FS ENERGY AND POWER FUND 8-K


Exhibit 10.6





PLEDGE AGREEMENT


 


This PLEDGE AGREEMENT,
dated as of November 6, 2015 (together with all amendments, modifications, restatements or supplements, if any, from time to time
hereto, this “Agreement”) is made and entered into by and between FS ENERGY AND POWER FUND, a Delaware statutory
trust (“FSEP” or the “Pledgor”), and FORTRESS CREDIT CO LLC, in its capacity as Administrative
Agent for Lenders (“Administrative Agent”).


 


W I T N E S S E T H:


 


WHEREAS, pursuant to that
certain Term Loan and Security Agreement, dated as of the date hereof, by and among FOXFIELDS FUNDING LLC, a Delaware limited liability
company (“Company”), the other Loan Parties party thereto from time to time, Administrative Agent and the Persons
signatory thereto from time to time as Lenders (including all exhibits and schedules thereto, and as from time to time amended,
restated, supplemented or otherwise modified, the “Loan Agreement”), the Lenders have agreed to make certain
Term Loans to Company;


 


WHEREAS, Pledgor is the
record and beneficial owner of the Capital Stock of Company listed on Schedule I hereto;


 


WHEREAS, as the sole shareholder
of Company, Pledgor benefits from the credit facilities made available to Company under the Loan Agreement; and


 


WHEREAS, in order to induce
Administrative Agent and Lenders to make the Term Loans to Company as provided for in the Loan Agreement, Pledgor has agreed to
(i) enter into that certain Guaranty, dated as of the Closing Date, made by FSEP in favor of Administrative Agent (the “FSEP
Guaranty”) and (ii) pledge the Pledged Collateral to Administrative Agent in accordance herewith.


 


NOW, THEREFORE, in consideration
of the premises and the covenants hereinafter contained and to induce Lenders to make Term Loans under the Loan Agreement, it is
agreed as follows:


 


1.              Definitions.
Unless otherwise defined herein, terms defined in the Loan Agreement are used herein as therein defined, and the following shall
have (unless otherwise provided elsewhere in this Agreement) the following respective meanings (such meanings being equally applicable
to both the singular and plural form of the terms defined):


 


“Pledged Collateral”
has the meaning assigned to such term in Section 2 hereof.


 


“Pledged Shares”
means the Capital Stock of Company listed on Schedule I hereto.


 


“Secured Obligations”
has the meaning assigned to such term in Section 3 hereof.


 






    	 



    	 



    

 


2.              Pledge. Pledgor
hereby pledges to Administrative Agent, and grants to Administrative Agent for itself and the benefit of Lenders, a first priority
security interest (subject to Permitted Liens) in all of the following (collectively, the “Pledged Collateral”):


 


(a)          the Pledged Shares
and any certificates representing the Pledged Shares, and, other than Permitted Distributions, all dividends, distributions, Cash,
instruments and other property or proceeds from time to time received, receivable or otherwise distributed in respect of or in
exchange for any or all of the Pledged Shares; and


 


(b)         any additional Capital
Stock of Company from time to time acquired by Pledgor in any manner (which Capital Stock shall be deemed to be part of the Pledged
Shares), and any certificates representing such additional Capital Stock, and, other than Permitted Distributions, all dividends,
distributions, Cash, instruments and other property or proceeds from time to time received, receivable or otherwise distributed
in respect of or in exchange for any or all of such Capital Stock.


 


3.             Security for Obligations.
This Agreement secures, and the Pledged Collateral is security for, the prompt payment in full when due, whether at stated maturity,
by acceleration or otherwise, and performance of all Obligations, including the Guaranteed Obligations (as defined in the FSEP
Guaranty), of any kind under or in connection with the Loan Agreement and the other Loan Documents and all obligations of Pledgor
now or hereafter existing under this Agreement, in each case, including, without limitation, all reasonable, documented and out-of-pocket
fees, costs and expenses to the extent required to be reimbursed pursuant to Section 12.04 of the Loan Agreement (collectively,
the “Secured Obligations”).


 


4.             Delivery of Pledged
Collateral. The certificates evidencing the Pledged Collateral shall be delivered to and held by or on behalf of Administrative
Agent, for itself and the benefit of Lenders, pursuant hereto. All such certificates shall be accompanied by duly executed instruments
of transfer or assignment in blank, all in form and substance reasonably satisfactory to Administrative Agent.


 


5.             Representations
and Warranties. Pledgor represents and warrants to Administrative Agent that:


 


(a)        Pledgor is the sole
holder of record and the sole beneficial owner of such Pledged Collateral pledged by Pledgor free and clear of any Lien thereon
or affecting the title thereto, except for any Lien created by this Agreement and Permitted Liens;


 


(b)         All of the Pledged
Shares have been duly authorized and validly issued;


 


(c)         Pledgor has the right
and requisite authority to Grant a security interest in the Pledged Collateral pledged by Pledgor to Administrative Agent as provided
herein;


 


(d)         None of the Pledged
Shares has been issued or transferred in material violation of the securities registration, securities disclosure or similar Laws
of any jurisdiction to which such issuance or transfer may be subject;


 


(e)         All of the Pledged
Shares are presently owned by Pledgor, and are presently represented by the certificates listed on Schedule I hereto. As
of the date hereof, there are no existing options, warrants, calls or commitments of any character whatsoever relating to the Pledged
Shares;


 






    	2



    	 



    

 


(f)         No Consent(s) and/or
Other Action of any Governmental Authority or any other Person is required (i) for the pledge by Pledgor of the Pledged Collateral
pursuant to this Agreement or for the execution, delivery or performance of this Agreement by Pledgor, or (ii) for the exercise
by Administrative Agent of the voting or other rights provided for in this Agreement or the remedies in respect of the Pledged
Collateral pursuant to this Agreement, except (x) as may be required in connection with such disposition by Laws affecting the
offering and sale of securities generally or (y) the consents described in Section 6.15 of the Loan Agreement;


 


(g)         Delivery of the Pledged
Collateral hereunder pursuant to the terms of Section 4 of this Agreement will create a valid first priority perfected security
interest (subject to Permitted Liens) in favor of the Administrative Agent for the benefit of Administrative Agent and Lenders
in the Pledged Collateral and the proceeds thereof, securing the payment of the Secured Obligations;


 


(h)         This Agreement has
been duly authorized, executed and delivered by Pledgor and constitutes a legal, valid and binding obligation of Pledgor enforceable
against Pledgor in accordance with its terms, subject to applicable Debtor Relief Laws and general principles of equity, regardless
of whether considered in a proceeding in equity or at Law;


 


(i)          The Pledged Shares
constitute 100% of the issued and outstanding Capital Stock of Company;


 


(j)          (i) Pledgor’s
name as it appears in official filings in the state of its organization is FS Energy and Power Fund, (ii) Pledgor is a Delaware
statutory trust and (iii) Pledgor has only one state of organization;


 


(k)         The Pledged Collateral
constitutes a “security” within the meaning set forth in Section 8-103 of the UCC;


 


(l)          None of the Pledged
Collateral is an investment company security; and


 


(m)        None of the Pledged
Collateral is dealt in or traded on securities exchanges or in securities markets.


 


The representations and
warranties set forth in this Section 5 shall survive the execution and delivery of this Agreement.


 


6.             Covenants.
Pledgor covenants and agrees that until the indefeasible payment in full in Cash of all Secured Obligations (other than contingent
and un-asserted indemnification and expense reimbursement claims):


 


(a)         Without the prior
written consent of Administrative Agent, Pledgor will not sell, assign, transfer, pledge, or otherwise encumber any of its rights
in or to the Pledged Collateral, or any unpaid dividends or other distributions or payments with respect to the Pledged Collateral
or grant a Lien in the Pledged Collateral, unless otherwise expressly permitted by the Loan Agreement (including with respect to
Permitted Distributions thereunder);


 






    	3



    	 



    

 


(b)        Pledgor will, at its
expense, promptly execute, acknowledge and deliver all such agreements, documents and/or instruments and take all such actions,
in each case, as Administrative Agent from time to time may reasonably request in order to perfect the security interest Granted
to the Administrative Agent, for the benefit of the Lenders, in and to the Pledged Collateral intended to be created by this Agreement,
including the filing of any necessary UCC financing statements, which Administrative Agent is authorized to file without the signature
of Pledgor;


 


(c)         [Intentionally Reserved]


 


(d)        Pledgor will, upon
obtaining ownership of any additional Capital Stock of Company, which Capital Stock is not already Pledged Collateral, promptly
(and in any event within three (3) Business Days) deliver to Administrative Agent a Pledge Amendment, duly executed by Pledgor,
in substantially the form of Schedule II hereto (a “Pledge Amendment”) in respect of any such additional
Capital Stock, pursuant to which Pledgor shall pledge to Administrative Agent all of such additional Capital Stock. Pledgor hereby
authorizes Administrative Agent to attach each Pledge Amendment to this Agreement and agrees that all Pledged Shares listed on
any Pledge Amendment delivered to Administrative Agent shall for all purposes hereunder be considered Pledged Collateral. Notwithstanding
the foregoing, Pledgor agrees that the security interest of Administrative Agent shall attach to all Pledged Collateral immediately
upon Pledgor’s acquisition of rights therein and shall not be affected by the failure of Pledgor to deliver a Pledge Amendment
as required hereby;


 


(e)         Pledgor shall not
change Pledgor’s name, identity, corporate structure, sole place of business, chief executive office, type of organization
or jurisdiction of organization, or establish any trade names unless Pledgor shall have (A) notified Administrative Agent
in writing at least thirty (30) days prior to any such change or establishment, identifying such new proposed name, identity, corporate
structure, sole place of business, chief executive office, type of organization, jurisdiction of organization, or trade name and
providing such other information in connection therewith as Administrative Agent may reasonably request and (B) taken all
actions necessary to maintain the continuous validity and perfection of Administrative Agent’s security interest in the Pledged
Collateral Granted hereby;


 


(f)         Pledgor shall take
all actions necessary to ensure that (i) the Pledged Collateral at all times (x) constitutes a “security” within the
meaning of and governed by Article 8 of the UCC and (y) is represented by a certificate evidencing such Pledged Collateral, so
long as such certificate is delivered to Administrative Agent in accordance with the terms of Section 4 hereof, (ii) none
of the Pledged Collateral is dealt in or traded on securities exchanges or in securities markets and (iii) none of the Pledged
Collateral constitutes an investment company security;


 


(g)        Pledgor, for any and
all purposes (including, without limitation, for purposes of any Organizational Document of Company), consents to, and waives any
and all rights to object to, Administrative Agent, for itself and the benefit of Lenders, exercising, after the occurrence and
during the continuance of an Event of Default, any and all remedies set forth herein pursuant to the terms hereof, notwithstanding
anything to the contrary in any Organizational Document of Company;


 






    	4



    	 



    

 


(h)         Pledgor shall cause
Company to maintain (I) proper books of record and account, in which true and correct entries in all material respects in accordance
with GAAP shall be made of all financial transactions and matters involving the assets and business of Company and (II) such
books of record and account in material conformity with all applicable requirements of any Governmental Authority having regulatory
jurisdiction over Company, except (solely in the cause of clause (II)) to the extent that failure to do so would not reasonably
be expected to have a Material Adverse Effect;


 


(i)          Pledgor shall permit
representatives and agents of the Administrative Agent to visit and inspect any of its properties, to examine its corporate, financial
and operating records related to the Pledged Collateral, and make copies thereof, and to discuss its affairs, finances and accounts
related to the Pledged Collateral with its directors, officers and independent public accountants (provided, that representatives
of Pledgor may be present at any such discussion), all at the expense of the Pledgor and at such reasonable times during normal
business hours and as often as may be reasonably desired, upon reasonable advance written notice from Administrative Agent to Pledgor;
provided, that so long as no Event of Default shall have occurred and be continuing (at which time no limit shall apply),
no more than one (1) such inspection or audit shall be conducted in any one year;


 


(j)          Pledgor shall comply
in all material respects with the requirements of all Laws and all Judgments applicable to it or its business or property (including,
without limitation, the Investment Company Act), except in such instances in which (I) such requirement of Law or Judgment is being
contested in good faith by appropriate proceedings diligently conducted or (II) the failure to comply therewith could not reasonably
be expected to have a Material Adverse Effect;


 


(k)         [Intentionally Reserved]


 


(l)          Pledgor shall maintain
shareholders’ equity of Pledgor and its Subsidiaries on a consolidated basis (as determined in accordance with GAAP) greater
than $1,500,000,000 as of the end of each fiscal quarter during the term of the Loan Agreement; and


 


(m)        Pledgor shall at all
times maintain an asset coverage ratio (as determined in accordance with the Investment Company Act) greater than or equal to 2:00
to 1:00.


 


7.             Pledgor’s
Rights. As long as no Event of Default shall have occurred and be continuing:


 


(a)         Pledgor shall have
the right, from time to time, to vote and give consents with respect to the Pledged Collateral, or any part thereof for all purposes
not expressly prohibited by the provisions of this Agreement, the Loan Agreement or any other Loan Document; provided, however,
that no vote shall be cast, and no consent shall be given or action taken, which would have the effect of impairing the position
or interest of Administrative Agent in any respect of the Pledged Collateral or which would authorize, effect or consent to (unless
and to the extent expressly permitted by the Loan Agreement):


 






    	5



    	 



    

 


(i)          the dissolution
or liquidation, in whole or in part, of Company;


 


(ii)         the consolidation
or merger of Company with any other Person;


 


(iii)        the
sale, disposition or encumbrance of all or substantially all of the assets of Company, except for Liens in favor of Administrative
Agent;


 


(iv)        any change
in the authorized Capital Stock, the stated capital or the authorized share capital of Company or the issuance of any additional
Capital Stock;


 


(v)         any change
in the Pledged Collateral’s classification as a “security” within the meaning of and governed by Article 8 of
the UCC; or


 


(vi)        the alteration
of the voting rights with respect to the Capital Stock of Company; and


 


(b)         i) Pledgor shall be
entitled, from time to time, to collect and receive for its own use, free of the lien and security interest of this Agreement and
the other Loan Documents, all Permitted Distributions paid in respect of the Pledged Shares to the extent not in violation of the
Loan Agreement; provided, however, that until actually paid all rights to such Permitted Distributions shall remain
subject to the Lien created by this Agreement; and (ii) all dividends and other distributions (other than Permitted Distributions
permitted to be paid to Pledgor in accordance with clause (i) above) in respect of any of the Pledged Shares, whenever paid
or made, shall be included as Pledged Collateral and shall, if received by Pledgor, be received in trust for the benefit of Administrative
Agent.


 


8.             Defaults and Remedies;
Proxy.


 


(a)         Upon the occurrence
of an Event of Default and during the continuation of such Event of Default, Administrative Agent (personally or through an agent)
is hereby authorized and empowered, in each case subject to applicable law, to transfer and register in its name or in the name
of its nominee the whole or any part of the Pledged Collateral, to exchange certificates representing or evidencing Pledged Collateral
for certificates of smaller or larger denominations, to exercise the voting and all other rights as a holder with respect thereto,
to collect and receive all Cash dividends and other distributions made thereon, to sell in one or more sales after ten (10) days’
notice of the time and place of any public sale or of the time at which a private sale is to take place (which notice Pledgor agrees
is commercially reasonable) the whole or any part of the Pledged Collateral and to otherwise act with respect to the Pledged Collateral
as though Administrative Agent was the outright owner thereof. Notwithstanding the foregoing, the Administrative Agent shall give
the Pledgor two (2) Business Days’ prior written notice of its intention to take any action described in this clause (a)
solely in the event the Administrative Agent is taking such action with respect to an Event of Default which does not constitute
a Material Event of Default. Any sale shall be made at a public or private sale at Administrative Agent’s place of business,
or at any place to be named in the notice of sale, either for Cash or upon credit or for future delivery at such price as Administrative
Agent may in its reasonable discretion deem fair, and Administrative Agent may be the purchaser of the whole or any part of the
Pledged Collateral so sold and hold the same thereafter in its own right free from any claim of Pledgor or any right of redemption.
Each sale shall be made to the highest bidder, but Administrative Agent reserves the right to reject any and all bids at such sale
which, in its reasonable discretion, it shall deem inadequate. Demands of performance, except as otherwise herein specifically
provided for, notices of sale, advertisements and the presence of property at sale are hereby waived and any sale hereunder may
be conducted by an auctioneer or any officer or agent of Administrative Agent. EFFECTIVE AFTER THE OCCURRENCE AND DURING THE CONTINUANCE
OF AN EVENT OF DEFAULT, PLEDGOR HEREBY IRREVOCABLY CONSTITUTES AND APPOINTS ADMINISTRATIVE AGENT AS THE PROXY AND ATTORNEY-IN-FACT
OF PLEDGOR WITH RESPECT TO THE PLEDGED COLLATERAL, INCLUDING THE RIGHT TO VOTE THE PLEDGED SHARES, WITH FULL POWER OF SUBSTITUTION
TO DO SO. THE APPOINTMENT OF ADMINISTRATIVE AGENT AS PROXY AND ATTORNEY-IN-FACT IS COUPLED WITH AN INTEREST AND SHALL BE IRREVOCABLE
UNTIL THE PAYMENT IN FULL IN CASH OF ALL SECURED OBLIGATIONS (OTHER THAN CONTINGENT AND UN-ASSERTED CLAIMS FOR INDEMNIFICATION
OR EXPENSE REIMBURSEMENT). IN ADDITION TO THE RIGHT TO VOTE THE PLEDGED SHARES, THE APPOINTMENT OF ADMINISTRATIVE AGENT AS PROXY
AND ATTORNEY-IN-FACT SHALL INCLUDE, AFTER THE OCCURRENCE AND DURING THE CONTINUANCE OF AN EVENT OF DEFAULT, THE RIGHT TO EXERCISE
ALL OTHER RIGHTS, POWERS, PRIVILEGES AND REMEDIES TO WHICH A HOLDER OF THE PLEDGED SHARES WOULD BE ENTITLED (INCLUDING GIVING OR
WITHHOLDING WRITTEN CONSENTS, CALLING SPECIAL MEETINGS AND VOTING AT SUCH MEETINGS). SUCH PROXY AND APPOINTMENT SHALL BE EFFECTIVE,
AUTOMATICALLY AND WITHOUT THE NECESSITY OF ANY ACTION (INCLUDING ANY TRANSFER OF ANY PLEDGED SHARES ON THE RECORD BOOKS OF THE
ISSUER THEREOF) BY ANY PERSON (INCLUDING THE ISSUER OF THE PLEDGED SHARES OR ANY OFFICER OR AGENT THEREOF), AFTER THE OCCURRENCE
AND DURING THE CONTINUATION OF AN EVENT OF DEFAULT. NOTWITHSTANDING THE FOREGOING, ADMINISTRATIVE AGENT SHALL NOT HAVE ANY DUTY
TO EXERCISE ANY SUCH RIGHT OR TO PRESERVE THE SAME AND SHALL NOT BE LIABLE FOR ANY FAILURE TO DO SO OR FOR ANY DELAY IN DOING SO.


 






    	6



    	 



    

 


(b)         If, at the original
time or times appointed for the sale of the whole or any part of the Pledged Collateral, the highest bid, if there be but one sale,
shall be inadequate to discharge in full all the Secured Obligations, Administrative Agent may, on one or more occasions and in
its discretion, postpone any of said sales by public announcement at the time of sale or the time of previous postponement of sale,
and no other notice of such postponement or postponements of sale need be given, any other notice being hereby waived; provided,
however, that any sale or sales made after such postponement shall be after not less than ten (10) days’ prior written
notice to Pledgor.


 


(c)         If, at any time when
Administrative Agent shall determine to exercise its right to sell the whole or any part of the Pledged Collateral hereunder, such
Pledged Collateral or the part thereof to be sold shall not, for any reason whatsoever, be effectively registered under the Securities
Act of 1933, as amended (or any similar statute then in effect) (the “Act”), Administrative Agent may, in its
discretion (subject only to applicable requirements of Law), sell such Pledged Collateral or part thereof by private sale in such
manner and under such circumstances as Administrative Agent may reasonably deem necessary, but subject to applicable law and the
other requirements of this Section 8, and shall not be required to effect such registration or to cause the same to be effected.
Without limiting the generality of the foregoing, in any such event, Administrative Agent in its discretion (x) may, in accordance
with applicable securities Laws, proceed to make such private sale notwithstanding that a registration statement for the purpose
of registering such Pledged Collateral or part thereof could be filed under said Act (or similar statute), (y) may approach and
negotiate with a single possible purchaser to effect such sale, and (z) may restrict such sale to a purchaser who is an accredited
investor under the Act and who will represent and agree that such purchaser is purchasing for its own account, for investment and
not with a view to the distribution or sale of such Pledged Collateral or any part thereof. In addition to a private sale as provided
above in this Section 8, if any of the Pledged Collateral shall not be freely distributable to the public without registration
under the Act (or similar statute) at the time of any proposed sale pursuant to this Section 8, then Administrative Agent
shall not be required to effect such registration or cause the same to be effected but, in its discretion (subject only to applicable
requirements of Law), may require that any sale hereunder (including a sale at auction) be conducted subject to restrictions:


 






    	7



    	 



    

 


(i)          as to
the financial sophistication and ability of any Person permitted to bid or purchase at any such sale;


 


(ii)         as to
the content of legends to be placed upon any certificates representing the Pledged Collateral sold in such sale, including restrictions
on future transfer thereof;


 


(iii)        as to
the representations required to be made by each Person bidding or purchasing at such sale relating to that Person’s access
to financial information about Pledgor and such Person’s intentions as to the holding of the Pledged Collateral so sold for
investment for its own account and not with a view to the distribution thereof; and


 


(iv)        as to
such other matters as Administrative Agent may, in its reasonable discretion, deem necessary in order that such sale (notwithstanding
any failure so to register) may be effected in compliance with the Bankruptcy Code and other Laws affecting the enforcement of
creditors’ rights and the Act and all applicable state securities Laws.


 


(d)         Pledgor recognizes
that Administrative Agent may be unable to effect a public sale of any or all the Pledged Collateral and may be compelled to resort
to one or more private sales thereof in accordance with clause (c) above. Pledgor also acknowledges that any such private
sale may result in prices and other terms less favorable to the seller than if such sale were a public sale and, notwithstanding
such circumstances, agrees that any such private sale shall not be deemed to have been made in a commercially unreasonable manner
solely by virtue of such sale being private. Administrative Agent shall be under no obligation to delay a sale of any of the Pledged
Collateral for the period of time necessary to permit Company to register such securities for public sale under the Act, or under
applicable state securities Laws, even if Pledgor and Company would agree to do so.


 






    	8



    	 



    

 


(e)         Pledgor agrees to
the maximum extent permitted by applicable Law that following the occurrence and during the continuance of an Event of Default
it will not at any time plead, claim or take the benefit of any appraisal, valuation, stay, extension, moratorium or redemption
Law now or hereafter in force in order to prevent or delay the enforcement of this Agreement, or the absolute sale of the whole
or any part of the Pledged Collateral or the possession thereof by any purchaser at any sale hereunder, and Pledgor waives the
benefit of all such Laws to the extent it lawfully may do so. Pledgor agrees that it will not interfere with any right, power and
remedy of Administrative Agent provided for in this Agreement or now or hereafter existing at law or in equity or by statute or
otherwise, or the exercise or beginning of the exercise by Administrative Agent of any one or more of such rights, powers or remedies.
No failure or delay on the part of Administrative Agent to exercise any such right, power or remedy and no notice or demand which
may be given to or made upon Pledgor by Administrative Agent with respect to any such remedies shall operate as a waiver thereof,
or limit or impair Administrative Agent’s right to take any action or to exercise any power or remedy hereunder, without
notice or demand, or prejudice its rights as against Pledgor in any respect.


 


(f)          Pledgor further agrees
that a breach of any of the covenants contained in this Section 8 may cause irreparable injury to Administrative Agent,
that Administrative Agent may have no adequate remedy at Law in respect of such breach and, as a consequence, agrees that each
and every covenant contained in this Section 8 shall be specifically enforceable against Pledgor, and Pledgor hereby waives
and agrees not to assert any defenses against an action for specific performance of such covenants except for a defense (i) that
the Secured Obligations are not then due and payable in accordance with the agreements and instruments governing and evidencing
such obligations or (ii) that no Event of Default shall have occurred and be continuing.


 


9.             Waiver. No
delay on Administrative Agent’s part in exercising any power of sale, Lien, option or other right hereunder, and no notice
or demand which may be given to or made upon Pledgor by Administrative Agent with respect to any power of sale, Lien, option or
other right hereunder, shall constitute a waiver thereof, or limit or impair Administrative Agent’s right to take any action
or to exercise any power of sale, Lien, option, or any other right hereunder, without notice or demand, or prejudice Administrative
Agent’s rights as against Pledgor in any respect.


 


10.           Assignment.
Administrative Agent and/or any Lender may assign, indorse or transfer any instrument evidencing all or any part of the Secured
Obligations as provided in, and in accordance with, the Loan Agreement, and the holder of such instrument shall be entitled to
the benefits of this Agreement.


 


11.           Termination.
Upon the payment in full in Cash of all Secured Obligations (other than contingent and un-asserted indemnification and expense
reimbursement claims), the Liens and security interests Granted hereunder shall automatically terminate without the necessity of
further action by any party, and Administrative Agent shall deliver to Pledgor the Pledged Collateral pledged by Pledgor at the
time subject to this Agreement and all instruments of assignment executed in connection therewith, free and clear of the Liens
hereof and, except as otherwise provided herein, all of Pledgor’s obligations hereunder shall at such time terminate.


 






    	9



    	 



    

 


12.           Lien Absolute.
All rights of Administrative Agent hereunder, and all obligations of Pledgor hereunder, shall be absolute and unconditional irrespective
of:


 


(a)         any lack of validity
or enforceability of the Loan Agreement, any other Loan Document (including the FSEP Guaranty) or any other agreement or instrument
governing or evidencing any Secured Obligations, except in each case as the result of the termination of any such agreement in
accordance with its terms;


 


(b)         any change in the
time, manner or place of payment of, or in any other term of, all or any part of the Secured Obligations, or any other amendment
or waiver of or any consent to any departure from the Loan Agreement, any other Loan Document or any other agreement or instrument
governing or evidencing any Secured Obligations, in each case effected in accordance with the terms thereof;


 


(c)         any exchange, release
or non-perfection of any other Collateral, or any release or amendment or waiver of or consent to departure from any guaranty (including
the Guaranty of Pledgor under the FSEP Guaranty) effected in accordance with the terms thereof, for all or any of the Secured Obligations;


 


(d)         the insolvency of
Pledgor, any Loan Party or the Servicer; or


 


(e)        any other circumstance
(other than termination of the liens and security interests and the termination of Pledgor’s obligations hereunder pursuant
to Section 10 hereof) which might otherwise constitute a defense available to, or a discharge of, Pledgor.


 


13.           Certain Consents
and Waivers.


 


(a)         Pledgor consents and
agrees that Administrative Agent may at any time, or from time to time, in its discretion and in accordance with the terms of the
Loan Agreement, renew, extend or change the time of payment, and/or the manner, place or terms of payment of all or any part of
the Secured Obligations.


 


(b)        Pledgor hereby waives
notice of acceptance of this Agreement, and also presentment, demand, protest and notice of dishonor of any and all of the Secured
Obligations, and promptness in commencing suit against any party hereto or liable hereon, and in giving any notice to or of making
any claim or demand hereunder upon Pledgor. No act or omission of any kind on Administrative Agent’s part shall in any event
affect or impair this Agreement.


 


14.           Reinstatement.
This Agreement shall remain in full force and effect and continue to be effective should any petition be filed by or against Pledgor,
Company, any other Loan Party or the Servicer for liquidation or reorganization, should Pledgor, Company, any other Loan Party
or the Servicer become insolvent or make an assignment for the benefit of creditors or should a receiver or trustee be appointed
for all or any significant part of Pledgor’s, Company’s, any other Loan Party’s assets, and shall continue to
be effective or be reinstated, as the case may be, if at any time payment and performance of the Secured Obligations, or any part
thereof, is, pursuant to applicable Law, rescinded or reduced in amount, or must otherwise be restored or returned by any obligee
of the Secured Obligations, whether as a “voidable preference”, “fraudulent conveyance”, or otherwise,
all as though such payment or performance had not been made. In the event that any payment, or any part thereof, is rescinded,
reduced, restored or returned, the Secured Obligations shall be reinstated and deemed reduced only by such amount paid and not
so rescinded, reduced, restored or returned.


 






    	10



    	 



    

 


15.           Miscellaneous.


 


(a)         Administrative Agent
may execute any of its duties hereunder by or through agents or employees and shall be entitled to advice of counsel concerning
all matters pertaining to its duties hereunder (it being understood that the obligations of the Pledgor or any Loan Party to pay
or reimburse expenses of counsel shall be subject to Section 12.04 of the Loan Agreement).


 


(b)         Pledgor agrees to
promptly reimburse Administrative Agent for actual out-of-pocket expenses, including, without limitation, all Attorney Costs incurred
by Administrative Agent in connection with the administration and enforcement of this Agreement.


 


(c)         Neither Administrative
Agent, nor any of its respective officers, directors, employees, agents or counsel shall be liable for any action lawfully taken
or omitted to be taken by it or them hereunder or in connection herewith, except for its or their own gross negligence or willful
misconduct as finally determined by a court of competent jurisdiction.


 


(d)         THIS AGREEMENT SHALL
BE BINDING UPON PLEDGOR AND ITS SUCCESSORS AND ASSIGNS (INCLUDING A DEBTOR-IN-POSSESSION ON BEHALF OF PLEDGOR), AND SHALL INURE
TO THE BENEFIT OF, AND BE ENFORCEABLE BY, ADMINISTRATIVE AGENT AND ITS SUCCESSORS AND PERMITTED ASSIGNS, AND SHALL BE GOVERNED
BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO ITS CONFLICTS OF LAW PROVISIONS
(OTHER THAN SECTION 5-1401 AND 5-1402 OF THE NEW YORK GENERAL OBLIGATIONS LAW), AND NONE OF THE TERMS OR PROVISIONS OF THIS AGREEMENT
MAY BE WAIVED, ALTERED, MODIFIED OR AMENDED EXCEPT IN WRITING DULY SIGNED FOR AND ON BEHALF OF ADMINISTRATIVE AGENT AND PLEDGOR.


 


16.           Severability.
If for any reason any provision or provisions hereof are determined to be invalid and contrary to any existing or future Law, such
invalidity shall not impair the operation of or effect those portions of this Agreement which are valid.


 


17.           Notices.
Except as otherwise provided herein, whenever it is provided herein that any notice, demand, request, consent, approval, declaration
or other communication shall or may be given to or served upon any of the parties by any other party, or whenever any of the parties
desires to give or serve upon any other a communication with respect to this Agreement, each such notice, demand, request, consent,
approval, declaration or other communication shall be in writing and either shall be delivered in person or sent by registered
or certified mail, return receipt requested, with proper postage prepaid, or by facsimile transmission and confirmed by delivery
of a copy by personal delivery or United States Mail as otherwise provided herein:


 






    	11



    	 



    

 





	(a)	If to Administrative Agent, at:
	 	 
	 	Fortress Credit Co LLC
	 	c/o Fortress Investment Group LLC
	 	1345 Avenue of the Americas, 46th Floor
	 	New York, NY 10105
	 	Attention: Constantine M. Dakolias
	 	Facsimile: 212-798-6090
	 	 
	 	With copies to:
	 	 
	 	Fortress Credit Co LLC
	 	3290 Northside Parkway NW, Suite 350
	 	Atlanta, Georgia 30327
	 	Facsimile: 678-550-9105
	 	 
	 	and
	 	 
	 	Hunton & Williams LLP
	 	600 Peachtree Street, N.E.
	 	Suite 4100, Bank of America Plaza
	 	Atlanta, Georgia 30308
	 	Attention: Greta T. Griffith
	 	Telecopier:
	 	 
	 	If to Pledgor, at:
	 	 
	 	FS Energy and Power Fund
	 	201 Rouse Boulevard
	 	Philadelphia, PA 19112
	 	Attention: [________________]
	 	Telecopier:







 


or at such other address as may be substituted
by notice given as herein provided. The giving of any notice required hereunder may be waived in writing by the party entitled
to receive such notice. All notices and other communications shall be deemed to be given or made upon the earlier to occur of (i)
the actual receipt thereof by the relevant party hereto and (ii) (A) if delivered by hand or by courier, when signed for by
or on behalf of the relevant party hereto; (B) if delivered by mail, four (4) Business Days after deposit in the mails, postage
prepaid; and (C) if delivered by facsimile, when sent and receipt has been confirmed by telephone. In no event shall a voicemail
message be effective as a notice, communication or confirmation hereunder. Failure or delay in delivering copies of any notice,
demand, request, consent, approval, declaration or other communication to any Persons designated above to receive copies shall
in no way adversely affect the effectiveness of such notice, demand, request, consent, approval, declaration or other communication.


 






    	12



    	 



    

 


18.           Section Titles.
The Section titles contained in this Agreement are and shall be without substantive meaning or content of any kind whatsoever and
are not a part of the agreement between the parties hereto.


 


19.           Counterparts.
This Agreement may be executed in any number of counterparts, which shall, collectively and separately, constitute one agreement.


 


20.           Benefit of Lenders.
All security interests granted or contemplated hereby shall be for the benefit of Administrative Agent and Lenders, and all proceeds
or payments realized from the Pledged Collateral in accordance herewith shall be applied to the Obligations in accordance with
the terms of the Loan Agreement.


 


[Remainder of Page Intentionally Blank]


 






    	13



    	 



    

 


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


 


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


 






    	 



    	 



    

 





	 	ADMINISTRATIVE AGENT:
	 	 
	 	FORTRESS CREDIT CO LLC
	 	 	 
	 	By:	/s/ Constantine M. Dakolias
	 	Name:	Constantine M. Dakolias
	 	Title:	President