FS ENERGY AND POWER FUND 8-K





Exhibit
10.3


 


Execution
Version


 


INVESTMENT MANAGEMENT
AGREEMENT


 


dated as of November
6, 2015


 


BY AND BETWEEN


 


FOXFIELDS FUNDING
LLC,

a Delaware limited liability company


 


AND


 


FS ENERGY AND
POWER FUND

a Delaware statutory trust


 






    	 



    	 



    

 





	 	 	Page
	 	 	 
	1.	General Duties of the Investment Manager	1
	2.	Duties and Obligations of the Investment
    Manager with Respect to the Administration of the Company	3
	3.	Authority to Bind the Company; No Joint
    Venture	5
	4.	Limitations Relating to Transferred Assets	5
	5.	Brokerage	6
	6.	Expenses	6
	7.	Services to Other Companies or Accounts;
    Conflicts of Interest	6
	8.	Duty of Care and Loyalty; Exculpation
    of Liability	7
	9.	Indemnification	7
	10.	Term of Agreement; Events Affecting the
    Investment Manager; Survival of Certain Terms; Delegation	10
	11.	Power of Attorney; Further Assurances	11
	12.	Amendment of this Agreement; Assignment	11
	13.	Notices	12
	14.	Binding Nature of Agreement; Successors
    and Assigns	12
	15.	Entire Agreement	12
	16.	Costs and Expenses	13
	17.	Books and Records	13
	18.	Titles Not to Affect Interpretation	13
	19.	Provisions Separable	13
	20.	Governing Law	13
	21.	Execution in Counterparts	13
	22.	Third Party Rights; Benefits of Agreement	13
	23.	Representations and Warranties of the
    Investment Manager	14
	24.	Managing REO Assets	15
	25.	Confidentiality	16




 






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INVESTMENT
MANAGEMENT AGREEMENT


 


This
Investment Management Agreement (the “Agreement”), dated as of November 6, 2015 is made by and between FOXFIELDS
FUNDING LLC (the “Company”), a Delaware limited liability company, and FS ENERGY AND POWER FUND (the “Investment
Manager”), a Delaware statutory trust. Unless otherwise specified, capitalized terms used but not otherwise defined
in this Agreement shall have the meanings given to them in the Limited Liability Company Agreement of the Company dated as of
the date hereof (as the same may be amended from time to time, the “Operating Agreement”), or if not defined
therein, shall have the meanings given to them in the Term Loan and Security Agreement, dated as of the date hereof, by and among
the Company, the other loan parties signatory thereto from time to time, the lenders from time to time party thereto and Fortress
Credit Co LLC, as administrative agent (as the same may be amended from to time, the “Loan Agreement”).


 


1.     General
Duties of the Investment Manager.


 


Subject
to the direction and control of the Company and in a manner consistent with the customary standards, policies and procedures followed
by asset managers of national standing relating to assets of the nature and character of the equity and debt portfolio investments
transferred by the Investment Manager to the Company from time to time (the “Transferred Assets”) and without
regard to any relationship that the Investment Manager or any Affiliate thereof may have with any Person who is an obligor under,
or issuer of, any Transferred Asset (“Obligor”) or any Affiliate of any Obligor (the “Investment Manager
Standard”), the Operating Agreement, the policies adopted or approved by the Company and the terms of this Agreement,
the Investment Manager agrees to supervise and direct the investment and reinvestment of the Transferred Assets, manage, service,
administer and make collections on the Transferred Assets and perform its duties set forth herein, and shall have such other powers
with respect to the investment and leverage related functions of the Company as shall be delegated from time to time to the Investment
Manager by the Company. The Investment Manager shall endeavor to comply with all applicable federal and state laws and regulations,
except to the extent that the failure to comply would not have a Material Adverse Effect (as defined below) on the operations
of the Company or the Investment Manager. The Investment Manager is hereby appointed as the Company’s agent and attorney-in-fact
with authority to negotiate, execute and deliver all documents and agreements on behalf of the Company and to do or take all related
acts, with the power of substitution, to acquire, dispose of or otherwise take action with respect to or affecting the Transferred
Assets, including, without limitation:


 


(a)    identifying
and originating Transferred Assets to be purchased by the Company, selecting the dates for such purchases, and purchasing or directing
the purchase of such Transferred Assets on behalf of the Company;


 


(b)   identifying
Transferred Assets owned by the Company to be sold by the Company, selecting the dates for such sales, and selling such Transferred
Assets on behalf of the Company;


 






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(c)   negotiating
and entering into, on behalf of the Company, documentation providing for the purchase and sale of Transferred Assets, including
without limitation, confidentiality agreements and commitment letters;


 


(d)   structuring
the terms of, and negotiating, entering into and/or consenting to, on behalf of the Company, documentation relating to Transferred
Assets to be purchased, held, exchanged or sold by the Company, including any amendments, modifications or supplements with respect
to such documentation;


 


(e)   exercising,
on behalf of the Company, rights and remedies associated with the Transferred Assets, including without limitation, rights to
petition to place an obligor or issuer in bankruptcy proceedings, to vote to accelerate the maturity of a Transferred Asset, to
waive any default, including a payment default, with respect to a Transferred Asset and to take any other action which the Investment
Manager deems necessary or appropriate in its discretion in connection with any restructuring, reorganization or other similar
transaction involving an obligor or issuer with respect to a Transferred Asset, including without limitation, initiating and pursuing
litigation;


 


(f)    responding
to any offer in respect of Transferred Assets by tendering the affected Transferred Assets, declining such offer, or taking such
other actions as the Investment Manager may determine;


 


(g)   exercising
all voting, consent and similar rights of the Company on its behalf and advising the Company with respect to matters concerning
the Transferred Assets;


 


(h)   advising
and assisting the Company with respect to the valuation and rating of the Transferred Assets;


 


(i)    retaining
legal counsel and other professionals (such as financial advisers) to assist in the structuring, negotiation, documentation, administration
and modification and restructuring of Transferred Assets;


 


(j)    directing,
or causing to be directed, all Obligors to pay all payments and collections owing to the Company on any Transferred Asset (“Collections”)
directly to the appropriate account of the Company, depositing all Collections received directly by it into the appropriate account
of the Company within one (1) Business Day of receipt thereof and, within three (3) Business Days after receipt into such account,
identifying all available balances in the such account as interest Collections or principal Collections. The Investment Manager
shall direct, or cause to be directed, the related Obligor to make such payments to the appropriate account of the Company and
shall promptly, and in any event no later than the Business Day after receipt thereof, deposit or cause to be deposited all such
amounts into such account (and shall identify such amounts as either principal Collections or interest Collections, as applicable).
For purposes of this Agreement, “Business Day” means any day that is not a Saturday, Sunday or other day on
which banking institutions in New York, New York are authorized or obligated by law, executive order or government decree to remain
closed; and


 






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(k)   causing
the Company to pay, perform and discharge or cause to be paid, performed and discharged promptly (i) all federal, state, county,
city, municipal, local, foreign or other governmental taxes; (ii) all levies, assessments, charges, or claims of any governmental
entity or any claims of statutory lienholders, the nonpayment of which could give rise by operation of law to a Lien on the Transferred
Assets or any other property of the Company and (iii) any such taxes, levies, assessment, charges or claims which constitute a
lien or encumbrance on any property of the Company (collectively, “Charges”) payable by it, except where the
failure to so pay, discharge or otherwise satisfy such Charge would not, individually or in the aggregate, be expected to have
a Material Adverse Effect. For purposes of this Agreement, “Lien” means (i) any mortgage, pledge, hypothecation,
assignment for security, encumbrance, lien (statutory or other), charge, or other security interest of any kind or nature whatsoever
(including any conditional sale or other title retention agreement, and any financing lease having substantially the same economic
effect as any of the foregoing), and (ii) any right of set off or offset, or other liens of any kind or nature whatsoever (including
federal or state Tax (as defined below) liens).


 


For
the avoidance of doubt, the Investment Manager, in its capacity as such, does not guarantee the performance of any obligations
of any other Person under this Agreement or any other document to be executed and delivered in connection with this Agreement
(“Transaction Document”).


 


2.    Duties
and Obligations of the Investment Manager with Respect to the Administration of the Company. 


 


The
Investment Manager agrees to furnish office facilities and equipment and clerical, bookkeeping and administrative services (other
than such services, if any, provided by the Company’s custodian and other service providers) to the Company. To the extent
requested by the Company, the Investment Manager agrees to provide the following administrative services:


 


(a)   maintain
or oversee the maintenance of the books and records of the Company and maintain (or oversee maintenance by other persons) such
other books and records required by law or for the proper operation of the Company;


 


(b)   to
the extent prepared or filed by the Company, oversee the preparation and filing of the Company’s federal, state and local
income Tax returns and any other required Tax returns or reports. For purposes of this Agreement, “Taxes” means
all taxes, levies, imposts, duties, deductions, withholdings (including backup withholding), assessments, fees or other charges
imposed by any Official Body, including any interest, additions to tax or penalties applicable thereto, and “Official
Body” means any government or political subdivision or any agency, authority, regulatory body, bureau, central bank,
commission, department or instrumentality of any such government or political subdivision, or any court, tribunal, grand jury
or arbitrator, in each case whether foreign or domestic;


 


(c)   review
the appropriateness of and arrange for payment of the Company’s expenses;


 


(d)  prepare
for review and approval by officers and other authorized persons of the Company (collectively, the “Authorized Signatories”)
financial information for the Company’s financial statements (if the Company prepares separate financial statements);


 






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(e)   prepare
reports relating to the business and affairs of the Company as may be mutually agreed upon and not otherwise prepared by others;


 


(f) 
  make recommendations to the Company concerning the performance and fees of any of the Company’s service
providers as the Company may reasonably request or deem appropriate;


 


(g)   oversee
and review calculations of fees paid to the Company’s service providers;


 


(h)   consult
with the Authorized Signatories, and the Company’s independent accountants, legal counsel, custodian and other service providers
in establishing the accounting policies of the Company and monitor financial accounting services;


 


(i)    determine
the amounts available for distribution as dividends and distributions to be paid by the Company to its Member;


 


(j)    prepare
such information and reports as may be required under any Financing;


 


(k)   provide
such assistance to the Company’s custodian, counsel, auditors and other service providers as generally may be required to
properly carry on the business and operations of the Company;


 


(l)    respond
to, or refer to the Company’s officers or Authorized Signatories, inquiries relating to the Company;


 


(m)  supervise
any other aspects of the Company’s administration as may be agreed to by the Company and the Investment Manager; and


 


(n)   from
time to time promptly following receipt thereof, forward additional documents evidencing any assumption, modification, consolidation
or extension of a Transferred Asset to any collateral custodian of the Company.


 


All
services are to be furnished through the medium of any officers, Authorized Signatories or employees of the Investment Manager
or its affiliates as the Investment Manager deems appropriate, or any investment adviser to the Investment Manager, in order to
fulfill its obligations hereunder.


 


The
Company shall, upon demand, reimburse the Investment Manager or its affiliates for all reasonable and documented out-of-pocket
expenses incurred by them in connection with the performance of the administrative services described in this Section 2;
provided, however, that such expenses may accrue but shall not be reimbursed after the occurrence and during the
continuation of an Event of Default under the Loan Agreement.


 






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3.     Authority
to Bind the Company; No Joint Venture.


 


(a)   Except
as provided in or pursuant to Sections 1, 4 and 11 hereof, the Investment Manager shall have no authority to bind
or obligate the Company. All acts of the Investment Manager (other than as provided in the Operating Agreement or in Section
1, Section 4 or Section 11 hereof with respect to any Transferred Asset) shall require the Company’s consent
and approval to bind the Company. Nothing in this Agreement shall be deemed to create a joint venture or partnership between the
parties with respect to the arrangements set forth in this Agreement. For all purposes hereof, the Investment Manager shall be
deemed to be an independent contractor and, unless otherwise provided herein or specifically authorized by the Company from time
to time, shall have no authority to act for or represent the Company.


 


(b)   The
Investment Manager shall act in conformity with the written instructions and directions of the Company delivered in accordance
with the terms and conditions hereof, except to the extent that authority has been delegated to the Investment Manager pursuant
to the terms of this Agreement or the Operating Agreement. The Investment Manager will not be bound to follow any amendment to
the Operating Agreement until it has received written notice thereof and until it has received a copy of the amendment from the
Company; provided that if any such amendment materially or adversely affects the rights or duties of the Investment Manager,
the Investment Manager shall not be obligated to respect or comply with the terms of such amendment unless it consents thereto.
Subject to the fiduciary duty of the Member, if applicable, the Company agrees that it shall not permit any amendment to the Operating
Agreement that materially or adversely affects the rights or duties of the Investment Manager to become effective unless the Investment
Manager has been given prior written notice of such amendment and has consented thereto in writing. The Investment Manager may,
with respect to the affairs of the Company, consult with such legal counsel, accountants and other advisors as may be selected
by the Investment Manager. The Investment Manager shall be fully protected, to the extent permitted by applicable law, in acting
or failing to act hereunder if such action or inaction is taken or not taken in good faith by the Investment Manager in accordance
with the advice or opinion of such counsel, accountants or other advisors. The Investment Manager shall be fully protected in
relying upon any writing signed in the appropriate manner with respect to any instruction, direction or approval of the Company
and may also rely on opinions of the Investment Manager’s counsel with respect to such instructions, directions and approvals.
The Investment Manager shall also be fully protected when acting upon any instrument, certificate or other writing the Investment
Manager believes in good faith to be genuine and to be signed or presented by the proper person or persons. The Investment Manager
shall be under no duty to make any investigation or inquiry as to any statement contained in any such writing and may accept the
same as conclusive evidence of the truth and accuracy of the statements therein contained if the Investment Manager in good faith
believes the same to be genuine.


 


4.     Limitations
Relating to Transferred Assets.


 


(a)   Transferred
Assets. Except as otherwise provided in this Section 4, and subject to the requirements of the Operating Agreement
and applicable law, the Investment Manager may cause the Company (which term shall include, for all purposes relating to the purchase
and sale of Transferred Assets and the duties and obligations of the Investment Manager set forth in Section 1 hereof,
the Company and its consolidated subsidiaries, if any) from time to time to purchase Transferred Assets.


 


(b)   Transaction,
Director, Consulting, Advisory, Closing and Break- up Fees. The Company shall receive its pro-rata share, measured by the
amount invested or proposed to be invested by the Company in any Transferred Asset, of any transaction, director, consulting,
advisory, closing and break-up fees, or similar fees (“Additional Fees”) payable with respect to any Transferred
Asset.


 






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5.     Brokerage.


 


The
Investment Manager shall use commercially reasonable efforts to effect all purchases and sales of securities in a manner consistent
with the principles of best execution, taking into account net price (including commissions) and execution capability and other
services which the broker or other intermediary may provide. In this regard, the Investment Manager may effect transactions which
cause the Company to pay a commission in excess of a commission which another broker or other intermediary would have charged;
provided, however, that the Investment Manager shall have first determined that such commission is reasonable in
relation to the value of the brokerage or research services performed by that broker or other intermediary or that the Company
is the sole beneficiary of the services provided.


 


6.     Expenses.


 


Other
than as set forth below, the Company will be responsible for paying all of its expenses. On behalf of the Company, the Investment
Manager may advance payment of any reasonable and documented out-of-pocket expenses, and the Company shall, upon request, at any
time when no Event of Default shall have occurred and be continuing under the Loan Agreement, reimburse the Investment Manager
therefor within 30 days following written request from the Investment Manager. Nothing in this Section 6 shall limit the
ability of the Investment Manager to be reimbursed by any Person other than the Company (including issuers or obligors of securities,
instruments or obligations owned by the Company) for reasonable and documented out-of-pocket expenses incurred by the Investment
Manager in connection with the performance of services hereunder. The Investment Manager shall maintain complete and accurate
records with respect to costs and expenses and shall furnish the Company with receipts or other written vouchers with respect
thereto upon request of the Company.


 


7.     Services
to Other Companies or Accounts; Conflicts of Interest.


 


(a)   The
Investment Manager and its Affiliates, employees or associates are in no way prohibited from, and intend to, spend substantial
business time in connection with other businesses or activities, including, but not limited to, managing investments, advising
or managing entities whose investment objectives are the same as or overlap with those of the Company, participating in actual
or potential investments of the Company, providing consulting, merger and acquisition, structuring or financial advisory services,
including with respect to actual, contemplated or potential investments of the Company, or acting as a director, officer or creditors’
committee member of, advisor to, or participant in, any corporation, company, trust or other business entity. The Investment Manager
and its Affiliates may, and expect to, receive fees or other compensation from third parties for any of these activities unrelated
to the Company, which fees will be for the benefit of their own account and not the Company.


 






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(b)   In
addition, the Investment Manager and its Affiliates may manage other investment vehicles and separate accounts (“Other
Accounts”) that invest in assets eligible for purchase by the Company. The Company may have the ability, under certain
circumstances, to take certain actions that would have an adverse effect on Other Accounts. In these circumstances, the Investment
Manager and its affiliated persons will act in a manner believed to be equitable to the Company and such Other Accounts, including
co-investment in accordance with applicable laws, including the conditions of any exemptive relief obtained by the Company and
the Investment Manager. The allocation of investment opportunities among the Company and Other Accounts will be made in good faith
pursuant to the Investment Manager’s written allocation policies. The Investment Manager may combine purchase or sale orders
on behalf of the Company with orders for Other Accounts, and allocate the assets so purchased or sold among such accounts in an
equitable manner. The Company may invest in portfolio companies in which Other Accounts have or are concurrently making the same
investment or a different investment (e.g., an investment that is junior to the Company’s investment). In such situations,
the Company and the Other Accounts may potentially have conflicting interests. If any matter arises that the Investment Manager
determines in its good faith judgment constitutes an actual conflict of interest, the Investment Manager may take such actions
as may be necessary or appropriate to ameliorate the conflict. These actions may include, by way of example and without limitation,
disposing of the asset giving rise to the conflict of interest, appointing an independent fiduciary, or delegating decisions relating
to the asset giving rise to the conflict of interest to a subcommittee of the Investment Manager.


 


8.     Duty
of Care and Loyalty; Exculpation of Liability.


 


The
Investment Manager shall exercise its discretion and authority in accordance with applicable law, all customary and usual servicing
practices for assets similar to the Transferred Assets and, to the extent consistent with the foregoing, (i) with reasonable care,
using a degree of skill and diligence not less than that with which the Company or Investment Manager, as applicable, services
and administers assets for its own account or for the account of its Affiliates having similar investment objectives and restrictions,
and (ii) to the extent not inconsistent with clause (i), in a manner consistent with the customary standards, policies and procedures
followed by institutional managers of national standing relating to assets of the nature and character of the Transferred Assets
and without regard to any relationship that the Investment Manager or any Affiliate thereof may have with any underlying Obligor
or any Affiliate of an Obligor.


 


9.     Indemnification.


 


(a)   To
the fullest extent permitted by applicable law, the Company shall be held harmless and indemnified by the Investment Manager against
any claims, demands, costs, liabilities and reasonable and documented out-of-pocket expenses, including amounts paid in satisfaction
of judgments, in compromise or as fines and penalties, and reasonable and documented out-of-pocket counsel fees incurred by the
Company (“Losses”) in connection with the defense or disposition of any action, suit or other proceeding, whether
civil or criminal, before any court or administrative or investigative body in which the Company may be or may have been involved
as a party or otherwise or with which the Company may be or may have been threatened, while acting in connection with the establishment,
management or operations of the Company or the management of the Transferred Assets; provided, however, to the fullest
extent permitted by applicable law, that the Company shall not be indemnified hereunder if there has been a determination by a
final decision on the merits by a court or other body of competent jurisdiction before whom the issue of entitlement to indemnification
was brought that such Losses have been primarily attributable to the Company’s willful misfeasance, bad faith, gross negligence
in performance, or reckless disregard, of its obligations; provided further, that the Investment Manager will not be required
to indemnify the Company with respect to any Losses (i) arising out of an action or claim brought against the Company by the Investment
Manager or its Affiliates, or (ii) resulting from the performance or non-performance of the Transferred Assets.


 






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Indemnification
under this Section 9(a) shall survive the termination of this Agreement and shall include reasonable and documented out-of-pocket
fees and expenses of counsel and reasonable and documented out-of-pocket expenses of litigation.


 


If
for any reason (other than the exclusions set forth in the first paragraph of Section 9(a)) the indemnification provided
above in Section 9(a) is unavailable to the Company or is insufficient to hold the Company harmless, then the Investment
Manager agrees to contribute to the amount paid or payable by the Company as a result of such loss, claim, damage or liability
in such proportion as is appropriate to reflect not only the relative benefits received by the Company, on the one hand, and the
Investment Manager and its Affiliates, on the other hand, but also the relative fault of the Company, on the one hand, and the
Investment Manager and its Affiliates, on the other hand, as well as any other relevant equitable considerations.


 


(b)  (i)     To the fullest extent permitted by applicable law, each of the Investment Manager, and its Affiliates, or any officer, director,
member, manager, employee, stockholder, assign, representative or agent of any such Person (each an “Indemnified Person”,
and collectively, the “Indemnified Persons”) shall be held harmless and indemnified by the Company (solely
out of the Transferred Assets and in accordance with Section 9(b)(v), and not (solely for the purposes of this Agreement)
out of the separate assets of any Member) against any Losses incurred by such Indemnified Person in connection with the defense
or disposition of any action, suit or other proceeding, whether civil or criminal, before any court or administrative or investigative
body in which such Indemnified Person may be or may have been involved as a party or otherwise (other than as authorized by the
trustees of the Member, as the plaintiff or complainant) or with which such Indemnified Person may be or may have been threatened,
while acting in such Person’s capacity as an Indemnified Person in connection with the establishment, management or operations
of the Company or the management of the Transferred Assets; provided, however, that an Indemnified Person shall
not be indemnified hereunder if and to the extent resulting from such Indemnified Person’s bad faith, willful misfeasance,
gross negligence or reckless disregard; provided further, that the Company will not be required to indemnify the
Indemnified Persons with respect to any Losses (i) arising out of an action or claim brought against any Indemnified Person by
the Company or its Affiliates, or (ii) resulting from the performance or non-performance of the Transferred Assets.


  


(ii)    The
Company shall make advance payments in connection with the reasonable expenses of defending any action, suit or other proceeding
with respect to which indemnification might be sought hereunder if the Company receives a written affirmation by the Indemnified
Person of the Indemnified Person’s good faith belief that the standards of conduct necessary for indemnification have been
met and a written undertaking to reimburse the Company unless it is subsequently determined that the Indemnified Person is entitled
to such indemnification and if a majority of the trustees of the Member determine that the applicable standards of conduct necessary
for indemnification appear to have been met. In addition, at least one of the following conditions must be met: (A) the Indemnified
Person shall provide adequate security for its undertaking, (B) the Company shall be insured against losses arising by reason
of any lawful advances, or (C) independent legal counsel in a written opinion, shall conclude, based on a review of readily available
facts (as opposed to a full trial-type inquiry), that there is substantial reason to believe that the Indemnified Person ultimately
will be found entitled to indemnification.


 






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(iii)   The
rights accruing to any Indemnified Person under these provisions shall not exclude any other right to which such Indemnified Person
may be lawfully entitled.


 


(iv)   Each
Indemnified Person (other than the Investment Manager) shall, in the performance of its duties, be fully and completely justified
and protected with regard to any act or any failure to act resulting from reliance in good faith upon the books of account or
other records of the Company, upon an opinion of counsel, or upon reports made to the Company by any of the Company’s officers
or employees or by any advisor, administrator, manager, distributor, selected dealer, accountant, appraiser or other expert or
consultant selected with reasonable care by the trustees of the Member, officers or employees of the Company, regardless of whether
such counsel or other person may also be a trustee of the Member. The Investment Manager shall, in the performance of its duties,
be fully and completely justified and protected with regard to any act or any failure to act resulting from reliance in good faith
upon any books of account or other records of the Company that were prepared by an agent or other third party, upon an opinion
of counsel, or upon reports made to the Company by any advisor, administrator, manager, distributor, selected dealer, accountant,
appraiser or other expert or consultant selected with reasonable care by the trustees of the Member, officers or employees of
the Company, regardless of whether such counsel or other person may also be a trustee of the Member.


 


(v)    All
determinations that may be made to make advance payments in connection with the expense of defending or settling any action, suit
or other proceeding, whether civil or criminal, shall be authorized and made (if so authorized and made) in accordance with paragraph
(b)(ii) above.


 


(vi)   Notwithstanding
anything herein to the contrary, the Company’s indemnification obligations hereunder (and any obligation to make advance
payments with respect thereto) may accrue but shall not be paid after the occurrence and during the continuance of an Event of
Default under the Loan Agreement.


 






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10.   Term
of Agreement; Events Affecting the Investment Manager; Survival of Certain Terms; Delegation.


 


(a)    This
Agreement shall become effective as of the date hereof and, unless sooner terminated by the Company or the Investment
Manager as provided herein, shall continue in effect during the existence of the Company. Notwithstanding the foregoing, this
Agreement may be terminated (i) at any time by the mutual agreement of the parties hereto or (ii) by the Company without the
payment of any penalty, upon the occurrence of a “cause” event. A “cause” event for purposes of this Section
10(a) shall have occurred by reason of (x) the conviction (or plea of no contest) for a felony of the Investment Manager,
(y) the conviction (or plea of no contest) for a felony of an officer or a member of the board of trustees of the Investment
Manager, if the employment or other affiliation of such Person so convicted is not terminated by the Investment Manager
within 30 days of such conviction and the Member votes thereafter to invoke this termination provision, or (z) the Investment
Manager or an officer or a member of the board of trustees of the Investment Manager has engaged in gross negligence or
willful misconduct with respect to the Company that has resulted in a Material Adverse Effect on the Company or the
Transferred Assets, or has committed a knowing material violation of securities laws, each as determined by a final decision
of a court or binding arbitration decision unless, in the case of such natural persons, their employment or other affiliation
with the Investment Manager is terminated or suspended within 30 days after discovery by the Investment Manager. The
Investment Manager shall promptly provide written notice to the Member upon the occurrence of a “cause”
event.


 


(b)   Notwithstanding
anything herein to the contrary, Sections 6 and 9 of this Agreement shall survive any termination hereof.


 


(c)   From
and after the effective date of termination of this Agreement, the Investment Manager and its Affiliates shall not be entitled
to compensation for further services hereunder, but shall be paid all compensation and reimbursement of reasonable and documented
out-of-pocket expenses accrued to the date of termination. Upon such termination and upon request by the Company, the Investment
Manager shall deliver as directed copies of all documents, books, records and other information prepared and maintained by or
on behalf of the Company with respect to any Transferred Asset (“Records”) within five (5) Business Days after
demand therefor and a computer tape or diskette (or any other means of electronic transmission acceptable to the successor investment
manager) containing as of the close of business on the date of demand all of the data maintained by the Investment Manager in
computer format in connection with managing the Transferred Assets. The Investment Manager agrees to use reasonable efforts to
cooperate with any successor investment manager in the transfer of its responsibilities hereunder, and will, among other things,
provide upon receipt of a written request by such successor investment manager any information available to it regarding any Transferred
Assets. The Investment Manager agrees that, notwithstanding any termination, it will reasonably cooperate in any proceeding arising
in connection with this Agreement or any Transferred Asset (excluding any such proceeding in which claims are asserted against
the Investment Manager or any Affiliate of the Investment Manager) upon receipt of appropriate indemnification and expense reimbursement.


 






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(d)   Until
a successor investment manager has commenced investment management activities in the place of FS Energy and Power Fund, FS Energy
and Power Fund shall not resign as Investment Manager hereunder. Notwithstanding anything contained herein to the contrary and
to the extent permitted by applicable law without causing the Investment Manager to have liability, the resignation of the Investment
Manager shall not become effective until another entity shall have assumed the responsibilities and obligations of the Investment
Manager.


 


11.   Power
of Attorney; Further Assurances.


 


In
addition to the power of attorney granted to the Investment Manager in Section 1 of this Agreement, the Company hereby
makes, constitutes and appoints the Investment Manager, with full power of substitution, as its true and lawful agent and attorney-in-fact,
with full power and authority in its name, place and stead, in accordance with the terms of this Agreement (a) to sign, execute,
certify, swear to, acknowledge, deliver, file, receive and record any and all documents which the Investment Manager reasonably
deems necessary or appropriate in connection with its investment management duties under this Agreement and (b) to (i) subject
to any policies adopted by the Member or the Company with respect thereto, exercise in its discretion any voting or consent rights
associated with any securities, instruments or obligations included in the Company’s assets, (ii) execute proxies,
waivers, consents and other instruments with respect to such securities, instruments or obligations, (iii) endorse, transfer
or deliver such securities, instruments and obligations and (iv) participate in or consent (or decline to consent) to any
modification, work-out, restructuring, bankruptcy proceeding, class action, plan of reorganization, merger, combination, consolidation,
liquidation or similar plan or transaction with regard to such securities, instruments and obligations. To the extent permitted
by applicable law, this grant of power of attorney is irrevocable and coupled with an interest, and it shall survive and not be
affected by the subsequent dissolution or bankruptcy of the Company; provided that this grant of power of attorney will
expire, and the Investment Manager will cease to have any power to act as the Company’s attorney-in-fact, upon termination
of this Agreement in accordance with its terms. The Company shall execute and deliver to the Investment Manager all such other
powers of attorney, proxies, dividend and other orders, and all such instruments, as the Investment Manager may reasonably request
for the purpose of enabling the Investment Manager to exercise the rights and powers which it is entitled to exercise pursuant
to this Agreement. Each of the Investment Manager and the Company shall take such other actions, and furnish such certificates,
opinions and other documents, as may be reasonably requested by the other party hereto in order to effectuate the purposes of
this Agreement and to facilitate compliance with applicable laws and regulations and the terms of this Agreement.


 


12.   Amendment
of this Agreement; Assignment.


 


No
provision of this Agreement may be amended, waived, discharged or terminated orally, but only by an instrument in writing signed
by the party against which enforcement of the amendment, waiver, discharge or termination is sought. The Investment Manager may
not, directly or indirectly, assign all or any part of its rights and duties under this Agreement to any Person without the prior
consent of the Company.


 






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13.   Notices.


 


Unless
expressly provided otherwise herein, any notice, request, direction, demand or other communication required or permitted under
this Agreement shall be in writing and shall be deemed to have been duly given, made and received if sent by hand or by overnight
courier, when personally delivered, if sent by telecopier, when receipt is confirmed by telephone, or if sent by registered or
certified mail, postage prepaid, return receipt requested, when actually received if addressed as set forth below:


 





	(a)	If to the Company:
	 	 
	 	Foxfields Funding LLC
	 	c/o FS Energy and Power Fund
	 	201 Rouse Boulevard
	 	Philadelphia, PA 19112
	 	Attention: Gerald F. Stahlecker, Executive Vice President
	 	Tel: (215) 495-1169
	 	Fax: (215) 222-4649
	 	 
	(b)	If to the Investment Manager:
	 	 
	 	FS Energy and Power Fund
	 	201 Rouse Boulevard
	 	Philadelphia, PA 19112
	 	Attention: Gerald F. Stahlecker, Executive Vice President
	 	Tel: (215) 495-1169
	 	Fax: (215) 222-4649




 


Either party
to this Agreement may alter the address to which communications or copies are to be sent to it by giving notice of such change
of address in conformity with the provisions of this Section 13.


 


14.   Binding
Nature of Agreement; Successors and Assigns.


 


This
Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns as
provided herein.


 


15.   Entire
Agreement.


 


This
Agreement contains the entire agreement and understanding between the parties hereto with respect to the subject matter hereof,
and supersedes all prior and contemporaneous agreements, understandings, inducements and conditions, express or implied, oral
or written, of any nature whatsoever with respect to the subject matter hereof. The express terms hereof control and supersede
any course of performance or usage of the trade inconsistent with any of the terms hereof.


 






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16.   Costs
and Expenses.


 


The
costs and expenses (including the fees and disbursements of counsel and accountants) incurred in connection with the negotiation,
preparation and execution of this Agreement, and all matters incident thereto, shall be borne by each party hereto.


 


17.    Books
and Records.


 


In
compliance with the requirements of Rule 31a-3 under the Investment Company Act of 1940, as amended (the “1940 Act”),
the Investment Manager hereby agrees that all records which it maintains for the Company are the property of the Company and further
agrees to surrender promptly to the Company any such records upon the Company’s request. The Investment Manager further
agrees to preserve for the periods prescribed by Rule 31a-2 under the 1940 Act the records maintained by it in its capacity as
Investment Manager that are required to be maintained by Rule 31a-1 under the 1940 Act.


 


18.   Titles
Not to Affect Interpretation.


 


The
titles of sections contained in this Agreement are for convenience only, and they neither form a part of this Agreement nor are
they to be used in the construction or interpretation hereof.


 


19.   Provisions
Separable.


 


The
provisions of this Agreement are independent of and separable from each other, and, to the extent permitted by applicable law,
no provision shall be affected or rendered invalid or unenforceable by virtue of the fact that for any reason any other or others
of them may be invalid or unenforceable in whole or in part.


 


20.   Governing
Law.


 


This
Agreement shall be governed by and construed in accordance with the laws of the State of New York.


 


21.   Execution
in Counterparts.


 


This
Agreement may be executed in separate counterparts, each of which shall be an original and all of which taken together shall constitute
one and the same instrument.


 


22.   Third
Party Rights; Benefits of Agreement.


 


None
of the provisions of this Agreement shall be for the benefit of or enforceable by any creditor of the Company or by any creditor
of the Member, in each case, other than the Administrative Agent.


 






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23.   Representations
and Warranties of the Investment Manager.


 


The
Investment Manager represents, warrants and covenants as of the Effective Date as to itself:


 


(a)   Organization
and Good Standing. It has been duly organized and is validly existing as a corporation in good standing under the laws of
its jurisdiction of organization, with power and authority to own its properties and to conduct its business as such properties
are currently owned and such business is currently conducted, and had at all relevant times;


 


(b)   Due
Qualification. It is duly qualified to do business as a Delaware statutory trust in good standing and has obtained all necessary
licenses and approvals in all jurisdictions where the failure to do so would have a Material Adverse Effect;


 


(c)   Power
and Authority. It has the power, authority and legal right to execute and deliver this Agreement and to perform its obligations
hereunder; and the execution, delivery and performance of this Agreement has been duly authorized by the Investment Manager by
all necessary action;


 


(d)   Binding
Obligations. This Agreement has been executed and delivered by the Investment Manager and, assuming due authorization, execution
and delivery by the Company, constitutes its legal, valid and binding obligation, enforceable against it in accordance with its
terms, except as enforceability may be limited by (A) bankruptcy, insolvency, reorganization, or other similar laws affecting
the enforcement of creditors’ rights generally, (B) equitable limitations on the availability of specific remedies, regardless
of whether such enforceability is considered in a proceeding in equity or at law and (C) implied covenants of good faith and fair
dealing;


 


(e)   No
Violation. The execution, delivery and performance of this Agreement by the Investment Manager, the Investment Manager’s
consummation of the transactions contemplated hereby and the Investment Manager’s fulfillment of the terms hereof do not
(A) conflict with, result in any breach of any of the terms and provisions of, or constitute (with or without notice or lapse
of time) a default under, its declaration of trust or bylaws, each as amended, or any material indenture, agreement, mortgage,
deed of trust or other material instrument to which it is a party or by which it or its properties are bound, (B) result in the
creation or imposition of any adverse claim upon any of its properties pursuant to the terms of any such material indenture, agreement,
mortgage, deed of trust or other material instrument (except as may be created pursuant to this Agreement or any other Transaction
Document), or (C) violate in any material respect any applicable law except, in the case of this subclause (C), to the extent
that such conflict or violation would not reasonably be expected to have a material adverse effect on (i) the assets, operations,
properties, financial condition, or business of the Investment Manager; (ii) the ability of the Investment Manager to perform
its obligations under this Agreement or any of the other Transaction Documents; or (iii) the validity or enforceability of this
Agreement or any of the other Transaction Documents (a “Material Adverse Effect”);


 






    	-14-



    	 



    

 


(f)    No
Proceedings. There are no proceedings or investigations pending or, to the best of the Investment Manager’s knowledge,
threatened against it, before any Official Body having jurisdiction over it or its properties (A) asserting the invalidity of
this Agreement, (B) seeking to prevent the consummation of any of the transactions contemplated hereby or (C) seeking any determination
or ruling that would reasonably be expected to have a Material Adverse Effect;


 


(g)   No
Consents. No consent, license, approval, authorization or order of, or registration, declaration or filing with, any Official
Body having jurisdiction over it or any of its properties is required to be made in connection with the execution, delivery or
performance of this Agreement or the consummation of the transactions contemplated hereby, in each case other than (A) consents,
licenses, approvals, authorizations, orders, registrations, declarations or filings which have been obtained or made and continuation
statements and renewals in respect thereof and (B) where the lack of such consents, licenses, approvals, authorizations, orders,
registrations, declarations or filings would not have a Material Adverse Effect;


 


(h)   Investment
Company Status. It is not required to be registered as an “investment company” within the meaning of the 1940
Act.


 


24.   Managing
REO Assets.


 


(a)   If,
in the reasonable business judgment of the Investment Manager, it becomes necessary to foreclose upon or repossess from the applicable
Obligor any real property securing any Transferred Asset (each such Transferred Asset, an “REO Asset”), the
Investment Manager shall first cause the Company to transfer and assign such Transferred Asset (or the portion thereof owned by
the Company) to a special purpose vehicle wholly owned by the Company (the “REO Asset Owner”) using a contribution
agreement. The Investment Manager shall cause each REO Asset to be serviced (i) in accordance with applicable laws, (ii) in accordance
with the Investment Management Standard and (iii) in accordance with the applicable REO Asset Owner’s limited liability
company operating agreement (collectively, the “REO Investment Management Standard”). The Investment Manager
will cause all “Distributable Cash” (or comparable definition set forth in the REO Asset Owner’s organization
documents) to be deposited into the appropriate account of the Company within two (2) Business Days of receipt thereof.


 


(b)   In
the event that title to any Related Property (as defined below) is acquired on behalf of the REO Asset Owner for the benefit of
its members in foreclosure, by deed in lieu of foreclosure or upon abandonment or reclamation from bankruptcy, the deed or certificate
of sale shall be taken in the name of a REO Asset Owner. The Investment Manager shall cause the REO Asset Owner to manage, conserve,
protect and operate each REO Asset for its members solely for the purpose of its prompt disposition and sale.


 


(c)   Notwithstanding
any provision to the contrary contained in this Agreement, the Investment Manager shall not (and shall not permit the REO Asset
Owner to) obtain title to any property or other assets designated and pledged or mortgaged as collateral to secure repayment of
such Transferred Asset (“Related Property”) as a result of or in lieu of foreclosure or otherwise, obtain title
to any direct or indirect partnership interest in any Obligor pledged pursuant to a pledge agreement and thereby be the beneficial
owner of Related Property, have a receiver of rents appointed with respect to, and shall not otherwise acquire possession of,
or take any other action with respect to, any Related Property if, as a result of any such action, the REO Asset Owner would be
considered to hold title to, to be a “mortgagee-in-possession” of, or to be an “owner” or “operator”
of, such Related Property within the meaning of the Comprehensive Environmental Response, Compensation and Liability Act of 1980,
as amended from time to time, or any comparable state or local environmental law, unless the Investment Manager has previously
determined in accordance with the REO Investment Management Standard, based on an updated Phase I environmental assessment report
generally prepared in accordance with the ASTM Phase I Environmental Site Assessment Standard E 1527-05, as may be amended or,
with respect to residential property, a property inspection and title report, that:


 


(i)     such
Related Property is in compliance in all material respects with applicable environmental laws; and


 


(ii)    there
are no circumstances present at such Related Property relating to the use, management or disposal of any hazardous materials for
which investigation, testing, monitoring, containment, clean-up or remediation would reasonably be expected to be required by
the owner, occupier or operator of the Related Property under applicable federal, state or local law or regulation.


 






    	-15-



    	 



    

 


(d)   In
the event that the Phase I or other environmental assessment first obtained by the Investment Manager with respect to Related
Property indicates that such Related Property may not be in compliance with applicable environmental laws or that hazardous materials
may be present but does not definitively establish such fact, the Investment Manager shall cause the Company to immediately sell
the related loan.


 


25.   Confidentiality.


 


The
Investment Manager shall hold in confidence, and not disclose to any Person the terms of any fees payable in connection with any
Transaction Document except it may disclose such information (i) to its officers, trustees, employees, agents, counsel, accountants,
auditors, advisors, lenders, prospective lenders, equity investors or representatives, (ii) to the extent such information has
become available to the public other than as a result of a disclosure by or through such Person, (iii) to the extent the Investment
Manager or any Affiliate deems disclosure reasonably prudent under, or should be required by, any law or regulation applicable
to it, or (iv) as requested by any Official Body to disclose such information.


 


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page intentionally left blank.]


 






    	-16-



    	 



    

 


IN
WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first written above.


 


	 	FS ENERGY AND POWER FUND
	 	 	 
	 	By:	/s/ Stephen S. Sypherd
	 	Name:	Stephen S. Sypherd
	 	Title:	Vice President, Treasurer and Secretary









 


	 	FOXFIELDS
FUNDING LLC
	 	 	 
	 	By:	/s/ Stephen S. Sypherd
	 	Name:	Stephen S. Sypherd
	 	Title:	Vice President, Treasurer and Secretary