FS Investment Corporation III 8-K


Exhibit 10.2

 


 EXECUTION
COPY


 


SALE
AND CONTRIBUTION AGREEMENT


 


between


 


FS
INVESTMENT CORPORATION III,

as Seller


 


and


 


JEFFERSON
SQUARE FUNDING LLC,

as Purchaser


 


Dated
as of May 8, 2015


 






    	 



    	 



    

  





	 	TABLE OF CONTENTS	 
	 	 	 
	 	 	Page
	 	 	 
	ARTICLE I.        DEFINITIONS	1
	 	 
	Section 1.1.	Definitions	1
	Section 1.2.	Other Terms	3
	Section 1.3.	Computation of Time Periods	3
	 	 	 
	ARTICLE II.       CONVEYANCES OF
    TRANSFERRED ASSETS	3
	 	 
	Section 2.1.	Conveyances	3
	Section 2.2.	Indemnification	5
	 	 	 
	ARTICLE III.      CONSIDERATION
    AND PAYMENT; REPORTING	5
	 	 
	Section 3.1.	Purchase Price	5
	Section 3.2.	Payment of Purchase Price	5
	 	 	 
	ARTICLE IV.      REPRESENTATIONS
    AND WARRANTIES	6
	 	 
	Section 4.1.	Seller’s Representations and Warranties	6
	Section 4.2.	Reaffirmation of Representations and
    Warranties by the Seller;	 
	 	Notice of Breach	11
	 	 	 
	ARTICLE V.       COVENANTS OF THE
    SELLER	11
	 	 
	Section 5.1.	Covenants of the Seller	11
	 	 	 
	ARTICLE VI.     [RESERVED]	14
	 	 
	ARTICLE VII.    CONDITIONS PRECEDENT	14
	 	 
	Section 7.1.	Conditions Precedent	14
	 	 	 
	ARTICLE VIII.   MISCELLANEOUS
    PROVISIONS	15
	 	 
	Section 8.1.	Amendments, Etc	15
	Section 8.2.	Governing Law: Submission to Jurisdiction	15
	Section 8.3.	Notices	16
	Section 8.4.	Severability of Provisions	16
	Section 8.5.	Reserved	16
	Section 8.6.	Further Assurances	17
	Section 8.7.	No Waiver; Cumulative Remedies	17
	Section 8.8.	Counterparts	17
	Section 8.9.	Binding Effect; Third-Party Beneficiaries	17
	Section 8.10.	Merger and Integration	18
	Section 8.11.	Headings	18







 






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This
SALE AND CONTRIBUTION AGREEMENT, dated as of May 9, 2015 (as amended, supplemented or otherwise modified and in effect from time
to time, this “Agreement”), between FS Investment Corporation III, a Maryland corporation, as seller (in such
capacity, the “Seller”) and Jefferson Square Funding LLC, a Delaware limited liability company, as purchaser
(in such capacity, the “Purchaser”).


 


W
I T N E S S E T H:


 


WHEREAS,
the Purchaser desires to purchase certain loans and related assets existing on the Effective Date and from time to time thereafter;


 


WHEREAS,
the Seller may also wish to contribute certain loans and related contracts to the capital of the Purchaser on the Effective Date
and from time to time on each Purchase Date;


 


WHEREAS,
the Seller desires to sell, assign and contribute such loans and related contracts to the Purchaser upon the terms and conditions
hereinafter set forth;


 


NOW,
THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, it is hereby agreed
by and between the Purchaser and the Seller as follows:


 


ARTICLE
I.



DEFINITIONS


 


Section
1.1.        Definitions. As used in this Agreement, the following terms shall have the following meanings (such meanings to be
equally applicable to both the singular and plural forms of the terms defined). All capitalized terms used herein but not defined
herein shall have the respective meanings specified in, or incorporated by reference into, the Loan Agreement, dated as of the
date hereof (as amended, supplemented or otherwise modified and in effect from time to time, the “Loan Agreement”),
by and among the Purchaser, as borrower, JPMorgan Chase Bank, National Association, as administrative agent, Citibank, N.A., as
collateral agent, and Virtus Group LP, as collateral administrator, and the agents and lenders party from time to time thereto.


 


“Agreement”
has the meaning set forth in the preamble hereto.


 


“Bankruptcy
Code” means the United States Bankruptcy Code, 11 U.S.C. § 101, et seq., as amended.


 


“Convey”
means to sell, transfer, assign, contribute or otherwise convey assets hereunder.


 


“Conveyance”
means, as the context may require, the Initial Conveyance or a Subsequent Conveyance.


 









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


 


“Initial
Conveyance” has the meaning set forth in Section 2.1(a).


 


“Payment
Date” means each Subsequent Conveyance Date and the date of the Initial Conveyance.


 


“Purchase
Date” has the meaning set forth in Section 2.1(b).


 


“Purchase
Notice” has the meaning set forth in Section 2.1(b).


 


“Purchase
Price” has the meaning set forth in Section 3.1.


 


“Purchaser”
has the meaning set forth in the preamble hereto.


 


“Related
Security” means, with respect to each Portfolio Investment:


 


(a)        any
property or other assets designated and pledged or mortgaged as collateral to secure repayment of a Portfolio Investment, all
payments paid in respect thereof and all monies due, to become due and paid in respect thereof accruing after the date of the
applicable Purchase and all liquidation proceeds thereof;


 


(b)        all
guaranties, indemnities and warranties, insurance policies, financing statements and other agreements or arrangements of whatever
character from time to time supporting or securing payment of any such indebtedness;


 


(c)        all
Interest Proceeds and Principal Proceeds with respect to such Portfolio Investment and any of the foregoing;


 


(d)        any
guarantees or similar credit enhancement for an obligor’s obligations under any Portfolio Investment, all UCC financing
statements or other filings relating thereto, including all rights and remedies, if any, against any Related Security, including
all amounts due and to become due to the Purchaser thereunder and all rights, remedies, powers, privileges and claims of the Purchaser
thereunder (whether arising pursuant to the terms of such agreement or otherwise available to the Purchaser at law or in equity);


 


(e)        all
records with respect to such Portfolio Investment and any of the foregoing; and


 


(f)         all
recoveries and proceeds of the foregoing.


 


“Retained
Economic Interest” has the meaning set forth in Section 5.1(o)(i).


 


“Repurchase
Amount” has the meaning set forth in Section 5.1(p).


 


“Schedule
of Portfolio Investments” has the meaning set forth in Section 2.1(a). 


 


“Seller”
has the meaning set forth in the preamble hereto.


 






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“Subsequent
Conveyance” has the meaning set forth in Section 2.1(b).


 


“Subsequent
Conveyance Date” has the meaning set forth in Section 2.1(b).


 


“Transferred
Assets” means, collectively, the Transferred Portfolio Investments and Related Security Conveyed by the Seller to the
Purchaser hereunder.


 


“Transferred
Portfolio Investment” means each Portfolio Investment Conveyed from the Seller to the Purchaser pursuant to the terms
of this Agreement.


 


“Transfer
Supplement” means the supplement to this Agreement between the Seller and the Purchaser substantially in the form attached
hereto as 

Exhibit A.


 


Section
1.2.        Other Terms. All accounting terms not specifically defined herein shall be construed in accordance with generally
accepted accounting principles. All terms used in Article 9 of the UCC, and not specifically defined herein, are used herein as
defined in such Article 9. The term “including” when used in this Agreement means “including without limitation.”


 


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


 


ARTICLE
II.



CONVEYANCES OF TRANSFERRED ASSETS


 


Section
2.1.        Conveyances.


 


(a)        On
the terms and subject to the conditions set forth in this Agreement, the Seller agrees to Convey to the Purchaser on the Effective
Date, and the Purchaser agrees to purchase from the Seller on the Effective Date (the “Initial Conveyance”),
all of the Seller’s right, title and interest in and to each Portfolio Investment listed on Schedule A to this Agreement
(as such schedule may be amended, supplemented, updated or otherwise modified from time to time, the “Schedule of Portfolio
Investments”) (the Schedule of Portfolio Investments, as amended, supplemented, updated or otherwise modified in connection
with an Approval Request, Subsequent Conveyance (as defined below), or otherwise, shall become part of the Schedule of Portfolio
Investments), together with all other Related Security and all proceeds of the foregoing.


 


(b)        In
the event the Purchaser agrees, from time to time after the Effective Date, to acquire additional Portfolio Investments (including
Related Security) from the Seller, the Purchaser shall deliver an Approval Request to the Administrative Agent in accordance with
the Loan Agreement and designating the date of the proposed Conveyance (a “Subsequent Conveyance Date”) and
including a Transfer Supplement which shall include a Schedule of Portfolio Investments identifying the Transferred Assets proposed
to be Conveyed. On the terms and subject to the conditions set forth in this Agreement and the Loan Agreement, the Seller shall
Convey to the Purchaser, and the Purchaser shall purchase, on the applicable Subsequent Conveyance Date (each such purchase and
sale being herein called a “Subsequent Conveyance”), all of the Seller’s right, title and interest in
and to each Portfolio Investment then reported by the Seller on the Schedule of Portfolio Investments attached to the related
Approval Request together with all other Related Security and all proceeds of the foregoing.


 






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(c)        It
is the express intent of the Seller and the Purchaser that each Conveyance of Transferred Assets by the Seller to the Purchaser
pursuant to this Agreement be construed as an absolute sale and/or contribution of such Transferred Assets by the Seller to the
Purchaser. Further, it is not the intention of the Seller and the Purchaser that any purchase be deemed a grant of a security
interest in the Transferred Assets by the Seller to the Purchaser to secure a debt or other obligation of the Seller. However,
in the event that, notwithstanding the intent of the parties, the Conveyances hereunder shall be characterized as loans and not
as sales and/or contributions, then (i) this Agreement also shall be deemed to be, and hereby is, a security agreement within
the meaning of the UCC and other applicable law and (ii) the Conveyances by the Seller provided for in this Agreement shall be
deemed to be, and the Seller hereby grants to the Purchaser, a security interest in, to and under all of the Seller’s right,
title and interest in, to and under, whether now owned or hereafter acquired, such Transferred Assets and all proceeds of the
foregoing. The Purchaser and its assignees shall have, with respect to such Transferred Assets and other related rights, in addition
to all the other rights and remedies available to the Purchaser and its assignees and under the other Loan Documents, all the
rights and remedies of a secured party under any applicable UCC.


 


The
Seller and the Purchaser shall, to the extent consistent with this Agreement, take such actions as may be necessary to ensure
that, if this Agreement were deemed to create a security interest in the Transferred Assets to secure a debt or other obligation,
such security interest would be deemed to be a perfected security interest in favor of the Purchaser under applicable law and
will be maintained as such throughout the term of this Agreement. The Seller represents and warrants that the Transferred Assets
are being transferred with the intention of removing them from the Seller’s estate pursuant to Section 541 of the Bankruptcy
Code.


 


(d)        In
connection with the Initial Conveyance, the Seller agrees to file on or prior to the Effective Date, at its own expense, a financing
statement or statements with respect to the Transferred Assets Conveyed by the Seller hereunder from time to time meeting the
requirements of applicable state law in the jurisdiction of the Seller’s organization to perfect and protect the interests
of the Purchaser created hereby under the UCC against all creditors of, and purchasers from, the Seller, and to deliver a file-stamped
copy of such financing statements or other evidence of such filings to the Purchaser as soon as reasonably practicable after its
receipt thereof.


 


(e)        The
Seller agrees that from time to time, at its expense, it will promptly execute and deliver all instruments and documents and take
all actions as may be reasonably necessary or as the Purchaser may reasonably request, in order to perfect or protect the interest
of the Purchaser in the Transferred Assets purchased hereunder or to enable the Purchaser to exercise or enforce any of its rights
hereunder. Without limiting the foregoing, the Seller will, in order to accurately reflect the Conveyances contemplated by this
Agreement, execute and file such financing or continuation statements or amendments thereto or assignments thereof (as permitted
pursuant hereto) or other documents or instruments as may be reasonably requested by the Purchaser and mark its master computer
records (or related sub-ledger) noting the purchase by the Purchaser of the Transferred Assets and the Lien of the Collateral
Agent pursuant to the Loan Agreement. The Seller hereby authorizes the Purchaser to file and, to the fullest extent permitted
by applicable law the Purchaser shall be permitted to file initial financing statements, continuation statements and amendments
thereto and assignments thereof without the Seller’s further action; provided that the description of collateral
contained in such financing statements shall be limited to only Transferred Assets. Carbon, photographic or other reproduction
of this Agreement or any financing statement shall be sufficient as a financing statement.


 






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Section
2.2.        Indemnification. Without limiting any other rights which any such Person may have hereunder or under applicable law,
the Seller agrees to indemnify on a net after-tax basis (including, for example, taking into account the deductibility of an applicable
underlying damage, loss, liability or related cost and expense) the Purchaser and its successors, transferees, and assigns (including
each Secured Party) and all officers, directors, shareholders, controlling persons, employees and agents of any of the foregoing
(each of the foregoing Persons being individually called an “Indemnified Party”), forthwith on demand, from
and against any and all damages, losses, claims, liabilities and related costs and expenses, including reasonable attorneys’
fees and disbursements (all of the foregoing being collectively called “Indemnified Amounts”) awarded against
or incurred by any of them arising out of any breach by the Seller of any of its obligations hereunder or arising as a result
of the failure of any representation or warranty of the Seller herein to be true and correct on the date such representation or
warranty was made, excluding, however, (a) Indemnified Amounts in respect of any Transferred Asset due to such obligor’s
creditworthiness, (b) Indemnified Amounts payable to an Indemnified Party to the extent determined by a court of competent jurisdiction
to have resulted from gross negligence, bad faith or willful misconduct on the part of any Indemnified Party or its agent or subcontractor,
(c) except as otherwise specifically provided herein, non-payment by any obligor of an amount due and payable with respect to
a Transferred Asset, (d) any Excluded Taxes and any Taxes indemnifiable under the Loan Agreement and (e) Indemnified Amounts resulting
from the performance or non-performance of the Portfolio Investments.


 


ARTICLE
III.



CONSIDERATION AND PAYMENT; REPORTING


 


Section
3.1.       Purchase Price. The purchase price (the “Purchase Price”) for the Transferred Assets Conveyed on
each Purchase Date shall be a dollar amount equal to the fair market value (as agreed upon between the Seller and the Purchaser
at the time of such Conveyance) of such Transferred Assets as of such date.


 


Section
3.2.       Payment of Purchase Price. The Purchase Price shall be paid on the related Purchase Date at the option of the Seller
(a) by payment in cash in immediately available funds in an amount not greater than the sum of (i) the proceeds of Advances made
to the Purchaser with respect to such Portfolio Investments to be Conveyed on such Purchase Date and (ii) amounts constituting
Principal Proceeds in the Principal Collection Account that may be utilized for a Reinvestment pursuant to the Loan Agreement,
(b) by the Seller making a capital contribution to the Purchaser in an amount equal to the unpaid portion of the Purchase Price,
or (c) any combination of the foregoing (a) and (b).


 






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ARTICLE
IV.



REPRESENTATIONS AND WARRANTIES


 


Section
4.1.       Seller’s Representations and Warranties. The Seller represents and warrants to the Purchaser as of the Effective
Date and as of each Purchase Date (or, if such representation or warranty is limited to a specific date, such specific date):


 


(a)        Organization
and Good Standing. The Seller is a corporation duly formed, validly existing and in good standing under the laws of its jurisdiction
of organization and is duly qualified to do business, and is in good standing, in every jurisdiction in which the nature of its
business and the performance of its obligations hereunder and under the other Loan Documents to which it is a party requires it
to be so qualified, except where the failure to be so qualified or in good standing would not reasonably be expected to have a
material adverse effect on (i) its ability to perform its obligations under this Agreement, (ii) the validity or enforceability
of the Transferred Assets and the Related Security or (iii) its ability to perform its obligations under the other Loan Documents
to which it is a party.


 


(b)        Power
and Authority. The Seller has the power and authority to own, pledge, mortgage, operate and convey the Transferred Assets,
to conduct its business as now, or proposed to be, conducted and to execute and deliver this Agreement and the Loan Documents
to which it is a party and to perform the transactions contemplated hereby and thereby.


 


(c)        Authorization;
Contravention. The execution, delivery and performance by the Seller of this Agreement, each other Loan Document to which
it is a party and all other agreements, instruments and documents which may be delivered by it pursuant hereto or thereto and
the transactions contemplated hereby and thereby (i) have been duly authorized by all necessary action on the part of the Seller,
(ii) do not contravene or cause the Seller to be in default in any material respect under (A) its certificate of formation or
limited partnership agreement, (B) any contractual restriction with respect to any Indebtedness of the Seller or contained in
any indenture, loan or credit agreement, lease, mortgage, security agreement, bond, note or other agreement or instrument binding
on or affecting it or its property, or (C) any law, rule, regulation, order, license, requirement, writ, judgment, award, injunction
or decree applicable to, binding on or affecting it or any of its property and (iii) do not result in or require the creation
of any Lien upon or with respect to any of its properties (other than Liens created pursuant to this Agreement).


 


(d)        Execution
and Delivery. This Agreement and each other Loan Document to which the Seller is a party have been duly executed and delivered
by the Seller.


 


(e)        Governmental
Authorization. No approval, consent of, notice to, filing with or permits, licenses, qualifications or other action by any
Governmental Authority having jurisdiction over it or its properties is required or necessary (i) for the conduct of the Seller’s
business as currently conducted, for the ownership, use, operation or maintenance of its properties and for the due execution,
delivery and performance by the Seller of this Agreement or any of the Loan Documents to which it is a party, (ii) for the perfection
of or the exercise by each of the Company and the Administrative Agent of any of its rights or remedies under the Loan Agreement
or hereunder, or (iii) to ensure the legality, validity, or enforceability of this Agreement in any jurisdiction in which the
Seller does business, in each case other than (A) consents, notices, filings and other actions which have been obtained or made
(or will be obtained or made substantially simultaneously with the Effective Date), and continuation statements and renewals in
respect thereof and (B) where the lack of such consent, notice, filing or other action would not have a material adverse effect
on its ability to perform its obligations hereunder and under the Loan Documents to which it is a party.


 






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(f)        Legality;
Validity; Enforceability. Assuming due authorization, execution and delivery by each other party hereto and thereto, this
Agreement and each other Loan Document to which it is a party is the legal, valid and binding obligation of the Seller enforceable
against the Seller in accordance with its respective terms, except as such 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.


 


(g)       No
Litigation. There are no proceedings or investigations pending or, to its knowledge, threatened against the Seller, before
any court or Governmental Authority having jurisdiction over it or its properties (A) asserting the invalidity of this Agreement
or any of the other Loan Documents, (B) seeking to prevent the consummation of any of the transactions contemplated by this Agreement
or any of the other Loan Documents, (C) seeking any determination or ruling that might materially and adversely affect the performance
by the Purchaser of its obligations under, or the validity or enforceability of, this Agreement or any of the other Loan Documents,
(D) seeking any determination or ruling that would reasonably be expected to have a material adverse effect on any of the Transferred
Assets or (E) seeking to impose any excise, franchise, transfer or similar tax upon the conveyance of the Transferred Assets hereunder.


 


(h)       Legal
Compliance. The Seller has complied and will comply in all material respects with all Applicable Laws, judgments, agreements
with governmental authorities, decrees and orders with respect to its business and properties and the Transferred Assets.


 


(i)        Taxes.
The Seller has timely filed all federal and other material Tax returns (foreign, federal, state, local and otherwise) required
to be filed by it relating to the Transferred Assets and has paid all federal and other material Taxes due and payable by it relating
to the Transferred Assets (other than any amount the validity of which is currently being contested in good faith by appropriate
proceedings and with respect to which reserves in conformity with GAAP have been provided on the books of the Seller). It is not
liable for taxes with respect to the Transferred Assets payable by any other Person. No Tax lien or similar Adverse Claim has
been filed, and no claim has been filed or is being asserted, with respect to any Tax relating to the Transferred Assets. Any
taxes, fees and other governmental charges payable by the Seller in connection with the transactions contemplated by this Agreement
and the execution and delivery of this Agreement have been paid or shall have been paid if and when due.


 






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(j)        Place
of Business. The principal place of business and chief executive office of the Seller, and the offices where the Seller keeps
all its records, are located at its address specified in Section 8.3, or such other locations notified to the Purchaser
in accordance with this Agreement in jurisdictions where all action required by the terms of this Agreement has been taken and
completed. There are currently no, and during the past four months (or such shorter time as the Seller has been in existence)
there have not been, any other locations where the Seller is located (as that term is used in the UCC of the jurisdiction where
such principal place of business is located).


 


(k)       Ownership;
Security Interest.


 


           (i)        In
the event that, notwithstanding the intent of the parties, the Conveyances hereunder shall be characterized as loans and not as
sales and/or contributions, then this Agreement creates a valid and continuing Lien on the Transferred Assets in favor of the
Purchaser and the Collateral Agent, as assignee, for the benefit of the Secured Parties, which security interest is validly perfected
under Article 9 of the UCC (to the extent such security interest may be perfected under such article), and is enforceable as such
against creditors of and purchasers from the Company; the Transferred Assets are comprised of Instruments, Security Entitlements,
General Intangibles, Certificated Securities, Uncertificated Securities, Securities Accounts, Investment Property and Proceeds
and such other categories of collateral under the applicable UCC as to which the Seller has complied with its obligations as set
forth herein; the Seller has received all consents and approvals required by the terms of any Portfolio Investment to the sale
and granting of a security interest in the Portfolio Investments hereunder to the Purchaser and the Collateral Agent, as assignee
on behalf of the Secured Parties; the Seller has taken all necessary steps to file or authorize the filing of all appropriate
financing statements in the proper filing office in the appropriate jurisdictions under Applicable Law in order to perfect the
security interest in that portion of the Transferred Assets in which a security interest may be perfected by filing pursuant to
Article 9 of the UCC as in effect in Maryland; all original executed copies of each underlying promissory note constituting or
evidencing any Transferred Asset have been or, subject to the delivery requirements contained in the Loan Agreement, will be delivered
to the Purchaser or its designee; none of the underlying promissory notes that constitute or evidence the Portfolio Investments
has any marks or notations indicating that they have been pledged, assigned or otherwise conveyed to any Person other than the
Purchaser and the Collateral Agent, as assignee on behalf of the Secured Parties; with respect to a Transferred Asset that constitutes
a Certificated Security, such certificated security has been delivered to the Purchaser or its designee and, if in registered
form, has been specially Indorsed (within the meaning of the UCC) to the Collateral Agent or in blank by an effective Indorsement
or has been registered in the name of the Collateral Agent upon original issue or registration of transfer by the Seller of such
Certificated Security; and in the case of an Uncertificated Security, by causing the Purchaser or its designee to become the registered
owner of such uncertificated security.


 


(l)        Fair
Consideration; No Avoidance for Portfolio Investment Payments. With respect to each Transferred Portfolio Investment
sold hereunder, the Seller sold such Transferred Portfolio Investment to the Purchaser in exchange for payment, made in accordance
with the provisions of this Agreement, in an amount which constitutes fair consideration and reasonably equivalent value. Each
such Conveyance referred to in the preceding sentence shall not have been made for or on account of an antecedent debt owed by
the Seller to the Purchaser. In addition, no such Conveyance shall have been made with the intent to hinder or delay payment to
or defraud any creditor of the Seller.


 






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(m)      Eligibility
of Transferred Portfolio Investments. Each Transferred Portfolio Investment Conveyed hereunder, at the time of such Conveyance,
meets all of the Eligibility Criteria (unless otherwise consented to by the Administrative Agent in accordance with the Loan Agreement).
As of each Purchase Date, Schedule A is an accurate and complete listing of all the Transferred Portfolio Investments and
other Transferred Assets hereunder as of such Purchase Date.


 


(n)       Adequate
Capitalization; No Insolvency. The Seller is adequately capitalized and will not become insolvent after giving effect to the
transactions contemplated by this Agreement and the Loan Documents. The Seller is adequately capitalized for its business as proposed
to be conducted in the foreseeable future and does not expect the commencement of any insolvency, bankruptcy or similar proceedings
or the appointment of a receiver, liquidator or similar official in respect of its assets. The Seller executed and delivered each
of the Loan Documents to which it is a party for fair consideration and without the intent to hinder, delay or defraud any of
its creditors or any other Person.


 


(o)       Reserved.


 


(p)       True
and Complete Information. All information heretofore or hereafter furnished by or on behalf of the Seller in writing to any
Lender, the Collateral Agent or the Administrative Agent in connection with this Agreement, the other Loan Documents, the Transferred
Assets, or any transaction contemplated hereby is and will be (when taken as a whole) true, correct and complete in all material
respects; provided that, to the extent any such information was furnished to the Seller by any third party or was not prepared
by or under the direction of the Seller, such information is as of its delivery date true, correct and complete in all material
respects to the knowledge of the Seller.


 


(q)       Financial
Statements. The Seller has delivered to each Lender complete and correct copies of (A) the audited consolidated financial
statements of the Seller for the fiscal year most recently ended, and (B) the unaudited consolidated financial statements of the
Seller for the fiscal quarter most recently ended, in each case when (and to the extent) required to be delivered under the Loan
Agreement. Such financial statements (including the related notes) fairly present the financial condition of the Seller as of
the respective dates thereof and the results of operations for the periods covered thereby, each in accordance with GAAP.


 


(r)        Payment
in Full. The Seller had no actual knowledge at the time of Conveyance of a Transferred Asset of any fact which leads it to
expect that any payments on such Transferred Asset will not be paid in full when due or to expect any other material adverse effect
on (A) the performance by the Seller of its obligations under this Agreement or any of the Loan Documents to which it is a party,
(B) the validity or enforceability of this Agreement or any of the Loan Documents to which it is a party, or (C) the Transferred
Assets or the interests of the Seller therein.


 






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(s)       No
Brokers or Finders. No broker or finder acting on behalf of the Seller was employed or utilized in connection with this Agreement
or the other Loan Documents or the transactions contemplated hereby or thereby and the Seller has no obligation to any Person
in respect of any finder’s or brokerage fees in connection therewith.


 


(t)        Restricted
Payments. The Seller shall not cause or permit the Purchaser to make any payments or distributions which would be in violation
of the Loan Agreement.


 


(u)       Special
Purpose Entity. The Purchaser is an entity with assets and liabilities separate and distinct from those of the Seller and
any Affiliates thereof, and the Seller hereby acknowledges that the Administrative Agent, the Lenders and the other Secured Parties
are entering into the transactions contemplated by the Loan Agreement in reliance upon the Purchaser’s identity as a legal
entity that is separate from the Seller and from each other Affiliate of the Seller. Therefore, from and after the date of execution
and delivery of this Agreement, the Seller shall take all reasonable steps, including all steps that the Purchaser or the Administrative
Agent may from time to time reasonably request, to maintain the Purchaser’s identity as a legal entity that is separate
from the Seller and from each other Affiliate of the Seller, and to make it manifest to third parties that the Purchaser is an
entity with assets and liabilities distinct from those of the Seller and each other Affiliate thereof and not just a division
of the Seller or any such other Affiliate.


 


(v)      Reserved.


 


(w)     Set–Off,
etc. At the time of Conveyance of a Transferred Asset and to the knowledge of the Seller after reasonable inquiry, such Transferred
Asset has not been compromised, adjusted, extended, satisfied, subordinated, rescinded, set–off or modified by the Seller
or by the obligor thereof, and at such time such Transferred Asset is not subject to compromise, adjustment, extension, satisfaction,
subordination, rescission, set–off, counterclaim, defense, abatement, suspension, deferment, deduction, reduction, termination
or modification, whether arising out of transactions concerning such Transferred Asset or otherwise, by the Seller or by the obligor
with respect thereto, except, in each case, for amendments, extensions and modifications, if any, to such Transferred Asset otherwise
permitted under the Loan Documents.


 


(x)       No
Fraud. Each Portfolio Investment was originated without any fraud or material misrepresentation by the Seller or, to the Seller’s
knowledge, on the part of the related obligor.


 


(y)       Good
Title to Transferred Assets. The Seller has not assigned, pledged, or otherwise conveyed or encumbered any interest in the
Transferred Assets to any other person, which assignment, pledge, conveyance or encumbrance remains effective as of the applicable
Purchase Date. Immediately prior to the purchase of any of the Transferred Assets by the Purchaser from the Seller, such Transferred
Assets are free and clear of any lien, encumbrance or impediment to transfer created by Seller (including any “adverse claim”
as defined in Section 8-102(a)(1) of the Uniform Commercial Code), and the Seller is the sole record and beneficial owner of and
has good and marketable title to and the right to sell and transfer such Transferred Assets to the Purchaser and, upon transfer
of such Transferred Asset to the Purchaser, the Purchaser shall be the sole owner of such Transferred Assets free of any adverse
claim created by the Seller.


 






    	10



    	 



    

  


(z)       No
Default. Except as otherwise permitted by the Loan Agreement, no default shall have occurred and be continuing with respect
to any Transferred Asset as of the applicable Purchase Date.


 


(aa)      Seller’s
Undertakings as to Transferred Assets. The sale of each Transferred Asset shall be a separate transaction (each, a “Transaction”)
and for each Transaction with respect to a Transferred Asset that is of a type normally traded thereby, except as herein expressly
provided, this Agreement shall constitute a “Confirmation” with respect to each Transaction and shall be governed
by the Standard Terms and Conditions for Par/Near Par Trade Confirmations published by the Loan Syndication and Trading Association,
Inc. (the “LSTA”) as of August, 2010 or April, 2014 (in either case, the “LSTA Standard Terms and Conditions”);
provided, that (a) no “Delayed Compensation” (as defined in the LSTA Standard Terms and Conditions) shall be
payable in respect of any Transaction; (b) “Credit Documentation” (as defined in the LSTA Standard Terms and Conditions)
shall be provided by the Seller to the Purchaser; and (c) “Assignment” (as defined in the LSTA Standard Terms and
Conditions) shall apply unless a consent to the related Transaction is not timely obtained to permit consummation of such Assignment
on or before the related settlement date, in which case the Transaction shall be settled by a participation with elevation applicable
thereto. The Purchaser agrees to pay the “purchase price” to the Seller for each such Transferred Asset on the related
settlement date by payment of the consideration specified for such Transferred Asset in the related Approval Request.


 


Section
4.2.       Reaffirmation of Representations and Warranties by the Seller; Notice of Breach. On the Effective Date and on each
Purchase Date, the Seller, by accepting the proceeds of such Conveyance, shall be deemed to have certified that all representations
and warranties described in Section 4.1 are true and correct on and as of such day as though made on and as of such day
(or, if such representation or warranty is limited to a specific date, such specific date). The representations and warranties
set forth in Section 4.1 shall survive (i) the Conveyance of the Transferred Assets to the Purchaser, (ii) the termination
of the rights and obligations of the Purchaser and the Seller under this Agreement and (iii) the termination of the rights and
obligations of the Purchaser under the Loan Agreement. Upon discovery by an officer of the Purchaser or the Seller of a breach
of any of the foregoing representations and warranties in any material respect, the party discovering such breach shall give prompt
written notice to the other and to the Administrative Agent.


 


ARTICLE
V.



COVENANTS OF THE SELLER


 


Section
5.1.       Covenants of the Seller. The Seller hereby covenants and agrees with the Purchaser that, from the date hereof, and
until all amounts owed by the Seller pursuant to this Agreement have been paid in full (other than as expressly survive the termination
of this Agreement), unless the Purchaser otherwise consents in writing:


 






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(a)       Compliance
with Agreements and Applicable Laws. The Seller shall perform each of its obligations under this Agreement and the other Loan
Documents to which it is a party and comply with all Applicable Laws, including those applicable to the Transferred Portfolio
Investments and all proceeds thereof, except to the extent that the failure to so comply would not reasonably be expected to have
a material adverse effect on (i) its ability to perform its obligations under the Loan Documents to which it is a party, (ii)
its assets, operations, properties, financial condition, or business or (iii) the validity or enforceability of this Agreement
or any of the other Loan Documents.


 


(b)       Maintenance
of Existence and Conduct of Business. The Seller shall: (i) do or cause to be done all things necessary to (A) preserve
and keep in full force and effect its existence as a corporation and maintain its rights and franchises in its jurisdiction of
formation and (B) qualify and remain qualified as a foreign corporation in good standing and preserve its rights and franchises
in each jurisdiction in which the failure to so qualify and remain qualified and preserve its rights and franchises would reasonably
be expected to have a material adverse effect on its assets, operations, properties, financial condition, or business; (ii) continue
to conduct its business substantially as now conducted or as otherwise permitted hereunder and under its organizational documents;
and (iii) at all times maintain, preserve and protect all of its licenses, permits, charters and registrations in each case except
where the failure to maintain such liens, permits, charters and registrations would not reasonably be expected to have a material
adverse effect on its assets, operations, properties, financial condition, or business.


 


(c)       Cash
Management Systems: Deposit of Collections. The Seller shall transfer, or cause to be transferred, all Interest Proceeds and
Principal Proceeds received by the Seller to the appropriate Account by the close of business on the Business Day following the
date such amounts are received.


 


(d)       Books
and Records. The Seller shall keep proper books of record and account in which full and correct entries shall be made of all
transactions with the Purchaser and the assets and business of the Seller related to its obligations under this Agreement or any
Transferred Assets or assets proposed to be transferred in accordance with GAAP, maintain and implement administrative and operating
procedures necessary to fulfill its obligations hereunder; and keep and maintain all documents, books, records and other information
necessary or reasonably advisable and relating to the Transferred Assets prior to their Conveyance hereunder for the collection
of all Transferred Assets.


 


(e)       Reserved.


 


(f)       Taxes.
The Seller will file on a timely basis all federal and other material Tax returns required to be filed and will pay all federal
and other material Taxes due and payable by it (other than any amount the validity of which is contested in good faith by appropriate
proceedings and with respect to which reserves in conformity with GAAP are provided on the books of the Seller).


 


(g)       ERISA.
The Seller shall not, and shall not cause or permit any of its Affiliates to, cause or permit to occur an event that results in
the imposition of a Lien on its interest, if any, in any Transferred Asset under Section 412 of the IRC or Section 303(K) or 4068
of ERISA.


 






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(h)       Liens.
The Seller shall not create, incur, assume or permit to exist any Lien on or with respect to any of its rights under any of the
Loan Documents (other than the Lien covering this Agreement and existing on the Effective Date, which has been disclosed to the
Administrative Agent) or on or with respect to any of its rights in the Transferred Assets, in each case other than Permitted
Liens. For the avoidance of doubt, this Section 5.1(h) shall not apply to any property retained by the Seller and not Conveyed
or purported to be Conveyed hereunder.


 


(i)        Change
of Name, Etc. The Seller shall not change its name, identity or corporate structure in any manner that would make any financing
statement or continuation statement filed by the Seller (or by the Administrative Agent on behalf of the Seller) in accordance
with Section 2.1(c) seriously misleading or change its jurisdiction of organization, unless the Seller shall have given
the Purchaser at least 10 days prior written notice thereof, and shall promptly file appropriate amendments to all previously
filed financing statements and continuation statements.


 


(j)        Sale
Characterization. The Seller shall not make statements or disclosures, or treat the transactions contemplated by this Agreement
(other than for tax or accounting purposes) in any manner other than as a true sale, contribution or absolute assignment of the
title to and sole record and beneficial ownership interest of the Transferred Portfolio Investments Conveyed or purported to be
Conveyed hereunder; provided that the Seller may consolidate the Purchaser and/or its properties and other assets for accounting
purposes in accordance with GAAP.


 


(k)       Commingling.
The Seller shall not, and shall not permit any of its Affiliates to, deposit or permit the deposit of any funds that do not constitute
Collections or other proceeds of any Portfolio Investments into the Collection Account.


 


(l)        Reserved.


 


(m)      Reserved.


 


(n)       Nonconsolidation
& True Sale Opinion. The Seller shall not take any action contrary to the “Assumptions and Facts” section
in the opinions of Dechert LLP, delivered in connection with the Loan Agreement, relating to certain nonconsolidation and true
sale matters.


 


(o)       Obligations
with Respect to Transferred Assets. The Seller hereby retains and undertakes to perform, pay or discharge in accordance with
the terms and conditions under such Portfolio Investments all of the obligations of the holder of the Transferred Asset to the
extent such obligations arose or accrued prior to the effectiveness of such transfer. Except as may otherwise have been agreed
to between the parties with respect to any particular Transferred Asset, (i) the Seller hereby represents, warrants and agrees
that any amounts received by it with respect to any Transferred Asset and which accrue from and after the effectiveness of the
transfer of such Transferred Asset shall be held in trust for the benefit of and shall be promptly remitted to the Purchaser upon
receipt thereof, and (ii) the Purchaser hereby represents, warrants and agrees that any amounts received by it with respect to
a Transferred Asset which accrue with respect to the period prior to the effectiveness of such transfer of such Transferred Asset
shall be held in trust for the benefit of and shall be promptly remitted to the Seller upon receipt thereof.


 






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(p)       Repurchase
of Portfolio Investments.


 


            (i)         Each
party to this Agreement shall give notice to the other party promptly, in writing, upon the discovery of any breach of the Seller’s
representations and warranties made pursuant to Section 4.1 hereof which has a material adverse effect on the interest of the
Purchaser in any Transferred Portfolio Investment (a “Warranty Portfolio Investment”). In the event of such
a material breach, the Seller shall, no later than 30 days after knowledge of such breach on the part of Seller, (x) repurchase
any affected Transferred Portfolio Investment from the Purchaser at an amount equal to (i) the purchase price paid by the Purchaser
for such Transferred Portfolio Investment (excluding purchased accrued interest and original issue discount) less all payments
of principal received in connection with such Transferred Portfolio Investment since the applicable Purchase Date and (ii) all
accrued and unpaid interest thereon (the “Repurchase Amount”) or (y) substitute for such affected Transferred
Portfolio Investment one or more Portfolio Investments with a Market Value at least equal to the Repurchase Amount of the Transferred
Portfolio Investment being replaced; provided that, no such repayment or substitution shall be required to be made if such
breach of Seller’s representations and warranties relating to such Transferred Portfolio Investment shall have been cured
before the expiration of such 30 day period.


 


            (ii)       The principal balance of all Transferred Portfolio Investments (other
than Warranty Portfolio Investments) sold pursuant to Section 1.04 of the Loan Agreement to the Seller or an Affiliate
thereof by the Purchaser shall not during the term of the Loan Agreement exceed 20% of the Net Purchased Loan Balance measured
as of the date of such sale; provided that the principal balance of all Transferred Portfolio Investments (other than Warranty
Portfolio Investments) that are in default as of the date of such sale and sold pursuant to Section 1.04 of the Loan Agreement
to the Seller or an Affiliate thereof by the Purchaser shall not during the term of the Loan Agreement exceed 10% of the Net Purchased
Loan Balance measured as of the date of such sale.


 


ARTICLE
VI.



[reserved]


 


ARTICLE
VII.



CONDITIONS PRECEDENT


 


Section
7.1.       Conditions Precedent. The obligations of the Purchaser to pay the Purchase Price for the Transferred Assets sold
on the Effective Date and any Purchase Date shall be subject to the satisfaction of the following conditions:


 


(a)       All
representations and warranties of the Seller contained in this Agreement shall be true and correct in all material respects on
such Purchase Date;


 






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(b)       All
information concerning the Transferred Assets provided to the Purchaser and the Administrative Agent shall be true and correct,
when taken as a whole, in all material respects as of such Purchase Date; provided that, to the extent any such information was
furnished to the Seller by any third party or was not prepared by or under the direction of the Seller, such information is as
of its delivery date true, correct and complete in all material respects to the knowledge of the Seller as of such Purchase Date;


 


(c)       The
Seller shall have performed in all material respects all other obligations required to be performed by the provisions of this
Agreement and the other Loan Documents to which it is a party;


 


(d)       The
Seller shall have either filed or caused to be filed the financing statement(s) required to be filed pursuant to Section 2.1(c);


 


(e)       All
corporate and legal proceedings, and all instruments in connection with the transactions contemplated by this Agreement and the
other Loan Documents shall be reasonably satisfactory in form and substance to the Purchaser, and the Purchaser shall have received
from the Seller copies of all documents (including records of corporate proceedings) relevant to the transactions herein contemplated
as the Purchaser may reasonably have requested;


 


(f)        The
applicable Transfer Supplement shall be duly executed by the Seller and the Purchaser; and


 


(g)       The
Portfolio Investments constituting the Transferred Assets and any applicable transfer documents that are requested by the Administrative
Agent shall be delivered to the Administrative Agent (or otherwise at the direction of the Purchaser).


 


ARTICLE
VIII.



MISCELLANEOUS PROVISIONS


 


Section
8.1.       Amendments, Etc. This Agreement and the rights and obligations of the parties hereunder may not be amended, supplemented,
waived or otherwise modified except in an instrument in writing signed by the Purchaser and the Seller and consented to in writing
by the Administrative Agent. Any Conveyance executed in accordance with the provisions hereof shall not be considered an amendment
or modification to this Agreement.


 


Section
8.2.       Governing Law: Submission to Jurisdiction.


 


(a)       THIS
AGREEMENT AND THE NOTES SHALL BE GOVERNED BY AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK.


 


(b)       Each
party hereto hereby irrevocably submits to the non-exclusive jurisdiction of any New York State or Federal court sitting in New
York City in any action or proceeding arising out of or relating to the Loan Documents, and each party hereto hereby irrevocably
agrees that all claims in respect of such action or proceeding may be heard and determined in such New York State court or, to
the extent permitted by law, in such Federal court. The parties hereto hereby irrevocably waive, to the fullest extent they may
effectively do so, the defense of an inconvenient forum to the maintenance of such action or proceeding. The parties hereto agree
that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit
on the judgment or in any other manner provided by law.


 






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Section
8.3.      Notices. All notices and other communications provided for hereunder shall, unless otherwise stated herein, be
in writing (including facsimile communication) and shall be personally delivered or sent by certified mail, electronic mail, postage
prepaid, or by facsimile, to the intended party at the address or facsimile number of such party set forth below:


 








	 	(a) 	in
the case of the Purchaser:	 
	 	 	 	 
	 	 	Jefferson
Square Funding LLC	 
	 	 	c/o
FS Investment Corporation III	 
	 	 	201
Rouse Boulevard	 
	 	 	Philadelphia,
PA 19112	 
	 	 	Attention:
Gerald F. Stahlecker, Executive Vice President	 
	 	 	Telephone:
(215) 495-1169	 
	 	 	Facsimile:
(215) 222-4649	 



 





	 	(b)	in
the case of the Seller:	 
	 	 	 	 
	 	 	FS
Investment Corporation III	 
	 	 	201
Rouse Boulevard	 
	 	 	Philadelphia,
PA 19112	 
	 	 	Attention:
Gerald F. Stahlecker, Executive Vice President	 
	 	 	Telephone:
(215) 495-1169	 
	 	 	Facsimile:
(215) 222-4649	 






 


(in
each case, with a copy to the Administrative Agent at the address for notice provided under the Loan Agreement)


 


All
such notices and communications shall be effective, (a) if personally delivered, when received, (b) if sent by certified mail,
three Business Days after having been deposited in the mail, postage prepaid, (c) if sent by two-day mail, two Business Days after
having been deposited in the mail, postage prepaid, (d) if sent by overnight courier, one Business Day after having been given
to such courier, and (e) if transmitted by facsimile, when sent, receipt confirmed by telephone or electronic means.


 


Section
8.4.       Severability of Provisions. If any one or more of the covenants, agreements, provisions or terms of this Agreement
shall for any reason whatsoever be held invalid, then such covenants, agreements, provisions, or terms shall be deemed severable
from the remaining covenants, agreements, provisions, or terms of this Agreement and shall in no way affect the validity or enforceability
of the other provisions of this Agreement.


 


Section
8.5.       Reserved.


 






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Section
8.6.       Further Assurances.


 


(a)       The
Purchaser and the Seller each agree that at any time and from time to time, at its expense and upon reasonable request of the
Administrative Agent or the Collateral Agent, it shall promptly execute and deliver all further instruments and documents, and
take all reasonable further action, that is necessary or desirable to perfect and protect the Conveyances and security interests
granted or purported to be granted by this Agreement or to enable the Collateral Agent or any of the Secured Parties to exercise
and enforce its rights and remedies under this Agreement with respect to any Collateral.


 


(b)       The
Purchaser and the Seller agree to do and perform, from time to time, any and all acts and to execute any and all further instruments
reasonably requested by the other party more fully to effect the purposes of this Agreement and the other Loan Documents, including
the execution of any financing statements or continuation statements or equivalent documents relating to the Transferred Portfolio
Investments for filing under the provisions of the UCC or other laws of any applicable jurisdiction.


 


(c)       The
Purchaser and the Seller hereby severally authorize the Collateral Agent, upon receipt of written direction from the Administrative
Agent, to file one or more financing or continuation statements, and amendments thereto, relating to all or any part of the Transferred
Assets.


 


(d)       The
Seller shall furnish to the Collateral Agent and the Administrative Agent from time to time such statements and schedules further
identifying and describing the Related Security and such other reports in connection with the Transferred Assets as the Collateral
Agent (acting solely at the Administrative Agent’s request) or the Administrative Agent may reasonably request, all in reasonable
detail.


 


Section
8.7.      No Waiver; Cumulative Remedies. No failure to exercise and no delay in exercising, on the part of the Purchaser, the
Seller or the Administrative Agent, any right, remedy, power or privilege hereunder, shall operate as a waiver thereof; nor shall
any single or partial exercise of any right, remedy, power or privilege hereunder preclude any other or further exercise thereof
or the exercise of any other right, remedy, power or privilege. The rights, remedies, powers and privileges herein provided are
cumulative and not exhaustive of any rights, remedies, powers and privilege provided by law.


 


Section
8.8.      Counterparts. This Agreement may be executed in two or more counterparts including telecopy transmission thereof
(and by different parties on separate counterparts), each of which shall be an original, but all of which together shall constitute
one and the same instrument.


 


Section
8.9.      Binding Effect; Third-Party Beneficiaries. This Agreement will inure to the benefit of and be binding upon the parties
hereto and their respective successors and permitted assigns.


 






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The
Seller hereby acknowledges that (a) the Collateral Agent is the beneficiary of a collateral assignment of this Agreement pursuant
to Section 8.02 of the Loan Agreement, and (b) the Collateral Agent for the benefit of the Secured Parties shall be an express
third party beneficiary of the Purchaser’s rights hereunder, including but not limited to the Purchaser’s right to
indemnification set forth in Section 2.2, subject to each of the limitations, restrictions and conditions set forth in Article
VIII of the Loan Agreement with respect to the collateral assignment of this Agreement; provided that, such collateral assignment
and such third party beneficiary rights shall automatically terminate upon the irrevocable payment in full of the Secured Obligations
(other than contingent indemnity obligations as to which no claim has been made) and the termination of the Financing Commitments
in full.


 


Section
8.10.     Merger and Integration. Except as specifically stated otherwise herein, this Agreement sets forth the entire understanding
of the parties relating to the subject matter hereof, and all prior understandings, written or oral, are superseded by this Agreement.


 


Section
8.11.     Headings. The headings herein are for purposes of reference only and shall not otherwise affect the meaning or
interpretation of any provision hereof.


 


[REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK]


 



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IN
WITNESS WHEREOF, the Purchaser and the Seller each have caused this Sale and Contribution Agreement to be duly executed by their
respective officers as of the day and year first above written.


 








	 	FS INVESTMENT CORPORATION III, as Seller
	 	 	 
	 	By:	/s/ Gerald F. Stahlecker
	 	Name:	Gerald F. Stahlecker
	 	Title:	Executive Vice President
	 	 	 
	 	JEFFERSON SQUARE FUNDING LLC, as Purchaser
	 	 	 
	 	By:	/s/ Gerald F. Stahlecker
	 	Name:	Gerald F. Stahlecker
	 	Title:	Executive Vice President






 


Signature
Page to the Sale and Contribution Agreement


 






    	19



    	 



    

  


Schedule
A


 


SCHEDULE
OF PORTFOLIO INVESTMENTS


 








	Issuer
 Description	Security Description	Par
 Amount	Market
 Value
	 	 	 	 
	 	 	 	 
	 	 	 	 
	 	 	 	 
	 	 	 	 
	 	 	 	 
	 	 	 	 
	 	 	 	 
	 	 	 	 
	 	 	 	 
	 	 	 	 
	 	 	 	 
	 	 	 	 
	 	 	 	 
	 	 	 	 
	 	 	 	 
	 	 	 	 
	 	 	 	 
	 	 	 	 
	 	 	 	 
	 	 	 	 
	 	 	 	 



 






    	20



    	 



    

  


EXHIBIT
A


 


FORM
OF TRANSFER SUPPLEMENT


 


THIS
TRANSFER SUPPLEMENT TO THE ASSET TRANSFER AGREEMENT (this “Transfer Supplement”), dated as of [INSERT DATE],
by and between FS Investment Corporation III (the “Seller”) and Jefferson Square Funding LLC (the “Purchaser”).
Except as otherwise expressly provided herein or unless the context otherwise requires, all capitalized terms used herein shall
have the meanings attributed to them in the Sale and Contribution Agreement, dated as of May 8, 2015, as amended from time to
time (the “Sale Agreement”), between the Seller and the Purchaser.


 


Section
1.Transferred Assets


 


(a)           The
Transferred Assets to which this Transfer Supplement applies are described on the Schedule of Portfolio Investments attached as
Schedule A hereto.


 


(b)           Purchase
Date:        [______].


 


(c)           Purchase
Price of Transferred Assets:        $[______________].


 


Section
2.         Representations, Warranties and Covenants of the Seller. The representations, warranties and covenants of the Seller
set forth in Section 4 of the Sale Agreement shall be true in all material respects as of the Purchase Date (or such other
date specifically provided in the particular representation or warranty).


 


Section
3.         Effect of Supplement. Except as specifically supplemented herein, the Sale Agreement shall continue in full force
and effect in accordance with its original terms. Reference to this specific Transfer Supplement need not be made in the Sale
Agreement, or any other instrument or document executed in connection therewith, or in any certificate, letter or communication
issued or made pursuant to or with respect to the Sale Agreement, any reference in any of such items to the Sale Agreement being
sufficient to refer to the Sale Agreement as supplemented hereby.


 


Section
4.          Counterparts. This Transfer Supplement may be
executed in any number of counterparts, and by the different parties on different counterpart signature pages, all of which taken
together shall constitute one and the same agreement. Any of the parties hereto may execute this Transfer Supplement by signing
any such counterpart and each of such counterparts shall for all purposes be deemed to be an original. This Transfer Supplement
shall be governed by the internal laws of the State of New York.


 


*
* * * *


 






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IN
WITNESS WHEREOF, the parties hereto have caused this Transfer Supplement to the Sale Agreement to be duly executed by their respective
officers duly authorized as of the day and year first above written.


 





	 	FS INVESTMENT CORPORATION III
	 	 	 
	 	By:	 
	 	Name:	 
	 	Title:	 
	 	 	 
	 	JEFFERSON SQUARE FUNDING LLC
	 	 	 
	 	By:	                                         
	 	Name:	 
	 	Title: