Exhibit 10.5

 

 

ARCH STREET FUNDING LLC

as Company

and

FS INVESTMENT CORPORATION

as Investment Manager

AMENDED AND RESTATED INVESTMENT MANAGEMENT AGREEMENT

Dated as of August 29, 2012

 

 

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AMENDED AND RESTATED INVESTMENT MANAGEMENT AGREEMENT, dated as of August 28,
2012 (this “Agreement”), between ARCH STREET FUNDING LLC, a Delaware limited
liability company (the “Company”), and FS INVESTMENT CORPORATION, a Maryland
corporation (in such capacity, the “Investment Manager”). This Agreement amends
and restates in its entirety the Investment Management Agreement, dated as of
March 18, 2011, by and between the Company and the Investment Manager.

WHEREAS, the Company desires to engage the Investment Manager to provide the
services described herein, and the Investment Manager desires to provide such
services; and

WHEREAS, capitalized terms used herein that are not otherwise defined herein
shall have the respective meanings ascribed thereto in the Loan Agreement dated
as of August 28, 2012, as amended from time to time (together with any
agreements referred to therein, the “Loan Agreement”), among the Company, the
financial institutions and other lenders from time to time party thereto (the
“Lenders”), Citibank, N.A., as administrative agent for the Lenders (in such
capacity, together with its successors in such capacity, the “Administrative
Agent”).

NOW, THEREFORE, in consideration of the mutual covenants and agreements herein,
the parties hereto hereby agree as follows:

 

  1. Management Services.

The Investment Manager will provide the Company with the following services (in
accordance with and subject to the applicable requirements of, and the
restrictions and limitations set forth in, the Loan Agreement and the Company’s
amended and restated limited liability company agreement (the “LLC Agreement”)):

(a) determining the specific Debt Obligations or other assets to be purchased,
otherwise acquired or sold by the Company, taking into consideration the payment
obligations of the Company on each Payment Date under the Loan Agreement, such
that expected distributions on the Debt Obligations and other assets of the
Company permit a timely performance of the payment obligations by the Company
under the Loan Agreement; provided that the Investment Manager does not hereby
guarantee the timely performance of such payment obligations;

(b) effecting the purchase, other acquisition and sale of Debt Obligations and
all other assets of the Company;

(c) subject to the limitations set forth in the Loan Agreement, negotiating with
underlying obligors of the Debt Obligations (the “Underlying Obligors”) as to
proposed amendments and modifications (including, but not limited to, extensions
or releases of collateral) of the documentation evidencing and governing the
Debt Obligations;

(d) making determinations with respect to the Company’s exercise (including but
not limited to any waiver) of any rights (including but not limited to voting
rights and rights arising in connection with the bankruptcy or insolvency of an
Underlying Obligor or the consensual or non-judicial restructuring of the debt
or equity of an Underlying

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Obligor) or remedies in connection with the Debt Obligations and participating
in the committees (official or otherwise) or other groups formed by creditors of
an Underlying Obligor;

(e) monitoring the ratings of the Debt Obligations;

(f) monitoring the Debt Obligations on an ongoing basis and providing to the
Agent and the Company or to any other Person designated by the Company all
information and data which is generated by, or reasonably accessible to, the
Investment Manager and which is required under the Loan Agreement or requested
by the Company in connection with the preparation of all reports, certificates,
schedules and other data which the Company is required to prepare and deliver
under the Loan Agreement, in the form and containing all information required by
the Loan Agreement, in sufficient time for the Company, or the Person designated
by the Company, to review such data and prepare and deliver to the parties
entitled thereto all such reports, certificates, schedules and other data
required by the Loan Agreement;

(g) determining whether any investment meets the Obligation Criteria and
Portfolio Criteria;

(h) determining whether any investment is a Specified Debt Obligation or
Unquoted Debt Obligation;

(i) determining whether any payment will be made, and the amount thereof,
pursuant to Section 3.8 of the Loan Agreement;

(j) managing the Company’s investments within the parameters set forth in the
Loan Agreement;

(k) complying with such other duties and responsibilities as may be expressly
required of the Investment Manager by the Loan Agreement;

(l) notifying the Administrative Agent and the Company in writing within one
(1) Business Day of an Event of Default under the Loan Agreement to the extent
the Investment Manager has actual knowledge of the occurrence thereof; and

(m) delivering notices of borrowing and payment instructions to the
Administrative Agent.

The Company agrees for the benefit of the Investment Manager and the
Administrative Agent to follow the lawful instructions and directions of the
Investment Manager in connection with the Investment Manager’s services
hereunder.

The Investment Manager shall use reasonable care in rendering its services
hereunder, using a degree of skill and attention no less than that which the
Investment Manager exercises with respect to comparable assets that it manages
for itself and for others in accordance with its existing practices and
procedures which the Investment Manager reasonably believes to be consistent
with those followed by institutional managers of national standing relating to
assets

 

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of the nature and character of Debt Obligations, except as expressly provided
otherwise in this Agreement or the Loan Agreement. The Investment Manager shall
comply with and perform all the duties and functions that have been specifically
delegated to it under this Agreement and the Loan Agreement. The Investment
Manager shall not be bound to follow any amendment to the Loan Agreement,
however, until it has received a copy of the amendment from the Company or the
Administrative Agent and, in addition, the Investment Manager shall not be bound
by any amendment to the Loan Agreement which adversely affects in any material
respects the obligations of the Investment Manager unless the Investment Manager
shall have consented thereto in writing. The Company agrees that it will not
permit any amendment to the Loan Agreement that adversely affects the duties or
liabilities of the Investment Manager to become effective unless the Investment
Manager has been given prior written notice of such amendment and consented
thereto in writing.

To the extent necessary or appropriate to perform all of the duties to be
performed by it hereunder, the Investment Manager shall have the power to
negotiate, execute and deliver all necessary documents and instruments on behalf
of the Company with respect to any Debt Obligation or other asset of the Company
and with respect to the rights and obligations of the Company under the Loan
Agreement.

The Investment Manager shall have no obligation to perform any duties other than
those specified herein or in the Loan Agreement.

 

  2. Brokerage.

The Investment Manager shall use reasonable efforts to obtain the best prices
and execution for all orders placed with respect to the Debt Obligations, and
other assets of the Company, considering all circumstances. Subject to the
objective of obtaining best prices and execution, the Investment Manager may
take into consideration research and other brokerage services furnished to the
Investment Manager or its Affiliates by brokers and dealers which are not
Affiliates of the Investment Manager. Such services may be used by the
Investment Manager or its Affiliates in connection with its other advisory
activities or investment operations. The Investment Manager may aggregate sales
and purchase orders of securities placed with respect to the Debt Obligations,
and other assets of the Company, with similar orders being made simultaneously
for other accounts managed by the Investment Manager or with accounts of the
Affiliates of the Investment Manager, if in the Investment Manager’s sole
judgment such aggregation shall result in an overall economic benefit to the
Company taking into consideration the selling or purchase price, brokerage
commission and other expenses. In accounting for such aggregated order price,
commission and other expenses shall be averaged on a per position basis.

The Company acknowledges that the determination of any such economic benefit by
the Investment Manager is subjective and represents the Investment Manager’s
evaluation at the time that the Company will be benefited by better purchase or
sales prices, lower commission expenses and beneficial timing of transactions or
a combination of these and other factors. When any aggregate sales or purchase
orders occur, the objective of the Investment Manager (and any of its Affiliates
involved in such transactions) shall be to allocate the executions among the
accounts in an equitable manner.

 

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Subject to the Investment Manager’s execution obligations described herein, the
Investment Manager is hereby authorized to effect client cross-transactions
where the Investment Manager causes a transaction to be effected between the
Company and another account advised by it or any of its Affiliates; provided
that, if and to the extent required by the Investment Advisers Act, such
authorization is terminable at the Company’s option without penalty, effective
upon receipt by the Investment Manager of written notice from the Company. In
addition, the Company hereby consents to, and authorizes the Investment Manager
to enter into, agency cross-transactions where it or any of its Affiliates acts
as broker for the Company and for the other party to the transaction, to the
extent permitted under applicable law; provided that the Company shall have the
right to revoke such consent at any time by written notice to the Investment
Manager.

 

  3. The Representations and Warranties of the Company.

The Company represents and warrants to the Investment Manager that:

(a) the Company has been duly organized and is validly existing under the laws
of Delaware, has the full power and authority to own its assets and the
obligations proposed to be owned by it and to transact the business in which it
is presently engaged and is duly qualified under the laws of each jurisdiction
where its ownership or lease of property or the conduct of its business
requires, or the performance of its obligations under this Agreement and the
Loan Agreement would require, such qualification, except for failures to be so
qualified, authorized or licensed that would not in the aggregate have a
material adverse effect on the business, operations, assets or financial
condition of the Company;

(b) the Company has full corporate power and authority to execute, deliver and
perform this Agreement, the Loan Agreement and all obligations required
hereunder and under the Loan Agreement, and the performance of all obligations
imposed upon it hereunder and thereunder;

(c) this Agreement has been duly authorized, executed and delivered by it and
constitutes its valid and binding obligation, enforceable in accordance with its
terms except that the enforceability thereof may be subject to (i) bankruptcy,
insolvency, reorganization, moratorium, receivership, conservatorship or other
similar laws now or hereafter in effect relating to creditors’ rights and
(ii) general principles of equity (regardless of whether such enforcement is
considered in a proceeding in equity or at law);

(d) no consent, approval, authorization or order of or declaration or filing
with any government, governmental instrumentality or court or other person is
required for the performance by the Company of its duties hereunder, except such
as have been duly made or obtained;

(e) neither the execution and delivery of this Agreement nor the fulfillment of
the terms hereof conflicts with or results in a material breach or violation of
any of the material terms or provisions of or constitutes a material default
under (i) the Company’s

 

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certificate of formation, operating agreement or other constituent documents,
(ii) the terms of any material indenture, contract, lease, mortgage, deed of
trust, note, agreement or other evidence of indebtedness or other material
agreement, obligation, condition, covenant or instrument to which the Company is
a party or is bound, (iii) any statute applicable to the Company or (iv) any
law, decree, order, rule or regulation applicable to the Company of any court or
regulatory, administrative or governmental agency, body or authority or
arbitrator having or asserting jurisdiction over the Company or its properties,
and which would have a material adverse effect upon the performance by the
Company of its duties under this Agreement;

(f) neither the Company nor any of its Affiliates are in violation of any U.S.
federal or state securities law or regulation promulgated thereunder and there
is no charge, investigation, action, suit or proceeding before or by any court
or regulatory agency pending or, to the best knowledge of the Company,
threatened that would have a material adverse effect upon the performance by the
Company of its duties under this Agreement;

(g) the Company has not engaged in any transaction that would result in the
violation of, or require registration as an investment company under, the
Investment Company Act;

(h) the Company is not required to register as an “investment company” under the
Investment Company Act; and

(i) there is no charge, investigation, action, suit or proceeding before or by
any court pending or, to the best knowledge of the Company, threatened that, if
determined adversely to the Company, would have a material adverse effect upon
the performance by the Company of its duties under, or on the validity or
enforceability of, this Agreement or the provisions of the Loan Agreement
applicable to the Company thereunder.

 

  4. Representations and Warranties of the Investment Manager.

The Investment Manager represents and warrants to the Company that:

(a) the Investment Manager is duly organized and validly existing under the laws
of Maryland and has the full power and authority to transact the business in
which it is presently engaged and is duly qualified under the laws of each
jurisdiction where the conduct of its business requires, or the performance of
its obligations under this Agreement and the provisions of the Loan Agreement
applicable to the Investment Manager would require, such qualification, except
for failures to be so qualified, authorized or licensed which would not in the
aggregate have a material adverse effect on the business, operations, assets or
financial condition of the Investment Manager, or on the ability of the
Investment Manager to perform its obligations under, or on the validity or
enforceability of, this Agreement and the applicable provisions of the Loan
Agreement;

 

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(b) the Investment Manager has full power and authority to execute and deliver
this Agreement and to perform all of its obligations hereunder and under the
Loan Agreement;

(c) this Agreement has been duly authorized, executed and delivered by the
Investment Manager and constitutes a valid and binding agreement of the
Investment Manager, enforceable against it in accordance with its terms, except
that the enforceability thereof may be subject to (i) bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter in effect
relating to creditors’ rights and (ii) general principles of equity (regardless
of whether such enforcement is considered in a proceeding in equity or at law);

(d) neither the Investment Manager nor any of its Affiliates is in violation of
any federal or state securities law or regulation promulgated thereunder or any
material listing requirements of any exchange on which it is listed and there is
no charge, investigation, action, suit or proceeding before or by any court,
exchange or regulatory agency pending or, to the best knowledge of the
Investment Manager, threatened, that in either case would have a material
adverse effect upon the performance by the Investment Manager of its duties
under this Agreement;

(e) neither the execution and delivery of this Agreement, nor the performance of
the terms hereof or the provisions of the Loan Agreement applicable to the
Investment Manager, conflicts with or results in a material breach or violation
of any of the material terms or provisions of, or constitutes a material default
under, (i) its articles of organization, operating agreement or other
constituent document, (ii) the terms of any material indenture, contract, lease,
mortgage, deed of trust, note agreement or other evidence of indebtedness or
other material agreement, obligation, condition, covenant or instrument to which
the Investment Manager is a party or is bound, (iii) any statute applicable to
the Investment Manager or (iv) any law, decree, order, rule or regulation
applicable to the Investment Manager of any court or regulatory, administrative
or governmental agency, body or authority or arbitrator having or asserting
jurisdiction over the Investment Manager or its properties, and which would
have, in the case of any of clauses (ii) through (iv) of this paragraph (e), a
material adverse effect upon the performance by the Investment Manager of its
duties under this Agreement or the provisions of the Loan Agreement applicable
to the Investment Manager; and

(f) no consent, approval, authorization or order of or declaration or filing
with any government, governmental instrumentality or court or other person is
required for the performance by it of its duties hereunder, except such as have
been duly made or obtained.

 

  5. Expenses.

The Investment Manager shall pay all expenses and costs (including salaries,
rent and other overhead) incurred by it in connection with its services under
this Agreement; provided that the Investment Manager shall not be liable for and
the Company shall be responsible for the payment of (i) expenses and costs of
legal advisers (including reasonable expenses and costs

 

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associated with the use of internal legal counsel of the Investment Manager),
consultants and other professionals retained by the Company or by the Investment
Manager, on behalf of the Company, in connection with the services provided by
the Investment Manager pursuant to this Agreement and the Loan Agreement,
(ii) the reasonable cost of asset pricing and asset rating services, and
accounting, programming and data entry services that are retained in connection
with services of the Investment Manager under this Agreement, (iii) travel
expenses (airfare, meals, lodging and other transportation) incurred by the
Investment Manager as is reasonably necessary in connection with the selection
of Debt Obligations and the negotiation, documentation, default or restructuring
of any Debt Obligation, and (iv) any extraordinary costs and expenses incurred
by the Investment Manager in the performance of its obligations under this
Agreement and the Loan Agreement. To the extent that such expenses are incurred
in connection with obligations that are also held by the Investment Manager, the
Investment Manager shall allocate the expenses among the accounts in a fair and
equitable manner. Any amounts payable pursuant to this Section 5 shall be
reimbursed by the Company to the extent funds are available therefor.

 

  6. Fees.

(a) The Company shall pay to the Investment Manager, for services rendered and
performance of its obligations under this Agreement fees which are payable in
arrears on each Payment Date (subject to availability of funds and the
conditions set forth in Section 3.8(b)(i)(A) of the Loan Agreement) in an amount
equal to 0.35% per annum of the aggregate Par Amount of all Debt Obligations
measured as of the Quarterly Date immediately preceding such Payment Date (the
“Senior Management Fee”). The Senior Management Fee will be calculated on the
basis of a calendar year consisting of 360 days and the actual number of days
elapsed.

(b) The Company shall pay to the Investment Manager, for services rendered and
performance of its obligations under this Agreement, fees which are payable in
arrears on each Payment Date (subject to availability of funds and the
conditions set forth in Section 3.8(b)(i)(C) of the Loan Agreement) in an amount
equal to 0.15% per annum of the aggregate Par Amount of all Debt Obligations
measured as of the Quarterly Date immediately preceding such Payment Date (the
“Subordinate Management Fee” and together with the Senior Management Fee, the
“Management Fees”). The Subordinate Management Fee will be calculated on the
basis of a calendar year consisting of 360 days and the actual number of days
elapsed.

(c) The Investment Manager may, in its sole discretion, (i) waive all or any
portion of the Management Fees or (ii) defer all or any portion of the
Management Fees. Such deferred amounts will become payable on the next Payment
Date in the same manner and priority as their original characterization would
have required unless deferred again.

(d) If this Agreement is terminated pursuant to Section 11 hereof or otherwise,
the Management Fees calculated as provided in Section 6(a) and 6(b) hereof shall
be prorated for any partial periods between Payment Dates during which this
Agreement was in effect and shall be due and payable, along with any deferred
Management Fees, on the first Payment Date following the effective date of such
termination.

 

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(e) The Management Fees will be payable from the Company’s assets in accordance
with the terms of the Loan Agreement. If on any Payment Date there are
insufficient funds to pay the Management Fees then due in full, the amount not
so paid shall be deferred without interest and shall be payable on the next
Payment Date if any on which any funds are available therefor, as provided in
the Loan Agreement.

 

  7. Non-Exclusivity.

The services of the Investment Manager to the Company are not to be deemed
exclusive, and the Investment Manager shall be free to render asset management
or management services to other Persons (including Affiliates, other investment
companies, and clients having objectives similar to those of the Company). It is
understood and agreed that the officers and directors of the Investment Manager
may engage in any other business activity or render services to any other Person
or serve as partners, officers or directors of any other firm or corporation.
Notwithstanding the foregoing, it is understood and agreed that the Investment
Manager will at no time render any services to, or in any way participate in the
organization or operation of, any investment company or other entity if such
actions would require the Company to register as an “investment company” under
the Investment Company Act. Subject to Section 9 hereof, it is understood and
agreed that information or advice received by the Investment Manager and
officers or directors of the Investment Manager hereunder shall be used by such
organization or such persons to the extent permitted by applicable law.

 

  8. Conflicts of Interest.

The Investment Manager may, subject to applicable legal requirements, direct the
Company (i) to acquire (whether by purchase, contribution or otherwise) any Debt
Obligations for the Company from the Investment Manager or any of its Affiliates
as principal or (ii) to sell or distribute any Debt Obligations for the Company
to the Investment Manager or any of its Affiliates as principal.

Notwithstanding the provisions of the preceding paragraph, various potential and
actual conflicts of interest may arise from the overall investment activity of
the Investment Manager and its Affiliates. The Investment Manager, its
Affiliates and their respective clients may invest in obligations that would be
appropriate for inclusion in the Company’s assets. Such investments may be
different from those made on behalf of the Company. The Investment Manager and
its Affiliates may have ongoing relationships with Underlying Obligors and may
own equity or debt obligations issued by Underlying Obligors. The Investment
Manager and its Affiliates and the clients of the Investment Manager or its
Affiliates may invest in obligations that are senior to, or have interests
different from or adverse to, the Debt Obligations of the Company. The
Investment Manager may serve as Investment Manager for, invest in, or be
affiliated with, other entities organized to issue collateralized debt
obligations secured by loans, high-yield debt securities, or other debt
obligations. The Investment Manager may at certain times be simultaneously
seeking to purchase or sell investments for other entities for which it serves
as Investment Manager, or for its clients and Affiliates, and selecting such
investments as

 

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Debt Obligations for the Company. Furthermore, the Investment Manager and/or its
Affiliates may make an investment on their behalf or on behalf of any account
that they manage or advise without offering the investment opportunity to the
Company or making an investment on behalf of the Company.

The Company hereby acknowledges the various potential and actual conflicts of
interest that may exist with respect to the Investment Manager; provided that
nothing in this Section 8 shall be construed as altering the duties of the
Investment Manager as set forth in this Agreement, the Loan Agreement or the
requirements of any law, rule, or regulation applicable to the Investment
Manager.

 

  9. Records; Confidentiality.

The Investment Manager shall maintain appropriate books of account and records
relating to services performed hereunder, and such books of account and records
shall be accessible for inspection by a representative of the Company, the
Administrative Agent, and independent accountants appointed by the Company at a
mutually agreed time during normal business hours and upon not less than three
(3) Business Days’ prior notice.

At no time will the Investment Manager make a public announcement concerning the
Loan Agreement, the Investment Manager’s role hereunder or any other aspect of
the transactions contemplated by this Agreement and the Loan Agreement absent
the written consent of the Company.

The Investment Manager shall, and shall cause its Affiliates to, keep
confidential any and all information obtained in connection with the services
rendered hereunder and shall not disclose any such information to non-affiliated
third parties except (i) with the prior written consent of the Company, (ii) as
required by law, regulation, court order or the rules or regulations of any self
regulating organization, body or official having jurisdiction over the
Investment Manager, (iii) to its professional advisers, (iv) such information as
shall have been publicly disclosed other than in violation of this Agreement,
(v) the identification of the Company as a client of the Investment Manager,
(vi) information related to the performance of the Investment Manager,
(vii) information furnished in connection with any successor investment manager
or assignee, or any agent that has been assigned duties in accordance with this
Agreement, or (viii) such information that was or is obtained by the Investment
Manager on a non-confidential basis; provided that the Investment Manager does
not know or have reason to know, after due inquiry, of any breach by such source
of any confidentiality obligations with respect thereto. For purposes of this
Section 9, the Administrative Agent shall in no event be considered a
“non-affiliated third party,” and the Investment Manager may disclose any of the
aforementioned information to the Administrative Agent insofar as such
information relates to the Company’s performance of its obligations under the
Loan Agreement.

 

  10. Term.

This Agreement shall become effective on the date hereof and shall continue
unless terminated as hereinafter provided.

 

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  11. Termination.

(a) This Agreement may be terminated, and the Investment Manager may be removed,
without payment to the Investment Manager of any penalty, for cause upon prior
written notice by the Company, acting with the consent of the Administrative
Agent; provided that such notice may be waived by the Investment Manager. For
this purpose, “cause” will mean the occurrence of any of the following events or
circumstances:

(i) the Investment Manager’s breach, in any respect, of any provision of this
Agreement or the Loan Agreement applicable to it (except for any breach that has
not had, and could not reasonably be expected to have, a material adverse effect
on the Company or the Administrative Agent) and the Investment Manager’s failure
to cure such breach within 30 days of its becoming aware of, or receiving notice
of, the occurrence of such breach;

(ii) the Investment Manager’s intentional breach of any provision of this
Agreement or the Loan Agreement applicable to it relating to the Investment
Manager’s or the Company’s obligation to comply with any material provision of
this Agreement or the Loan Agreement applicable to it, and the Investment
Manager’s failure to cure such breach within 15 days of the occurrence of such
breach;

(iii) the failure of any representation, warranty, certification or statement
made or delivered by the Investment Manager in or pursuant to this Agreement or
the Loan Agreement to be correct in any material respect when made, which
failure (a) could reasonably be expected to have a material adverse effect on
the Administrative Agent and (b) is not corrected by the Investment Manager
within 30 days of its receipt of notice from the Company or the Administrative
Agent of such failure, unless, if such failure is not capable of being cured in
30 days but is curable within 90 days, the Investment Manager has taken action
that the Investment Manager in good faith believes will remedy, and does in fact
remedy, such failure within 90 days after notice of such failure being given to
the Investment Manager;

(iv) the Investment Manager (1) is dissolved (other than pursuant to a
consolidation, amalgamation or merger), (2) files, or consents by answer or
otherwise to the filing against it of, a petition for relief or reorganization
or arrangement or any other petition in bankruptcy, for liquidation or to take
advantage of any bankruptcy, insolvency, reorganization, moratorium or other
similar law of any jurisdiction, (3) becomes insolvent or is unable to pay its
debts or fails or admits in writing its inability generally to pay its debts as
they become due, (4) makes a general assignment, arrangement or composition with
or for the benefit of its creditors, (5) consents to the appointment of a
custodian, receiver, trustee or other officer with similar powers with respect
to it or with respect to any substantial part of its property or (6) is
adjudicated as insolvent or bankrupt, or a petition seeking reorganization,
arrangement, adjustment or composition of or

 

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in respect of the Investment Manager, or appointing a receiver, liquidator,
assignee, or sequestrator (or other similar official) of the Investment Manager
or of any substantial part of its property, and the continuance of any such
decree or order unstayed and in effect for a period of 60 consecutive days;

(v) the occurrence of an Event of Default under the Loan Agreement that results
from any breach by the Investment Manager of its duties under the Loan Agreement
or this Agreement; or

(vi) the occurrence of an act by the Investment Manager that constitutes fraud
or criminal activity in the performance of its obligations under this Agreement,
or the Investment Manager being indicted for a criminal offense materially
related to its business of providing asset management services.

If any such event occurs, the Investment Manager shall give prompt written
notice thereof to the Company and the Administrative Agent promptly upon the
Investment Manager becoming aware of the occurrence of such event.

(b) The Investment Manager shall have the right to terminate this Agreement only
upon 90 days prior written notice to the Company and the Administrative Agent,
and this Agreement shall terminate automatically in the event of its assignment
by the Investment Manager which is not made in accordance with Sections 13 and
17 of this Agreement.

(c) This Agreement shall be automatically terminated in the event that the
Company determines in good faith that the Company or the Company’s asset
portfolio has become required to be registered under the provisions of the
Investment Company Act.

(d) Within 30 days of the resignation or removal of the Investment Manager, the
Company may appoint a successor investment manager; provided that such
appointment is subject to the prior approval of the Administrative Agent.

 

  12. Action Upon Termination.

(a) Upon the effective termination of this Agreement, the Investment Manager
shall as soon as practicable:

(i) deliver to the Company all property and documents of the Company or
otherwise relating to the Company’s assets then in the custody of the Investment
Manager; and

(ii) deliver to the Administrative Agent an account with respect to the books
and records delivered to the Administrative Agent or the successor investment
manager appointed pursuant to Section 11(d).

Notwithstanding such termination, the Investment Manager shall remain liable to
the extent set forth herein (but subject to Section 13 hereof) for its acts or
omissions

 

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hereunder arising prior to termination and for any expenses, losses, damages,
liabilities, demands, charges and claims (including reasonable attorney’s fees)
in respect of or arising out of a breach of the representations and warranties
made by the Investment Manager in Section 4 hereof or from any failure of the
Investment Manager to comply with the provisions of this Section 12.

(b) The Investment Manager agrees that, notwithstanding any termination, it
shall reasonably cooperate in any suit, action or proceeding relating to this
Agreement (each, a “Proceeding”) arising in connection with this Agreement, the
Loan Agreement or any of the Company’s assets (excluding any such Proceeding in
which claims are asserted against the Investment Manager or any Affiliate of the
Investment Manager) so long as the Investment Manager shall have been offered
reasonable security, indemnity or other provisions against the cost, expenses
and liabilities that might be incurred in connection therewith and a reasonable
per diem fee.

 

  13. Liability of Investment Manager; Delegation.

(a) The Investment Manager assumes no responsibility under this Agreement other
than to render the services called for hereunder and under the terms of the Loan
Agreement made applicable to it pursuant to the terms of this Agreement. The
Investment Manager shall not be responsible for any action of the Company in
declining to follow any advice, recommendation or direction of the Investment
Manager. The Investment Manager shall have no liability to the Administrative
Agent or other creditors of the Company, for any error of judgment, mistake of
law, or for any loss arising out of any investment, or for any other act or
omission in the performance of its obligations to the Company except for
liability to which it would be subject by reason of willful misfeasance, bad
faith, gross negligence in performance, or reckless disregard of its obligations
hereunder. The Investment Manager may delegate to an agent selected with
reasonable care, which shall include any Person that is party to a sub-advisory
agreement with the Investment Manager or any of its Affiliates as of the date
hereof, any or all duties (other than its asset selection or trade execution
duties) assigned to the Investment Manager hereunder; provided that no such
delegation by the Investment Manager of any of its duties hereunder shall
relieve the Investment Manager of any of its duties hereunder nor relieve the
Investment Manager of any liability with respect to the performance of such
duties. For the avoidance of doubt, asset selection and trade execution duties
shall include the services described in Section 1(a) hereof.

Notwithstanding the above and Section 17, the Investment Manager shall be
permitted to assign any or all of its rights and delegate any or all of its
obligations to an Affiliate reasonably acceptable to the Administrative Agent
that (i) will professionally and competently perform duties similar to those
imposed upon the Investment Manager under this Agreement and (ii) is legally
qualified and has the capacity to act as the Investment Manager under this
Agreement. The Investment Manager shall not be liable for any consequential
damages hereunder.

(b) The Company shall reimburse, indemnify and hold harmless the Investment
Manager, its directors, officers, agents and employees and any of its Affiliates

 

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from any and all expenses, losses, damages, liabilities, demands, charges and
claims of any nature whatsoever (including reasonable attorneys’ fees and
expenses), as are incurred in investigating, preparing, pursuing or defending
any claim, action, proceeding or investigation with respect to any pending or
threatened litigation caused by, or arising out of or in connection with, any
acts or omissions of the Investment Manager, its directors, officers,
stockholders, agents and employees made in good faith and in the performance of
the Investment Manager’s duties under this Agreement or the Loan Agreement
except to the extent resulting from such person’s bad faith, willful
misfeasance, gross negligence or reckless disregard of its duties hereunder or
thereunder. The Investment Manager, its directors, officers, stockholders,
agents and employees may consult with counsel and accountants with respect to
the affairs of the Company and shall be fully protected and justified, to the
extent allowed by law, in acting, or failing to act, if such action or failure
to act is taken or made in good faith and is in accordance with the advice or
opinion of such counsel or accountants. Notwithstanding anything contained
herein to the contrary, the obligations of the Company under this Section 13(b)
shall be payable from the Company’s assets and are subject to the availability
of funds.

(c) The Investment Manager shall reimburse, indemnify and hold harmless the
Company, its members, manager, officers, agents and employees from any and all
expenses, losses, damages, liabilities, demands, charges and claims of any
nature whatsoever (including reasonable attorneys’ fees and expenses), as are
incurred in investigating, preparing, pursuing or defending any claim, action,
proceeding or investigation with respect o any pending or threatened litigation
caused by, or arising out of or in connection with, (i) any acts or omissions of
the Investment Manager constituting bad faith, willful misconduct, gross
negligence or reckless disregard of its duties under this Agreement or under the
Loan Agreement and (ii) any breach of the representations and warranties made by
the Investment Manger in Section 4 hereof.

 

  14. Obligations of Investment Manager.

Unless otherwise required by any provision of the Loan Agreement or this
Agreement or by applicable law, the Investment Manager shall not intentionally
take any action, which it knows or should know would (a) materially adversely
affect the Company for purposes of United States federal or state law or any
other law known to the Investment Manager to be applicable to the Company,
(b) require registration of the Company or the Company’s assets as an
“investment company” under the Investment Company Act, (c) not be permitted
under the Company’s operating agreement or certificate of formation (including,
but not limited to, Section 9 thereof), (d) cause the Company to violate the
terms of the Loan Agreement, (e) subject the Company to federal, state or other
income taxation or (f) adversely affect the interests of the Administrative
Agent in any material respect (other than as permitted or required hereunder or
under the Loan Agreement, including, without limitation, as may result from the
performance of any Debt Obligation), it being understood that in connection with
the foregoing the Investment Manager will not be required to make any
independent investigation of any facts or laws not otherwise known to it in
connection with its obligations under this Agreement and the Loan Agreement or
the conduct of its business generally. The Investment Manager covenants that it
shall comply in all material respects with all laws and regulations applicable
to it in connection with the performance of its duties under this Agreement and
the Loan

 

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Agreement. Notwithstanding anything in this Agreement, the Investment Manager
shall not take any discretionary action that would reasonably be expected to
cause an Event of Default under the Loan Agreement. The Investment Manager
covenants that it shall not fail to correct any known misunderstandings
regarding the separate identity of the Company and shall not identify itself as
a division or department of the Company.

 

  15. No Partnership or Joint Venture.

The Company and the Investment Manager are not partners or joint venturers with
each other and nothing herein shall be construed to make them such partners or
joint venturers or impose any liability as such on either of them. The
Investment Manager’s relation to the Company shall be deemed to be that of an
independent contractor.

 

  16. Notices.

Any notice under this Agreement shall be in writing and sent by facsimile,
confirmed by telephonic communication, or addressed and delivered or mailed
postage paid to the other party at such address as such other party may
designate for the receipt of such notice. Until further notice to the other
party it is agreed that the address of the Company and the Administrative Agent
for this purpose shall be as set forth in Section 8.3 of the Loan Agreement, and
the address of the Investment Manager for this purpose shall be:

FS Investment Corporation

Cira Centre

2929 Arch Street, Suite 675

Philadelphia, Pennsylvania 19104

Attention: Gerald F. Stahlecker

Telephone: (215) 495-1169

Facsimile: (215) 222-4649

Electronic Mail: jerry.stahlecker@franklinsquare.com

All notices are to be effective in accordance with Section 8.3 of the Loan
Agreement.

 

  17. Succession/Assignment.

This Agreement shall inure to the benefit of and be binding upon the successors
to the parties hereto. No assignment of this Agreement by the Investment Manager
(including, without limitation, a change in control or management of the
Investment Manager which would be deemed an “assignment” under the Investment
Advisers Act) shall be made without the consent of the Company and the
Administrative Agent.

 

  18. Conflicts with the Loan Agreement.

Subject to the provisions of Section 1 hereof pertaining to the binding effect
of certain amendments to the Loan Agreement on the Investment Manager, in the
event that this Agreement requires any action to be taken with respect to any
matter and the Loan Agreement requires that a different action be taken with
respect of such matter, and such actions are mutually exclusive, the provisions
of the Loan Agreement in respect thereof shall control.

 

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  19. Miscellaneous.

(a) This Agreement shall be governed by and construed in accordance with the
laws of the State of New York without regard to conflicts of laws principles.
With respect to any Proceeding, each party irrevocably (i) submits to the
non-exclusive jurisdiction of the courts of the State of New York and the United
States District Court located in the Borough of Manhattan in New York City and
(ii) waives any objection which it may have at any time to the laying of venue
of any Proceedings brought in any such court, waives any claim that such
Proceedings have been brought in an inconvenient forum and further waives the
right to object, with respect to such Proceedings, that such court does not have
any jurisdiction over such party. Nothing in this Agreement precludes either
party from bringing Proceedings in any other jurisdiction, nor will the bringing
of Proceedings in any one or more jurisdictions preclude the bringing of
Proceedings in any other jurisdiction.

(b) THE PARTIES HERETO IRREVOCABLY CONSENT TO THE SERVICE OF ANY AND ALL PROCESS
IN ANY ACTION OR PROCEEDING BY THE MAILING OR DELIVERY OF COPIES OF SUCH PROCESS
TO EACH SUCH PARTY AT THE ADDRESS SPECIFIED IN SECTION 16 HEREOF. THE PARTIES
HERETO AGREE THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL BE
CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR
IN ANY OTHER MANNER PROVIDED BY LAW.

(c) EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED
BY LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT
OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.

(d) No failure on the part of either party hereto to exercise and no delay in
exercising, and no course of dealing with respect to, any right, remedy, power
or privilege under this Agreement shall operate as a waiver thereof nor shall
any single or partial exercise of any right, remedy, power or privilege under
this Agreement preclude any other or further exercise thereof or the exercise of
any other right, remedy, power or privilege, nor shall any waiver of any right,
remedy, power or privilege with respect to any occurrence be construed as a
waiver of such right, remedy, power or privilege with respect to any other
occurrence. No waiver shall be effective unless it is in writing and is signed
by the party asserted to have granted such waiver.

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

(f) In the event any provision of this Agreement shall be held invalid or
unenforceable, by any court of competent jurisdiction, such holding shall not
invalidate or render unenforceable any other provisions hereof.

 

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(g) This Agreement may not be amended or modified or any provision thereof
waived except by an instrument in writing signed by the parties hereto.

(h) This Agreement and the Loan Agreement contain the entire understanding and
agreement between the parties and supersedes all other prior understandings and
agreements, whether written or oral, between the parties concerning this subject
matter. The express terms of this Agreement control and supersede any course of
performance and/or usage of the trade inconsistent with any of the terms hereof.

(i) The Investment Manager (i) consents to, and agrees to perform, the
provisions of the Loan Agreement applicable to the Investment Manager and
(ii) agrees that all of the representations, covenants and agreements made by
the Investment Manager in this Agreement are also for the benefit of the
Lenders.

(j) This Agreement may be executed in any number of counterparts, each of which
so executed shall be deemed an original, but all such counterparts shall
together constitute but one and the same instrument. This Agreement shall become
binding when one or more counterparts hereof, individually or taken together,
shall bear the signatures of all of the parties reflected hereon as the
signatories.

(k) Each representation and warranty made or deemed to be made herein or
pursuant hereto, and each indemnity provided for hereby, shall survive the
execution and delivery and any termination or assignment of this Agreement or
resignation or removal of the Investment Manager.

(l) The Company hereby acknowledges and accepts all actions that were taken by
the Investment Manager and/or recommended to the Company by the Investment
Manager prior to the Closing Date, including all actions and recommendations
that were otherwise consistent with the services to be provided by the
Investment Manager to the Company pursuant to Section 1 of this Agreement prior
to the Closing Date, in each case, as if this Agreement had been in effect at
the time that such actions were taken or such recommendations were made.

 

  20. Non-Payment.

The Investment Manager shall continue to serve as Investment Manager under this
Agreement notwithstanding that the Investment Manager shall not have received
amounts due to it under this Agreement because sufficient funds were not then
available hereunder to pay such amounts in accordance with Section 3.8(b) of the
Loan Agreement.

 

  21. No Recourse.

The Investment Manager hereby acknowledges and agrees that the Company’s
obligations hereunder will be solely the corporate obligations of the Company,
and the Investment Manager will not have any recourse to any of the directors,
officers, employees, holders of the membership interest of Company with respect
to any claims, losses, damages, liabilities, indemnities or other obligations in
connection with any transactions contemplated hereby. Recourse in respect of any
obligations of the Company hereunder will be limited to the

 

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Company’s assets and on the exhaustion thereof all claims against the Company
arising from this Agreement or any transactions contemplated hereby shall be
extinguished. The provisions of this Section 21 shall survive the termination of
this Agreement for any reason whatsoever.

[signature page follows]

 

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IN WITNESS WHEREOF, the parties hereto have caused this AMENDED AND RESTATED
INVESTMENT MANAGEMENT AGREEMENT to be executed by their respective authorized
representatives on the day and year first above written.

 

ARCH STREET FUNDING LLC By:  

/s/ William Goebel

Name: William Goebel Title: Chief Financial Officer FS INVESTMENT CORPORATION
By:  

/s/ William Goebel

Name: William Goebel Title: Chief Financial Officer