent
of such Lender.

 

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Section 12.2     Notices, Etc.

 

(a)       Except in the case of notices and other communications expressly
permitted to be given by telephone (and subject to paragraph (b) below), all
notices and other communications provided for herein shall be in writing and
shall be delivered by hand or overnight courier service, mailed by certified or
registered mail or sent by telecopy, as follows:

 

(i)       if to the Borrower, the Collateral Manager, Ally Bank, Collateral
Administrator, the Collateral Custodian, as set forth on Annex A;

 

(ii)      if to the Administrative Agent, to Ally Bank, , as set forth on Annex
A;

 

(iii)     if to any other Lender, to it at its address (or telecopy number) set
forth in its Administrative Questionnaire.

 

(b)       Notices and other communications to the Lenders hereunder may be
delivered or furnished by electronic communication (including e-mail and
internet or intranet websites) pursuant to procedures approved by the
Administrative Agent; provided that, the foregoing shall not apply to notices to
any Lender pursuant to Article II if such Lender has notified the Administrative
Agent that it is incapable of receiving notices under such Article by electronic
communication. The Administrative Agent or the Borrower may, in its discretion,
agree to accept notices and other communications to it hereunder by electronic
communications pursuant to procedures approved by it; provided that, approval of
such procedures may be limited to particular notices or communications. Unless
the Administrative Agent otherwise prescribes, (i) notices and other
communications sent to an e-mail address shall be deemed received upon the
sender’s receipt of an acknowledgement from the intended recipient (such as by
the “return receipt requested” function, as available, return e-mail or other
written acknowledgement); provided that, if such notice or other communication
is not sent during the normal business hours of the recipient, such notice or
communication shall be deemed to have been sent at the opening of business on
the next Business Day for the recipient, and (ii) notices or communications
posted to an internet or intranet website shall be deemed received upon the
deemed receipt by the intended recipient at its e-mail address as described in
the foregoing clause (i) of notification that such notice or communication is
available and identifying the website address therefor.

 

(c)       The Borrower agrees that the Administrative Agent may, but shall not
be obligated to, make Syndicate Communications available to the Lenders by
posting such Syndicate Communications on the Platform. The Platform is provided
by the Administrative Agent “as is” and “as available”. The Agent Parties
(defined below) do not warrant the accuracy or completeness of the Syndicate
Communications or the adequacy of the Platform and expressly disclaim liability
for errors or omissions in the Syndicate Communications. No warranty of any
kind, express, implied or statutory, including any warranty of merchantability,
fitness for a particular purpose, non-infringement of third-party rights or
freedom from viruses or other code defects, is made by any Agent Party in
connection with the Syndicate Communications or the Platform. In no event shall
the Administrative Agent or any of its Affiliates (collectively, the “Agent
Parties”) have any liability to the Borrower, any Lenders or any other Person
for losses, claims, damages, liabilities or expenses of any kind (whether in
tort, contract or otherwise) arising out of the Borrower’s or any Agent Party’s
transmission or posting of Obligor materials through the Platform or via email,
except to the extent such losses, claims, damages, liabilities or expenses are
determined by a court of competent jurisdiction by a final and non-appealable
judgment to have resulted from the gross negligence or willful misconduct of
such Agent Party; provided, however, that in no event shall any Agent Party have
any liability to Borrower, any Lender or any other Person for indirect,
incidental, consequential or punitive damages (as opposed to direct or actual
damages).

 

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(d)       Notwithstanding the foregoing, the Borrower hereby acknowledges that
certain of the Lenders (each, a “Public Lender”) may have personnel who do not
wish to receive material non-public information with respect to the Borrower or
its Affiliates, or the respective securities of any of the foregoing, and who
may be engaged in investment and other market-related activities with respect to
such Person’s securities. The Borrower hereby agrees that (i) all Syndicate
Communications that are not to be made available to Public Lenders shall be
clearly and conspicuously marked “PRIVATE” which, at a minimum, shall mean that
the word “PRIVATE” shall appear prominently on the first page thereof; (ii)
unless marking Syndicate Communications “PRIVATE”, the Borrower shall be deemed
to authorize the Administrative Agent and the Lenders to treat such Syndicate
Communications as not containing any material non-public information with
respect to the Borrower or any Affiliate thereof or their respective securities
for purposes of United States Federal and state securities laws; (iii) unless
marked “PRIVATE”, all Syndicate Communications are permitted to be made
available through the Platform; and (iv) the Administrative Agent shall be
entitled to treat any Syndicate Communications that are marked “PRIVATE” as
being suitable only for posting on a portion of the Platform designated as
“Non-Public Information”.

 

Section 12.3    Ratable Payments.

 

If any Secured Party, whether by setoff or otherwise, has payment made to it
with respect to any portion of the Obligations owing to such Secured Party
(other than payments received pursuant to Section 10.1) in a greater proportion
than that received by any other Secured Party, such Secured Party agrees,
promptly upon demand, to purchase for cash without recourse or warranty a
portion of the Obligations held by the other Secured Parties so that after such
purchase each Secured Party will hold its ratable proportion of the Obligations;
provided that if all or any portion of such excess amount is thereafter
recovered from such Secured Party, such purchase shall be rescinded and the
purchase price restored to the extent of such recovery, but without interest.

 

Section 12.4     No Waiver; Remedies.

 

No failure on the part of the Administrative Agent, the Collateral Custodian,
the Collateral Administrator or a Secured Party to exercise, and no delay in
exercising, any right or remedy hereunder shall operate as a waiver thereof; nor
shall any single or partial exercise of any right or remedy hereunder preclude
any other or further exercise thereof or the exercise of any other right. The
rights and remedies herein provided are cumulative and not exclusive of any
rights and remedies provided by law.

 

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Section 12.5     Binding Effect; Benefit of Agreement.

 

This Agreement shall be binding upon and inure to the benefit of the FS/KKR
Parties, the Administrative Agent, the Collateral Custodian, the Collateral
Administrator, the Secured Parties and their respective successors and permitted
assigns. Each Indemnified Party and each Indemnified Party shall be an express
third party beneficiary of this Agreement.

 

Section 12.6     Term of this Agreement.

 

This Agreement, including the Borrower’s representations and covenants set forth
in Articles IV and V, create and constitute the continuing obligation of the
parties hereto in accordance with its terms, and shall remain in full force and
effect during the Covenant Compliance Period; provided that the rights and
remedies with respect to any breach of any representation and warranty made or
deemed made by the Borrower pursuant to Articles IV and V, the provisions,
including the indemnification and payment provisions, of Article X, Section
2.13, Section 12.9, Section 12.10 and Section 12.11, shall be continuing and
shall survive any termination of this Agreement.

 

Section 12.7     Governing Law; Jury Waiver.

 

THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES UNDER THIS
AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE
WITH, THE LAW OF THE STATE OF NEW YORK. EACH OF THE PARTIES HERETO WAIVES, TO
THE FULLEST EXTENT PERMITTED BY LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN
RESPECT OF ANY LITIGATION ARISING DIRECTLY OR INDIRECTLY OUT OF, UNDER OR IN
CONNECTION WITH THIS AGREEMENT OR ANY OF THE TRANSACTIONS CONTEMPLATED
HEREUNDER.

 

Section 12.8     Consent to Jurisdiction; Waivers.

 

Each of the Borrower, the Lenders, Collateral Custodian, the Collateral
Administrator and the Administrative Agent hereby irrevocably and
unconditionally:

 

(a)       submits for itself and its property in any legal action or proceeding
relating to this Agreement and the other Transaction Documents to which it is a
party, or for recognition and enforcement of any judgment in respect thereof, to
the non-exclusive general jurisdiction of the courts of the State of New York
sitting in New York City, the courts of the United States of America for the
Southern District of New York, and appellate courts from any thereof;

 

(b)       consents that any such action or proceeding may be brought in such
courts and waives any objection that it may now or hereafter have to the venue
of any such action or proceeding in any such court or that such action or
proceeding was brought in an inconvenient forum and agrees not to plead or claim
the same;

 

(c)       agrees that service of process (other than with respect to the
Collateral Custodian and Collateral Administrator) in any such action or
proceeding may be effected by mailing a copy thereof by registered or certified
mail (or any substantially similar form of mail), postage prepaid, to its
address as provided in Section 12.2;

 

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(d)       agrees that nothing herein shall affect the right to effect service of
process in any other manner permitted by law or shall limit the right to sue in
any other jurisdiction; and

 

(e)       waives, to the maximum extent not prohibited by law, any right it may
have to claim or recover in any legal action or proceeding referred to in this
Section 12.8 any special, exemplary, punitive or consequential damages.

 

Section 12.9     Costs and Expenses.

 

(a)       In addition to the rights of indemnification granted to the
Indemnified Parties under ARTICLE X hereof, the Borrower agrees to pay on demand
all reasonable out-of-pocket costs and expenses of the Administrative Agent, the
Collateral Custodian, the Securities Intermediary, the Collateral Administrator
and the Secured Parties incurred in connection with the preparation, execution,
delivery, administration (including periodic auditing), renewal, amendment or
modification of, or any waiver or consent issued in connection with, this
Agreement and the other documents to be delivered hereunder or in connection
herewith, including the reasonable fees and out-of-pocket expenses of one
primary counsel and such other local or special counsel as may be necessary for
the Administrative Agent, the Collateral Custodian, the Securities Intermediary,
the Collateral Administrator and the Secured Parties with respect thereto and
with respect to advising the Administrative Agent, the Collateral Custodian, the
Securities Intermediary, the Collateral Administrator and the Secured Parties as
to their respective rights and remedies under this Agreement and the other
documents to be delivered hereunder or in connection herewith, and all costs and
expenses, if any (including reasonable counsel fees and expenses), incurred by
the Administrative Agent, the Collateral Custodian, the Securities Intermediary,
the Collateral Administrator or the Secured Parties in connection with the
enforcement of this Agreement by such Person and the other documents to be
delivered hereunder or in connection herewith.

 

(b)       The Borrower shall pay on the Payment Date following receipt of a
request therefor, all other costs and expenses that have been invoiced at least
two (2) Business Days prior to such Payment Date and incurred by the
Administrative Agent and the Secured Parties, in each case in connection with
periodic audits of the FS/KKR Parties’ books and records.

 

Section 12.10   No Proceedings.

 

(a)       Each of the parties hereto (other than the Administrative Agent)
hereby agrees that it will not institute against, or join any other Person in
instituting against, the Borrower any Insolvency Proceeding so long as there
shall not have elapsed one year and one day (or such longer preference period as
shall then be in effect) since the end of the Covenant Compliance Period.

 

(b)       The provisions of this Section 12.10 shall survive the termination
hereof.

 

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Section 12.11   Recourse Against Certain Parties.

 

(a)       No recourse under or with respect to any obligation, covenant or
agreement (including the payment of any fees or any other obligations) of the
Administrative Agent, any Secured Party, or any FS/KKR Party as contained in
this Agreement or any other agreement, instrument or document entered into by it
pursuant hereto or in connection herewith shall be had against any incorporator,
affiliate, stockholder, member, officer, partner, employee, administrator,
partner, organizer or director of the Administrative Agent, any Secured Party,
or any FS/KKR Party by the enforcement of any assessment or by any legal or
equitable proceeding, by virtue of any statute or otherwise; it being expressly
agreed and understood that the agreements of the Administrative Agent, any
Secured Party, or any FS/KKR Party contained in this Agreement and all of the
other agreements, instruments and documents entered into by it pursuant hereto
or in connection herewith are, in each case, solely the corporate obligations of
the Administrative Agent, any Secured Party, or any FS/KKR Party, and that no
personal liability whatsoever shall attach to or be incurred by the
Administrative Agent, any Secured Party, any FS/KKR Party or any incorporator,
stockholder, affiliate, officer, partner, employee or director of the
Administrative Agent, any Secured Party, or any FS/KKR Party under or by reason
of any of the obligations, covenants or agreements of the Administrative Agent,
any Secured Party, or any FS/KKR Party contained in this Agreement or in any
other such instruments, documents or agreements, or that are implied therefrom,
and that any and all personal liability of the Administrative Agent, any Secured
Party, or any FS/KKR Party and each incorporator, stockholder, affiliate,
officer, partner, employee administrator, partner, organizer or director of the
Administrative Agent, any Secured Party or any FS/KKR Party, or any of them, for
breaches by the Administrative Agent, any Secured Party, or any FS/KKR Party of
any such obligations, covenants or agreements, which liability may arise either
at common law or at equity, by statute or constitution, or otherwise, is hereby
expressly waived as a condition of and in consideration for the execution of
this Agreement; provided that the foregoing non-recourse provisions shall in no
way affect any rights the Secured Parties might have against any incorporator,
affiliate, stockholder, officer, employee or director of any FS/KKR Party to the
extent of any fraud, misappropriation, embezzlement or any other financial crime
constituting a felony by such Person.

 

(b)       Notwithstanding any contrary provision set forth herein, no claim may
be made by any FS/KKR Party or any other Person against the Administrative Agent
and the Secured Parties or their respective Affiliates, directors, officers,
employees, attorneys or agents for any special, indirect, consequential or
punitive damages in respect to any claim for breach of contract or any other
theory of liability arising out of or related to the transactions contemplated
by this Agreement, or any act, omission or event occurring in connection
therewith; and each FS/KKR Party hereby waives, releases, and agrees not to sue
upon any claim for any such damages, whether or not accrued and whether or not
known or suspected.

 

(c)       No obligation or liability to any Obligor under any of the Loans is
intended to be assumed by the Administrative Agent and the Secured Parties under
or as a result of this Agreement and the transactions contemplated hereby.

 

(d)       The provisions of this Section 12.11 shall survive the termination of
this Agreement.

 

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Section 12.12   Protection of Right, Title and Interest in the Collateral;
Further Action Evidencing Advances.

 

(a)       [Reserved].

 

(b)       The Borrower agrees that from time to time, at its expense, it will
promptly authorize, execute and deliver all instruments and documents, and take
all actions, that the Administrative Agent may reasonably request in order to
perfect, protect or more fully evidence the security interest granted in the
Collateral, or to enable the Administrative Agent or the Secured Parties to
exercise and enforce their rights and remedies hereunder or under any other
Transaction Document.

 

(c)       If the Borrower fails to perform any of its obligations hereunder, the
Administrative Agent or any Secured Party may (but shall not be required to)
perform, or cause performance of, such obligation; and the Administrative
Agent’s or such Secured Party’s costs and expenses incurred in connection
therewith shall be payable by the Borrower as provided in ARTICLE X. The
Borrower irrevocably authorizes the Administrative Agent and appoints the
Administrative Agent as its attorney-in-fact to act on behalf of the Borrower
(i) to execute on behalf of the Borrower as debtor and to file financing
statements necessary or desirable in the Administrative Agent’s sole discretion
to perfect and to maintain the perfection and priority of the interest of the
Secured Parties in the Collateral, including those that describe the Collateral
as “all assets,” or words of similar effect, and (ii) to file a carbon,
photographic or other reproduction of this Agreement or any financing statement
with respect to the Collateral as a financing statement in such offices as the
Administrative Agent in its sole discretion deems necessary or desirable to
perfect and to maintain the perfection and priority of the interests of the
Secured Parties in the Collateral. This appointment is coupled with an interest
and is irrevocable.

 

(d)       Without limiting the generality of the foregoing, the Borrower will,
not earlier than six (6) months and not later than three (3) months prior to the
fifth anniversary of the date of filing of the financing statement referred to
in Section 3.1(k) or any other financing statement filed pursuant to this
Agreement or in connection with any Advance hereunder, unless the Covenant
Compliance Period shall have ended, authorize, execute and deliver and file or
cause to be filed an appropriate continuation statement with respect to such
financing statement.

 

Section 12.13 Confidentiality.

 

(a)       Each of the Administrative Agent, the Secured Parties, the Collateral
Custodian, the Collateral Administrator and each FS/KKR Party shall maintain and
shall cause each of its employees and officers to maintain the confidentiality
of the Agreement and all information with respect to the other parties,
including all information regarding the business and beneficial ownership of the
Borrower and the Collateral Manager hereto and their respective businesses
obtained by it or them in connection with the structuring, negotiating and
execution of the transactions contemplated herein, except that each such party
and its officers and employees may (i) disclose such information to its external
accountants, investigators, auditors, attorneys, investors, potential investors
or other agents, engaged by such party in connection with any due diligence or
comparable activities with respect to the transactions and Loans contemplated
herein and the agents of such Persons (“Excepted Persons”); provided that each
Excepted Person shall, as a condition to any such disclosure, agree for the
benefit of the Administrative Agent, the Secured Parties, the Collateral
Custodian, the Collateral Administrator and the FS/KKR Parties that such
information shall be used solely in connection with such Excepted Person’s
evaluation of, or relationship with, the Borrower and its affiliates, (ii)
disclose the existence of the Agreement, but not the financial terms thereof,
(iii) disclose such information as is required by Applicable Law and (iv)
disclose the Agreement and such information in any suit, action, proceeding or
investigation (whether in law or in equity or pursuant to arbitration) involving
any of the Transaction Documents for the purpose of defending itself, reducing
its liability, or protecting or exercising any of its claims, rights, remedies,
or interests under or in connection with any of the Transaction Documents. It is
understood that the financial terms that may not be disclosed except in
compliance with this Section 12.13(a) include all fees and other pricing terms,
and all Events of Default, and priority of payment provisions.

 

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(b)       Anything herein to the contrary notwithstanding, each FS/KKR Party
hereby consents to the disclosure of any nonpublic information with respect to
it (i) to the Administrative Agent, the Collateral Custodian, the Collateral
Administrator or the Secured Parties by each other, (ii) by the Administrative
Agent, the Collateral Custodian, the Collateral Administrator and the Secured
Parties to any prospective or actual assignee or participant of any of them
provided such Person agrees to hold such information confidential in accordance
with the terms hereof or (iii) by the Administrative Agent, and the Secured
Parties to any Rating Agency, any commercial paper dealer or other provider of a
surety, guaranty or credit or liquidity enhancement to any Lender, and to any
officers, directors, employees, outside accountants and attorneys of any of the
foregoing, provided each such Person is informed of the confidential nature of
such information and agrees to maintain the confidentiality thereof. In
addition, the Secured Parties and the Administrative Agent, may disclose any
such nonpublic information as required pursuant to any law, rule, regulation,
direction, request or order of any judicial, administrative or regulatory
authority or proceedings (whether or not having the force or effect of law).

 

(c)       Each of the Administrative Agent, the Secured Parties, the Collateral
Custodian and the Collateral Administrator agrees that (i) it will keep the
information of the Obligors confidential in the manner required by the
applicable Underlying Instruments, (ii) it will hold confidential any
information provided to it by any FS/KKR Party in connection with a prospective
Loan in the same manner and pursuant to the same procedures and exceptions that
it applies to confidential information delivered directly to it when acting in
the same capacity as it is acting under this Agreement, (iii) it will use any
information described in clauses (i) and (ii) above only in connection with this
Agreement, and (iv) if (a) the applicable FS/KKR Party delivers information in
connection with a Loan or a prospective Loan that was prepared by a third party
(other than the Obligor or any agent thereof), and (b) such third party has
entered into an agreement with the applicable FS/KKR Party restricting the
ability of the applicable FS/KKR Party to rely on such report, it will not have
any direct rights against such third party (or the party which has engaged such
third party) unless otherwise expressly acknowledged and agreed to by such third
party or engaging party.

 

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(d)       Notwithstanding anything herein to the contrary, the foregoing shall
not be construed to prohibit (i) disclosure of any and all information that is
or becomes publicly known; (ii) disclosure of any and all information (a) if
required to do so by any applicable statute, law, rule or regulation, (b) to any
government agency or regulatory body having or claiming authority to regulate or
oversee any respects of the Administrative Agent’s, the Secured Parties’, the
Collateral Custodian’s, the Collateral Administrator’s or the Borrower’s
business or that of their affiliates, (c) pursuant to any subpoena, civil
investigative demand or similar demand or request of any court, regulatory
authority, arbitrator or arbitration to which the Administrative Agent, the
Secured Parties, the Collateral Custodian, the Collateral Administrator or the
Borrower or an officer, director, employer, shareholder or affiliate of any of
the foregoing is a party, (d) in any preliminary or final offering circular,
registration statement or contract or other document approved in advance by the
Borrower or the Collateral Manager or (e) to any affiliate, independent or
internal auditor, agent (including any potential sub-or-successor Collateral
Manager), employee or attorney of the Collateral Custodian or the Collateral
Administrator having a need to know the same, provided that the Collateral
Custodian or the Collateral Administrator advises such recipient of the
confidential nature of the information being disclosed and such person agrees to
the terms hereof for the benefit of the Borrower and the Collateral Manager; or
(iii) any other disclosure authorized by the Borrower or the Collateral Manager,
as applicable.

 

(e)       Notwithstanding any other provision of this Agreement, each FS/KKR
Party shall each have the right to keep confidential from the Administrative
Agent and the Collateral Custodian, the Collateral Administrator and/or the
Secured Parties, for such period of time as such FS/KKR Party determines is
reasonable (i) any information that any FS/KKR Party reasonably believes to be
in the nature of trade secrets and (ii) any other information that any FS/KKR
Party or any of their Affiliates, or the officers, employees or directors of any
of the foregoing, is required to by law.

 

Section 12.14   Execution in Counterparts; Severability; Integration.

 

This Agreement may be executed in any number of counterparts and by different
parties hereto in separate counterparts (including by facsimile), each of which
when so executed shall be deemed to be an original and all of which when taken
together shall constitute one and the same agreement. In case any provision in
or obligation under this Agreement shall be invalid, illegal or unenforceable in
any jurisdiction, the validity, legality and enforceability of the remaining
provisions or obligations, or of such provision or obligation in any other
jurisdiction, shall not in any way be affected or impaired thereby. This
Agreement, the other Transaction Documents and any agreements or letters
(including fee letters) executed in connection herewith contain the final and
complete integration of all prior expressions by the parties hereto with respect
to the subject matter hereof and shall constitute the entire agreement among the
parties hereto with respect to the subject matter hereof, superseding all prior
oral or written understandings.

 

Section 12.15   Waiver of Setoff.

 

Each of the parties hereto hereby waives any right of setoff it may have or to
which it may be entitled under this Agreement from time to time against any
Lender or its assets.

 

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Section 12.16   Assignments by the Lenders.

 

(a)       Each Lender may at any time assign, or grant a security interest or
sell a participation interest in or sell any Advance or Commitment (or portion
thereof) or any Note (or any portion thereof) to any Person; provided that, as
applicable, (i) no transfer of any Advance or Commitment (or any portion
thereof) or of any Note (or any portion thereof) shall be made unless such
transfer is exempt from the registration requirements of the Securities Act and
any applicable state securities laws or is made in accordance with the
Securities Act and such laws, and is made only to either an “accredited
investor” as defined in paragraphs (a)(1), (2), (3), or (7) of Rule 501 of
Regulation D under the Securities Act or any entity in which all of the equity
owners come within such paragraphs or to a “qualified institutional buyer” as
defined in Rule 144A under the Securities Act which in each case is a “qualified
purchaser” as defined in the 1940 Act, (ii) so long as no Event of Default has
occurred or is continuing, no such assignment, grant or sale of a participation
interest shall be to an Ineligible Assignee, (iii) such Person shall have a
long-term unsecured debt rating of “A” or better by S&P and “A3” or better by
Moody’s, (iv) in the case of an assignment of any Advance or Commitment (or any
portion thereof) or of any Note (or of any portion thereof) the assignee
executes and delivers to the Collateral Manager, the Borrower and the
Administrative Agent a fully executed Joinder Supplement substantially in the
form of Exhibit H hereto and a transferee letter substantially in the form of
Exhibit G hereto (a “Transferee Letter”), (v) the consent of the Administrative
Agent shall be required for any assignment, and (vi) so long as no Event of
Default has occurred or is continuing, the consent of the Borrower (such consent
not to be unreasonably withheld or delayed and shall be deemed if no response is
made by the Borrower within ten (10) Business Days after delivery to Borrower of
notice of a proposed assignment) shall be required for any assignment or
participation, other than an assignment or participation to a Lender, an
Affiliate of a Lender or an Approved Fund. The parties to any such assignment,
grant or sale of a participation interest shall execute and deliver to such
assigning Lender for its acceptance and recording in its books and records, such
agreement or document as may be satisfactory to such parties. The Borrower shall
not assign or delegate, or grant any interest in, or permit any Lien to (other
than Permitted Liens) exist upon, any of the Borrower’s rights, obligations or
duties under the Transaction Documents without the prior written consent of the
Administrative Agent. Notwithstanding anything contained in this Agreement to
the contrary, (i) Ally Bank shall not need prior consent of the Borrower or any
other party hereto to consolidate with or merge into any Person or convey or
transfer substantially all of its properties and assets, including as part of
such a transaction all or substantially all of its Advances, Commitments and
Notes, to any Person, (ii) if any Lender fails at any time to satisfy the Rating
Criteria, and such failure has not been remedied within 30 days (as evidenced by
a certification to the Borrower, the Collateral Manager and the Administrative
Agent including a letter from Moody’s, S&P, and/or an equivalent rating agency,
as the case maybe establishing the existence of the rating criteria), or (iii)
if any Lender becomes a Defaulting Lender, unless such Lender shall have been
deemed to no longer be a Defaulting Lender pursuant to Section 2.16(b), then, in
each case, the Administrative Agent shall have the right to cause such Person to
assign its entire interest in the Advances and Commitments and this Agreement to
a transferee selected by the Administrative Agent prior to the occurrence of an
Event of Default with the consent of the Borrower, in an assignment which
satisfies the conditions set forth in the first sentence of this Section
12.16(a). Assignments shall be subject to the following additional conditions:

 

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(1)      no assignments shall be made to (x) the Borrower or any of the
Borrower’s Affiliates or Subsidiaries or (y) any Defaulting Lender or any of its
Subsidiaries, or any Person who, upon becoming a Lender hereunder, would
constitute any of the foregoing Persons described in this clause (y);

 

(2)      no assignments shall be made to a natural person;

 

(3)     except in the case of an assignment to a Lender or an Affiliate of a
Lender or an Approved Fund or an assignment of the entire remaining amount of
the assigning Lender’s Commitment or Loans of any class, the amount of the
Commitment or Loans of the assigning Lender subject to each such assignment
(determined as of the date the assignment and assumption with respect to such
assignment is delivered to the Administrative Agent) shall not be less than
$1,000,000 unless each of the Borrower and the Administrative Agent otherwise
consent, provided that no such consent of the Borrower shall be required if an
Event of Default has occurred and is continuing;

 

(4)     each partial assignment shall be made as an assignment of a
proportionate part of all the assigning Lender’s rights and obligations under
this Agreement, provided that this clause shall not be construed to prohibit the
assignment of a proportionate part of all the assigning Lender’s rights and
obligations in respect of one class of Commitments or Loans;

 

(5)      the parties to each assignment shall execute and deliver to the
Administrative Agent an assignment and assumption, together with a processing
and recordation fee of $3,500, such fee to be paid by either the assigning
Lender or the assignee Lender or shared between such Lenders; and

 

(6)      the assignee, if it shall not be a Lender, shall deliver to the
Administrative Agent an Administrative Questionnaire in which the assignee
designates one or more credit contacts to whom all syndicate-level information
(which may contain material non-public information about the Borrower and its
affiliates and their Related Parties or their respective securities) will be
made available and who may receive such information in accordance with the
assignee’s compliance procedures and applicable laws, including Federal and
state securities laws, and containing payment instruction for such assignee.

 

(b)       The Administrative Agent, acting solely for this purpose as an agent
of Borrower, shall maintain at one of its lending offices, a copy of each
transfer pursuant to Section 12.16(a) delivered to it and a register for the
recordation of the names and addresses of the Lenders, and the Commitments of,
and principal amounts of the Advances as well as entitlements to interest owing
to, each Lender pursuant to the terms hereof from time to time (the “Register”).
Transfer by a Lender of its rights hereunder or under any Note may be effected
only by the recording by the Administrative Agent of the identity of the
transferee in the Register. The entries in the Register shall be conclusive, and
Borrower, the Administrative Agent and the Lenders shall treat each Person whose
name is recorded in the Register pursuant to the terms hereof as a Lender
hereunder for all purposes of this Agreement, notwithstanding notice to the
contrary. The Register shall be available for inspection by Borrower and any
Lender, at any reasonable time and from time to time upon reasonable prior
notice. Each Lender that sells a participation interest shall, acting solely for
this purpose as a non-fiduciary agent of the Borrower, maintain a register on
which it enters the name and address of each participant and the principal
amounts (and stated interest) of each participant’s interest in the loans or
other obligations under this Agreement (the “Participant Register”); provided
that no Lender shall have any obligation to disclose all or any portion of the
Participant Register (including the identity of any participant or any
information relating to a participant’s interest hereunder) to any Person except
to the extent that such disclosure is necessary to establish that such
commitment, loan, letter of credit or other obligation is in Registered form.
The entries in the Participant Register shall be conclusive absent manifest
error, and such Lender shall treat each Person whose name is recorded in the
Participant Register as the owner of such participation for all purposes of this
Agreement notwithstanding any notice to the contrary. For the avoidance of
doubt, the Administrative Agent (in its capacity as Administrative Agent) shall
have no responsibility for maintaining a Participant Register.

 

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(c)       The Collateral Custodian may, at any time, assign all or any part of
its rights and obligations hereunder as Collateral Custodian; provided, however,
that any such assignee shall (i) be a bank or other financial institution
organized and doing business under the laws of the United States or of any state
thereof, (ii) be authorized under such laws to exercise corporate trust powers,
(iii) have a combined capital and surplus of at least $200,000,000, (iv) be
subject to supervision or examination by a United States federal or state
banking authority, (v) have a long-term unsecured debt rating of at least “Baa1”
by Moody’s and “BBB+” by S&P, (vi) have an office within the United States;
(vii) be in the business of providing collateral custodian services consistent
with those required pursuant to this Agreement and (viii) is otherwise
reasonably acceptable to the Administrative Agent and prior to the occurrence of
an Event of Default the Borrower; and provided, further, that such assignment
shall not be effective unless (i), prior to such assignment, Collateral
Custodian shall have given ninety (90) days written notice to the Borrower,
Collateral Manager, Administrative Agent and each Lender describing such
assignment and (ii) such assignee has assumed the responsibilities and
obligations of the Collateral Custodian, being assigned to it in writing.

 

Section 12.17   Heading and Exhibits.

 

The headings herein are for purposes of references only and shall not otherwise
affect the meaning or interpretation of any provision hereof. The schedules and
exhibits attached hereto and referred to herein shall constitute a part of this
Agreement and are incorporated into this Agreement for all purposes.

 

Section 12.18   Effect of Benchmark Transition Event.

 

(a)       Benchmark Replacement. Notwithstanding anything to the contrary herein
or in any other Transaction Document, upon the occurrence of a Benchmark
Transition Event or an Early Opt-in Election, as applicable, the Administrative
Agent and the Borrower may amend this Agreement to replace the LIBOR Rate with a
Benchmark Replacement. Any such amendment with respect to a Benchmark Transition
Event will become effective at 5:00 p.m. on the fifth (5th) Business Day after
the Administrative Agent has posted such proposed amendment to all Lenders and
the Borrower so long as the Administrative Agent has not received, by such time,
written notice of objection to such amendment from Lenders comprising the
Required Lenders. Any such amendment with respect to an Early Opt-in Election
will become effective on the date that Lenders comprising the Required Lenders
have delivered to the Administrative Agent written notice that such Required
Lenders accept such amendment. No replacement of the LIBOR Rate with a Benchmark
Replacement pursuant to this Section titled “Effect of Benchmark Transition
Event” will occur prior to the applicable Benchmark Transition Start Date.

 

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(b)       Benchmark Replacement Conforming Changes. In connection with the
implementation of a Benchmark Replacement, the Administrative Agent will have
the right to make Benchmark Replacement Conforming Changes from time to time
and, notwithstanding anything to the contrary herein or in any other Transaction
Document, any amendments implementing such Benchmark Replacement Conforming
Changes will become effective without any further action or consent of any other
party to this Agreement.

 

(c)       Notices; Standards for Decisions and Determinations. The
Administrative Agent will promptly notify the Borrower and the Lenders of (i)
any occurrence of a Benchmark Transition Event or an Early Opt-in Election, as
applicable, and its related Benchmark Replacement Date and Benchmark Transition
Start Date, (ii) the implementation of any Benchmark Replacement, (iii) the
effectiveness of any Benchmark Replacement Conforming Changes and (iv) the
commencement or conclusion of any Benchmark Unavailability Period. Any
determination, decision or election that may be made by the Administrative Agent
or Lenders pursuant to this Section titled “Effect of Benchmark Transition
Event,” including any determination with respect to a tenor, rate or adjustment
or of the occurrence or non-occurrence of an event, circumstance or date and any
decision to take or refrain from taking any action, will be conclusive and
binding absent manifest error and may be made in its or their sole discretion
and without consent from any other party hereto, except, in each case, as
expressly required pursuant to this Section titled “Effect of Benchmark
Transition Event.”

 

(d)       Benchmark Unavailability Period. Upon the Borrower’s receipt of notice
of the commencement of a Benchmark Unavailability Period, the Borrower may
revoke any request for an Advance for which Interest accrues at the LIBOR Rate,
conversion to or continuation of an Advance for which Interest accrues at the
LIBOR Rate to be made, converted or continued during any Benchmark
Unavailability Period.

 

Section 12.19   Divisions.

 

Any reference herein to a merger, transfer, consolidation, amalgamation,
consolidation, assignment, sale, disposition or transfer, or similar term, shall
be deemed to apply to a division of or by a limited liability company, or an
allocation of assets to a series of a limited liability company (or the
unwinding of such a division or allocation), as if it were a merger, transfer,
consolidation, amalgamation, consolidation, assignment, sale or transfer, or
similar term, as applicable, to, of or with a separate Person. Notwithstanding
anything to the contrary in this Agreement, (i) any division of a limited
liability company shall constitute a separate Person hereunder, and each
resulting division of any limited liability company that, prior to such
division, is a Subsidiary, a Guarantor, a FS/KKR Party, a joint venture or any
other like term shall remain a Subsidiary, a FS/KKR Party, a joint venture, or
other like term, respectively, after giving effect to such division, to the
extent required under this Agreement, and any resulting divisions of such
Persons shall remain subject to the same restrictions and corresponding
exceptions applicable to the pre-division predecessor of such divisions, and
(ii) in no event shall Transferor or Borrower be permitted to effectuate a
division.

 

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Section 12.20   Judgment Currency.

 

This is an international loan transaction in which the specification of Dollars
or Canadian Dollars, as the case may be (the “Specified Currency”), and payment
in New York City, New York or the country of the Specified Currency, as the case
may be (the “Specified Place”), is of the essence, and the Specified Currency
shall be the currency of account in all events relating to Advances denominated
in the Specified Currency. The payment obligations of the Borrower under this
Agreement shall not be discharged or satisfied by an amount paid in another
currency or in another place, whether pursuant to a judgment or otherwise, to
the extent that the amount so paid on conversion to the Specified Currency and
transfer to the Specified Place under normal banking procedures does not yield
the amount of the Specified Currency at the Specified Place due hereunder. If
for the purpose of obtaining judgment in any court it is necessary to convert a
sum due hereunder in the Specified Currency into another currency (the “Second
Currency”), the rate of exchange that shall be applied shall be the rate at
which in accordance with normal banking procedures the Administrative Agent
could purchase the Specified Currency with the Second Currency on the Business
Day next preceding the day on which such judgment is rendered. The obligation of
the Borrower in respect of any such sum due from it to the Administrative Agent
or any Lender hereunder or under any other Facility Document (in this Section
called an “Entitled Person”) shall, notwithstanding the rate of exchange
actually applied in rendering such judgment be discharged only to the extent
that on the Business Day following receipt by such Entitled Person of any sum
adjudged to be due hereunder in the Second Currency such Entitled Person may in
accordance with normal banking procedures purchase and transfer to the Specified
Place the Specified Currency with the amount of the Second Currency so adjudged
to be due; and the Borrower hereby, as a separate obligation and notwithstanding
any such judgment (but subject to the provisions set forth in Article X, agrees
to indemnify such Entitled Person against, and to pay such Entitled Person on
demand, in the Specified Currency, the amount (if any) by which the sum
originally due to such Entitled Person in the Specified Currency hereunder
exceeds the amount of the Specified Currency so purchased and transferred.

 

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ARTICLE XIII

tax considerations

 

Section 13.1     Acknowledgement of Parties.

 

The parties hereto acknowledge and agree that, for U.S. federal income tax
purposes, financial accounting and other purposes, the parties will treat the
Advances and the Notes as indebtedness and not an equity interests in the
Borrower unless otherwise required by Applicable Law.

 

ARTICLE XIV

[RESERVED]

 

[Remainder of page intentionally left blank; signature pages follow.]

 

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

          AMBLER FUNDING LLC, as the Borrower             By:  /s/ William
Goebel     Name: William Goebel     Title: Chief Financial Officer  

 

  Solely with respect to Section 5.1(d), 5.1(k), 9.2(d) and 12.19:            
TRANSFEROR:           FS Investment Corporation IV, as Transferor            
By:  /s/ William Goebel     Name: William Goebel     Title: Chief Accounting
Officer  

 

[Signatures continued on the following page.]

 

[Signature Page] 

Loan and Security Agreement

 

 

 

 

          ADMINISTRATIVE AGENT AND ARRANGER:           ALLY BANK, as
Administrative Agent and Arranger             By:  /s/ Riley Quinn       Name:
Riley Quinn       Title: Authorized Signatory Ally CF  

          LENDERS:           ALLY BANK, as a Lender             By:  /s/ Riley
Quinn       Name: Riley Quinn       Title: Authorized Signatory Ally CF  

 

[Signatures continued on the following page.]

 

[Signature Page] 

Loan and Security Agreement

 

 

 

 

          THE COLLATERAL CUSTODIAN:           Wells Fargo Bank, N.A., not in its
individual capacity but solely as Collateral Custodian             By: /s/
Michael J. Baker       Name: Michael J. Baker       Title: Vice President  

          THE COLLATERAL ADMINISTRATOR:           Wells Fargo Bank, N.A., not in
its individual capacity but solely as the Collateral Administrator            
By: /s/ Michael J. Baker       Name: Michael J. Baker       Title: Vice
President  

 

[Signature Page] 

Loan and Security Agreement

 

 

 

Annex A

 

If to Borrower:

 

201 Rouse Boulevard

Philadelphia, PA 19112

Attention: William Goebel

Facsimile No.: 215-222-4649

Email: credit.notices@fsinvestments.com; FSICIV_Team@fsinvestments.com;
portfolio_finance@fsinvestments.com

 

If to Ally Bank:

 

ALLY BANK
3 Bethesda Metro Center

Suite 925

Bethesda, MD 20814

Attn: Keith Harris

Email: Keith.Harris@Ally.com

 

with a copy to:

 

HOLLAND & KNIGHT LLP

200 Crescent Court, Suite 1600

Dallas, TX 75201

Attention: James L. Baker, Esq.

Facsimile No.: (214) 964-9501

Email: jay.baker@hklaw.com

 

 

[Annex A]

Loan and Security Agreement

 

 

 

Annex A

 

If to the Collateral Custodian or Collateral Administrator:

 

Wells Fargo Bank, N.A.

Corporate Trust Services Division

‎9062 Old Annapolis Rd

Columbia, MD 21045‎

Attn: CDO Trust Services – Ambler Funding LLC

Telephone No.: 410-884-2000‎

Facsimile No.: 410-715-3748‎

 

[Annex A]

Loan and Security Agreement

 

 

 

 

Annex B

 

COMMITMENTS

 

Lender Commitment Ally Bank $200,000,000.00     Total: $200,000,000.00

 

[Annex B]

Loan and Security Agreement

 

 

 

 

Agreement

 

EXHIBITS AND SCHEDULES

TO

LOAN AND SECURITY AGREEMENT

 

Dated as of November 22, 2019

 

EXHIBITS

 

EXHIBIT A-1 Form of Funding Notice EXHIBIT A-2 Form of Repayment Notice EXHIBIT
A-3 Form of Reinvestment Notice EXHIBIT A-4 Form of Borrowing Base Certificate
EXHIBIT A-5 [Reserved] EXHIBIT A-6 Form of Payment Date Report EXHIBIT A-7 Form
of Static Pool Analysis EXHIBIT B Form of Promissory Note EXHIBIT C Form of
Officer's Certificate as to Solvency EXHIBIT D Form of Officer's Closing
Certificate EXHIBIT E Form of Release of Underlying Instruments EXHIBIT F
[Reserved] EXHIBIT G Form of Transferee Letter EXHIBIT H Form of Joinder
Supplement EXHIBIT I

Form of Section 2.13 Certificate

EXHIBIT J Form of Collateral Custodian Certification EXHIBIT K Form of
Compliance Certificate

 

SCHEDULES

 

SCHEDULE I Loan Party Names SCHEDULE II Loan List SCHEDULE III [Reserved]
SCHEDULE IV Agreed-Upon Procedures SCHEDULE V S&P Industry Classifications

 

[FS Investment] Exhibits and Schedules to Loan and Security Agreement

 

 

 

 

●   EXHIBIT A-1

 

FORM OF FUNDING NOTICE

 

[Date]

 

AMBLER FUNDING LLC

 

Ally Bank,
as the Administrative Agent

300 Park Avenue, 4th Floor

New York, New York 10022

Attention: SFD Portfolio Manager

Facsimile No.: (212) 884-7693

 

with a copy to:

 

Ally Bank

300 Park Avenue, 4th Floor

New York, New York 10022

Attention: Legal Services/SFD

Facsimile No.: (212) 884-7189

Email: jorge.wagner@ally.com

 

Wells Fargo Bank, N.A.,

as the Collateral Custodian

Corporate Trust Services Division

9062 Old Annapolis Rd

Columbia, MD 21045
Attention: CDO Trust Services – Ambler Funding LLC

Telephone No.: (410) 884-2000

Facsimile No.: (410) 715-3748

 

Re:Loan and Security Agreement dated as of [_______], 2019

 

Ladies and Gentlemen:

 

This Funding Notice is delivered to you pursuant to Sections 2.2 and 3.2 of that
certain Loan and Security Agreement, dated as of [_______], 2019 (as amended,
modified, waived, supplemented, restated or replaced from time to time, the
“Loan and Security Agreement”), by and among Ambler Funding LLC, a Delaware
limited liability company, as the borrower (in such capacity, the “Borrower”),
each of the lenders from time to time party thereto (together with its
representatives, successors and assigns in such capacity, each a “Lender” and
collectively, the “Lenders”), Ally Bank, as the administrative agent thereunder
(together with its successors and assigns in such capacity, the “Administrative
Agent”) and as Arranger and Wells Fargo Bank, N.A., not in its individual
capacity but as the collateral custodian (together with its successors and
assigns in such capacity, the “Collateral Custodian”) and the collateral
administrator (together with its successors and assigns in such capacity, the
“Collateral Administrator”). Capitalized terms used but not defined herein shall
have the meanings provided in the Loan and Security Agreement.

 

[FS Investment] Exhibits and Schedules to Loan and Security Agreement

Exhibit A-1

 

 

The undersigned, through their duly appointed Responsible Officers, as
applicable, hereby certify as follows:

 

The Borrower hereby requests an Advance as described in the Notice of Borrowing
attached hereto as Annex A. The Advance shall be at least equal to $500,000 (or,
in the case of any Advance to be applied to fund any draw under a Revolving Loan
or Delayed Draw Loan, such lesser amount as may be required to fund such draw).

 

Attached to this Funding Notice is a true, correct and complete list of the
Obligors and all Loans which will become part of the Collateral on the date
hereof, each Loan reflected thereon being an Eligible Loan except to the extent
a portion of any such Loan is being acquired solely with equity contributions,
and specifying (a) the Outstanding Balance, Assigned Value and Purchase Price of
each such Loan, (b) with respect to any Revolving Loan or Delayed Draw Loan, the
amount to be deposited in the Unfunded Exposure Account in connection with the
acquisition of each such Loan pursuant to Section 2.9(e) of the Loan and
Security Agreement, [(c) whether such Loan is a First Lien Loan, First Lien Last
Out Loan or Second Lien Loan and (d) the Advance Rate applicable to such Loan.

 

All of the conditions precedent to the Advance requested herein as set forth in
Section 3.1 or Section 3.2, as applicable, of the Loan and Security Agreement
have been satisfied or will be satisfied to the date of such Advance, including
the following:

 

(i)The representations and warranties contained in Section 4.1 and Section 4.2
are true and correct in all material respects (except for such representations
and warranties as are qualified by materiality, a Material Adverse Effect or any
similar qualifier, which representations and warranties shall be true in all
respects) on and as of such day as though made on and as of such day and shall
be deemed to have been made on such day (other than any representation and
warranty that is made as of a another specific date which were true, correct,
and complete in all material respects as of such date);

 

(ii)No event has occurred and is continuing, or would result from such Advance
or from the application of proceeds therefrom, which constitutes a Default or an
Event of Default;

 

(iii)On and as of such day, immediately after giving effect to such Advance, the
Advances Outstanding do not exceed the Availability (or, to the extent permitted
under Section 2.14, any existing Borrowing Base Deficiency is reduced); and

 

[FS Investment] Exhibits and Schedules to Loan and Security Agreement

Exhibit A-1

 

 

(iv)No Applicable Law prohibits or enjoins the making of such Advance by any
Lender or the proposed acquisition of Loans.

 

Each of the undersigned certify that all information contained herein and in the
attached Borrowing Base Certificate is true, correct and complete as of the date
hereof.

 

[Remainder of page intentionally left blank; signature page follows.]

 

[FS Investment] Exhibits and Schedules to Loan and Security Agreement

Exhibit A-1

 

 

IN WITNESS WHEREOF, the undersigned have executed this Funding Notice this
______ day of ________________, __________.

          AMBLER FUNDING LLC, as the Borrower             By:       Name:      
Title:    

 

[Attach Borrowing Base Certificate and List of Loans]

 

[FS Investment] Exhibits and Schedules to Loan and Security Agreement

 

Exhibit A-1

 

 

Annex A TO FUNDING NOTICE

 

Notice of Borrowing

 

Borrower gives notice that it hereby requests an Advance under the Loan and
Security Agreement, and in that connection sets forth below the information
relating to such Advance (the “Proposed Advance”):

 

(i)The Proposed Advance is in the aggregated amount of $___________________, and
is to be made on (date)___________________.

 

●   

 

(ii)The Borrower hereby directs Administrative Agent to deposit $____________ in
the Unfunded Exposure Account in accordance with Section 2.9(e) of the Loan and
Security Agreement.

 

The remaining proceeds of the Proposed Advance should be transmitted to Borrower
in accordance with the following wire transfer instructions:

 

            Bank Name         City, State & ZIP         ABA Routing No.        
Account Name:         Account No:         Amount:         Reference:      

 

            Bank Name         City, State & ZIP         ABA Routing No.        
Account Name:         Account No:         Amount:         Reference:      

 

[FS Investment] Exhibits and Schedules to Loan and Security Agreement

Exhibit A-1

 

 

●   EXHIBIT A-2

 

FORM OF REPAYMENT NOTICE

 

[Date]

 

AMBLER FUNDING LLC

Ally Bank,
as the Administrative Agent

300 Park Avenue, 4th Floor

New York, New York 10022

Attention: SFD Portfolio Manager

Facsimile No.: (212) 884-7693

 

with a copy to:

 

Ally Bank

300 Park Avenue, 4th Floor

New York, New York 10022

Attention: Legal Services/SFD

Facsimile No.: (212) 884-7189

Email: jorge.wagner@ally.com

 

Wells Fargo Bank, N.A.,

as the Collateral Custodian

Corporate Trust Services Division

9062 Old Annapolis Rd

Columbia, MD 21045
Attention: CDO Trust Services – Ambler Funding LLC

Telephone No.: (410) 884-2000

Facsimile No.: (410) 715-3748

1.

 

Re:Loan and Security Agreement dated as of November 22, 2019

 

Ladies and Gentlemen:

 

This Repayment Notice is delivered to you pursuant to Section 2.3 of that
certain Loan and Security Agreement, dated as of November 22, 2019 (as amended,
modified, waived, supplemented, restated or replaced from time to time, the
“Loan and Security Agreement”), by and among Ambler Funding LLC, a Delaware
limited liability company, as the borrower (in such capacity, the “Borrower”),
each of the lenders from time to time party thereto (together with its
representatives, successors and assigns in such capacity, each a “Lender” and
collectively, the “Lenders”), Ally Bank, as the administrative agent thereunder
(together with its successors and assigns in such capacity, the “Administrative
Agent”) and as Arranger and Wells Fargo Bank, N.A., not in its individual
capacity but as the collateral custodian (together with its successors and
assigns in such capacity, the “Collateral Custodian”) and the collateral
administrator (together with its successors and assigns in such capacity, the
“Collateral Administrator”). Capitalized terms used but not defined herein shall
have the meanings provided in the Loan and Security Agreement.

 

[FS Investment] Exhibits and Schedules to Loan and Security Agreement

Exhibit A-2

 

 

The undersigned, through their duly appointed Responsible Officers, as
applicable, hereby certify as follows:

 

1.       Pursuant to Section 2.3(a) of the Loan and Security Agreement, the
Borrower desires to reduce the Advances Outstanding (an “Advance Reduction”) by
the amount of $__________. Any reduction of the Advances Outstanding (other than
with respect to payments of Advances Outstanding made by the Borrower to reduce
a Borrowing Base Deficiency Amount to $0.00) shall be in a minimum amount of
$500,000 and in integral multiples of $100,000 in excess thereof (other than any
such partial reduction of Advances Outstanding which is funded (A) solely with
proceeds from the repayment of a Revolving Loan or (B) solely with amounts
otherwise distributable to the Borrower under Sections 2.7(a)(17), 2.7(b)(5) or
2.8(11) of the Loan and Security Agreement)).

 

2.       In connection with any such Advance Reduction, the Borrower shall
deliver to the Administrative Agent funds sufficient to repay such Advances
Outstanding together with all accrued Interest and Breakage Costs, but only to
the extent such accrued Interest and Breakage Costs are requested with such
repayment by an applicable Lender.

 

3.       The Borrower hereby requests that such Advance Reduction be made on the
following date: _________.

 

Each of the undersigned certify that all information contained herein is true
and correct as of the date hereof.

 

[Remainder of page intentionally left blank; signature page follows.]

 

[FS Investment] Exhibits and Schedules to Loan and Security Agreement 

Exhibit A-2

 

 

IN WITNESS WHEREOF, the undersigned have executed this Repayment Notice this
______ day of ________________, __________. 

          AMBLER FUNDING LLC, as the Borrower             By:       Name:      
Title:    

 

[Attach Borrowing Base Certificate]

 

[FS Investment] Exhibits and Schedules to Loan and Security Agreement 

Exhibit A-2

 

 

●    EXHIBIT A-3

 

FORM OF REINVESTMENT NOTICE

 

[Date]

 

AMBLER FUNDING LLC

 

Ally Bank,
as the Administrative Agent

300 Park Avenue, 4th Floor

New York, New York 10022

Attention: SFD Portfolio Manager

Facsimile No.: (212) 884-7693

 

with a copy to:

 

Ally Bank

300 Park Avenue, 4th Floor

New York, New York 10022

Attention: Legal Services/SFD

Facsimile No.: (212) 884-7189

Email: jorge.wagner@ally.com

 

Wells Fargo Bank, N.A.,

as the Collateral Custodian

Corporate Trust Services Division

9062 Old Annapolis Rd

Columbia, MD 21045
Attention: CDO Trust Services – Ambler Funding LLC

Telephone No.: (410) 884-2000

Facsimile No.: (410) 715-3748

2.

Re:Loan and Security Agreement dated as of November 22, 2019

 

Ladies and Gentlemen:

 

This Reinvestment Notice is delivered to you pursuant to Section 3.2(b) of that
certain Loan and Security Agreement, dated as of November 22, 2019 (as amended,
modified, waived, supplemented, restated or replaced from time to time, the
“Loan and Security Agreement”), by and among Ambler Funding LLC, a Delaware
limited liability company, as the borrower (in such capacity, the “Borrower”),
each of the lenders from time to time party thereto (together with its
representatives, successors and assigns in such capacity, each a “Lender” and
collectively, the “Lenders”), Ally Bank, as the administrative agent thereunder
(together with its successors and assigns in such capacity, the “Administrative
Agent”) and as Arranger and Wells Fargo Bank, N.A., not in its individual
capacity but as the collateral custodian (together with its successors and
assigns in such capacity, the “Collateral Custodian”) and the collateral
administrator (together with its successors and assigns in such capacity, the
“Collateral Administrator”). Capitalized terms used but not defined herein shall
have the meanings provided in the Loan and Security Agreement.

 

[FS Investment] Exhibits and Schedules to Loan and Security Agreement

Exhibit A-3

 

 

The undersigned, through their duly appointed Responsible Officers, as
applicable, hereby certify as follows:

 

1.     In connection with a proposed [Reinvestment of Principal Collections
permitted by Section 2.14(a)] [acquisition of Loans in connection with a
Substitution pursuant to Section 2.14(b)] of the Agreement, the Borrower hereby
requests a disbursement (a “Disbursement”) of Principal Collections from the
Principal Collections Account in the amount of $_______________; the Eligible
Loans supporting this Advance are in Dollars or Canadian Dollars.

 

The Borrower hereby request that such Disbursement be made on the following
date:________________.

 

Attached to this Reinvestment Notice is a true, correct and complete calculation
of the Borrowing Base and all components thereof and a true, correct and
complete list of the Obligors and all Loans which will become part of the
Collateral on the date hereof, each Loan reflected thereon being an Eligible
Loan, and specifying (a) the Outstanding Balance, Assigned Value and Purchase
Price of each such Loan, (b) with respect to any Revolving Loan or Delayed Draw
Loan, the amount to be deposited in the Unfunded Exposure Account in connection
with the acquisition of each such Loan pursuant to Section 2.9(e) of the Loan
and Security Agreement, (c) whether such Loan is a First Lien Loan, First Lien
Last Out Loan or Second Lien Loan and (d) the Advance Rate applicable to such
Loan.

 

All of the conditions precedent to the Disbursement as set forth in Section 3.2
of the Loan and Security Agreement have been satisfied as of the date hereof and
will remain satisfied to the date of such Disbursement including the following:

 

(i)The representations and warranties contained in Section 4.1 and Section 4.2
are true and correct in all material respects (except for such representations
and warranties as are qualified by materiality, a Material Adverse Effect or any
similar qualifier, which representations and warranties shall be true in all
respects) on and as of such day as though made on and as of such day and shall
be deemed to have been made on such day (other than any representation and
warranty that is made as of a another specific date which were true, correct,
and complete in all material respects as of such date);

 

(ii)No event has occurred and is continuing, or would result from such Advance
or from the application of proceeds therefrom, which constitutes a Default or an
Event of Default;

 

[FS Investment] Exhibits and Schedules to Loan and Security Agreement

Exhibit A-3

 

 

(iii)On and as of such day, immediately after giving effect to such Advance, the
Advances Outstanding do not exceed the Availability (or, to the extent permitted
under Section 2.14, any existing Borrowing Base Deficiency is reduced); and

 

(iv)No Applicable Law prohibits or enjoins the making of such Advance by any
Lender or the proposed Reinvestment of Principal Collections or acquisition of
Loans;

 

Each of the undersigned certify that all information contained herein and in the
attached Borrowing Base Certificate is true and correct as of the date hereof.

 

[Remainder of page intentionally left blank; signature page follows.]

 

[FS Investment] Exhibits and Schedules to Loan and Security Agreement

Exhibit A-3

 

IN WITNESS WHEREOF, the undersigned have executed this Reinvestment Notice this
______ day of ________________, __________.

          AMBLER FUNDING LLC, as the Borrower             By:       Name:      
Title:    

 

[Attach Borrowing Base Certificate]

 

[FS Investment] Exhibits and Schedules to Loan and Security Agreement 

Exhibit A-3

 

 

●   EXHIBIT A-4

 

FORM OF BORROWING BASE CERTIFICATE

 

This certificate is delivered pursuant to that certain Loan and Security
Agreement, dated as of November 22, 2019 (as amended, modified, waived,
supplemented, restated or replaced from time to time, the “Loan and Security
Agreement”), by and among Ambler Funding LLC, a Delaware limited liability
company, as the borrower (in such capacity, the “Borrower”), each of the lenders
from time to time party thereto (together with its representatives, successors
and assigns in such capacity, each a “Lender” and collectively, the “Lenders”),
Ally Bank, as the administrative agent thereunder (together with its successors
and assigns in such capacity, the “Administrative Agent”) and as Arranger and
Wells Fargo Bank, N.A., not in its individual capacity but as the collateral
custodian (together with its successors and assigns in such capacity, the
“Collateral Custodian”) and the collateral administrator (together with its
successors and assigns in such capacity, the “Collateral Administrator”).
Capitalized terms used but not defined herein shall have the meanings provided
in the Loan and Security Agreement.

 

As of the date hereof, the undersigned each certify that

 

(i) all of the information set forth in Annex I attached hereto is true, correct
and complete and for the avoidance doubt, includes the amount and type (whether
Principal Collections, Interest Collections or other Collections) of all
Collections received since the last Reporting Date, all Principal Collections
and Interest Collections on deposit as of the date hereof and a detailed aging
of each Loan;

 

(ii) the Borrower is in compliance with all covenants and agreement under the
Loan and Security Agreement and no Default or Event of Default has occurred and
is continuing under the Loan and Security Agreement;

 

(iii) all of the Loans owned by the Borrower are Eligible Loans, within the
meaning of such term in the Loan and Security Agreement other than as waived by
the Administrative Agent as of the Funding Date with respect to any such Loan;
and

 

(iv) the representations and warranties contained in Section 4.1 and Section 4.2
are true and correct in all material respects (except for such representations
and warranties as are qualified by materiality, a Material Adverse Effect or any
similar qualifier, which representations and warranties shall be true in all
respects) on and as of such day as though made on and as of such day and shall
be deemed to have been made on such day (other than any representation and
warranty that is made as of a another specific date which were true, correct,
and complete in all material respects as of such date).

 

[Remainder of page intentionally left blank; signature page follows.]

 

[FS Investment] Exhibits and Schedules to Loan and Security Agreement 

Exhibit A-4

 

Certified as of the _________________ day of ___________________, _____.

          AMBLER FUNDING LLC, as the Borrower             By:       Name:      
Title:    

 

[FS Investment] Exhibits and Schedules to Loan and Security Agreement

Exhibit A-4

 

ANNEX I
To Exhibit A-4

 

BORROWING BASE REPORT

 

[See attached.]

 

[FS Investment] Exhibits and Schedules to Loan and Security Agreement

Exhibit A-4

 

●    EXHIBIT A-5

 

[Reserved]

 

[FS Investment] Exhibits and Schedules to Loan and Security Agreement

Exhibit A-6

 

EXHIBIT A-6

 

FORM OF PAYMENT DATE REPORT

 

This certificate is delivered pursuant to that certain Loan and Security
Agreement, dated as of November 22, 2019 (as amended, modified, waived,
supplemented, restated or replaced from time to time, the “Loan and Security
Agreement”), by and among Ambler Funding LLC, a Delaware limited liability
company, as the borrower (in such capacity, the “Borrower”), each of the lenders
from time to time party thereto (together with its representatives, successors
and assigns in such capacity, each a “Lender” and collectively, the “Lenders”),
Ally Bank, as the administrative agent thereunder (together with its successors
and assigns in such capacity, the “Administrative Agent”) and as Arranger and
Wells Fargo Bank, N.A., not in its individual capacity but as the collateral
custodian (together with its successors and assigns in such capacity, the
“Collateral Custodian”) and the collateral administrator (together with its
successors and assigns in such capacity, the “Collateral Administrator”).
Capitalized terms used but not defined herein shall have the meanings provided
in the Loan and Security Agreement.

 

As of the date hereof, the undersigned each certify that:

 

(i) all of the information set forth in Annex I attached hereto is true, correct
and complete;

 

(ii) the Borrower is in compliance with all covenants and agreement under the
Loan and Security Agreement and no Default or Event of Default has occurred and
is continuing under the Loan and Security Agreement;

 

(iii) except as set forth on Annex II attached hereto, all of the Loans owned by
the Borrower are Eligible Loans, within the meaning of such term in the Loan and
Security Agreement other than as waived by the Administrative Agent as of the
Funding Date with respect to any such Loan; and

 

(iv) the representations and warranties contained in Section 4.1 and Section 4.2
are true and correct in all material respects (except for such representations
and warranties as are qualified by materiality, a Material Adverse Effect or any
similar qualifier, which representations and warranties shall be true in all
respects) on and as of such day as though made on and as of such day and shall
be deemed to have been made on such day (other than any representation and
warranty that is made as of a another specific date which were true, correct,
and complete in all material respects as of such date).

 

[Remainder of page intentionally left blank; signature page follows.]

 

[FS Investment] Exhibits and Schedules to Loan and Security Agreement

Exhibit A-6

 

Certified as of the _________________ day of ___________________, _____.

          AMBLER FUNDING LLC, as the Borrower             By:       Name:      
Title:    

 

[See attached.]

 

[FS Investment] Exhibits and Schedules to Loan and Security Agreement

Exhibit A-6

 

ANNEX I
To Exhibit A-6

 

PAYMENT DATE REPORT1

 

[See attached.]

 

 

 

1 1 Report to set forth (a) application of payments under either of Section 2.7
or 2.8 as applicable; (b) currency calculations under Section 5.1(q) and (c)
calculations of financial covenants under Sectin5.2(n).

 

[FS Investment] Exhibits and Schedules to Loan and Security Agreement

Exhibit A-6

 

EXHIBIT A-7

 

FORM OF STATIC POOL ANALYSIS

 

[On file with the Administrative Agent.]

 

[FS Investment] Exhibits and Schedules to Loan and Security Agreement

Exhibit A-7

 

 

● EXHIBIT B

 

FORM OF PROMISSORY NOTE

 

$[________ ] [___], 20[__]

 

THIS PROMISSORY NOTE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE U.S.
SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), ANY STATE SECURITIES
LAWS IN THE UNITED STATES OR THE SECURITIES LAWS OF ANY OTHER JURISDICTION AND
THE BORROWER HAS NOT REGISTERED UNDER THE U.S. INVESTMENT COMPANY ACT OF 1940,
AS AMENDED (THE “INVESTMENT COMPANY ACT”). THE HOLDER HEREOF, BY ITS ACCEPTANCE
OF THIS PROMISSORY NOTE, REPRESENTS THAT IT HAS OBTAINED THIS PROMISSORY NOTE IN
A TRANSACTION IN COMPLIANCE WITH THE SECURITIES ACT, THE INVESTMENT COMPANY ACT
AND ALL OTHER APPLICABLE LAWS OF THE UNITED STATES OR ANY OTHER APPLICABLE
JURISDICTION, AND THE RESTRICTIONS ON SALE AND TRANSFER SET FORTH IN THE LOAN
AND SECURITY AGREEMENT. THE HOLDER HEREOF, BY ITS ACCEPTANCE OF THIS PROMISSORY
NOTE, FURTHER REPRESENTS, ACKNOWLEDGES AND AGREES THAT IT WILL NOT RE-OFFER,
RE-SELL, PLEDGE OR OTHERWISE TRANSFER THIS NOTE (OR ANY INTEREST HEREIN) EXCEPT
IN COMPLIANCE WITH THE SECURITIES ACT, THE INVESTMENT COMPANY ACT AND ALL OTHER
APPLICABLE LAWS OF ANY JURISDICTION AND IN ACCORDANCE WITH THE CERTIFICATIONS
AND OTHER REQUIREMENTS SPECIFIED IN THE LOAN AND SECURITY AGREEMENT REFERRED TO
HEREIN.

 

THIS PROMISSORY NOTE IS TRANSFERABLE ONLY IN ACCORDANCE WITH THE RESTRICTIONS
DESCRIBED HEREIN AND IN THE LOAN AND SECURITY AGREEMENT. ANY SALE OR TRANSFER IN
VIOLATION OF THE FOREGOING WILL BE OF NO FORCE AND EFFECT, WILL BE VOID AB
INITIO, AND WILL NOT OPERATE TO TRANSFER ANY RIGHTS TO THE TRANSFEREE,
NOTWITHSTANDING ANY INSTRUCTIONS TO THE CONTRARY TO THE BORROWER, THE
ADMINISTRATIVE AGENT OR ANY INTERMEDIARY. EACH TRANSFEROR OF THIS PROMISSORY
NOTE OR AN INTEREST HEREIN AGREES TO PROVIDE NOTICE OF THE TRANSFER RESTRICTIONS
SET FORTH HEREIN AND IN THE LOAN AND SECURITY AGREEMENT TO THE TRANSFEREE.

 

FOR VALUE RECEIVED, Ambler Funding LLC, a Delaware limited liability company
(the “Borrower”), promises to pay to [__________] (“Lender”) or its assigns, the
principal sum of [___________________] Dollars ($[__________]), or, if less, the
unpaid principal amount of the aggregate advances (“Advances”) made by the
Lender to the Borrower pursuant to the Loan and Security Agreement (as defined
below), as set forth on the attached Schedule, on the dates specified in the
Loan and Security Agreement, and to pay interest on the unpaid principal amount
of each Advance on each day that such unpaid principal amount is outstanding, at
the Interest Rate related to such Advance as provided in the Loan and Security
Agreement, on each Payment Date and each other date specified in the Loan and
Security Agreement.

 

[FS Investment] Exhibits and Schedules to Loan and Security Agreement

 Exhibit B

 

 

This Promissory Note (this “Note”) is issued pursuant to that certain Loan and
Security Agreement, dated as of November 22, 2019 (as amended, modified, waived,
supplemented, restated or replaced from time to time, the “Loan and Security
Agreement”), by and among Borrower, each of the lenders from time to time party
thereto (together with its representatives, successors and assigns in such
capacity, each a “Lender” and collectively, the “Lenders”), Ally Bank, as the
administrative agent thereunder (together with its successors and assigns in
such capacity, the “Administrative Agent”) and as Arranger and Wells Fargo Bank,
N.A., not in its individual capacity but as the collateral custodian (together
with its successors and assigns in such capacity, the “Collateral Custodian”)
and the collateral administrator (together with its successors and assigns in
such capacity, the “Collateral Administrator”). Capitalized terms used but not
defined herein shall have the meanings provided in the Loan and Security
Agreement.

 

Notwithstanding any other provisions contained in this Note, if at any time the
rate of interest payable by the Borrower under this Note, when combined with any
and all other charges provided for in this Note, in the Loan and Security
Agreement or in any other document (to the extent such other charges would
constitute interest for the purpose of any applicable law limiting interest that
may be charged on this Note), exceeds the highest rate of interest permissible
under applicable law (the “Maximum Lawful Rate”), then for so long as the
Maximum Lawful Rate would be exceeded, the rate of interest under this Note
shall be equal to the Maximum Lawful Rate. If at any time thereafter the rate of
interest payable under this Note is less than the Maximum Lawful Rate, the
Borrower shall continue to pay interest under this Note at the Maximum Lawful
Rate until such time as the total interest paid by the Borrower is equal to the
total interest that would have been paid had applicable law not limited the
interest rate payable under this Note. In no event shall the total interest
received by the Lender under this Note exceed the amount which the Lender could
lawfully have received had the interest due under this Note been calculated
since the date of this Note at the Maximum Lawful Rate.

 

Payments of the principal of, and interest on, Advances represented by this Note
shall be made by or on behalf of the Borrower to the holder hereof by wire
transfer of immediately available funds in the manner and at the address
specified for such purpose as provided in the Loan and Security Agreement, or in
such manner or at such other address as the holder of this Note shall have
specified in writing to the Borrower for such purpose, without the presentation
or surrender of this Note or the making of any notation on this Note.

 

If any payment under this Note falls due on a day that is not a Business Day,
then such due date shall be extended to the next succeeding Business Day and
interest shall be payable on any principal so extended at the applicable
Interest Rate.

 

If all or a portion of (i) the principal amount hereof or (ii) any interest
payable thereon or (iii) any other amounts payable hereunder shall not be paid
when due (whether at maturity, by acceleration or otherwise), such overdue
amount shall bear interest at a rate per annum set forth in the Loan and
Security Agreement, in each case from the date of such non-payment to (but
excluding) the date such amount is paid in full, provided that such interest
rate shall not at any time exceed the Maximum Lawful Rate.

 

[FS Investment] Exhibits and Schedules to Loan and Security Agreement

 Exhibit B

 

 

Portions or all of the principal amount of the Note shall become due and payable
at the time or times set forth in the Loan and Security Agreement. Any portion
or all of the principal amount of this Note may be prepaid, together with
interest thereon (and, as set forth in the Loan and Security Agreement, certain
costs and expenses of the Lender) at the time and in the manner set forth in,
but subject to the provisions of, the Loan and Security Agreement.

 

Except as provided in the Loan and Security Agreement, the Borrower expressly
waives presentment, demand, diligence, protest and all notices of any kind
whatsoever with respect to this Note.

 

All amounts evidenced by this Note, the Lender's Advances and all payments and
prepayments of the principal hereof and the respective dates and maturity dates
thereof shall be endorsed by the Lender on the schedule attached hereto and made
a part hereof or on a continuation thereof, which shall be attached hereto and
made a part hereof; provided, however, that the failure of the Lender to make
such a notation shall not in any way limit or otherwise affect the obligations
of the Borrower under this Note as provided in the Loan and Security Agreement.

 

The holder hereof may sell, assign, transfer, negotiate, grant participations in
or otherwise dispose of all or any portion of any Advances made by the Lender
and represented by this Note and the indebtedness evidenced by this Note,
subject to the applicable provisions of the Loan and Security Agreement.

 

This Note is secured by the security interests granted pursuant to Section 8.1
of the Loan and Security Agreement. The holder of this Note is entitled to the
benefits of the Loan and Security Agreement and may enforce the agreements of
the Borrower contained in the Loan and Security Agreement and exercise the
remedies provided for by, or otherwise available in respect of, the Loan and
Security Agreement, all in accordance with, and subject to the restrictions
contained in, the terms of the Loan and Security Agreement. If an Event of
Default shall occur, the Lenders may declare, or in certain circumstances, the
unpaid principal balance thereof, together with accrued interest thereon, shall
be declared, and become, due and payable, in each case, in the manner and with
the effect provided in the Loan and Security Agreement.

 

The Borrower, the Administrative Agent, the Collateral Custodian, and each
Lender each intend, for federal, state and local income and franchise tax
purposes only, that this Note be evidence of indebtedness secured by the
Collateral, and the Lender, as a lender under the Loan and Security Agreement,
by the acceptance hereof, agrees to treat the Note for federal, state and local
income and franchise tax purposes as indebtedness.

 

This Note is one of the “Notes” referred to in Section 2.1 of the Loan and
Security Agreement. This Note shall be construed in accordance with and governed
by the laws of the State of New York.

 

[FS Investment] Exhibits and Schedules to Loan and Security Agreement

 Exhibit B

 

 

[Remainder of page intentionally left blank; signature page follows.]

 

[FS Investment] Exhibits and Schedules to Loan and Security Agreement 

 Exhibit B

 

 

IN WITNESS WHEREOF, the undersigned has executed this Note as on the date first
written above. 

          AMBLER FUNDING LLC, as the Borrower             By:       Name:      
Title:    

 

[FS Investment] Exhibits and Schedules to Loan and Security Agreement

 Exhibit B

 

 

Schedule attached to Promissory Note dated [__________] [____], 20[___] of
[Borrower] payable to the order of [Lender].

 

Date of
Advance or
Repayment Principal
Amount of
Advance Principal
Amount of
Repayment Outstanding
Principal
Amount        

[FS Investment] Exhibits and Schedules to Loan and Security Agreement

 Exhibit B

 

 

●     EXHIBIT C

 

FORM OF OFFICER’S CERTIFICATE AS TO SOLVENCY

 

[FS INVESTMENT CORPORATION IV]

 

[Ambler Funding LLC]

 

Reference is made to that certain Loan and Security Agreement, dated as of
November 22, 2019 (as amended, modified, waived, supplemented, restated or
replaced from time to time, the “Loan and Security Agreement”), by and among
Ambler Funding LLC, a Delaware limited liability company, as the borrower (in
such capacity, the “Borrower”) each of the lenders from time to time party
thereto (together with its representatives, successors and assigns in such
capacity, each a “Lender” and collectively, the “Lenders”), Ally Bank, as the
administrative agent thereunder (together with its successors and assigns in
such capacity, the “Administrative Agent”) and as Arranger and Wells Fargo Bank,
N.A., not in its individual capacity but as the collateral custodian (together
with its successors and assigns in such capacity, the “Collateral Custodian”)
and the collateral administrator (together with its successors and assigns in
such capacity, the “Collateral Administrator”). Capitalized terms used but not
defined herein shall have the meanings provided in the Loan and Security
Agreement.

 

The undersigned, through their duly appointed Responsible Officers, as
applicable, hereby certify as of the [__]th day of [_____], 2019 (the
“Certification Date”) to the Administrative Agent, the Lenders, the other
Secured Parties, and their respective successors and assigns, as follows:

 

Both before and after giving effect to (a) the transactions contemplated by the
Loan and Security Agreement and (b) the payment and accrual of all transaction
costs, fees, and expenses in connection with the foregoing, each of the
undersigned is and will be Solvent.

 

[Remainder of page intentionally left blank; signature page follows.]

 

[FS Investment] Exhibits and Schedules to Loan and Security Agreement

 

Exhibit C

 

 

IN WITNESS WHEREOF, the undersigned have signed and delivered this Officer’s
Certificate as to Solvency as of the Certification Date.

 

  [FS INVESTMENT CORPORATION IV, as the Collateral Manager       By:       Name:
Title:]

 

  [Ambler Funding LLC, as the Borrower       By:       Name:
Title:]

 

[FS Investment] Exhibits and Schedules to Loan and Security Agreement

 

Exhibit C

 

 

●     EXHIBIT D

 

FORM OF OFFICER’S CLOSING CERTIFICATE

 

[FS INVESTMENT CORPORATION IV

 

Ambler Funding LLC]

 

Reference is made to that certain Loan and Security Agreement, dated as of
November 22, 2019 (as amended, modified, waived, supplemented, restated or
replaced from time to time, the “Loan and Security Agreement”), by and among
Ambler Funding LLC, a Delaware limited liability company, as the borrower (in
such capacity, the “Borrower”), each of the lenders from time to time party
thereto (together with its representatives, successors and assigns in such
capacity, each a “Lender” and collectively, the “Lenders”), Ally Bank, as the
administrative agent thereunder (together with its successors and assigns in
such capacity, the “Administrative Agent”) and as Arranger and Wells Fargo Bank,
N.A., not in its individual capacity but as the collateral custodian (together
with its successors and assigns in such capacity, the “Collateral Custodian”)
and the collateral administrator (together with its successors and assigns in
such capacity, the “Collateral Administrator”). Capitalized terms used but not
defined herein shall have the meanings provided in the Loan and Security
Agreement.

 

The undersigned, through their duly appointed Responsible Officers, as
applicable, hereby certify as of the [__]th day of [_____], 2019 (the
“Certification Date”) to the Administrative Agent, the Lenders, the other
Secured Parties, and their respective successors and assigns, as follows (other
than with respect to item 5 below, which is made only by and with respect to the
Collateral Manager):

 

Each of the representations and warranties of the undersigned contained in the
Transaction Documents is true, complete and correct in all material respects
(except for such representations and warranties as are qualified by materiality,
a Material Adverse Effect or any similar qualifier, which representations and
warranties are true in all respects) and no event has occurred and is
continuing, or would result from the transactions effected pursuant thereto that
constitutes or would constitute a Default, an Event of Default or a Change of
Control.

 

The undersigned are each in compliance in all material respects with all
Applicable Laws except in instances where non-compliance or contravention that
could not reasonably be expected to have a Material Adverse Effect.

 

Except as otherwise indicated on a schedule to a Transaction Document, or as
otherwise consented to by the Administrative Agent, the undersigned have
delivered to the Administrative Agent true, complete and correct copies of all
documents required to be delivered by them to the Administrative Agent pursuant
to the Transaction Documents, all such documents are true, complete and correct
in all respects on and as of the date hereof, and each and every other condition
to the closing of the transactions as set forth in Section 3.1 of the Loan and
Security Agreement has been performed.

 

[FS Investment] Exhibits and Schedules to Loan and Security Agreement

 

Exhibit D

 

 

 

No Liens have arisen or been granted with respect to the Collateral other than
Permitted Liens.

 

The Collateral Manager has neither incurred nor suffered to exist any
Indebtedness as of the Effective Date except as previously disclosed to the
Administrative Agent.

 

[Remainder of page intentionally left blank; signature page follows.]

 

[FS Investment] Exhibits and Schedules to Loan and Security Agreement

 

Exhibit D

 

 

IN WITNESS WHEREOF, the undersigned have signed and delivered this Officer’s
Closing Certificate as of the Certification Date.

 

  [FS INVESTMENT CORPORATION IV, as the Collateral Manager       By:       Name:
Title:]

 

  [AMBLER FUNDING LLC, as the Borrower       By:       Name:
Title:]

 

[FS Investment] Exhibits and Schedules to Loan and Security Agreement

 

Exhibit D

 

 

●     EXHIBIT E

 

FORM OF RELEASE OF UNDERLYING INSTRUMENTS

 

[Delivery Date]

 

Wells Fargo Bank, N.A.,

as the Collateral Custodian

Corporate Trust Services Division

9062 Old Annapolis Rd

Columbia, MD 21045
Attention: CDO Trust Services – Ambler Funding
LLC

Telephone No.: (410) 884-2000

Facsimile No.: (410) 715-3748

 

Ally Bank,
as the Administrative Agent

300 Park Avenue, 4th Floor

New York, New York 10022

Attention: SFD Portfolio Manager

Facsimile No.: (212) 884-7693

 

with a copy to:

 

Ally Bank

300 Park Avenue, 4th Floor

New York, New York 10022

Attention: Legal Services/SFD

Facsimile No.: (212) 884-7189

Email: jorge.wagner@ally.com

 

Re:Loan and Security Agreement, dated as of November 22, 2019 (as amended,
modified, waived, supplemented, restated or replaced from time to time, the
“Loan and Security Agreement”), by and among Ambler Funding LLC, a Delaware
limited liability company, as the borrower (in such capacity, the “Borrower”),
each of the lenders from time to time party thereto (together with its
representatives, successors and assigns in such capacity, each a “Lender” and
collectively, the “Lenders”), Ally Bank, as the administrative agent thereunder
(together with its successors and assigns in such capacity, the “Administrative
Agent”) and as Arranger and Wells Fargo Bank, N.A., not in its individual
capacity but as the collateral custodian (together with its successors and
assigns in such capacity, the “Collateral Custodian”) and the collateral
administrator (together with its successors and assigns in such capacity, the
“Collateral Administrator”).

 

[FS Investment] Exhibits and Schedules to Loan and Security Agreement

 

Exhibit E

 

 

Ladies and Gentlemen:

 

In connection with the administration of the Underlying Instruments held by
Wells Fargo Bank, N.A., as the Collateral Custodian on behalf of the
Administrative Agent as agent for the Secured Parties, under the Loan and
Security Agreement, we request the release of the Underlying Instruments (or
such documents as specified below) for the Loans described below, for the reason
indicated. All capitalized terms used but not defined herein shall have the
meaning provided in the Loan and Security Agreement.

 

Obligor’s Name, Address & Zip Code:

 

Loan Identification Number:

 

Reason for Requesting Documents (check one)

 

● ☐ 3.   ●     Loan paid in full.   ● ☐ ●     ●     Loan liquidated by
[_______________]. ● ☐ ●     ●     Loan in foreclosure. ● ☐ ●    
●     Delivered in Error. ● ☐ ●     ●     Substitution. ● ☐ ●     ●     Failure
to satisfy Review Criteria. ● ☐ ●     ●     Repurchased. ● ☐ ●    
●     Discretionary Sale. ● ☐ ●     ●     Termination of Loan and Security
Agreement. ● ☐ ●     ●     Servicing. ● ☐ ●     ●     Other (explain). ____    
_    

 

If box 1, 2, 4, 5, 6, 7, 8 or 9 above is checked, and if all or part of the
Underlying Instruments were previously released to us, please release to us the
Underlying Instruments, requested in our previous request and receipt on file
with you, as well as any additional documents in your possession relating to the
specified Loan.

 

If box 3, 10 or 11 above is checked, we will return all of the above Underlying
Instruments to you as the Collateral Custodian (i) promptly upon the request of
the Administrative Agent or (ii) when our need therefor no longer exists.

 

[Remainder of page intentionally left blank; signature page follows.]

 

[FS Investment] Exhibits and Schedules to Loan and Security Agreement

 

Exhibit E

 

 

  FS INVESTMENT CORPORATION IV, as the Collateral Manager       By:       Name:
Title:

 

Consent of Administrative Agent if required under the Loan and Security
Agreement:

 

Ally Bank,

as the Administrative Agent

 

By:     Name:     Title:    

 

[FS Investment] Exhibits and Schedules to Loan and Security Agreement

 

Exhibit E

 

 

●     EXHIBIT F

 

[Reserved]

 

[FS Investment] Exhibits and Schedules to Loan and Security Agreement

 

Exhibit F

 

 

●     EXHIBIT G

 

FORM OF TRANSFEREE LETTER

 

___________ , 20___

 

Ambler Funding LLC,

as the Borrower

[_____]

[_____]
Attention: [_____]

Telephone No.: [_____]

Email: [_____]

 

FS Investment Corporation IV,

as the Collateral Manager

[_____]

[_____]
Attention: [_____]

Telephone No.: [_____]

Email: [_____]

 

Ally Bank,
as the Administrative Agent

300 Park Avenue, 4th Floor

New York, New York 10022

Attention: SFD Portfolio Manager

Facsimile No.: (212) 884-7693

 

with a copy to:

 

Ally Bank

300 Park Avenue, 4th Floor

New York, New York 10022

Attention: Legal Services/SFD

Facsimile No.: (212) 884-7189

Email: jorge.wagner@ally.com

 

Re:Ambler Funding LLC Notes issued to [Name of Lender] (the “Notes”)

 

[FS Investment] Exhibits and Schedules to Loan and Security Agreement

 

Exhibit G

 

 

Ladies and Gentlemen:

 

In connection with our acquisition of the above-captioned Notes, we certify that
(a) we understand that the Notes are not registered under the Securities Act of
1933, as amended (the “Securities Act”), or any state securities laws and are
being transferred to us in a transaction that is exempt from the registration
requirements of the Securities Act and any such laws, (b) we are either a
Qualified Institutional Buyer under Rule 144A of the Securities Act or an
institutional “Accredited Investor” as defined in Rule (1)-501(a)(l)-(3) or (7)
under the Securities Act, and have such knowledge and experience in financial
and business matters that we are capable of evaluating the merits and risks of
investments in the Notes, (c) we are a “Qualified Purchaser” for the purpose of
Section 3(c)(7) of the Investment Company Act of 1940, as amended (d) we have
had the opportunity to ask questions of and receive answers from the Borrower
concerning the purchase of the Notes and all matters relating thereto or any
additional information deemed necessary to our decision to purchase the Notes,
(e) we are acquiring the Notes for investment for our own account and not with a
view to any distribution of such Notes (but without prejudice to our right at
all times to sell or otherwise dispose of the Notes in accordance with clause
(g) below), (f) we have not offered or sold any Notes to, or solicited offers to
buy any Notes from, any person, or otherwise approached or negotiated with any
person with respect thereto, or taken any other action which would result in a
violation of Section 5 of the Securities Act, (g) we will not sell, transfer or
otherwise dispose of any Notes unless (1) such sale, transfer or other
disposition is made pursuant to an effective registration statement under the
Securities Act or is exempt from such registration requirements, and if
requested, we will at our expense provide an opinion of counsel satisfactory to
the addressees of this certificate that such sale, transfer or other disposition
may be made pursuant to an exemption from the Securities Act, (2) the purchaser
or transferee of such Notes has executed and delivered to you a certificate to
substantially the same effect as this certificate, and (3) the purchaser or
transferee has otherwise complied with any conditions for transfer set forth in
the Loan and Security Agreement, dated as of November 22, 2019 (as amended,
modified, waived, supplemented, restated or replaced from time to time, the
“Loan and Security Agreement”), by and among Ambler Funding LLC, a Delaware
limited liability company, as the borrower (in such capacity, the “Borrower”),
each of the lenders from time to time party thereto (together with its
representatives, successors and assigns in such capacity, each a “Lender” and
collectively, the “Lenders”), Ally Bank, as the administrative agent thereunder
(together with its successors and assigns in such capacity, the “Administrative
Agent”) and as Arranger and Wells Fargo Bank, N.A., not in its individual
capacity but as the collateral custodian (together with its successors and
assigns in such capacity, the “Collateral Custodian”) and the collateral
administrator (together with its successors and assigns in such capacity, the
“Collateral Administrator”), (h) we are not acquiring a Note, directly or
indirectly, for or on behalf of an employee benefit plan or other retirement
arrangement subject to the Employee Retirement Income Security Act of 1974, as
amended, and/or Section 4975 of the Internal Revenue Code of 1986, as amended,
or any entity, the assets of which would be deemed plan assets under the
Department of Labor regulations set forth at 29 C.F.R. §2510.3-101; unless
Prohibited Transaction Class Exemption (“PTCE”) 84-14, PTCE 90-1, PTCE 91-38,
PTCE 95-60 or PTCE 92-23 or some other applicable prohibited transaction
exemption is applicable to the acquisition and holdings of such Notes and (i) we
are a U.S. Person, as such term is defined in Section 7701(a)(30) of the
Internal Revenue Code of 1986, as amended. Capitalized terms used but not
defined herein shall have the meanings provided in the Loan and Security
Agreement.

 

[FS Investment] Exhibits and Schedules to Loan and Security Agreement

 

Exhibit G

 

 

  Very truly yours.           Print Name of Transferee         By:        
Responsible Officer

  

[FS Investment] Exhibits and Schedules to Loan and Security Agreement

 

Exhibit G

 

 

●     EXHIBIT H

 

FORM OF JOINDER SUPPLEMENT

 

JOINDER SUPPLEMENT, dated as of the date set forth in Item 1 of Schedule I
hereto, among the financial institution identified in Item 2 of Schedule I
hereto, Ambler Funding LLC, a Delaware limited liability company, as the
borrower (the “Borrower”) and Ally Bank, as administrative agent (the
“Administrative Agent”).

 

WHEREAS, this Joinder Supplement is being executed and delivered under Section
2.1 of the Loan and Security Agreement, dated as of November 22, 2019 (as
amended, modified, waived, supplemented, restated or replaced from time to time,
the “Loan and Security Agreement”), by and among Borrower, each of the lenders
from time to time party thereto (together with its representatives, successors
and assigns in such capacity, each a “Lender” and collectively, the “Lenders”),
Administrative Agent and Wells Fargo Bank, N.A., not in its individual capacity
but as the collateral custodian (together with its successors and assigns in
such capacity, the “Collateral Custodian”) and the collateral administrator
(together with its successors and assigns in such capacity, the “Collateral
Administrator”). Capitalized terms used but not defined herein shall have the
meaning provided in the Loan and Security Agreement; and

 

WHEREAS, the party set forth in Item 2 of Schedule I hereto (the “Proposed
Lender”) wishes to become a Lender party to the Loan and Security Agreement;

 

NOW, THEREFORE, the parties hereto hereby agree as follows:

 

Upon receipt by the Administrative Agent of the executed counterparts to this
Joinder Supplement, to which is attached a fully completed Schedule I and
Schedule II, each of which has been executed by the Proposed Lender, the
Borrower and the Administrative Agent, this Joinder Supplement shall become
effective (the “Joinder Effective Date”). From and after the Joinder Effective
Date, the Proposed Lender shall be a Lender party to the Loan and Security
Agreement for all purposes thereof.

 

Each of the parties to this Joinder Supplement agrees and acknowledges that at
any time and from time to time upon the written request of any other party, it
will execute and deliver such further documents and do such further acts and
things as such other party may reasonably request in order to affect the
purposes of this Joinder Supplement.

 

[FS Investment] Exhibits and Schedules to Loan and Security Agreement

 

Exhibit H 

 

 

By executing and delivering this Joinder Supplement, the Proposed Lender
confirms to and agrees with the Administrative Agent and the other Lenders as
follows: (i) none of the Administrative Agent and the other Lenders makes any
representation or warranty or assumes any responsibility with respect to any
statements, warranties or representations made in or in connection with the Loan
and Security Agreement or the execution, legality, validity, enforceability,
genuineness, sufficiency or value of the Loan and Security Agreement or any
other instrument or document furnished pursuant thereto, or with respect to any
Notes issued under the Loan and Security Agreement, or the Collateral (as
defined under the Loan and Security Agreement) or the financial condition of any
FS/KKR Party, or the performance or observance by any FS/KKR Party of any of
their respective obligations under the Loan and Security Agreement, any other
Transaction Document or any other instrument or document furnished pursuant
thereto; (ii) the Proposed Lender confirms that it has received a copy of such
documents and information as it has deemed appropriate to make its own credit
analysis and decision to enter into this Joinder Supplement; (iii) the Proposed
Lender will, independently and without reliance upon the Administrative Agent or
any other Lender and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking or
not taking action under the Loan and Security Agreement; (iv) the Proposed
Lender appoints and authorizes the Administrative Agent and the Collateral
Custodian, as applicable, to take such action as agent on its behalf and to
exercise such powers under the Loan and Security Agreement as are delegated to
the Administrative Agent and the Collateral Custodian, as applicable, by the
terms thereof, together with such powers as are reasonably incidental thereto,
all in accordance with the Loan and Security Agreement; (v) the Proposed Lender
agrees (for the benefit of the parties hereto and the other Lenders) that it
will perform in accordance with their terms all of the obligations which by the
terms of the Loan and Security Agreement are required to be performed by it as a
Lender; and (vi) the Proposed Lender hereby individually represents and
warrants, as to itself, that it would satisfy the requirements of a “qualified
purchaser” as defined in Section 2(a)(51) of the Investment Company Act of 1940,
as amended , or an “accredited investor” as defined in paragraphs (a)(1), (2),
(3), or (7) of Rule 501 of Regulation D under the U.S. Securities Act of 1933,
as amended, or any entity in which all of the equity owners come within such
paragraphs.

 

Schedule II hereto sets forth administrative information with respect to the
Proposed Lender.

 

This Joinder Supplement shall be governed by, and construed in accordance with,
the laws of the State of New York.

 

[Remainder of page intentionally left blank; signature page follows.]

 

[FS Investment] Exhibits and Schedules to Loan and Security Agreement

 

Exhibit H 

 

 

IN WITNESS WHEREOF, the parties hereto have caused this Joinder Supplement to be
executed by their respective duly authorized officers on Schedule I hereto as of
the date set forth in Item 1 of Schedule I hereto.

 

  ALLY BANK,
as Administrative Agent             By:       Name:       Title:    

 

  [NAME OF LENDER],
as Lender             By:       Name:       Title:    

 

  [AMBLER FUNDING LLC, as the Borrower             By:       Name:    
Title:   ]2  

 

 

 

2 To be included if Borrower consent is required pursuant to Section 12.16 of
the Loan and Security Agreement.

 

 

 

[FS Investment] Exhibits and Schedules to Loan and Security Agreement

 

Exhibit H 

 

 

SCHEDULE I TO

JOINDER SUPPLEMENT

 

COMPLETION OF INFORMATION AND SIGNATURES FOR JOINDER SUPPLEMENT

 

Re:Loan and Security Agreement, dated as of November 22, 2019 (as amended,
modified, waived, supplemented, restated or replaced from time to time, the
“Loan and Security Agreement”), by and among Ambler Funding LLC, a Delaware
limited liability company, as the borrower (in such capacity, the “Borrower”),
each of the lenders from time to time party thereto (together with its
representatives, successors and assigns in such capacity, each a “Lender” and
collectively, the “Lenders”), Ally Bank, as the administrative agent thereunder
(together with its successors and assigns in such capacity, the “Administrative
Agent”) and as Arranger and Wells Fargo Bank, N.A., not in its individual
capacity but as the collateral custodian (together with its successors and
assigns in such capacity, the “Collateral Custodian”) and the collateral
administrator (together with its successors and assigns in such capacity, the
“Collateral Administrator”).

 

 

Item 1: Date of Joinder Supplement:    

 

Item 2: Proposed Lender:    

 

Item 3: Commitment: $_______________           Commitment Termination
Date:_______________  

 

Item 4: Signatures of Parties to Agreement:

 

  __________________________       , as
Proposed Lender             By:.         Name:       Title:  

 

[FS Investment] Exhibits and Schedules to Loan and Security Agreement

 

Exhibit H 

 

 

SCHEDULE II TO

JOINDER SUPPLEMENT

 

ADDRESS FOR NOTICES

AND

WIRE INSTRUCTIONS

 

Address for Notices:

____________________________

____________________________

____________________________

____________________________

Telephone:    __________________

Facsimile:         _________________

email:                  ________________

 

With a copy to:

 

____________________________

____________________________

____________________________

Telephone:        ________________

Facsimile:           ________________

email:                  ________________

 

Wire Instructions: 

Name of Bank:   ________________

A/C No.:             ________________

ABA No.:           ________________

Reference:          ________________

 

 

[FS Investment] Exhibits and Schedules to Loan and Security Agreement

 

Exhibit H 

 

 

●     EXHIBIT I

 

FORM OF SECTION 2.13 CERTIFICATE

 

Reference is hereby made to the Loan and Security Agreement, dated as of
November 22, 2019 (as amended, modified, waived, supplemented, restated or
replaced from time to time, the “Loan and Security Agreement”), by and among
Ambler Funding LLC, a Delaware limited liability company, as the borrower (in
such capacity, the “Borrower”), each of the lenders from time to time party
thereto (together with its representatives, successors and assigns in such
capacity, each a “Lender” and collectively, the “Lenders”), Ally Bank, as the
administrative agent thereunder (together with its successors and assigns in
such capacity, the “Administrative Agent”) and as Arranger and Wells Fargo Bank,
N.A., not in its individual capacity but as the collateral custodian (together
with its successors and assigns in such capacity, the “Collateral Custodian”)
and the collateral administrator (together with its successors and assigns in
such capacity, the “Collateral Administrator”). Capitalized terms used but not
defined herein shall have the meanings provided in the Loan and Security
Agreement. Pursuant to the provisions of Section 2.13 of the Loan and Security
Agreement, the undersigned hereby certifies that:

 

1.               It is a □ natural individual person, □ treated as a corporation
for U.S. federal income tax purposes, □ disregarded for U.S. federal income tax
purposes (in which case a copy of this Section 2.13 Certificate is attached in
respect of its sole beneficial owner), or □ treated as a partnership for U.S.
federal income tax purposes (one must be checked).

 

It is the sole beneficial owner of amounts received pursuant to the Loan and
Security Agreement.

 

It is not a bank, as such term is used in section 881(c)(3)(A) of the Internal
Revenue Code of 1986, as amended (the “Code”), or the Loan and Security
Agreement is not, with respect to the undersigned, a Loan and Security Agreement
entered into in the ordinary course of its trade or business, within the meaning
of such section.

 

It is not a 10-percent shareholder of Borrower within the meaning of section
871(h)(3) or 881(c)(3)(B) of the Code.

 

It is not a controlled foreign corporation that is related to Borrower within
the meaning of section 881(c)(3)(C) of the Code.

 

Amounts paid to it under the Loan and Security Agreement and the other
Transaction Documents are not effectively connected with its conduct of a trade
or business in the United States.

 

If the undersigned is not a U.S. Tax Person and is not treated as a partnership
for U.S. federal income tax purposes, it has provided the Borrower (or
participating Lender, as applicable) with a certificate that it is not a U.S.
Tax Person on IRS Form W-8BEN or IRS Form W-8BEN-E.

 

  

[FS Investment] Exhibits and Schedules to Loan and Security Agreement

 

Exhibit I 

 

 

If the undersigned is not a U.S. Tax Person and is treated as a partnership for
U.S. federal income tax purposes, it has provided the Borrower (or participating
Lender, as applicable) with an IRS Form W-8IMY accompanied by one of the
following forms from each of its partners or members (as applicable) that is
claiming the portfolio interest exemption: (i) an IRS Form W-8BEN or IRS Form
W-8BEN-E or (ii) an IRS Form W-8IMY accompanied by an IRS Form W-8BEN or IRS
Form W-8BEN-E from each of such partner’s or member’s beneficial owners that is
claiming the portfolio interest exemption.

 

By executing this certificate, the undersigned agrees that (1) if the
information provided in this certificate changes, the undersigned shall promptly
so inform the Borrower (or participating Lender, as applicable), and (2) the
undersigned shall have at all times furnished the Borrower (or participating
Lender, as applicable) with a properly completed and currently effective
certificate in either the calendar year in which each payment is to be made to
the undersigned, or in either of the two calendar years preceding such payments.

 

[Remainder of page intentionally left blank; signature page follows.]

 

  [NAME OF UNDERSIGNED]             By:       Name:       Title:    

 

[FS Investment] Exhibits and Schedules to Loan and Security Agreement

 

Exhibit I 

 

 

●     EXHIBIT J

 

FORM OF COLLATERAL CUSTODIAN CERTIFICATION

 

[Date]

FS Investment Corporation IV,

as the Collateral Manager

[_____]

[_____]
Attention: [_____]

Telephone No.: [_____]

Facsimile No.: [_____]

Email: [_____]

 

Ally Bank,
as the Administrative Agent

300 Park Avenue, 4th Floor

New York, New York 10022

Attention: SFD Portfolio Manager

Facsimile No.: (212) 884-7693

 

with a copy to:

 

Ally Bank

300 Park Avenue, 4th Floor

New York, New York 10022

Attention: Legal Services/SFD

Facsimile No.: (212) 884-7189

Email: jorge.wagner@ally.com

 

Re: Loan and Security Agreement, dated as of November 22, 2019 (as amended,
modified, waived, supplemented, restated or replaced from time to time, the
“Loan and Security Agreement”), by and among Ambler Funding LLC, a Delaware
limited liability company, as the borrower (in such capacity, the “Borrower”),
each of the lenders from time to time party thereto (together with its
representatives, successors and assigns in such capacity, each a “Lender” and
collectively, the “Lenders”), Ally Bank, as the administrative agent thereunder
(together with its successors and assigns in such capacity, the “Administrative
Agent”) and as Arranger and Wells Fargo Bank, N.A., not in its individual
capacity but as the collateral custodian (together with its successors and
assigns in such capacity, the “Collateral Custodian”) and the collateral
administrator (together with its successors and assigns in such capacity, the
“Collateral Administrator”)

 

[FS Investment] Exhibits and Schedules to Loan and Security Agreement

 

Exhibit J 

 

 

Ladies and Gentlemen:

 

In accordance with the provisions of Section 7.2(b)(i) of the above-referenced
Loan and Security Agreement, the undersigned, as Collateral Custodian, hereby
certifies and confirms that with respect to each Loan listed on the Loan List
annexed hereto as Schedule I, except as noted on the report of exceptions
attached hereto as Schedule II;

 

(i)all Required Loan Documents set forth on the applicable Loan Checklist are in
the Collateral Custodian’s possession; and

 

(ii)all Required Loan Documents delivered to the Collateral Custodian related to
each such Loans have been reviewed by the Collateral Custodian in accordance
with the Review Criteria and each of the Review Criteria are satisfied other
than as set forth on Schedule II hereof.

 

The Collateral Custodian shall have no liability for or obligation with respect
to, and shall not be construed or obliged to make any representation or warranty
as to: (i) the validity, sufficiency, marketability, genuineness, value,
contents or enforceability of any Loan or Required Loan Document; (ii) the
validity, adequacy or perfection of any lien upon or security interest purported
to be evidenced or created thereby; or (iii) to determine that the contents of
any Loan or Required Loan Document are appropriate for the represented purpose
or that any Loan or Required Loan Document has actually been recorded or filed,
as maybe applicable, or that any Loan or Required Loan Document is other than
what it purports on its face to be. All capitalized terms used but not defined
herein shall have the meaning provided in the Loan and Security Agreement.

 

[Remainder of page intentionally left blank; signature page follows.]

 

[FS Investment] Exhibits and Schedules to Loan and Security Agreement

 

Exhibit J 

 

 

  WELLS FARGO BANK, N.A.,
as Collateral Custodian             By:       Name:       Title:    

 

[FS Investment] Exhibits and Schedules to Loan and Security Agreement

 

Exhibit J 

 

 

SCHEDULE I

TO EXHIBIT J

 

Loan List

 

[See attached.]

 

[FS Investment] Exhibits and Schedules to Loan and Security Agreement

 

Exhibit J 

 

 

SCHEDULE II

TO EXHIBIT J

 

Exceptions

 

[See attached.]

 

[FS Investment] Exhibits and Schedules to Loan and Security Agreement

 

Exhibit J

 

 

EXHIBIT K

 

FORM OF COMPLIANCE CERTIFICATE

 

AMBLER FUNDING LLC

 

Date: _______________, 20__

 

2.               This Compliance Certificate (this “Certificate”) is given by
Ambler Funding LLC, a Delaware limited liability company (the “Borrower”),
pursuant to Section 5.1(t)(ii) of that certain Loan and Security Agreement,
dated as of November 22, 2019 (as amended, modified, waived, supplemented,
restated or replaced from time to time, the “Loan and Security Agreement”), by
and among Ambler Funding LLC, a Delaware limited liability company, as the
borrower (in such capacity, the “Borrower”), each of the lenders from time to
time party thereto (together with its representatives, successors and assigns in
such capacity, each a “Lender” and collectively, the “Lenders”), Ally Bank, as
the administrative agent thereunder (together with its successors and assigns in
such capacity, the “Administrative Agent”) and as Arranger and Wells Fargo Bank,
N.A., not in its individual capacity but as the collateral custodian (together
with its successors and assigns in such capacity, the “Collateral Custodian”)
and the collateral administrator (together with its successors and assigns in
such capacity, the “Collateral Administrator”). Capitalized terms used but not
defined herein shall have the meanings provided in the Loan and Security
Agreement.

 

3.               The officer executing this Certificate is a Responsible Officer
of the Borrower and as such is duly authorized to execute and deliver this
Certificate on behalf of the Borrower. By executing this Certificate, such
officer hereby certifies to Administrative Agent and the Lenders, on behalf of
the Borrower and not in his/her individual capacity, that:

 

4.               (a)          the financial statements delivered with this
Certificate in accordance with Sections 5.1(s)(i) and/or 5.1(s)(ii) of the Loan
and Security Agreement are correct and complete and fairly present, in all
material respects, in accordance with GAAP the financial position and the
results of operations of the Transferor, the Borrower and their Subsidiaries as
of the dates of and for the periods covered by such financial statements
(subject, in the case of interim financial statements, to normal year-end
adjustments and the absence of footnote disclosure);

 

5.               (b)         Annex A hereto includes a correct calculation of
the Borrower’s Total Interest Coverage Ratio for the relevant period ended
_________ __, 20__;3

 

6.               (c)         to the best of such officer’s knowledge, no Default
or Event of Default exists [except as specified on Annex B attached hereto];

 

 

 

3 To be included after [_____], 2020 [NTD: to be the date that is the last day
of the eleventh month after the Effective Date].

 

[FS Investment] Exhibits and Schedules to Loan and Security Agreement

 

Exhibit K

 

 

7.               (d)          since the Effective Date and except as disclosed
in prior Compliance Certificates delivered to Administrative Agent, no FS/KKR
Party and no Subsidiary of any FS/KKR Party has:

 

8.              (i)      changed its legal name, identity, jurisdiction of
incorporation, organization or formation or organizational structure or formed
or acquired any Subsidiary except as follows:
____________________________________;

 

9.               (ii)      acquired all or substantially all of the assets of,
or merged or consolidated with or into, any Person, except as
follows:________________________________; or

 

10.          (iii)    changed its address or otherwise relocated, acquired fee
simple title to any real property or entered into any real property leases,
except as follows: ____________________ _______________________________.

 

11.            IN WITNESS WHEREOF, the Borrower has caused this Certificate to
be executed by one of its Responsible Officers this _____ day of
_______________, 20__.

 

12.      

 

[FS Investment] Exhibits and Schedules to Loan and Security Agreement

 

Exhibit J

 

 

  13.           14. AMBLER FUNDING LLC, as the Borrower         By:     Name:  
Title:

 

[FS Investment] Exhibits and Schedules to Loan and Security Agreement

 

Exhibit J

 

 

Annex A

 

Total Interest Coverage Ratio Calculations

 

[See attached]

 

[FS Investment] Exhibits and Schedules to Loan and Security Agreement

 

Exhibit J

 

 

[Annex B]

 

Defaults or Events of Default]

 

[FS Investment] Exhibits and Schedules to Loan and Security Agreement

 

Exhibit J

 

 

SCHEDULE I

 

LEGAL NAMES

 

Pursuant to Section 4.1 of the Loan and Security Agreement, each FS/KKR Party’s
exact legal name is as follows:

 

Borrower: Ambler Funding LLC, a Delaware limited liability company

 

Transferor: FS Investment Corporation IV, a Maryland corporation

 

[FS Investment] Exhibits and Schedules to Loan and Security Agreement

 

Schedule I

 

 

SCHEDULE II

 

LOAN LIST

 

TO BE DELIVERED IN CONNECTION WITH EACH BORROWING BASE CERTIFICATE

 

[FS Investment] Exhibits and Schedules to Loan and Security Agreement

 

Schedule II

 

 

SCHEDULE III

 

[reserved]

 

[FS Investment] Exhibits and Schedules to Loan and Security Agreement

 

Schedule III

 

 

SCHEDULE IV

 

ARTICLE I.AGREED-UPON PROCEDURES

 

In accordance with Section 5.1(t)(vi) of the Credit Agreement, the Borrower will
cause a firm of nationally recognized independent public accountants to furnish
in accordance with attestation standards established by the American Institute
of Certified Public Accountants a report to the effect that such accountants
have either verified, compared, or recalculated each of the following accounts
in the Collateral Report to applicable system or records of the Borrower or the
Transferor and the financial statements of the underlying Obligors, as
applicable:

 

●Borrowing Base

●Availability

●Minimum Credit Enhancement

●Total Interest Coverage Ratio

●Loan Tape

○Loan Classification/Seniority

○Outstanding Balance Purchase Price

○Loan maturity date

○Interest Rate:

■fixed/floating

■index (if applicable)

■spread or coupon

■PIK (if applicable)

○S&P Industry Classification

○Eligible principal amount

○Assigned Value

○Moody’s, S&P, and Fitch ratings (if applicable)

○Trailing twelve-month EBITDA for the current test period

○Original trailing twelve-month reported EBITDA and Original trailing
twelve-month adjusted EBITDA

○Net Senior Debt (or equivalent) (recalculated based on the Obligor financial
statements of the current test period)

○Original Net Senior Debt (or equivalent) (recalculated based on Obligor
financial states of original test period)

○Net Total Debt (or equivalent) (recalculated based on the Obligor financial
statements of the current test period)

○Original Net Total Debt (or equivalent) (recalculated based on Obligor
financial states of original test period)

○Total Interest Coverage Ratio (or equivalent ratio) (recalculated based on the
Obligor financial statements of the current test period)

○Original Interest Coverage Ratio (or equivalent ratio) (recalculated based on
the Obligor financial statements of the original test period)

○Fair Market Value, with respect to Principal Finance Loans

●Compliance with Concentration Limitations

 

[FS Investment] Exhibits and Schedules to Loan and Security Agreement

 

Schedule IV

 

 

○Non-Senior Secured Loans

○Largest to fifth largest Industries

○Second Lien Loans

○First Lien/Last Out Loans

○First Lien Loans to Tier 3 Obligors

○First Lien Last Out Loans or Second Lien Loans to Tier 3 Obligors

○Loans with maturities greater than 7 years

○DIP Loans

○Obligor concentrations

○Collateral Loans that permit payment of interest less frequently than quarterly

○Obligors domiciled in Canada

○Cov-Lite Loans

○Collateral Loans with an Obligor that has a trailing twelve month EBITDA most
recently calculated in accordance with the related Underlying Instrument, of
less than $10,000,000 at the time of acquisition

○Revolving Loans and the unfunded portion of Delayed Draw Loans

○PIK Loans and Partial PIK Loans

○Principal Finance Loans

○Loans to Obligors principally engaged in gaming businesses

 

At the discretion of the Administrative Agent and such firm, the foregoing
review will be of no more than (i) one (1) random Borrowing Base Certificate
from the 2019 fiscal year and (ii) three (3) random Borrowing Base Certificate
for each subsequent fiscal year.

 

For each such Borrowing Base Certificate, such firm shall also, for the ten (10)
largest single Obligors in each such Borrowing Base Certificate, compare the
cash activity information in the Administrative Agent’s cash log to the
corresponding information in the Collateral Manager’s cash log for the
collection period corresponding to such Borrowing Base Certificate and verify
the interest and principal payments received during such period.

 

The report provided by such firm may be in a format such typically utilized for
a report of this nature; provided that it will consist of at a minimum (i) a
list of deviations from the applicable Borrowing Base Certificate and (ii)
discuss with the Borrower and the Collateral Manager the reason for such
deviations, and set forth the findings in such report.

 

For the purposes of this Schedule IV, the following terms shall have the
following meanings:

 

“Net Senior Debt” shall mean the Dollar amount equal to either (a) the meaning
of “Net Senior Debt” or comparable definition set forth in the Underlying
Instruments for such Loan, or (b) in the case of any Loan with respect to which
the related Underlying Instruments do not include a definition of “Net Senior
Debt” or comparable definition, the “total indebtedness” (as defined in the
Underlying Instruments or comparable definition thereof, including such Loan) of
the applicable Obligor as of the date of determination, excluding any junior
indebtedness and any unsecured indebtedness of such Obligor or non-recourse
indebtedness of such Obligor secured solely by the real property and related
improvements and fixtures of such Obligor as of such date, minus the
Unrestricted Cash of such Obligor as of such date.

 

[FS Investment] Exhibits and Schedules to Loan and Security Agreement

 

Schedule IV

 

 

“Net Total Debt” shall mean the Dollar amount equal to either (a) the meaning of
“Net Total Debt” or comparable definition set forth in the Underlying
Instruments for such Loan, or (b) in the case of any Loan with respect to which
the related Underlying Instruments do not include a definition of “Net Total
Debt” or comparable definition, the Dollar Equivalent of the “total
indebtedness” (as defined in the Underlying Instruments or comparable definition
thereof, including such Loan) of the applicable Obligor as of the date of
determination, minus the Dollar Equivalent of Unrestricted Cash of such Obligor
as of such date.

 

[FS Investment] Exhibits and Schedules to Loan and Security Agreement

 

Schedule IV

 

 

SCHEDULE V

 

S&P INDUSTRY CLASSIFICATIONS

 

●     Asset Type ●     Description ●     1020000 ●     Energy Equipment and
Services ●     1030000 ●     Oil, Gas and Consumable Fuels ●     1033403
●     Mortgage Real Estate Investment Trust (REITs) ●     2020000
●     Chemicals ●     2030000 ●     Construction Materials ●     2040000
●     Containers and Packaging ●     2050000 ●     Metals and Mining
●     2060000 ●     Paper and Forest Products ●     3020000 ●     Aerospace and
Defense ●     3030000 ●     Building Products ●     3040000 ●     Construction &
Engineering ●     3050000 ●     Electrical Equipment ●     3060000
●     Industrial Conglomerates ●     3070000 ●     Machinery ●     3080000
●     Trading Companies and Distributors ●     3110000 ●     Commercial Services
and Supplies ●     9612010 ●     Professional Services ●     3210000 ●     Air
Freight and Logistics ●     3220000 ●     Airlines ●     3230000 ●     Marine
●     3240000 ●     Road and Rail ●     3250000 ●     Transportation
Infrastructure ●     4011000 ●     Auto Components ●     4020000
●     Automobiles ●     4110000 ●     Household Durables ●     4120000
●     Leisure Products ●     4130000 ●     Textiles, Apparel and Luxury Goods
●     4210000 ●     Hotels, Restaurants and Leisure ●     9551701
●     Diversified Consumer Services ●     4310000 ●     Media ●     4410000
●     Distributors ●     4420000 ●     Internet and Catalog Retail ●     4430000
●     Multiline Retail ●     4440000 ●     Specialty Retail ●     5020000
●     Food and Staples Retailing ●     5110000 ●     Beverages ●     5120000
●     Food Products ●     5130000 ●     Tobacco

 

[FS Investment] Exhibits and Schedules to Loan and Security Agreement

 

Schedule V

 

 

●     5220000 ●     Personal Products ●     6020000 ●     Healthcare Equipment
and Supplies ●     6030000 ●     Healthcare Providers and Services ●     9551729
●     Health Care Technology ●     6110000 ●     Biotechnology ●     6120000
●     Pharmaceuticals ●     9551727 ●     Life Sciences Tools & Services
●     7011000 ●     Banks ●     7020000 ●     Thrifts and Mortgage Finance
●     7110000 ●     Diversified Financial Services ●     7120000 ●     Consumer
Finance ●     7130000 ●     Capital Markets ●     7210000 ●     Insurance
●     7310000 ●     Real Estate Management and Development ●     7311000
●     Equity Real Estate Investment Trust (REITs) ●     8020000 ●     Internet
Software and Services ●     8030000 ●     IT Services ●     8040000
●     Software ●     8110000 ●     Communications Equipment ●     8120000
●     Technology Hardware, Storage and Peripherals ●     8130000
●     Electronic Equipment, Instruments and Components ●     8210000
●     Semiconductors and Semiconductor Equipment ●     9020000 ●     Diversified
Telecommunication Services ●     9030000 ●     Wireless Telecommunication
Services ●     9520000 ●     Electric Utilities ●     9530000 ●     Gas
Utilities ●     9540000 ●     Multi-Utilities ●     9550000 ●     Water
Utilities ●     9551702 ●     Independent Power and Renewable Electricity
Producers

 

[FS Investment] Exhibits and Schedules to Loan and Security Agreement