FS Investment Corporation IV 8-K [fsiciv-8k_062819.htm] 

 

Exhibit 10.2

 

EXECUTION COPY

 

SCHEDULE

 

to the

 

ISDA 2002 Master Agreement

 

dated as of January 19, 2016

(amended and restated as of June 28, 2019)

 

between

 

CITIBANK, N.A., 

a national banking association organized under the laws of the United States

(“Party A”)

 

and

 

CHELTENHAM FUNDING LLC, 

a limited liability company formed 

under the laws of the State of Delaware 

(“Party B”)

 

With effect from and after June 28, 2019 (the “Amendment Effective Date”), this
Schedule to the ISDA 2002 Master Agreement (without the Credit Support Annex
thereto) amends and restates the prior Schedule to the Master Agreement dated as
of January 19, 2016 (without the Credit Support Annex thereto, the “Original
Schedule”), which Original Schedule (with respect to the period from and after
the Amendment Effective Date) is hereby superseded and shall be of no further
force or effect. The Original Schedule, as amended and restated hereby, is the
Schedule to the Master Agreement dated as of January 19, 2016 between Party A
and Party B. Except as expressly provided in this amended and restated Schedule,
said Master Agreement shall remain unchanged and in full force and effect. Any
reference to the “Schedule” or words of similar import in said Master Agreement
or any Confirmation exchanged thereunder shall be a reference to the Original
Schedule, as amended and restated hereby, and as the same may be further
amended, supplemented and otherwise modified and in effect from time to time.

 

Part 1

Termination Provisions

 

In this Agreement:

 

(a)           “Specified Entity” means:

 

(i)       in relation to Party A, for the purpose of Section 5(a)(v) of this
Agreement, Citigroup Global Markets Limited, Citigroup Global Markets Inc.,
Citigroup Global Markets Commercial Corp., Citicorp Securities Services, Inc.,
Citibank Europe PLC, Citigroup Global Markets Deutschland AG, Citigroup Energy
Inc., Citibank Japan Ltd., Citibank Canada, Citigroup Energy Canada ULC and
Citigroup Financial Products Inc. (individually a “Section 5(a)(v) Affiliate”),
and for all other purposes not applicable; and

 

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(ii)       in relation to Party B, for the purpose of Sections 5(a)(v),
5(a)(vi), 5(a)(vii) and 5(b)(v) of this Agreement, FS Investment Corporation IV,
a Maryland corporation (the “Party B Investor”).

 

(b)          “Specified Transaction” will have the meaning specified in
Section 14 of this Agreement. For purposes of clause (c) of such definition,
Specified Transaction includes any securities options, margin loans, short
sales, and any other similar transaction now existing or hereafter entered into
between Party A or any Section 5(a)(v) Affiliate, on the one hand, and Party B
or any Specified Entity of Party B, on the other hand.

 

(c)          The “Cross Default” provisions of Section 5(a)(vi) will apply to
Party A and will apply to Party B; provided that, notwithstanding the foregoing,
an Event of Default shall not occur under either (1) or (2) therein if (a) the
event or condition referred to in (1) or the failure to pay referred to in
(2) is a failure to pay caused by an error or omission of an administrative or
operational nature; (b) funds were available to such party to enable it to make
the relevant payment when due; and (c) such relevant payment is made within
three Local Business Days following the discovery of the error or failure.

 

For purposes of Section 5(a)(vi), the following provisions apply:

 

“Specified Indebtedness” shall have the meaning set forth in Section 14 of this
Agreement; provided that Specified Indebtedness shall not include deposits
received in the course of a party’s ordinary banking business.

 

“Threshold Amount” means

 

(i) with respect to Party A, 2% of the stockholders’ equity of Party A; 

(ii) with respect to Party B, USD100,000; and 

(iii) with respect to the Party B Investor, the lesser of USD10,000,000 and 2%
of the Net Asset Value of the Party B Investor;

 

including the U.S. Dollar equivalent on the date of any default, event of
default or other similar condition or event of any obligation stated in any
other currency.

 

For purposes of the above, stockholders’ equity shall be determined by reference
to the relevant party’s most recent consolidated (quarterly, in the case of a
U.S. organized party) balance sheet and shall include, in the case of a U.S.
organized party, legal capital, paid-in capital, retained earnings and
cumulative translation adjustments. Such balance sheet shall be prepared in
accordance with accounting principles that are generally accepted in such
party’s country of organization.

 

2 

 

 

For purposes of the above, “Net Asset Value” means, in relation to the Party B
Investor, its net asset value calculated in accordance with the requirements of
the Investment Company Act of 1940, as amended, and all applicable rules and
regulations promulgated under the U.S. Federal securities laws, including
Regulation S-X.

 

(d)          The “Credit Event Upon Merger” provisions of Section 5(b)(v) of
this Agreement will apply to Party A and will apply to Party B (and to the
Party B Investor).

 

(e)          The “Automatic Early Termination” provisions of Section 6(a) will
not apply to Party A and will not apply to Party B; provided, however, that with
respect to a party, where the Event of Default specified in Section
5(a)(vii)(1), (3), (4), (5), (6) or to the extent analogous thereto, (8) is
governed by a system of law which does not permit termination to take place
after the occurrence of the relevant Event of Default, then the Automatic Early
Termination provisions of Section 6(a) will apply to such party.

 

(f)          “Termination Currency” means United States Dollars.

 

(g)         “Additional Termination Event”: The following shall constitute
Additional Termination Events (and, with respect to each such Additional
Termination Event other than that provided under clause (14) below, Party B will
be the sole Affected Party, and all Transactions will be Affected Transactions):

 

(1)          Without Party A’s prior written consent, (x) the Party B Investor
changes its jurisdiction of organization and/or organizational form from a
corporation incorporated under the laws of the State of Maryland or (y) any
amendment, supplement or other modification is made to the articles of
incorporation or bylaws of the Party B Investor, in each case, to the extent
such change, amendment, supplement or other modification has, or could
reasonably be expected to have, a Material Adverse Effect.

 

(2)          Without Party A’s prior written consent, (x) Party B changes its
jurisdiction of organization and/or organizational form from a limited liability
company formed under the laws of the State of Delaware or (y) any amendment,
supplement or other modification is made to the limited liability company
agreement of Party B, in each case, to the extent such change, amendment,
supplement or other modification has, or could reasonably be expected to have, a
Material Adverse Effect.

 

(3)          The Party B Investor ceases to be the sole owner, beneficially and
of record, of all of the equity ownership interests issued by Party B.

 

(4)          The Party B Investor or any legal successor thereto (the
“Manager”) ceases to be the manager of Party B or ceases to have authority to
enter into transactions pursuant to this Agreement on behalf of Party B and
shall not have been replaced by another person or entity as to which Party A has
not made an objection, having a reasonable basis, in writing within 10 Business
Days following notice.

 

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(5)          The Party B Investor fails to maintain FSIC IV Advisor, LLC, or a
successor thereto acceptable to Party A in its sole discretion (the “Investment
Advisor”) as its sole investment adviser.

 

(6)          [Intentionally Omitted].

 

(7)          Party B fails to comply with its investment strategies and/or
restrictions as in effect on the date hereof to the extent such non-compliance
has, or could reasonably be expected to have, a Material Adverse Effect.

 

(8)          Party B incurs, assumes or otherwise becomes liable in respect of
any Specified Indebtedness (other than any Specified Indebtedness arising under
any Transaction hereunder).

 

(9)          The Party B Investor or Party B shall dissolve or liquidate.

 

(10)       There occurs any material change to or departure from a Fundamental
Policy of the Party B Investor or Party B that relates to Party B’s performance
of its obligations under this Agreement without the prior consent of Party A
(which consent shall not be unreasonably withheld).

 

(11)       The Party B Investor violates Section 18, as modified by Section 61,
of the 1940 Act.

 

(12)       The Party B Investor violates Section 55(a) of the 1940 Act.

 

(13)       The Party B Investor’s election to be subject to the provisions of
Sections 55 through 65 of the 1940 Act pursuant to Section 54(a) of the 1940 Act
is revoked by order of the Securities and Exchange Commission or is withdrawn by
the Party B Investor pursuant to Section 54(c) of the 1940 Act.

 

(14)        If, after the parties hereto have entered into one or more
Transactions, (x) due to the adoption of or any change in any applicable law or
regulation (including, without limitation, a change with respect to Section 18
of the 1940 Act or any rule or regulation promulgated thereunder) or (y) due to
the announcement of or any change in the interpretation by any court, tribunal
or regulatory authority with competent jurisdiction of any applicable law or
regulation (including any action taken by the U.S. Securities Exchange
Commission), Party B determines that it will, or has, become illegal for Party B
or materially detrimental to Party B’s interests to perform its obligations in
respect of one or more such Transactions. For purposes of this Additional
Termination Event, both parties hereto will be the Affected Parties and all
Transactions will be Affected Transactions.

 

Notwithstanding the foregoing, (i) a merger of the Party B Investor with or into
FS KKR Capital Corp., FS Investment Corporation II, FS Investment Corporation IV
or Corporate Capital Trust II (each a “Permitted BDC”) or other fundamental
change transaction the result of which effectively combines the ownership and/or
assets of the Party B Investor and one or more Permitted BDCs and (ii) any
publicly announced other transaction or series of transactions, the result of
which is that Party B is a direct or indirect wholly-owned subsidiary of a
business development company advised by a joint venture entity between (x) KKR
Credit Advisors (US) LLC (and any successor entity thereto) or its Affiliate and
(y) Franklin Square Holdings, L.P. (and any successor entity thereto) or its
Affiliate, shall not constitute a Termination Event or an Additional Termination
Event.

 

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As used herein:

 

“1940 Act” means the Investment Company Act of 1940, as amended.

 

“Fundamental Policy” means any policies of the Party B Investor that may not be
changed without the vote of the owners of shares of common stock of the Party B
Investor.

 

“Material Adverse Effect” means a material adverse effect on (a) the ability of
Party B or its Credit Support Provider to perform any of its obligations under
this Agreement or any Credit Support Document to which Party B or its Credit
Support Provider is a party, (b) the rights of or benefits available to Party A
under this Agreement or any Credit Support Document to which Party B or its
Credit Support Provider is a party, (c) the authority of the Manager to act as
Party B’s agent in entering into and confirming Transactions and in receiving
notices to Party B under this Agreement or (d) whether any Transaction shall be
consistent with the then-current and applicable investment policies, trading
strategies and/or restrictions of Party B and the Party B Investor.

 

Part 2

Tax Representations

 

(a)       Payer Representations. For the purpose of Section 3(e) of this
Agreement, Party A will make the following representation and Party B will make
the following representation:

 

It is not required by any applicable law, as modified by the practice of any
relevant governmental revenue authority, of any Relevant Jurisdiction to make
any deduction or withholding for or on account of any Tax from any payment
(other than interest under Section 9(h) of this Agreement) to be made by it to
the other party under this Agreement. In making this representation, it may rely
on (i) the accuracy of any representations made by the other party pursuant to
Section 3(f) of this Agreement, (ii) the satisfaction of the agreement contained
in Section 4(a)(i) or 4(a)(iii) of this Agreement and the accuracy and
effectiveness of any document provided by the other party pursuant to
Section 4(a)(i) or 4(a)(iii) of this Agreement and (iii) the satisfaction of the
agreement of the other party contained in Section 4(d) of this Agreement, except
that it will not be a breach of this representation where reliance is placed on
clause (ii) above and the other party does not deliver a form or documents under
Section 4(a)(iii) by reason of material prejudice to its legal or commercial
position.

 

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(b)       Payee Representations. For the purpose of Section 3(f) of this
Agreement, Party A and Party B make the representations specified below, if any:

 

The following representations will apply to Party A:

 

It is a national banking association organized under the laws of the United
States, and its U.S. taxpayer identification number is 13-5266470.

 

It is “exempt” within the meaning of Treasury Regulation sections 1.6041-3(p)
and 1.6049-4(c) from information reporting on Form 1099 and backup withholding.

 

The following representations will apply to Party B:

 

Party B is a limited liability company organized under the laws of the State of
Delaware.

 

Party B is a disregarded entity for U.S. Federal income tax purposes.

 

The Party B Investor is a corporation incorporated under the laws of the State
of Maryland, and its U.S. taxpayer identification number is 47-3258730.

 

The Party B Investor is a regulated investment company for U.S. Federal income
tax purposes.

 

Part 3 

Agreement to Deliver Documents

 

For the purpose of Section 4(a) of this Agreement:

 

I. Tax forms, documents or certificates to be delivered are:

 

Party required to

deliver document 

Form/Document/

Certificate 

Date by which to 

Be delivered 

      Party A An executed IRS Form W-9 (or any successor form) (together with
any required attachments) with respect to Party A. Upon execution and delivery
of this Agreement; and promptly upon learning that any form previously provided
by such party has become obsolete or incorrect.       Party B An executed IRS
Form W-9 (or any successor form) (together with any required attachments) with
respect to the Party B Investor, indicating Party B as the disregarded entity
name with respect to the Party B Investor. Upon execution and delivery of this
Agreement; and promptly upon learning that any form previously provided by such
party has become obsolete or incorrect.

 

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II. Other documents to be delivered are:

 

Party required 

to deliver 

document 

Form/Document/ 

Certificate

Date by which to 

be delivered 

Covered by 

Section 3(d)

        Party A and Party B

Evidence reasonably satisfactory to the other party of the (i) authority of such
party to enter into this Agreement, each Credit Support Document to which it is
a party and any Transactions and (ii) the authority and genuine signature of the
individual signing this Agreement on behalf of such party to execute the same.

 

Upon execution and delivery of this Agreement and, if requested by the other
party, as soon as practicable after execution of any Confirmation of any other
Transaction.

 

Yes Party B

Evidence reasonably satisfactory to the other party of the (i) authority of such
party to enter into the Party B Investor Guarantee and (ii) the authority and
genuine signature of the individual signing the Party B Investor Guarantee on
behalf of such party to execute the same.

 

Upon execution and delivery of this Agreement.

 

Yes

 

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Party B

The annual report of the Party B Investor containing audited consolidated
financial statements prepared in accordance with accounting principles that are
generally accepted in the United States of America and certified by independent
certified public accountants for each fiscal year.

 

As soon as available and in any event within 120 days (or as soon as practicable
after becoming publicly available) after the end of each of the Party B
Investor’s fiscal years.

Yes; provided that the phrase “is, as of the date of the information, true,
accurate and complete in every material respect” in Section 3(d) shall be
deleted and the phrase “fairly presents, in all material respects, the financial
condition and results of operations as of their respective dates and for the
respective periods covered thereby” shall be inserted in lieu thereof.

 

Party B

The unaudited consolidated financial statements, the consolidated balance sheet
and related statements of income of the Party B Investor for each of the first
three fiscal quarters of each fiscal year prepared in accordance with accounting
principles that are generally accepted in the United States of America.

 

As soon as available and in any event within 60 days (or as soon as practicable
after becoming publicly available) after the end of each of the Party B
Investor’s fiscal quarters.

Yes; provided that the phrase “is, as of the date of the information, true,
accurate and complete in every material respect” in Section 3(d) shall be
deleted and the phrase “fairly presents, in all material respects, the financial
condition and results of operations as of their respective dates and for the
respective periods covered thereby” shall be inserted in lieu thereof.

 

 

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Party B

Certified copies of (a) the articles of incorporation and bylaws of the Party B
Investor; (b) the limited liability company agreement of Party B, (c) the
Investment Management Agreement between Party B and the Manager and (d) the
Investment Advisory and Administrative Services Agreement dated September 21,
2015 between the Party B Investor and the Investment Advisor.

 

Upon execution and delivery of this Agreement and as soon as practicable after
any amendment, supplement or other modification of any thereof.

 

Yes Party B

A confirmation, addressed to Party A, from the Investment Advisor to the effect
that no advice given by Party A or its Affiliates shall form a primary basis for
any investment advice provided by it relating to any Transaction under or in
connection with this Agreement, that neither Party A nor any of its Affiliates
is or shall be a fiduciary or advisor with respect to the Party B Investor or
Party B and that no amounts paid or to be paid to Party A or its Affiliates are
attributable to any advice provided by Party A or its Affiliates.

 

Upon execution and delivery of this Agreement. Yes Party A

A duly executed copy of each Credit Support Document in relation to Party A
specified in Part 4(f) of this Schedule.

 

Upon execution and delivery of this Agreement. No

 

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Party B

A duly executed copy of each Credit Support Document in relation to Party B
specified in Part 4(f) of this Schedule.

 

Upon execution and delivery of this Agreement. No Party B Such other documents
that may be reasonably requested by Party A from time to time. As per written
request by Party A. Yes

 

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Part 4 

Miscellaneous

 

(a)         Addresses for Notices. For the purpose of Section 12(a) of this
Agreement:

 

Address for notices or communications to Party A:

 

Address:Capital Markets Documentation Unit

388 Greenwich Street, 17th Floor

New York, New York 10013

 

Attention:         Director Derivatives Operations

 

Facsimile No.: 212-816-5550

 

(For all purposes)

 

Address for notices or communications to Party B:

 

Address:Cheltenham Funding LLC
c/o FS Investment Corporation IV
201 Rouse Boulevard
Philadelphia, PA 19112

Attention: William Goebel 

Phone: 215-220-4247 

Fax: 215-339-1931 

Email: Bill.Goebel@fsinvestments.com

 

(b)          Process Agent. For the purpose of Section 13(c) of this Agreement:

 

Party A appoints as its Process Agent: Not Applicable

Party B appoints as its Process Agent: Not Applicable

 

(c)          Offices. The provisions of Section 10(a) will apply to this
Agreement.

 

(d)          Multibranch Party. For the purpose of Section 10(b) of this
Agreement:

 

Party A is a Multibranch Party and may enter into a Transaction through any of
the following offices: New York, London, Singapore and Sydney.

 

Party B is not a Multibranch Party.

 

(e)          Calculation Agent. The Calculation Agent will be Party A unless
otherwise specified in a Confirmation in reference to the relevant Transaction.

 

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(f)           Credit Support Document.

 

(i)        In relation to Party A, the Credit Support Annex dated as of the date
hereof and attached hereto between the parties hereto; and

 

(ii)        In relation to Party B, (1) the Credit Support Annex dated as of the
date hereof and attached hereto between the parties hereto, (2) the Account
Control Agreement referred to in said Credit Support Annex and (3) the guarantee
dated as of the date hereof (the “Party B Investor Guarantee”) made by the
Party B Investor in favor of Party A.

 

(g)          Credit Support Provider.

 

(i) In relation to Party A, none; and

 

(ii) In relation to Party B, so long as the Party B Investor Guarantee remains
in effect, the Party B Investor.

 

(h)          Governing Law. This Agreement shall be construed in accordance
with, and this Agreement and all matters arising out of or relating in any way
whatsoever to this Agreement (whether in contract, tort or otherwise) shall be
governed by, the law of the State of New York.

 

(i)           Jurisdiction. Section 13(b)(i) of this Agreement is hereby amended
by deleting in line 2 of paragraph 2 the word “non-” and by deleting paragraph
(iii) thereof. The following shall be added at the end of Section 13(b):
“Nothing in this provision shall prohibit a party from bringing an action to
enforce a money judgment in any other jurisdiction.”

 

(j)          “Affiliate” will have the meaning specified in Section 14 of this
Agreement.

 

(k)         Absence of Litigation. For the purpose of Section 3(c), “Specified
Entity” means in relation to Party A, any Affiliate of Party A, and in relation
to Party B, each Specified Entity referred to in Part 1 of this Schedule.

 

(l)          No Agency. The provisions of Section 3(g) will apply to this
Agreement.

 

(m)        Additional Representation will apply. Section 3(a) of this Agreement
is hereby amended by the deletion of “and” at the end of Section 3(a)(iv); the
substitution of a semi-colon for the period at the end of Section 3(a)(v) and
the addition of Sections 3(a)(vi) to (viii), as follows:

 

“(vi) Relationship Between Parties. Each party will be deemed to represent to
the other party on the date on which it enters into a Transaction that (absent a
written agreement between the parties that expressly imposes affirmative
obligations to the contrary for that Transaction):

 

(1)       No Reliance. It is acting for its own account, and it has made its own
independent decisions to enter into that Transaction and as to whether that
Transaction is appropriate or proper for it based upon its own judgment and upon
advice from such advisors as it has deemed necessary. It is not relying on any
communication (written or oral) of the other party as investment advice or as a
recommendation to enter into that Transaction; it being understood that
information and explanations related to the terms and conditions of a
Transaction shall not be considered investment advice or a recommendation to
enter into that Transaction. It has not received from the other party any
assurance or guarantee as to the expected results of that Transaction.

 

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(2)       Evaluation and Understanding. It is capable of evaluating and
understanding (on its own behalf or through independent professional advice),
and understands and accepts, the terms, conditions and risks of that
Transaction. It is also capable of assuming, and assumes, the financial and
other risks of that Transaction.

 

(3)       Status of Parties. The other party is not acting as a fiduciary for or
an advisor to it in respect of that Transaction.

 

(vii)        Eligible Contract Participant. At the time of each Transaction
entered into under this Agreement, each of Party A and Party B represents to the
other that it is an eligible contract participant as defined in Section 1a(18)
of the U.S. Commodity Exchange Act (“CEA”) and CFTC Regulations promulgated
thereunder (an “ECP”).

 

(viii)       ERISA. The assets that are used in connection with the execution,
delivery and performance of this Agreement and the Transactions entered into
pursuant hereto are not (i) the assets of an “employee benefit plan” (within the
meaning of Section 3(3)) of the Employee Retirement Income Security Act of 1974,
as amended (“ERISA”) or other plan subject to Title I of ERISA, (ii) a plan
described in Section 4975 of the Internal Revenue Code of 1986, as amended (the
“Code”), (iii) an entity whose underlying assets include “plan assets” by reason
of Department of Labor regulation section 2510.3-101 (as modified by Section
3(42) of ERISA), or (iv) a governmental plan that is subject to any federal,
state, or local law that is substantially similar to the provisions of Section
406 of ERISA or Section 4975 of the Code.”

 

(n)         “Netting of Payments” Either party may notify the other in writing,
not less than one Local Business Day in advance of one or more Scheduled Payment
Dates, that with regard to payments due on that date, Multiple Transaction
Payment Netting will apply; provided that no such notice shall be required with
respect to any Transaction if the related Confirmation expressly provides that
Multiple Transaction Payment Netting will apply. Except to the extent that such
advance written notice shall have been given or as is specified in a related
Confirmation, subparagraph Multiple Transaction Payment Netting will not apply
for purposes of Section 2(c) of this Agreement.

 

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Part 5

Other Provisions

 

(a)       Waiver of Right to Trial by Jury. EACH PARTY HEREBY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT THAT IT MAY HAVE TO A
TRIAL BY JURY IN RESPECT OF ANY PROCEEDING. Each party hereby (i) certifies that
no representative, agent or attorney of the other has represented, expressly or
otherwise, that the other would not, in the event of a Proceeding, seek to
enforce the foregoing waiver and (ii) acknowledges that it has been induced to
enter into this Agreement by, among other things, the mutual waivers and
certifications in this paragraph.

 

(b)       Severability. Except as otherwise provided in Sections 5(b)(i) or
5(b)(ii) in the event that any one or more of the provisions contained in this
Agreement should be held invalid, illegal, or unenforceable in any jurisdiction,
the validity, legality and enforceability of the remaining provisions contained
herein shall not in any way be affected or impaired thereby. The parties shall
endeavor, in good faith negotiations, to replace the invalid, illegal or
unenforceable provisions with valid provisions, the economic effect of which
comes as close as possible to that of the invalid, illegal or unenforceable
provisions.

 

(c)       Netting. In the event that any Terminated Transaction cannot be
aggregated and netted against all other Terminated Transactions under
Section 6(e) of this Agreement, such excluded Terminated Transactions shall be
aggregated and netted amongst themselves to the fullest extent permitted by law.

 

(d)       Escrow Payments. If by reason of the time difference between the
cities in which payments are to be made, it is not possible for simultaneous
payments to be made on any date on which both parties are required to make
payments hereunder, either party may at its option and in its sole discretion
notify the other party that payments on that date are to be made in escrow. In
this case the deposit of the payment due earlier on that date shall be made by
2:00 p.m. (local time at the place for the earlier payment) on that date with an
escrow agent selected by the party giving the notice, accompanied by irrevocable
payment instructions (i) to release the deposited payment to the intended
recipient upon receipt by the escrow agent of the required deposit of the
corresponding payment from the other party on the same date accompanied by the
irrevocable payment instructions to the same effect or (ii) if the required
deposit of the corresponding payment is not made on that same date, to return
the payment deposited to the party that paid it into escrow. The party that
elects to have payments made in escrow shall pay the costs of the escrow
arrangements and shall cause those arrangements to provide that the intended
recipient of the payment due to be deposited first shall be entitled to interest
on that deposited payment for each day in the period of its deposit at the rate
offered by the escrow agent for that day for overnight deposits in the relevant
currency in the office where it holds that deposited payment (at 11:00 a.m.
local time on that day) if that payment is not released by 5:00 p.m. on the date
it is deposited for any reason other than the intended recipients’ failure to
make the escrow deposit it is required to make hereunder in a timely fashion.

 

(e)       Recording of Conversations. Each party hereto consents to the
recording of its telephone conversations relating to this Agreement or any
potential Transaction.

 

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(f)         [Intentionally Omitted]

 

(g)         2002 Master Agreement Protocol. The parties agree that the
definitions and provisions contained in Annexes 1 to 16 and Section 6 of the
2002 Master Agreement Protocol published by the International Swaps and
Derivatives Association, Inc. on 15th July 2003 are incorporated into and apply
to this Agreement.

 

(h) Additional Party B Representations. Section 3 of this Agreement is hereby
amended by the addition of the following representations (which shall be made
solely by Party B to Party A):

 

(h)      Compliance with Investment Policies. The execution, delivery, and
performance by Party B of this Agreement and each Confirmation does not conflict
with or violate the investment policies, trading strategies and/or restrictions
of the Party B Investor as set forth in the offering and organizational
documents, in each case as in effect from time to time, of the Party B Investor.

 

(i)       Manager Authorized as Agent. The Manager is duly authorized to act as
Party B’s agent in entering into and confirming Transactions and receiving
notices to Party B under this Agreement, and the Manager’s entering into or
confirmation of any Transaction shall be sufficient to bind Party B, with the
result that Party B’s signature shall not be required on any Confirmation.

 

(j)       Compliance with 1940 Act. The Party B Investor has elected to be
subject to the provisions of Sections 55 through 65 of the 1940 Act pursuant to
Section 54(a) of the 1940 Act. Party B will enter into any Transaction in
compliance with its investment policies; the execution of this Agreement by
Party B, the entry by Party B into any Transaction hereunder, and the
performance of its obligations hereunder and under each Transaction, will not
result in a violation by the Party B Investor of any provision of the 1940 Act
applicable to business development companies. The Party B Investor has disclosed
in its prospectus or other offering documents that it may enter into
transactions of the type contemplated by this Agreement, to the extent required
by applicable laws and regulations. The Board of Directors of the Party B
Investor, or its equivalent, has given all necessary approvals for the Party B
Investor (either directly or through a subsidiary) to enter into this Agreement
and any Transaction. The Party B Investor is not a person of which Party A is an
“affiliated person”, or an affiliated person of an affiliated person, within the
meaning of Section 2(a)(3) of the 1940 Act.

 

(k)       Assets of Party B. All of the assets of Party B are available to
satisfy the obligations of Party B under this Agreement.

 

(l)       Obligations Pari Passu. The obligations of Party B to Party A under
this Agreement rank at least pari passu with all other senior unsecured
indebtedness of Party B.

 

15 

 

 

Party B covenants that (i) it will not take any action during the term of any
Transaction that would render any of the representations and warranties in this
Part 5(h) untrue and (ii) it will take all necessary action during the term of
each Transaction to cause such representations and warranties to continue at all
times to be true.

 

(i)           Manager Representations. The following representations shall be
made by the Manager in accordance with Section 3 of this Agreement as if the
Manager was a party to this Agreement:

 

“(i) Manager Representations. The Manager represents and warrants to Party A
(x) that it is duly authorized to act as Party B’s agent in entering into and
confirming Transactions and in receiving notices to Party B under this
Agreement, and (y) that any Transaction shall be entered into in accordance with
the applicable investment policies, trading strategies and/or restrictions of
Party B and the Party B Investor as are then in effect.

 

(ii) No Investment Advice from Party A. The Manager represents and agrees that
no advice given by Party A or its Affiliates shall form a primary basis for any
decision by or on behalf of the Manager relating to any Transaction under or in
connection with this Agreement, that neither Party A nor any of its Affiliates
is or shall be a fiduciary or advisor with respect to the Manager or Party B and
that no amounts paid or to be paid to Party A or its Affiliates are attributable
to any advice provided by Party A or its Affiliates.”

 

(j)           Additional Party B Covenant. For purposes of Section 4 of this
Agreement, the following shall be added immediately following paragraph
(e) thereof:

 

“(f) Notification Requirements. Party B shall notify Party A in writing
immediately upon the occurrence of any of the following: (i) any Additional
Termination Event in relation to Party B, (ii) a material change in the
investment policies of Party B or the Party B Investor as they relate to
derivatives transactions, borrowing, leverage or other matters arising under
Section 18 of the 1940 Act (as modified by Section 61 of the 1940 Act) and
Section 55(a) of the 1940 Act; (iii) the entry by Party B, the Party B Investor
or the Manager into an agreement that would result in the merger, change in
control or reorganization of Party B, the Party B Investor or the Manager; (iv)
Party B or the Party B Investor or the Manager becomes aware of the commencement
of litigation or regulatory action against Party B, the Party B Investor or the
Manager that has, or could reasonably be expected to have, a Material Adverse
Effect; or (v) the independent public accountant of the Party B Investor
resigns, is dismissed, or issues a report on the Party B Investor’s financial
statements that contains an adverse opinion or disclaimer of opinion, or issues
an opinion that is qualified or modified as to uncertainty, audit scope or audit
principles.”

 

(k)       [Intentionally Omitted].

 

16 

 

 

(l)         Recourse Limited to Party B. Notwithstanding anything to the
contrary contained in this Agreement, the Schedule or any Confirmation or other
document issued or delivered in connection with any Transaction entered into
under this Agreement, any amounts owed or liabilities incurred by Party B
hereunder or in respect of any Transaction entered into under this Agreement,
shall be satisfied solely from the assets of Party B and no recourse whether by
set-off or otherwise, shall be had to the assets of the Manager or any director,
officer or employee or partner of Party B or the Manager or any of their
Affiliates, except that the foregoing will not limit service of process on
Party B by delivery of notice on its behalf to Party B.

 

(m)       Limitation on Liability. No party shall be required to pay or be
liable to the other party for any consequential, indirect or punitive damages,
opportunity costs or lost profits; provided that the foregoing shall not limit
any party’s obligation to make any amount otherwise payable in accordance with
the express provisions of this Agreement.

 

(n)       Foreign Account Tax Compliance Act. The parties agree that the
definitions and provisions contained in the ISDA 2012 FATCA Protocol as
published by the International Swaps and Derivatives Association, Inc. on August
15, 2012, are incorporated into and apply to this Agreement as if set forth in
full herein.

 

(o)       ISDA HIRE Act Protocols. The parties agree that solely as between
Party A and Party B, the definitions and provisions contained in the (x)
Attachment to the ISDA 2010 Short Form HIRE Act Protocol published by the
International Swaps and Derivatives Association, Inc. on November 30, 2010
(“Short Form Protocol Attachment”) and (y) 2015 Section 871(m) Protocol
published by the International Swaps and Derivatives Association, Inc. on
November 2, 2015, will be deemed to be incorporated herein, mutatis mutandis, as
though such definitions and provisions were set out in full herein, with any
such conforming changes as are necessary to deal with what would otherwise be
inappropriate or incorrect cross references. The parties further agree that the
Implementation Date (as such term is defined in the Short Form Protocol
Attachment) shall be the date of execution of this Agreement.

 

(p)       Notification of Right To Segregate Independent Amounts. With respect
to funds or other property provided to margin, guarantee or secure obligations
for Uncleared Swaps entered into under this Agreement, to the extent mandated by
the Dodd-Frank Act, Party B has the right to require segregation of such funds
or other property (other than variation margin) at an independent third party
custodian. This notification is deemed repeated each time Party B enters into an
Uncleared Swap with Party A. For purposes of this paragraph, the term “Uncleared
Swap” means a Transaction that is a “swap” as defined in the CEA section
1(a)(47) and CFTC regulation 1.3(xxx) that is not subject to the CFTC’s
mandatory clearing requirement under CEA section 2(h) and CFTC regulations
promulgated thereunder.

 

(q)       ISDA 2018 U.S. Resolution Stay Protocol. The parties agree that the
definitions and provisions contained in the ISDA 2018 U.S. Resolution Stay
Protocol and Attachment thereto (“U.S. Stay Protocol”) as published by the
International Swaps and Derivatives Association, Inc. on July 31, 2018 are
hereby incorporated into and apply to this Agreement as if set forth in full in
this Schedule.  For these purposes, the following terms as used in the U.S. Stay
Protocol shall have the following meanings: “Regulated Entity” shall mean Party
A and “Protocol Covered Agreement” or “Covered Agreement”, as applicable, shall
mean this Agreement.

 

[Signature Page Follows.]

 

17 

 

 

IN WITNESS WHEREOF the parties have executed this document on the respective
dates specified below with effect from the date specified on the first page of
this document.

 

CITIBANK, N.A.   CHELTENHAM FUNDING LLC           By: /s/ Candice E. Somerville
  By: /s/ William Goebel   Name: Candice E. Somerville     Name: William Goebel
  Title: Assistant General Counsel     Title: Chief Financial Officer          
      FS INVESTMENT CORPORATION IV, in its individual capacity in respect of the
representations made by the Manager in Part 5(i) of this Schedule.              
  By: /s/ William Goebel         Name: William Goebel         Title: Chief
Financial Officer                 Date: 6/28/2019

 

ISDA Master Schedule