Document:

EX-10.1

 Exhibit 10.1 

EXECUTION VERSION 

INVESTMENT ADVISORY AND 

ADMINISTRATIVE SERVICES AGREEMENT 

BETWEEN 
 FS INVESTMENT
CORPORATION III 
 AND 

FS/KKR ADVISOR, LLC 
 This
Investment Advisory and Administrative Services Agreement (this “Agreement”) is made this 9th day of April, 2018, by and between FS INVESTMENT CORPORATION III, a Maryland
corporation (the “Corporation”), and FS/KKR ADVISOR, LLC, a Delaware limited liability company (the “Adviser”). 

WHEREAS, the Corporation is a non-diversified, closed-end
management investment company that has elected to be regulated as a business development company (“BDC”) under the Investment Company Act of 1940, as amended (the “Investment Company Act”); 

WHEREAS, the Adviser is a newly organized investment adviser that intends to register as an investment adviser under the Investment Advisers
Act of 1940, as amended (the “Advisers Act”); and 
 WHEREAS, the Corporation desires to retain the Adviser to
furnish investment advisory services to the Corporation and to provide for the administrative services necessary for the operation of the Corporation on the terms and conditions hereinafter set forth, and the Adviser wishes to be retained to provide
such services. 
 NOW, THEREFORE, in consideration of the premises and for other good and valuable consideration, the parties hereby agree
as follows: 
  

	1.	Duties of the Adviser. 

 (a)    Retention of
Adviser. The Corporation hereby appoints the Adviser to act as an investment adviser to the Corporation and to manage the investment and reinvestment of the assets of the Corporation, subject to the supervision of the board of directors of the
Corporation (the “Board”), for the period and upon the terms herein set forth, in accordance with: 

(i)    the investment objectives, policies and restrictions that are set forth in the Corporation’s
filings with the Securities and Exchange Commission (the “SEC”), as supplemented, amended or superseded from time to time; 

(ii)    all other applicable federal and state laws, rules and regulations, and the Corporation’s
articles of amendment and restatement (as may be amended from time to time, the “Articles”) and bylaws (as may be amended from time to time, the “Bylaws”); and 

(iii)    such investment policies, directives and regulatory restrictions as the Corporation may from time
to time establish or issue and communicate to the Adviser in writing. 

  
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 (b)    Responsibilities of Adviser. Without limiting the generality of
the foregoing, the Adviser shall, during the term and subject to the provisions of this Agreement: 

(i)    determine the composition and allocation of the Corporation’s investment portfolio, the nature
and timing of any changes therein and the manner of implementing such changes; 
 (ii)    identify,
evaluate and negotiate the structure of the investments made by the Corporation; 
 (iii)    execute,
monitor and service the Corporation’s investments; 
 (iv)    place orders with respect to, and
arrange for, any investment by the Corporation; 
 (v)    determine the securities and other assets that
the Corporation shall purchase, retain, or sell; 
 (vi)    perform due diligence on prospective
portfolio companies; and 
 (vii)    provide the Corporation with such other investment advisory,
research and related services as the Corporation may, from time to time, reasonably request or require for the investment of its funds. 

(c)    Power and Authority. To facilitate the Adviser’s performance of these undertakings, but subject to the
restrictions contained herein, the Corporation hereby delegates to the Adviser (which power and authority may be delegated by the Adviser to one or more Sub-Advisers (as defined below)), and the Adviser hereby
accepts, the power and authority to act on behalf of the Corporation to effectuate investment decisions for the Corporation, including the negotiation, execution and delivery of all documents relating to the Corporation’s investments and the
placing of orders for other purchase or sale transactions on behalf of the Corporation. In the event that the Corporation determines to acquire debt financing (or to refinance existing debt financing), the Adviser shall seek to arrange for such
financing on the Corporation’s behalf, subject to the oversight and approval of the Board. If it is necessary or appropriate for the Adviser to make investments on behalf of the Corporation through one or more special purpose vehicles, the
Adviser shall have authority to create or arrange for the creation of such special purpose vehicles and to make such investments through such special purpose vehicles in accordance with applicable law. The Corporation also grants to the Adviser
power and authority to engage in all activities and transactions (and anything incidental thereto) that the Adviser deems appropriate, necessary or advisable to carry out its duties pursuant to this Agreement, including the authority to provide, on
behalf of the Corporation, significant managerial assistance to the Corporation’s portfolio companies to the extent required by the Investment Company Act or otherwise deemed appropriate by the Adviser. 

(d)    Administrative Services. Subject to the supervision, direction and control of the Board, the provisions of
the Articles and Bylaws and applicable federal and state law, the Adviser shall perform, or cause to be performed by other persons, all administrative services in connection with the operation of the Corporation. 

  
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 (e)    Acceptance of Appointment. The Adviser hereby accepts such
appointment and agrees during the term hereof to render the services described herein for the compensation provided herein, subject to the limitations contained herein. 

(f)    Sub-Advisers. The Adviser is hereby authorized to enter into one or
more sub-advisory agreements (each, a “Sub-Advisory Agreement”) with other investment advisers or other service providers (each, a “Sub-Adviser”) pursuant to which the Adviser may obtain the services of the Sub-Adviser(s) to assist the Adviser in fulfilling its responsibilities hereunder,
subject to the oversight of the Adviser and the Corporation. Specifically, the Adviser may retain a Sub-Adviser to recommend specific securities or other investments based upon the Corporation’s
investment objectives, policies and restrictions, and work, along with the Adviser, in sourcing, structuring, negotiating, arranging or effecting the acquisition or disposition of such investments and monitoring investments on behalf of the
Corporation, subject to the oversight of the Adviser and the Corporation, with the scope of such services and oversight to be set forth in each Sub-Advisory Agreement. 

(i)    The Adviser and not the Corporation shall be responsible for any compensation payable to any Sub-Adviser; provided, however, that the Adviser shall have the right to direct the Corporation to pay directly any Sub-Adviser the amounts due and payable to such Sub-Adviser from the fees and expenses otherwise payable to the Adviser under this Agreement. 

(ii)    Any Sub-Advisory Agreement entered into by the Adviser
shall be in accordance with the requirements of the Investment Company Act, including without limitation the requirements relating to the Board and the Corporation’s stockholder approval thereunder, and other applicable federal and state law.

 (iii)    Any Sub-Adviser shall be subject to the same
fiduciary duties imposed on the Adviser pursuant to this Agreement, the Investment Company Act and the Advisers Act, as well as other applicable federal and state law. 

(g)    Independent Contractor Status. The Adviser shall, for all purposes herein provided, be deemed to be an
independent contractor and, except as expressly provided or authorized herein, shall have no authority to act for or represent the Corporation in any way or otherwise be deemed an agent of the Corporation. 

(h)    Record Retention. Subject to review by, and the overall control of, the Board, the Adviser shall keep and
preserve for the period required by the Investment Company Act or the Advisers Act, as applicable, any books and records relevant to the provision of its investment advisory services to the Corporation and shall specifically maintain all books and
records with respect to the Corporation’s portfolio transactions and shall render to the Board such periodic and special reports as the Board may reasonably request or as may be required under applicable federal and state law, and shall make
such records available for inspection by the Board and its authorized agents, at any time and from time to time during normal business hours. The Adviser agrees that all records that it maintains for the Corporation are the property of the
Corporation and shall surrender promptly to the Corporation any such records upon the Corporation’s request and upon termination of this Agreement pursuant to Section 9, provided that the Adviser may

  
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retain a copy of such records. The Adviser shall have the right to retain copies, or originals where required by Rule 204-2 promulgated under the Advisers
Act, of such records to the extent required by applicable law. 
 The following provisions in this Section 1 shall apply for
only so long as the shares of common stock of the Corporation (“Common Stock”) are not listed on a national securities exchange. 

(i)    Administrator. The Adviser shall, upon request by an official or agency administering the securities laws of
a state, province or commonwealth (an “Administrator”), submit to such Administrator the reports and statements required to be distributed to the Corporation’s stockholders pursuant to this Agreement, the
Corporation’s then effective Registration Statement on Form N-2 (as amended from time to time, the “Registration Statement”) and applicable federal and state law. 

(j)    Fiduciary Duty. It is acknowledged that the Adviser shall have a fiduciary responsibility for the
safekeeping and use of all funds and assets of the Corporation, whether or not in the Adviser’s immediate possession or control. The Adviser shall not employ, or permit another to employ, such funds or assets in any manner except for the
exclusive benefit of the Corporation. The Adviser shall not, by entry into an agreement with any stockholder of the Corporation or otherwise, contract away the fiduciary obligation owed to the Corporation and the Corporation’s stockholders
under common law. 
  

	2.	The Corporation’s Responsibilities and Expenses Payable by the Corporation and the Adviser. 

(a)    Adviser Personnel. All personnel of the Adviser, when and to the extent engaged in providing investment
advisory services herein, and the compensation and routine overhead expenses of such personnel allocable to such services, shall be provided and paid for by the Adviser or its affiliates and not by the Corporation. 

(b)    Costs. Subject to the limitations on reimbursement of the Adviser as set forth in
Section 2(c) below, the Corporation, either directly or through reimbursement to the Adviser, shall bear all other costs and expenses of its operations and transactions, including (without limitation): expenses deemed to be
“organization and offering expenses” of the Corporation for purposes of Conduct Rule 2310(a)(12) of the Financial Industry Regulatory Authority (for purposes of this Agreement, such expenses, exclusive of commissions, the
dealer manager fee, any discounts and other similar expenses paid by investors at the time of sale of the stock of the Corporation, are hereinafter referred to as “Organization and Offering Costs”); corporate and
organizational expenses relating to offerings of shares of Common Stock, subject to limitations included in this Agreement; the cost of calculating the Corporation’s net asset value for each share class, as applicable, including the cost of any
third-party pricing or valuation services; the cost of effecting sales and repurchases of shares of Common Stock and other securities; investment advisory fees; fees payable to third parties including, without limitation, agents, consultants or
other advisors, relating to, or associated with, making investments, monitoring investments and valuing investments, including fees and expenses associated with performing due diligence reviews of prospective investments; interest payments on the
Corporation’s debt or 

  
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related obligations; transfer agent and custodial fees; research and market data (including news and quotation equipment and services, and any computer hardware and connectivity hardware (e.g.,
telephone and fiber optic lines) incorporated into the cost of obtaining such research and market data); fees and expenses associated with marketing efforts; federal and state registration or notification fees; federal, state and local taxes; fees
and expenses of directors not also serving in an executive officer capacity for the Corporation or the Adviser; costs of proxy statements, stockholders’ reports, notices and other filings; fidelity bond, directors and officers errors and
omissions liability insurance and other insurance premiums; direct costs such as printing, mailing, long distance telephone and staff costs; fees and expenses associated with accounting, corporate governance, independent audits and outside legal
costs; costs associated with the Corporation’s reporting and compliance obligations under the Investment Company Act and applicable federal and state securities laws, including compliance with the Sarbanes-Oxley Act of 2002, as amended; all
costs of registration and listing the Corporation’s Common Stock or other securities on any securities exchange; brokerage commissions for the Corporation’s investments; all other expenses incurred by the Adviser, any Sub-Adviser or the Corporation in connection with administering the Corporation’s business, including expenses incurred by the Adviser or any Sub-Adviser in performing
administrative services for the Corporation and administrative personnel paid by the Adviser or any Sub-Adviser, to the extent they are not controlling persons of the Adviser, any Sub-Adviser or any of their respective affiliates; and any expenses incurred outside of the ordinary course of business, including, without limitation, costs incurred in connection with any claim, litigation,
arbitration, mediation, government investigation or similar proceeding and indemnification expenses as provided for in the Articles or Bylaws. 

Notwithstanding the foregoing, the Corporation shall not be liable for Organization and Offering Costs to the extent that Organization and Offering Costs,
together with all prior Organization and Offering Costs, exceed 1.5% of the aggregate gross proceeds from the offering of the Corporation’s securities. 

The following provisions in this Section 2(c) shall apply for only so long as shares of Common Stock are not listed on a
national securities exchange. 
 (c)    Limitations on Reimbursement of Expenses. 

(i)    In addition to the compensation paid to the Adviser pursuant to Section 3,
the Corporation shall reimburse the Adviser for all expenses of the Corporation incurred by the Adviser as well as the actual cost of goods and services used for or by the Corporation and obtained from entities not affiliated with the Adviser. The
Adviser may be reimbursed for the administrative services performed by it on behalf of the Corporation; provided, however, the reimbursement shall be an amount equal to the lower of the Adviser’s actual cost or the amount the Corporation would
be required to pay third parties for the provision of comparable administrative services in the same geographic location; and provided, further, that such costs are reasonably allocated to the Corporation on the basis of assets, revenues, time
allocations and/or other reasonable metrics, consistent with past practice (but solely to the extent such past practice is not inconsistent with the policies of the Adviser). No reimbursement shall be permitted for

  
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services for which the Adviser is entitled to compensation by way of a separate fee. Excluded from the allowable reimbursement shall be: 

(A)    rent or depreciation, utilities, capital equipment, and other administrative items of the Adviser;
and 
 (B)    salaries, fringe benefits, travel expenses and other administrative items incurred by or
allocated to any controlling person (as defined in the Investment Company Act) of the Adviser (or any individual performing such services) or a holder of 10% or greater equity interest in the Adviser (or any person having the power to direct or
cause the direction of the Adviser, whether by ownership of voting securities, by contract or otherwise). 

(d)    Periodic Reimbursement. Expenses incurred by the Adviser on behalf of the Corporation and payable pursuant
to this Section 2 shall be reimbursed no less than monthly to the Adviser. The Adviser shall prepare a statement documenting the expenses of the Corporation and the calculation of the reimbursement and shall deliver such
statement to the Corporation prior to full reimbursement. 
  

	3.	Compensation of the Adviser. 

 The Corporation agrees to pay, and the
Adviser agrees to accept, as compensation for the services provided by the Adviser herein, a base management fee (the “Base Management Fee”) and an incentive fee (the “Incentive Fee”) as hereinafter
set forth. Any of the fees payable to the Adviser under this Agreement for any partial month or calendar quarter shall be appropriately prorated. The Adviser may agree to temporarily or permanently waive, in whole or in part, the Base Management Fee
and/or the Incentive Fee. See Appendix A for examples of how these fees are calculated. Prior to the payment of any fee to the Adviser, the Corporation shall obtain written instructions from the Adviser with respect to any waiver or deferral of any
portion of such fees. Any portion of a deferred fee payable to the Adviser and not paid over to the Adviser with respect to any month, calendar quarter or year shall be deferred without interest and may be paid over in any such other month prior to
the termination of this Agreement, as the Adviser may determine upon written notice to the Corporation. 

(a)    Base Management Fee. The Base Management Fee shall be calculated at an annual rate of 1.5% of the
Corporation’s average weekly gross assets. The Base Management Fee shall be payable quarterly in arrears, and shall be calculated based on the average weekly value of the Corporation’s gross assets during the most recently completed
calendar quarter. All or any part of the Base Management Fee not taken as to any quarter shall be deferred without interest and may be taken in any such other quarter prior to the occurrence of a liquidity event (as such term is defined in the
Corporation’s prospectus that forms a part of the Registration Statement, as amended and supplemented (the “Prospectus”)) as the Adviser shall determine. 

(b)    Incentive Fee. The Incentive Fee shall consist of two parts, as follows: 

(i)    The first part of the Incentive Fee, referred to as the “Subordinated Incentive Fee on
Income,” shall be calculated and payable quarterly in arrears based on the Corporation’s “Pre-Incentive Fee Net Investment Income” for the immediately

  
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preceding quarter. The payment of the Subordinated Incentive Fee on Income shall be subject to a quarterly hurdle rate, expressed as a rate of return on the average Adjusted Capital (as defined
below) for the most recently completed calendar quarter, of 1.75% (7.0% annualized) (the “Hurdle Rate”), subject to a “catch up” feature (as described below). 

For this purpose, “Pre-Incentive Fee Net Investment Income” means interest
income, dividend income and any other income (including any other fees, other than fees for providing managerial assistance, such as commitment, origination, structuring, diligence and consulting fees or other fees that the Corporation receives from
portfolio companies) accrued during the calendar quarter, minus the Corporation’s operating expenses for the quarter (including the Base Management Fee, expenses reimbursed to the Adviser under this Agreement and any interest expense and
dividends paid on any issued and outstanding preferred stock, but excluding the Incentive Fee). Pre-Incentive Fee Net Investment Income includes, in the case of investments with a deferred interest feature
(such as original issue discount debt instruments with payment-in-kind interest and zero coupon securities), accrued income that the Corporation has not yet received in
cash. Pre-Incentive Fee Net Investment Income does not include any realized capital gains, realized capital losses or unrealized capital appreciation or depreciation. 

For purposes of this fee, “Adjusted Capital” shall mean cumulative gross proceeds generated by the Corporation from
sales of shares of Common Stock (including proceeds from the Corporation’s distribution reinvestment plan) reduced for amounts paid for share repurchases pursuant to the Corporation’s share repurchase program. 

The calculation of the Subordinated Incentive Fee on Income for each quarter is as follows: 

(A)    No Subordinated Incentive Fee on Income shall be payable to the Adviser in any calendar quarter in
which the Corporation’s Pre-Incentive Fee Net Investment Income does not exceed the Hurdle Rate; 

(B)    100% of the Corporation’s Pre-Incentive Fee Net
Investment Income, if any, that exceeds the Hurdle Rate but is less than or equal to 2.1875% in any calendar quarter (8.75% annualized) shall be payable to the Adviser. This portion of the Corporation’s Subordinated Incentive Fee on Income that
exceeds the Hurdle Rate but is less than or equal to 2.1875% is referred to as the “catch up” and is intended to provide the Adviser with an incentive fee of 20.0% on all of the Corporation’s Pre-Incentive Fee Net Investment Income when the Corporation’s Pre-Incentive Fee Net Investment Income reaches 2.1875% in any calendar quarter (8.75% annualized); and

 (C)    20.0% of the amount of the Corporation’s
Pre-Incentive Fee Net Investment Income, if any, that exceeds 2.1875% in any calendar quarter (8.75% annualized) shall be payable to the Adviser once the Hurdle Rate and
catch-up have been achieved (20.0% of the Corporation’s Pre-Incentive Fee Net Investment Income thereafter shall be allocated to the Adviser). 

  
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 (ii)    The second part of the Incentive Fee, referred to as
the “Incentive Fee on Capital Gains,” shall be an incentive fee on capital gains and shall be determined and payable in arrears as of the end of each calendar year (or upon termination of this Agreement). This fee
shall equal 20.0% of the Corporation’s incentive fee capital gains, which shall equal the Corporation’s realized capital gains on a cumulative basis from inception, calculated as of the end of the applicable period, computed net of all
realized capital losses and unrealized capital depreciation on a cumulative basis, less the aggregate amount of any previously paid capital gain incentive fees. 
  

	4.	Covenants of the Adviser. 

 (a)    Adviser
Status. The Adviser is registered as an investment adviser under the Advisers Act and covenants that it will maintain such registration. The Adviser agrees that its activities will at all times be in compliance in all material respects with all
applicable federal and state laws governing its operations and investments. 
 The following provisions in this
Section 4 shall apply for only so long as shares of Common Stock are not listed on a national securities exchange. 

(b)    Reports to Stockholders. The Adviser shall prepare or shall cause to be prepared and distributed to
stockholders during each year the following reports of the Corporation (either included in a periodic report filed with the SEC or distributed in a separate report): 

(i)    Quarterly Reports. Within sixty (60) days of the end of each calendar quarter, a report
containing the same financial information contained in the Corporation’s Quarterly Report on Form 10-Q filed by the Corporation under the Securities Exchange Act of 1934, as amended. 

(ii)    Annual Report. Within one hundred and twenty (120) days after the end of the
Corporation’s fiscal year, an annual report containing: 
 (A)    A balance sheet as of the end of
each fiscal year and statements of income, equity, and cash flow, for the year then ended, all of which shall be prepared in accordance with generally accepted accounting principles and accompanied by an auditor’s report containing an opinion
of an independent certified public accountant; 
 (B)    A report of the activities of the Corporation
during the period covered by the report; 
 (C)    Where forecasts have been provided to the
Corporation’s stockholders, a table comparing the forecasts previously provided with the actual results during the period covered by the report; and 

(D)    A report setting forth distributions by the Corporation for the period covered thereby and
separately identifying distributions from (i) cash flow from operations during the period; (ii) cash flow from operations during a prior period which have been held as reserves; and (iii) proceeds from disposition of the
Corporation’s assets. 

  
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 (iii)    Previous Reimbursement Reports. The Adviser
shall prepare or shall cause to be prepared a report, prepared in accordance with the American Institute of Certified Public Accountants United States Auditing Standards relating to special reports, and distributed to stockholders not less than
annually, containing an itemized list of the costs reimbursed to the Adviser pursuant to Section 2(c) for the previous fiscal year. The special report shall at a minimum provide: 

(A)    A review of the time allocations of individual employees, the costs of whose services were
reimbursed; and 
 (B)    A review of the specific nature of the work performed by each such employee.

 (iv)    Proposed Reimbursement Reports. The Adviser shall prepare or shall cause to be prepared
a report containing an itemized estimate of all proposed expenses for which it shall receive reimbursements pursuant to Section 2(c) of this Agreement for the next fiscal year, together with a breakdown by year of such
expenses reimbursed in each of the last five public programs formed by the Adviser. 
 (c)    Reports to
Administrators. The Adviser shall, upon written request of any Administrator, submit any of the reports and statements to be prepared and distributed by it pursuant to this Section 4 to such Administrator. 

(d)    Reserves. In performing its duties hereunder, the Adviser shall cause the Corporation to provide for
adequate reserves for normal replacements and contingencies (but not for payment of fees payable to the Adviser hereunder) by causing the Corporation to retain a reasonable percentage of proceeds from offerings and revenues. 

(e)    Recommendations Regarding Reviews. From time to time and not less than quarterly, the Adviser must review
the Corporation’s accounts to determine whether cash distributions are appropriate. The Corporation may, subject to authorization by the Board, distribute pro rata to the stockholders funds received by the Corporation which the Adviser deems
unnecessary to retain in the Corporation. 
 (f)    Temporary Investments. The Adviser shall, in its sole
discretion, temporarily place proceeds from offerings by the Corporation into short term, highly liquid investments which, in its reasonable judgment, afford appropriate safety of principal during such time as it is determining the composition and
allocation of the portfolio of the Corporation and the nature, timing and implementation of any changes thereto pursuant to Section 1(b); provided however, that the Adviser shall be under no fiduciary obligation to select
any such short-term, highly liquid investment based solely on any yield or return of such investment. The Adviser shall cause any proceeds of the offering of the Corporation’s securities not committed for investment within the later of two
(2) years from the initial date of effectiveness of the Registration Statement or one year from termination of the offering, unless a longer period is permitted by the applicable Administrator, to be paid as a distribution to the stockholders
of the Corporation as a return of capital without deduction of Front End Fees (as defined below). 

  
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	5.	Brokerage Commissions, Limitations on Front End Fees. 

(a)    Brokerage Commissions. The Adviser is hereby authorized, to the fullest extent now or hereafter permitted by
law, to cause the Corporation to pay a member of a national securities exchange, broker or dealer an amount of commission for effecting a securities transaction in excess of the amount of commission another member of such exchange, broker or dealer
would have charged for effecting that transaction, if the Adviser determines in good faith, taking into account such factors as price (including the applicable brokerage commission or dealer spread), size of order, difficulty of execution, and
operational facilities of the firm and the firm’s risk and skill in positioning blocks of securities, that such amount of commission is reasonable in relation to the value of the brokerage and/or research services provided by such member,
broker or dealer, viewed in terms of either that particular transaction or its overall responsibilities with respect to the Corporation’s portfolio, and is consistent with the Adviser’s duty to seek the best execution on behalf of the
Corporation. 
 The following provisions in this Section 5 shall apply for only so long as shares of Common Stock are not
listed on a national securities exchange. 
 (b)    Limitations. Notwithstanding anything herein to the
contrary: 
 (i)    All fees and expenses paid by any party for any services rendered to organize the
Corporation and to acquire assets for the Corporation (“Front End Fees”) shall be reasonable and shall not exceed 15% of the gross offering proceeds, regardless of the source of payment. Any reimbursement to the Adviser or
any other person for deferred organizational and offering costs, including any interest thereon, if any, will be included within this 15% limitation. 

(ii)    The Adviser shall commit at least eighty-two percent (82%)
of the gross offering proceeds towards the investment or reinvestment of assets and reserves as set forth in Section 4(d) above on behalf of the Corporation. The remaining proceeds may be used to pay Front End Fees. 

 

	6.	Other Activities of the Adviser. 

 The services provided by the Adviser to the
Corporation are not exclusive, and the Adviser may engage in any other business or render similar or different services to others including, without limitation, the direct or indirect sponsorship or management of other investment based accounts or
commingled pools of capital, however structured, having investment objectives similar to those of the Corporation, so long as its services to the Corporation hereunder are not impaired thereby, and nothing in this Agreement shall limit or restrict
the right of any manager, partner, member (including its members and the owners of its members), officer or employee of the Adviser to engage in any other business or to devote his or her time and attention in part to any other business, whether of
a similar or dissimilar nature, or to receive any fees or compensation in connection therewith (including fees for serving as a director of, or providing consulting services to, one or more of the Corporation’s portfolio

  
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companies, subject to applicable law). The Adviser assumes no responsibility under this Agreement other than to render the services called for hereunder. It is understood that directors,
officers, employees and stockholders of the Corporation are or may become interested in the Adviser and its affiliates, as directors, officers, employees, partners, stockholders, members, managers or otherwise, and that the Adviser and directors,
officers, employees, partners, stockholders, members and managers of the Adviser and its affiliates are or may become similarly interested in the Corporation as stockholders or otherwise. 

 

	7.	Responsibility of Dual Directors, Officers and/or Employees. 

 If any
person who is a manager, partner, member, officer or employee of the Adviser is or becomes a director, officer and/or employee of the Corporation and acts as such in any business of the Corporation, then such manager, partner, member, officer and/or
employee of the Adviser shall be deemed to be acting in such capacity solely for the Corporation, and not as a manager, partner, member, officer or employee of the Adviser or under the control or direction of the Adviser, even if paid by the
Adviser. 
  

	8.	Indemnification; Limitation of Liability. 

(a)    Indemnification. The Adviser and any Sub-Adviser (and their officers,
managers, partners, members (and their members, including the owners of their members), agents, employees, controlling persons (as defined in the Investment Company Act) and any other person or entity affiliated with, or acting on behalf of the
Adviser or Sub-Adviser) (each an “Indemnified Party” and, collectively, the “Indemnified Parties”), shall not be liable to the Corporation for any action taken
or omitted to be taken by any such Indemnified Party in connection with the performance of any of its duties or obligations under this Agreement or otherwise as an investment adviser of the Corporation (except to the extent specified in
Section 36(b) of the Investment Company Act concerning loss resulting from a breach of fiduciary duty (as the same is finally determined by judicial proceedings) with respect to the receipt of compensation for services), and the Corporation
shall indemnify, defend and protect the Indemnified Parties (each of whom shall be deemed a third party beneficiary hereof) and hold them harmless from and against all damages, liabilities, costs and expenses (including reasonable attorneys’
fees and amounts reasonably paid in settlement) (“Losses”) incurred by the Indemnified Parties in or by reason of any pending, threatened or completed action, suit, investigation or other proceeding (including an action or
suit by or in the right of the Corporation or its security holders) arising out of or otherwise based upon the performance of any of the Indemnified Parties’ duties or obligations under this Agreement, any
Sub-Advisory Agreement, or otherwise as an investment adviser of the Corporation, to the extent such Losses are not fully reimbursed by insurance, and to the extent that such indemnification would not be
inconsistent with the laws of the State of Maryland, the Investment Company Act or other applicable law, the Articles or, for only as long as the shares of Common Stock are not listed on a national securities exchange, the provisions of Section II.G
of the Omnibus Guidelines published by the North American Securities Administrators Association on March 29, 1992, as it may be amended from time to time. Notwithstanding the preceding sentence of this Section 8 to the
contrary, nothing contained herein shall protect or be deemed to protect the Indemnified Parties against or entitle or be deemed to entitle the Indemnified Parties to indemnification in respect of any Losses to the Corporation or its stockholders to
which the Indemnified Parties would otherwise be subject by 

  
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reason of willful misfeasance, bad faith or gross negligence in the performance of the Adviser’s duties or by reason of the reckless disregard of the Adviser’s duties and obligations
under this Agreement (to the extent applicable, as the same shall be determined in accordance with the Investment Company Act and any interpretations or guidance by the SEC or its staff thereunder). In addition, notwithstanding any of the foregoing
to the contrary, the provisions of this Section 8 shall not be construed so as to provide for the indemnification of any Indemnified Party for any liability (including liability under federal securities laws which, under
certain circumstances, impose liability even on persons that act in good faith), to the extent (but only to the extent) that such indemnification would be in violation of applicable law, but shall be construed so as to effectuate the provisions of
this Section 8 to the fullest extent permitted by law. As long as the shares of Common Stock are not listed on a national securities exchange, nothing in the preceding two sentences shall be construed to limit the scope or
applicability of Sections 8(b) and 8(c). 
 The following provisions in this Section 8 shall apply for only so
long as shares of Common Stock are not listed on a national securities exchange. 
 (b)    Limitations on
Indemnification. Notwithstanding Section 8(a) to the contrary, the Corporation shall not provide for indemnification of the Indemnified Parties for any Loss suffered by the Indemnified Parties, nor shall the Corporation
provide that any of the Indemnified Parties be held harmless for any Loss suffered by the Corporation, unless all of the following conditions are met: 

(i)    the Indemnified Party has determined, in good faith, that the course of conduct which caused the
Loss was in the best interests of the Corporation; 
 (ii)    the Indemnified Party was acting on behalf
of or performing services for the Corporation; 
 (iii)    such Loss was not the result of negligence or
misconduct by the Indemnified Party; and 
 (iv)    such indemnification or agreement to hold harmless is
recoverable only out of the Corporation’s net assets and not from stockholders. 
 Furthermore, the Indemnified Party shall not be
indemnified for any Losses arising from or out of an alleged violation of federal or state securities laws unless one or more of the following conditions are met: 

(i)    there has been a successful adjudication on the merits of each count involving alleged securities
law violations; 
 (ii)    such claims have been dismissed with prejudice on the merits by a court of
competent jurisdiction; or 
 (iii)    a court of competent jurisdiction approves a settlement of the
claims against a particular indemnitee and finds that indemnification of the settlement and related costs should be made, and the court of law considering the request for 

  
 12 

 
indemnification has been advised of the position of the SEC and the published position of any state securities regulatory authority in which securities of the Corporation were offered or sold as
to indemnification for violations of securities laws. 
 (c)    Advancement of Funds. The Corporation shall be
permitted to advance funds to the Indemnified Party for legal expenses and other costs incurred as a result of any legal action for which indemnification is being sought and will do so if: 

(i)    the proceeding relates to acts or omissions with respect to the performance of duties or services on
behalf of the Corporation; 
 (ii)    the Indemnified Party provides the Corporation with written
affirmation of his or her good faith belief that the standard of conduct necessary for indemnification by the Corporation has been met; 

(iii)    the legal proceeding was initiated by a third party who is not a stockholder or, if by a
stockholder of the Corporation acting in his or her capacity as such, a court of competent jurisdiction approves such advancement; and 

(iv)    the Indemnified Party provides the Corporation with a written agreement to repay the amount paid or
reimbursed by the Corporation, together with the applicable legal rate of interest thereon, in cases in which such Indemnified Party is found not to be entitled to indemnification. 

 

	9.	Duration and Termination of Agreement. 

(a)    Term. This Agreement shall remain in effect for two (2) years commencing on the date hereof and
thereafter shall continue automatically for successive annual periods, provided that such continuance is specifically approved at least annually by (i) the vote of the Board, or by the vote of a majority of the outstanding voting securities of
the Corporation and (ii) the vote of a majority of the Corporation’s directors who are not parties to this Agreement or “interested persons” (as such term is defined in Section 2(a)(19) of the Investment
Company Act) of any such party, in accordance with the requirements of the Investment Company Act. 

(b)    Termination. This Agreement may be terminated at any time, without the payment of any penalty, upon sixty
(60) days’ written notice (i) by the Corporation to the Adviser, (x) upon the vote of a majority of the outstanding voting securities of the Corporation (within the meaning of Section 2(a)(42) of the Investment Company Act),
or (y) by the vote of the Board, or (ii) by the Adviser to the Corporation. This Agreement shall automatically terminate in the event of its “assignment” (as such term is defined for purposes of
Section 15(a)(4) of the Investment Company Act). Further, notwithstanding the termination or nonrenewal of this Agreement as aforesaid, the Adviser shall be entitled to any amounts owed to it under Section 3 through
the date of termination or nonrenewal, the provisions of Section 8 of this Agreement shall remain in full force and effect, and the Adviser shall remain entitled to the benefits thereof. 

  
 13 

 (c)    Payments to and Duties of Adviser Upon
Termination. 
 (i)    After the termination of this Agreement, the Adviser shall not be entitled to
compensation or reimbursement for further services provided hereunder, except that it shall be entitled to receive from the Corporation within thirty (30) days after the effective date of such termination all unpaid reimbursements and all
earned but unpaid fees payable to the Adviser prior to termination of this Agreement. 
 (ii)    The
Adviser shall promptly upon termination: 
 (A)    Deliver to the Board a full accounting, including a
statement showing all payments collected by it and a statement of all money held by it, covering the period following the date of the last accounting furnished to the Board; 

(B)    Deliver to the Board all assets and documents of the Corporation then in custody of the Adviser; and

 (C)    Cooperate with the Corporation to provide an orderly management transition. 

The following provisions in this Section 9 shall apply for only so long as shares of Common Stock are not listed on a national
securities exchange. 
 (d)    Other Matters. Without the approval of holders of a majority of the shares
of Common Stock entitled to vote on the matter, the Adviser shall not: (i) amend this Agreement except for amendments that do not adversely affect the interests of the stockholders; (ii) voluntarily withdraw as the Adviser unless such
withdrawal would not affect the tax status of the Corporation and would not materially adversely affect the stockholders; (iii) appoint a new Adviser; (iv) sell all or substantially all of the Corporation’s assets other than in the
ordinary course of the Corporation’s business; or (v) cause the merger or other reorganization of the Corporation. In the event that the Adviser should withdraw pursuant to (ii) above, the withdrawing Adviser shall pay all expenses
incurred as a result of its withdrawal. The Corporation may terminate the Adviser’s interest in the Corporation’s revenues, expenses, income, losses, distributions and capital by payment of an amount equal to the then present fair market
value of the terminated Adviser’s interest, determined by agreement of the terminated Adviser and the Corporation. If the Corporation and the Adviser cannot agree upon such amount, then such amount will be determined in accordance with the
then-current rules of the American Arbitration Association. The expenses of such arbitration shall be borne equally by the terminated Adviser and the Corporation. The method of payment to the terminated Adviser must be fair and must protect the
solvency and liquidity of the Corporation. 
  

	10.	Conflicts of Interests and Prohibited Activities. 

 The following provisions in this
Section 10 shall apply for only so long as shares of Common Stock are not listed on a national securities exchange. 

(a)    No Exclusive Agreement. The Adviser is not hereby granted or entitled to an exclusive right to sell or
exclusive employment to sell assets for the Corporation. 

  
 14 

 (b)    Rebates, Kickbacks and Reciprocal Arrangements. 

(i)    The Adviser agrees that it shall not (A) receive or accept any rebate, give-up or similar arrangement that is prohibited under applicable federal or state securities laws, (B) participate in any reciprocal business arrangement that would circumvent provisions of applicable federal
or state securities laws governing conflicts of interest or investment restrictions, or (C) enter into any agreement, arrangement or understanding that would circumvent the restrictions against dealing with affiliates or promoters under
applicable federal or state securities laws. 
 (ii)    The Adviser agrees that it shall not directly or
indirectly pay or award any fees or commissions or other compensation to any person or entity engaged to sell shares of Common Stock or give investment advice to a potential stockholder; provided, however, that this subsection shall not prohibit the
payment to a registered broker-dealer or other properly licensed agent of sales commissions for selling or distributing shares of Common Stock. 

(c)    Commingling. The Adviser covenants that it shall not permit or cause to be permitted the Corporation’s
funds to be commingled with the funds of any other entity. Nothing in this Section 10(c) shall prohibit the Adviser from establishing a master fiduciary account pursuant to which separate
sub-trust accounts are established for the benefit of affiliated programs, provided that the Corporation’s funds are protected from the claims of other programs and creditors of such programs. 

 

	11.	Proxy Voting. 

 The Adviser will exercise voting
rights on any assets held in the portfolio securities of portfolio companies. The Adviser is obligated to furnish to the Corporation, in a timely manner, a record of all proxies voted in such form and format that complies with applicable federal
statutes and regulations. 
  

	12.	Notices. 

 Any notice under this Agreement shall be given in writing,
addressed and delivered or mailed, postage prepaid, to the other party at its principal office. 
  

	13.	Amendments. 

 This Agreement may be amended in writing by mutual consent of
the parties hereto, subject to the provisions of the Investment Company Act and the Articles. 
  

	14.	Entire Agreement; Governing Law. 

 This Agreement contains the
entire agreement of the parties and supersedes all prior agreements, understandings and arrangements with respect to the subject matter hereof. 

  
 15 

 
Notwithstanding the place where this Agreement may be executed by any of the parties hereto, this Agreement shall be construed in accordance with the laws of the State of New York. For so long as
the Corporation is regulated as a BDC under the Investment Company Act and the Adviser is regulated as an investment adviser under the Advisers Act, this Agreement shall also be construed in accordance with the applicable provisions of the
Investment Company Act and the Advisers Act, respectively, and any other then-current regulatory interpretations thereunder. To the extent the applicable laws of the State of New York, or any of the provisions herein, conflict with the provisions of
the Investment Company Act, the latter shall control. 
  

	15.	Severability. 

 If any provision of this Agreement shall be declared
illegal, invalid or unenforceable in any jurisdiction, then such provision shall be deemed to be severable from this Agreement (to the extent permitted by law) and in any event such illegality, invalidity or unenforceability shall not affect the
remainder hereof. 
  

	16.	Counterparts. 

 This Agreement may be executed in counterparts, each of
which shall be deemed to be an original copy and all of which together shall constitute one and the same instrument binding on all parties hereto, notwithstanding that all parties shall not have signed the same counterpart. 

 

	17.	Third Party Beneficiaries. 

 Except for any
Sub-Adviser (with respect to Section 8) and any Indemnified Party, such Sub-Adviser and the Indemnified Parties each being an intended
beneficiary of this Agreement, this Agreement is for the sole benefit of the parties hereto and their permitted assigns and nothing herein express or implied shall give or be construed to give to any person, other than the parties hereto and such
assigns, any legal or equitable rights hereunder. 
  

	18.	Survival. 

 The provisions of Sections 8, 9(b),
9(c), 14, 17 and this Section 18 shall survive termination of this Agreement. 
  

	19.	Insurance. 

 Subject to the requirements of Rule 17d-1(d)(7) under the Investment Company Act, the Corporation shall acquire and maintain a directors and officers liability insurance policy or similar insurance policy, which may name the Adviser and any Sub-Adviser each as an additional insured party (each an “Additional Insured Party” and collectively the “Additional Insured Parties”). Such insurance policy shall
include reasonable coverage from a reputable insurer. The Corporation shall make all premium payments required to maintain such policy in full force and effect; provided, however, each Additional Insured Party, if any, shall pay to the
Corporation, in advance of the due date of such premium, its allocated share of the premium. Irrespective of whether the Adviser and any Sub-Adviser is a named Additional Insured Party on such policy, the
Corporation shall provide the Adviser and any Sub-Adviser with written notice upon receipt of any notice of: (a) any default under such policy; (b) any pending or threatened

  
 16 

 
termination, cancellation or non-renewal of such policy or (c) any coverage limitation or reduction with respect to such policy. The foregoing
provisions of this Section 19 notwithstanding, the Corporation shall not be required to acquire or maintain any insurance policy to the extent that the same is not available upon commercially reasonable pricing terms or at
all, as determined in good faith by the required majority (as defined in Section 57(o) of the Investment Company Act) of the Board. 
  

	20.	Brand Usage. 

 The Adviser conducts its investment advisory business under,
and owns all rights to, the trademark “FS/KKR Advisor” and the “FS/KKR Advisor” design (collectively, the “Brand”). In connection with the Corporation’s (a) public filings; (b) requests for
information from state and federal regulators; (c) offering materials and advertising materials; and (d) investor communications, the Corporation may state in such materials that investment advisory services are being provided by the
Adviser to the Corporation under the terms of this Agreement. The Adviser hereby grants a non-exclusive, non-transferable, non-sublicensable and royalty-free license
(the “License”) to the Corporation for the use of the Brand solely as permitted in the foregoing sentence. Prior to using the Brand in any manner, the Corporation shall submit all proposed uses to the Adviser for prior
written approval solely to the extent the Corporation’s use of the Brand or any combination or derivation thereof has materially changed from the Corporation’s use of the Brand previously approved by the Adviser. The Adviser reserves the
right to terminate the License immediately upon written notice for any reason, including if the usage is not in compliance with its standards and policies. Notwithstanding the foregoing, the term of the License granted under this
Section 20 shall be for the term of this Agreement only, including renewals and extensions, and the right to use the Brand as provided herein shall terminate immediately upon the termination of this Agreement. The
Corporation agrees that the Adviser is the sole owner of the Brand, and any and all goodwill in the Brand arising from the Corporation’s use shall inure solely to the benefit of the Adviser. Without limiting the foregoing, the License shall
have no effect on the Corporation’s ownership rights of the works within which the Brand shall be used. 
 [Remainder of page left
intentionally blank] 

  
 17 

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

					
	FS INVESTMENT CORPORATION III
		
	By:	 	 /s/ Stephen Sypherd

		 	Name:	 	Stephen Sypherd
		 	Title:	 	General Counsel and Secretary
	
	FS/KKR ADVISOR, LLC
		
	By:	 	 /s/ Stephen Sypherd

		 	Name:	 	Stephen Sypherd
		 	Title:	 	General Counsel and Secretary

 [Signature Page to Investment Advisory and Administrative Services Agreement]

 Appendix A 

NOTE: All percentages herein refer to Adjusted Capital. 

Example 1: Subordinated Incentive Fee on Income for Each Calendar Quarter* 

Scenario 1 
 Assumptions 

Investment income (including interest, dividends, fees, etc.) = 1.25% 

Hurdle Rate(1) = 1.75% 

Base Management Fee(2) = 0.375% 

Other expenses (legal, accounting, custodian, transfer agent, etc.)(3) = 0.2% 

Pre-Incentive Fee Net Investment Income 

(investment income – (Base Management Fee + other expenses)) = 0.675% 

Pre-Incentive Fee Net Investment Income does not exceed the Hurdle Rate, therefore there is no
Subordinated Incentive Fee on Income payable. 
 Scenario 2 

Assumptions 
 Investment income (including
interest, dividends, fees, etc.) = 2.675% 
 Hurdle Rate(1) = 1.75% 

Base Management Fee(2) = 0.375% 

Other expenses (legal, accounting, custodian, transfer agent, etc.)(3) = 0.2% 

Pre-Incentive Fee Net Investment Income 

(investment income – (Base Management Fee + other expenses)) = 2.1% 

Subordinated Incentive Fee on Income = 100% × Pre-Incentive Fee Net Investment Income (subject
to “catch-up”)(4) 
 =
100% x (2.1% – 1.75%) 
 = 0.35% 

Pre-Incentive Fee Net Investment Income exceeds the Hurdle Rate, but does not fully satisfy the
“catch-up” provision, therefore the Subordinated Incentive Fee on Income is 0.35%. 

Scenario 3 
 Assumptions 

Investment income (including interest, dividends, fees, etc.) = 3.5% 

Hurdle Rate(1) = 1.75% 

Base Management Fee(2) = 0.375% 

Other expenses (legal, accounting, custodian, transfer agent, etc.)(3) = 0.2% 

Pre-Incentive Fee Net Investment Income 

  
 A-1 

 (investment income – (Base Management Fee + other expenses)) = 2.925% 

Catch up = 100% × Pre-Incentive Fee Net Investment Income (subject to “catch-up”)(4) 
 Subordinated Incentive
Fee on Income = 100% × “catch-up” + (20.0% × (Pre-Incentive Fee Net Investment Income – 2.1875%)) 

 

	 	Catch-up	= 2.1875% –1.75% 

 = 0.4375% 

 

	 	Subordinated	Incentive Fee on Income = (100% × 0.4375%) + (20.0% × (2.925% – 2.1875%)) 

 =
0.4375% + (20.0% × 0.7375%) 
 = 0.4375% + 0.1475% 

= 0.585% 
 Pre-Incentive Fee Net Investment Income exceeds the Hurdle Rate and fully satisfies the “catch-up” provision, therefore the Subordinated Incentive Fee
on Income is 0.585%. 
  
  

	(1)	Represents 7.0% annualized Hurdle Rate. 

	(2)	Represents 1.5% annualized Base Management Fee on average weekly gross assets. Examples assume assets are equal to Adjusted Capital. 

	(3)	Excludes organizational and offering costs. 

	(4)	The “catch-up” provision is intended to provide the Adviser with an Incentive Fee of 20.0% on all Pre-Incentive Fee Net
Investment Income when the Corporation’s net investment income exceeds 2.1875% in any calendar quarter. 

 Example 2: Incentive Fee on
Capital Gains* 
 Scenario 1: 
 Assumptions

 Year 1: $20 million investment made in Company A (“Investment A”), and $30 million investment made
in Company B (“Investment B”) 
 Year 2: Investment A sold for $50 million and fair market value
(“FMV”) of Investment B determined to be $32 million 
 Year 3: FMV of Investment B determined to be
$25 million 
 Year 4: Investment B sold for $31 million 

The Incentive Fee on Capital Gains would be: 

Year 1: None 

  
 A-2 

 Year 2: Incentive Fee on Capital Gains of $6 million ($30 million realized capital
gains on sale of Investment A multiplied by 20.0%) 
 Year 3: None, because $5 million (20.0% multiplied by ($30 million
cumulative capital gains less $5 million cumulative capital depreciation)) less $6 million (previous capital gain incentive fee paid to the Adviser in Year 2) is less than $0 

Year 4: Incentive Fee on Capital Gains of $200,000, because $6.2 million ($31 million cumulative realized capital gains multiplied
by 20.0%) less $6 million (previous capital gain incentive fee paid to the Adviser in Year 2) is $200,000 
 Scenario 2 

Assumptions 
 Year 1: $20 million
investment made in Company A (“Investment A”), $30 million investment made in Company B (“Investment B”) and $25 million investment made in Company C (“Investment C”)

 Year 2: Investment A sold for $50 million, FMV of Investment B determined to be $25 million and FMV of Investment C determined
to be $25 million 
 Year 3: FMV of Investment B determined to be $27 million and Investment C sold for $30 million 

Year 4: FMV of Investment B determined to be $35 million 

Year 5: Investment B sold for $20 million 

The Incentive Fee on Capital Gains, if any, would be: 

Year 1: None 
 Year 2:
$5 million Incentive Fee on Capital Gains, because 20.0% multiplied by $25 million ($30 million realized capital gains on Investment A less unrealized capital depreciation on Investment B) is $5 million 

Year 3: $1.4 million Incentive Fee on Capital Gains, because $6.4 million (20.0% multiplied by $32 million ($35 million
cumulative realized capital gains less $3 million unrealized capital depreciation)) less $5 million capital gain incentive fee paid to the Adviser in Year 2 is $1.4 million 

Year 4: None 
 Year 5: None,
because $5 million (20.0% multiplied by $25 million (cumulative realized capital gains of $35 million less realized capital losses of $10 million)) less $6.4 million cumulative capital gain incentive fee paid to the Adviser in
Year 2 and Year 3 is less than $0 

  
 A-3 

	*	The returns shown are for illustrative purposes only. No Subordinated Incentive Fee on Income is payable to the Adviser in any calendar quarter in which the Corporation’s
Pre-Incentive Fee Net Investment Income does not exceed the Hurdle Rate. Positive returns are shown to demonstrate the fee structure and there is no guarantee that positive returns will be realized. Actual
returns may vary from those shown in the examples above. 

  
 A-4Exhibit 4.1

	
 
    	
 
    

 

ASHFORD INC.

 

AND

 

COMPUTERSHARE TRUST COMPANY, N.A.
 Rights Agent

 

Amendment No. 2 to the Amended and Restated Rights Agreement

 

Dated as of April 6, 2018

	
 
    	
 
    

 

 

AMENDMENT NO. 2
 TO THE AMENDED AND RESTATED RIGHTS AGREEMENT

 

This Amendment No. 2 to the Amended and Restated Rights Agreement (this “Amendment”), dated as of April 6, 2018, by and between Ashford Inc., a Maryland corporation (the “Company”) and Computershare Trust Company, N.A., a federally chartered trust company (the “Rights Agent”).  All capitalized terms used in this Amendment and not otherwise defined herein shall have the respective meanings set forth in the Existing Rights Agreement (as defined below).

 

W I T N E S S E T H:

 

WHEREAS, the Company and the Rights Agent are parties to that certain Amended and Restated Rights Agreement, dated as of August 12, 2015 (the “Amended and Restated Rights Agreement”), as amended by Amendment No. 1 to the Amended and Restated Rights Agreement, dated as of October 31, 2016 (“Amendment No. 1”) (the Amended and Restated Rights Agreement as amended by Amendment No. 1, the “Existing Rights Agreement”);

 

WHEREAS, the Company wishes to amend the Existing Rights Agreement as set forth herein; and

 

WHEREAS, in compliance with the terms of Section 27 of the Existing Rights Agreement, the Company may from time to time, and the Rights Agent shall if the Company so directs, supplement or amend the Existing Rights Agreement to make any change to or delete any provision thereof or to adopt any other provisions with respect to the Rights which the Company may deem necessary or desirable.

 

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

 

Section 1.                               Definitions.

 

(a)                                 The first paragraph of Section 1.1 of the Existing Rights Agreement is hereby amended in its entirety to read as follows:

 

““Acquiring Person” means any Person (other than an Exempt Person) who or which, together with all Affiliates and Associates of such Person, shall be the Beneficial Owner of 10% or more of the Common Shares of the Company then outstanding, but shall not include (i) the Company, (ii) any Subsidiary of the Company, (iii) any employee benefit plan of the Company or of any Subsidiary of the Company, (iv) any entity or trustee holding (or acting in a fiduciary capacity in respect of) Common Shares for or pursuant to the terms of any such employee benefit plan or for the purpose of funding any such plan or funding other employee benefits for employees of the Company or of any Subsidiary of the Company, (v) Monty J. Bennett, Archie Bennett Jr. and their respective Affiliates and 

 

1

 

Associates, and (vi) any Person who or which, at the Close of Business on the Record Date, was a Beneficial Owner of 10% or more of the Common Shares of the Company then outstanding, other than a Person who or which is not an Affiliate or Associate of the Beneficial Owner on the Record Date and who or which subsequently becomes an Affiliate or Associate of such Beneficial Owner without the prior written approval of the Board of Directors (a “Grandfathered Stockholder”); provided, however, that if a Grandfathered Stockholder becomes, after the Record Date, the Beneficial Owner of additional Common Shares (other than Common Shares acquired solely as a result of corporate action of the Company not caused, directly or indirectly, by such Person) at any time such that the Grandfathered Stockholder is or thereby becomes the Beneficial Owner of 10% or more of the Common Shares then outstanding (or such other percentage as would otherwise result in such Person becoming an Acquiring Person), then such Grandfathered Stockholder shall be deemed an Acquiring Person; provided, however, that upon the first decrease of a Grandfathered Stockholder’s Beneficial Ownership below 10%, such Grandfathered Stockholder shall no longer be considered a Grandfathered Stockholder and this clause (vi) shall have no further force or effect with respect to such Grandfathered Stockholder.”

 

(b)                                 The definition of “Final Expiration Date” contained in Section 1.19 of the Existing Rights Agreement is hereby amended in its entirety to read as follows:

 

“Final Expiration Date” means the date of the Company’s 2018 annual meeting of stockholders.”

 

Section 2.                               Exhibit B. Exhibit B to the Existing Rights Agreement is hereby amended in its entirety to read as set forth in Exhibit 1 to this Amendment.

 

Section 3.                               Exhibit C. Exhibit C to the Existing Rights Agreement is hereby amended in its entirety to read as set forth in Exhibit 2 to this Amendment.

 

Section 4.                               Governing Law.  This Amendment shall be deemed to be a contract made under the laws of the State of Maryland and for all purposes shall be governed by and construed in accordance with the laws of such State applicable to contracts to be made and performed entirely within such State, except that the rights, duties and obligations of the Rights Agent shall be governed by and construed in accordance with the laws of the State of New York applicable to contracts to be made and performed entirely within such State.

 

Section 5.                               Counterparts.  This Amendment may be executed in any number of counterparts, and each of such counterparts shall for all purposes be deemed to be an original, and all such counterparts shall together constitute but one and the same instrument.  A signature to this Amendment executed and/or transmitted electronically shall have the same authority, effect and enforceability as an original signature.

 

2

 

Section 6.                               Descriptive Headings.  Descriptive headings of the several Sections of this Amendment are inserted for convenience only and shall not control or affect the meaning or construction of any of the provisions hereof.

 

Section 7.                               Ratification of the Existing Rights Agreement.  Except as expressly amended hereby, the Existing Rights Agreement is in all respects ratified and confirmed and all the terms, conditions and provisions thereof shall remain in full force and effect.

 

[Signatures follow on the next page.]

 

3

 

IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed as of the day and the year first above written.

 

 

	
 
    	
ASHFORD INC.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Deric S. Eubanks
    
	
 
    	
 
    	
Name: Deric S. Eubanks
    
	
 
    	
 
    	
Title: Chief Financial   Officer
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
COMPUTERSHARE TRUST   COMPANY, N.A.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Fred Papenmeier
    
	
 
    	
 
    	
Name: Fred Papenmeier 
    
	
 
    	
 
    	
Title: Vice President   & Manager
    

 

[Signature Page to Amendment No. 2 to Amended and Restated Rights Agreement]

 

 

EXHIBIT 1
 (Form of Right Certificate)

 

Certificate No. R-                       Rights

 

NOT EXERCISABLE AFTER THE DATE OF THE COMPANY’S 2018 ANNUAL MEETING OF STOCKHOLDERS OR EARLIER IF REDEMPTION OR EXCHANGE OCCURS. THE RIGHTS ARE SUBJECT TO REDEMPTION AT $0.001 PER RIGHT AND TO EXCHANGE ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT. UNDER CERTAIN CIRCUMSTANCES, AS SET FORTH IN THE RIGHTS AGREEMENT, RIGHTS THAT ARE OR WERE ACQUIRED OR BENEFICIALLY OWNED BY AN ACQUIRING PERSON OR ANY ASSOCIATES OR AFFILIATES THEREOF (AS SUCH TERMS ARE DEFINED IN THE RIGHTS AGREEMENT) OR ANY SUBSEQUENT HOLDER OF SUCH RIGHTS MAY BECOME NULL AND VOID AND WILL NO LONGER BE TRANSFERABLE.

 

Right Certificate
  ASHFORD INC.

 

This certifies that                                          , or registered assigns, is the registered owner of the number of Rights set forth above, each of which entitles the owner thereof, subject to the terms, provisions and conditions of the Amended and Restated Rights Agreement dated as of August 12, 2015, as amended by Amendment No. 1 to the Amended and Restated Rights Agreement dated as of October 31, 2016, as further amended by Amendment No. 2 to the Amended and Restated Rights Agreement dated as of April 6, 2018 (as may be further amended from time to time, the “Rights Agreement”), between Ashford Inc., a Maryland corporation (the “Company”), and Computershare Trust Company, N.A., a federally chartered trust company (the “Rights Agent”), to purchase from the Company at any time after the Distribution Date (as such term is defined in the Rights Agreement) and prior to 5:00 p.m., New York time, on November 27, 2014, at the office or offices of the Rights Agent designated for such purpose, or at the office or offices of its successor as Rights Agent designated for such purpose, one one-thousandth of a fully paid non-assessable share of Series A Preferred Stock, par value $0.01 per share (the “Preferred Shares”), of the Company, at a purchase price of $275 per one one-thousandth of a Preferred Share (the “Purchase Price”), upon presentation and surrender of this Right Certificate with the Form of Election to Purchase duly executed. The number of Rights evidenced by this Right Certificate (and the number of one one-thousandths of a Preferred Share which may be purchased upon exercise hereof) set forth above, and the Purchase Price set forth above, are the number and Purchase Price as of August 12, 2015, based on the Preferred Shares as constituted at such date. As provided in the Rights Agreement, the Purchase Price and the number of one one-thousandths of a Preferred Share (or other securities or property) which may be purchased upon the exercise of the Rights evidenced by this Right Certificate are subject to modification and adjustment upon the happening of certain events.

 

From and after the occurrence of a Stock Acquisition Date (as defined in the Rights Agreement) of the Rights Agreement, if the Rights evidenced by this Right Certificate are or were at any time on or after the earlier of (x) the date of such event or (y) the Distribution Date acquired or beneficially owned by an Acquiring Person or an Associate or Affiliate of an Acquiring Person,

 

Exhibit 1-1

 

such Rights shall become void, and any holder of such Rights shall thereafter have no right to exercise such Rights.

 

This Right Certificate is subject to all of the terms, provisions and conditions of the Rights Agreement, which terms, provisions and conditions are incorporated herein by this reference and made a part hereof, and to which Rights Agreement reference is made for a full description of the rights, limitations of rights, obligations, duties and immunities hereunder of the Rights Agent, the Company and the holders of the Right Certificates. Copies of the Rights Agreement are on file at the principal executive offices of the Company and the office or offices of the Rights Agent designated for such purpose. The Company will mail to the holders of this Right Certificate a copy of the Rights Agreement without charge after receipt of a written request therefor.

 

This Right Certificate, with or without other Right Certificates, upon surrender at the office or offices of the Rights Agent designated for such purpose, may be exchanged for another Right Certificate or Right Certificates of like tenor and date evidencing Rights entitling the holder to purchase a like aggregate number of Preferred Shares as the Rights evidenced by the Right Certificate or Right Certificates surrendered shall have entitled such holder to purchase. If this Right Certificate shall be exercised in part, the holder shall be entitled to receive upon surrender hereof another Right Certificate or Right Certificates for the number of whole Rights not exercised.

 

Subject to the provisions of the Rights Agreement, at the Company’s option, the Rights evidenced by this Certificate (i) may be redeemed by the Company at a redemption price of $0.001 per Right or (ii) may be exchanged in whole or in part for shares of the Company’s Common Stock, par value $0.01 per share, or Preferred Shares.

 

No fractional Preferred Shares will be issued upon the exercise of any Right or Rights evidenced hereby (other than fractions which are integral multiples of one one-thousandth of a Preferred Share, which may, at the election of the Company, be evidenced by depositary receipts), but in lieu thereof a cash payment will be made, as provided in the Rights Agreement.

 

No holder of this Right Certificate, as such, shall be entitled to vote or receive dividends or be deemed for any purpose the holder of the Preferred Shares or of any other securities of the Company which may at any time be issuable on the exercise or exchange hereof, nor shall anything contained in the Rights Agreement or herein be construed to confer upon the holder hereof, as such, any of the rights of a stockholder of the Company or any right to vote for the election of directors or upon any matter submitted to stockholders at any meeting thereof, or to give or withhold consent to any corporate action, or to receive notice of meetings or other actions affecting stockholders (except as provided in the Rights Agreement), or to receive dividends or subscription rights, or otherwise, until the Right or Rights evidenced by this Right Certificate shall have been exercised or exchanged as provided in the Rights Agreement.

 

This Right Certificate shall not be valid or obligatory for any purpose until it shall have been countersigned by the Rights Agent.

 

[Signatures follow on the next page.]

 

Exhibit 1-2

 

WITNESS the facsimile signature of the proper officers of the Company and its corporate seal.

 

Dated as of                   ,            .

 

 

	
Attest:
    	
 
    	
Ashford Inc.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
By: 
    	
 
    	
 
    	
By: 
    	
 
    
	
 
    	
Name:
    	
 
    	
 
    	
Name:
    
	
 
    	
Title:
    	
 
    	
 
    	
Title:
    

 

Countersigned:

 

 

	
COMPUTERSHARE TRUST   COMPANY, N.A.
    	
 
    
	
 
    	
 
    
	
By:
    	
 
    	
 
    
	
 
    	
Authorized Signature
    	
 
    

 

Exhibit 1-3

 

[Form of Reverse Side of Right Certificate]

 

FORM OF ASSIGNMENT

 

(To be executed by the registered holder if such holder desires to transfer the Right Certificate.)

 

	
FOR VALUE   RECEIVED                                                                         hereby sells, assigns and transfers unto
    
	
 
    
	
(Please print name and   address of transferee)
    
	
Rights represented by this Right Certificate,   together with all right, title and interest therein, and does hereby irrevocably   constitute and appoint                                                 ,   Attorney, to transfer said Rights on the books of the within-named Company,   with full power of substitution.
    

 

DATED:                   ,            

 

Signature

 

Signature Guaranteed:

 

Signatures must be guaranteed by an eligible guarantor institution (bank, stock broker or savings and loan association with membership in an approved signature medallion program).

 

Certificate

 

The undersigned hereby certifies that the Rights evidenced by this Right Certificate are not beneficially owned by and were not acquired by the undersigned from, and are not being assigned to, an Acquiring Person or an Affiliate or Associate thereof and are not issued with respect to notional Common Shares related to a Derivative Interest described in Section 1.4.4 of the definition of Beneficial Owner (as such terms are defined in the Rights Agreement).

 

Dated:                   ,            

 

 

	
 
    	
 
    
	
 
    	
Signature
    

 

Exhibit 1-4

 

[Form of Reverse Side of Right Certificate continued]

 

FORM OF ELECTION TO PURCHASE

(To be executed if holder desires to exercise Rights represented by the Right Certificate)

 

To ASHFORD INC.:

 

The undersigned hereby irrevocably elects to exercise                  Rights represented by this Right Certificate to purchase the Preferred Shares (or other securities or property) issuable upon the exercise of such Rights and requests that certificates for such Preferred Shares (or other securities or property) be issued in the name of:

 

Please insert Social Security or other identifying number:

 

(Please print name and address)

 

If such number of Rights shall not be all the Rights evidenced by this Right Certificate, a new Right Certificate for the balance remaining of such Rights shall be registered in the name of and delivered to:

 

Please insert Social Security or other identifying number

 

(Please print name and address)

 

Dated:                   ,            

 

Signature

 

(Signature must conform to the holder specified on the Right Certificate)

 

Signature Guaranteed:

 

Signatures must be guaranteed by an eligible guarantor institution (bank, stock broker or savings and loan association with membership in an approved signature medallion program).

 

Exhibit 1-5

 

[Form of Reverse Side of Right Certificate continued]

 

Certificate

 

The undersigned hereby certifies that the Rights evidenced by this Right Certificate are not beneficially owned by, were not acquired by the undersigned from and are not being assigned to an Acquiring Person or an Affiliate or Associate thereof and are not issued with respect to notional Common Shares related to a Derivative Interest described in Section 1.4.4 of the definition of Beneficial Owner (as such terms are defined in the Rights Agreement).

 

Dated:                   ,            

 

 

	
 
    	
 
    
	
 
    	
Signature
    

 

NOTICE

 

The signature in the foregoing Forms of Assignment and Election to Purchase must conform to the name as written upon the face of this Right Certificate in every particular, without alteration or enlargement or any change whatsoever.

 

In the event the certification set forth above in the Form of Assignment or the Form of Election to Purchase, as the case may be, is not completed, such assignment or election to purchase will not be honored.

 

Exhibit 1-6

 

EXHIBIT 2

 

UNDER CERTAIN CIRCUMSTANCES, AS SET FORTH IN THE RIGHTS AGREEMENT, RIGHTS OWNED BY OR TRANSFERRED TO ANY PERSON WHO IS OR BECOMES AN ACQUIRING PERSON (AS DEFINED IN THE RIGHTS AGREEMENT) AND CERTAIN TRANSFEREES THEREOF WILL BECOME NULL AND VOID AND WILL NO LONGER BE TRANSFERABLE.

 

SUMMARY OF RIGHTS TO PURCHASE

 

PREFERRED SHARES

 

On November 16, 2014, the Board of Directors of Ashford Inc. (the “Company”) declared a dividend of one preferred share purchase right (a “Right”) for each outstanding share of Common Stock, par value $0.01 per share (the “Common Shares”), outstanding on November 27, 2014 (the “Record Date”) to the stockholders of record on that date. Each Right entitles the registered holder to purchase from the Company one one-thousandth of a share of Series A Preferred Stock, par value $0.01 per share (the “Preferred Shares”), of the Company, at a price of $275 per one one-thousandth of a Preferred Share represented by a Right (the “Purchase Price”), subject to adjustment. The description and terms of the Rights are set forth in an Amended and Restated Rights Agreement (the “Amended and Restated Rights Agreement”) dated as of August 12, 2015, as amended by Amendment No. 1 to the Amended and Restated Rights Agreement, dated as of October 31, 2016 (the “Amendment No. 1”), as further amended by Amendment No. 2 to the Amended and Restated Rights Agreement dated as of April 6, 2018 (the “Amendment No. 2”), as the same may be further amended from time to time by and between the Company and Computershare Trust Company, N.A., a federally chartered trust company, as Rights Agent (the Amended and Restated Rights Agreement as amended by Amendment No. 1 and Amendment No. 2 and as further amended, the “Rights Agreement”).

 

Until the earlier to occur of (i) 10 business days following a public announcement that a person or group of affiliated or associated persons has acquired beneficial ownership of 10% or more of the outstanding Common Shares (with certain exceptions as described below, an “Acquiring Person”) (or, in the event an exchange is effected in accordance with Section 24 of the Rights Agreement and the Board determines that a later date is advisable, then such later date that is not more than 20 days after such public announcement) or (ii) 10 business days (or such later date as may be determined by action of the Board of Directors prior to such time as any person becomes an Acquiring Person) following the commencement of, or announcement of an intention to make, a tender offer or an exchange offer the consummation of which would result in the beneficial ownership by a person or group of 10% or more of the outstanding Common Shares (the earlier of such dates, the “Distribution Date”), the Rights will be evidenced, with respect to any of the Common Share certificates outstanding as of the Record Date, by such Common Share certificate with a copy of this Summary of Rights attached thereto.

 

Exhibit 2-1

 

A Person shall not be deemed to be an “Acquiring Person” if (i) such Person, on the date of the first public announcement of the adoption of the Rights Agreement, is a Beneficial Owner  of 10% or more of the Common Shares of the Company then outstanding, (a “Grandfathered Stockholder”); provided, however, that Monty J. Bennett, Archie Bennett Jr. and their respective Affiliates and Associates shall not be deemed to be an Acquiring Person; provided, further, that if a Grandfathered Stockholder becomes, after the Record Date, the Beneficial Owner of additional Common Shares (other than Common Shares acquired solely as a result of corporate action of the Company not caused, directly or indirectly, by such Person) at any time such that the Grandfathered Stockholder is or thereby becomes the Beneficial Owner of 10% or more of the Common Shares then outstanding (or such other percentage as would otherwise result in such Person becoming an Acquiring Person), then such Grandfathered Stockholder shall be deemed an Acquiring Person; provided, however, that upon the first decrease of a Grandfathered Stockholder’s Beneficial Ownership below 10%, such Grandfathered Stockholder shall no longer be considered a Grandfathered Stockholder. “Beneficial Ownership” shall include any securities such Person or any of such Person’s Affiliates or Associates (i) beneficially owns, directly or indirectly, (ii) has the right to acquire, (iii) which are beneficially owned, directly or indirectly, by any other Person (or any Affiliate or Associate of such other Person) with which such first Person or any of such first Person’s Affiliates or Associates or any other Person (or any Affiliate or Associate of such other Person) with whom such first Person (or any Affiliates or Associates of such first Person) is Acting in Concert has any agreement, arrangement or understanding, whether or not in writing, for the purpose of acquiring, holding, voting (subject to certain limited exceptions) or disposing of any voting securities of the Company, and (iv) which are the subject of, or the reference securities for, or that underlie, any derivative securities (as defined under Rule 16a-1 under the Exchange Act) of such Person or any of such Person’s Affiliates or Associates that increase in value as the value of the underlying equity increases, with the number of Common Shares deemed Beneficially Owned being the notional or other number of Common Shares specified in the documentation evidencing the derivative interest as being subject to be acquired upon the exercise or settlement of the derivative interest or as the basis upon which the value or settlement amount of such derivative interest is to be calculated in whole or in part or, if no such number of Common Shares is specified in such documentation, as determined by the Board of Directors in its sole discretion to be the number of Common Shares to which the derivative interest relates.

 

The Rights Agreement provides that, until the Distribution Date (or earlier expiration of the Rights), the Rights will be transferred with and only with the Common Shares. Until the Distribution Date (or earlier redemption or expiration of the Rights), new Common Share certificates issued after the Record Date or upon transfer or new issuance of Common Shares will contain a notation incorporating the Rights Agreement by reference. Until the Distribution Date (or earlier redemption or expiration of the Rights), the surrender for transfer of any certificates for Common Shares outstanding as of the Record Date, even without such notation or a copy of this Summary of Rights being attached thereto, will also constitute the transfer of the Rights associated with the Common Shares represented by such certificate. As soon as practicable following the Distribution Date, separate certificates evidencing the Rights (“Right Certificates”) will be mailed to holders of record of the Common Shares as of the close 

 

Exhibit 2-2

 

of business on the Distribution Date, and such separate Right Certificates alone will evidence the Rights.

 

The Rights are not exercisable until the Distribution Date. The Rights will expire on the date of the Company’s 2018 annual meeting of stockholders (the “Final Expiration Date”), unless the Final Expiration Date is extended or unless the Rights are earlier redeemed or exchanged by the Company, in each case, as described below, or upon the occurrence of certain transactions.

 

The Purchase Price payable, and the number of Preferred Shares or other securities or property issuable, upon exercise of the Rights is subject to adjustment from time to time to prevent dilution (i) in the event of a stock dividend on, or a subdivision, combination or reclassification of, the Preferred Shares; (ii) upon the grant to holders of the Preferred Shares of certain rights or warrants to subscribe for or purchase Preferred Shares at a price, or securities convertible into Preferred Shares with a conversion price, less than the then current market price of the Preferred Shares; or (iii) upon the distribution to holders of the Preferred Shares of evidences of indebtedness or assets (excluding regular periodic cash dividends or dividends payable in Preferred Shares) or of subscription rights or warrants (other than those referred to above).

 

The number of outstanding Rights and the number of Preferred Shares issuable upon exercise of each Right are also subject to adjustment in the event of a stock split of the Common Shares or a stock dividend on the Common Shares payable in Common Shares or subdivisions, consolidations or combinations of the Common Shares occurring, in any such case, prior to the Distribution Date.

 

Preferred Shares purchasable upon exercise of the Rights will not be redeemable. Each Preferred Share will be entitled, when, as and if declared, to a quarterly dividend payment of 1,000 multiplied by the dividend declared per Common Share. In the event of liquidation, dissolution or winding up of the Company, the holders of the Preferred Shares will be entitled to a payment per share equal to 1,000 multiplied by the aggregate payment made per Common Share. Each Preferred Share will have 1,000 votes, voting together with the Common Shares. In the event of any merger, consolidation or other transaction in which Common Shares are converted or exchanged, each Preferred Share will be entitled to receive 1,000 multiplied by the amount received per Common Share. These rights are protected by customary antidilution provisions.

 

Because of the nature of the dividend, liquidation and voting rights of the Preferred Shares, the value of the one one-thousandth interest in a Preferred Share purchasable upon exercise of each Right should approximate the value of one Common Share.

 

From and after the time any person becomes an Acquiring Person, if the Rights evidenced by this Right Certificate are or were at any time on or after the earlier of (i) the date of such event or (ii) the Distribution Date acquired or beneficially owned by an Acquiring Person or an Associate or Affiliate of an Acquiring Person (as such terms are defined in the Rights 

 

Exhibit 2-3

 

Agreement), such Rights shall become void, and any holder of such Rights shall thereafter have no right to exercise such Rights.

 

If, at any time after a person becomes an Acquiring Person, the Company is acquired in a merger or other business combination transaction or 50% or more of its consolidated assets or Earning Power (as defined in the Rights Agreement) are sold, proper provision will be made so that each holder of a Right will thereafter have the right to receive, upon the exercise thereof at the  then current exercise price of the Right, that number of shares of common stock of the acquiring company which at the time of such transaction will have a market value of two times the exercise price of the Right. If any Person becomes an Acquiring Person, proper provision shall be made so that each holder of a Right, other than Rights beneficially owned by the Acquiring Person and its Affiliates and Associates (which will thereafter be void), will thereafter have the right to receive upon exercise that number of Common Shares having a market value of two times the exercise price of the Right. If the Board of Directors so elects, the Company shall deliver upon payment of the exercise price of a Right an amount of cash or securities equivalent in value to the Common Shares issuable upon exercise of a Right; provided, that if the Company fails to meet such obligation within 30 days following the date a person becomes an Acquiring Person, the Company must deliver, upon exercise of a Right but without requiring payment of the exercise price then in effect, Common Shares (to the extent available) and cash equal in value to the difference between the value of the Common Shares otherwise issuable upon the exercise of a Right and the exercise price then in effect. The Board of Directors may extend the 30-day period described above for up to an additional 60 days to permit the taking of action that may be necessary to authorize sufficient additional Common Shares to permit the issuance of Common Shares upon the exercise in full of the Rights.

 

At any time after any person becomes an Acquiring Person and prior to the acquisition by any Person or group of a majority of the outstanding Common Shares, the Board of Directors of the Company may exchange the Rights (other than Rights owned by such Person or group which have become void), in whole or in part, at an exchange ratio of one Common Share per Right (subject to adjustment).

 

With certain exceptions, no adjustment in the Purchase Price will be required until cumulative adjustments require an adjustment of at least 1% in such Purchase Price. No fractional Preferred Shares will be issued (other than fractions which are integral multiples of one one-thousandth of a Preferred Share, which may, at the election of the Company, be evidenced by depositary receipts), and in lieu thereof, an adjustment in cash will be made based on the market price of the Preferred Shares on the last trading day prior to the date of exercise.

 

At any time prior to the time any person or group becomes an Acquiring Person, the Board of Directors of the Company may redeem the Rights in whole, but not in part, at a price of $0.001 per Right (the “Redemption Price”). The redemption of the Rights may be made effective at such time, on such basis and with such conditions as the Board of Directors in its sole discretion may establish. Immediately upon any redemption of the Rights, the right to exercise the Rights will terminate and the only right of the holders of the Rights will be to receive the Redemption Price.

 

Exhibit 2-4

 

The terms of the Rights Agreement may be amended by the Board of Directors of the Company without the consent of the holders of the Rights, provided, that no such amendment may adversely affect the interests of the holders of the Rights. Without limiting the foregoing, the Company may at any time prior to such time as any Person being an Acquiring Person amend the Rights Agreement to lower the threshold at which a person or group becomes an Acquiring Person, but may not lower the threshold below 5% of the outstanding Common Shares. In addition, the Board may not cause a person or group to become an Acquiring Person by lowering this threshold  below the percentage interest that such person or group already owns from and after such time as any Person becomes an Acquiring Person no such amendment may adversely affect the interests of the holders of the Rights (other than the Acquiring Person and its Affiliates and Associates).

 

Until a Right is exercised or exchanged, the holder thereof, as such, will have no rights as a stockholder of the Company, including, without limitation, the right to vote or to receive dividends.

 

A copy of the Rights Agreement is available free of charge from the Company. This summary description of the Rights does not purport to be complete and is qualified in its entirety by reference to the Rights Agreement, which is hereby incorporated herein by reference.

 

Exhibit 2-5

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