Document:

Exhibit 10.1

 

[FINAL EXECUTION COPY]

 

 

EMPLOYMENT AGREEMENT

 

This EMPLOYMENT AGREEMENT (this “Agreement”)
by and between Benjamin W. Schall (“you” and words of similar import, or “Executive”) and
AvalonBay Communities, Inc., a Maryland corporation (“we” and words of similar import, or “AvalonBay”
or the “Company”), is made as of the later date of the two signatures affixed on the signature page hereto (provided
delivery of this Agreement or a counterpart thereof to the other party is made on such date).

 

WHEREAS, Executive and the Company desire
to enter into an employment agreement, effective as of the date of execution of this Agreement.

 

NOW, THEREFORE, the parties hereto do hereby
agree as follows.

 

1.           
Term. The Company hereby agrees to employ Executive, and Executive hereby agrees to remain in the employ of the
Company subject to the terms and conditions of this Agreement, for a period commencing on a mutually agreeable date on or before
February 1, 2021 (the date of employment commencement being hereinafter referred to as the “Start Date”) and
terminating on the third anniversary of the Start Date, unless earlier terminated as provided in Section 7 (the “Employment
Term”). If not earlier terminated, the Employment Term shall expire at midnight on the last day of the Employment Term
without need for advance notice of any kind, after which Executive will remain employed in his then current role as an employee
at will without the benefit or burden of this Agreement (other than with respect to those provisions which survive expiration
or termination of the Employment Term as provided herein) but subject to other policies of AvalonBay and other agreements he may
have entered into before such date, including but not limited to agreements relating to equity awards.

 

For the purpose of clarity, it is noted that
a termination of employment upon or following the expiration of the Employment Term upon the third anniversary of the Start Date
shall in no event be deemed a termination without Cause or give rise to a right by Executive to terminate his employment for Good
Reason, except to the extent provided in existing Company policies or other agreements between the parties so providing. References
herein to the “expiration” of the Employment Term shall mean the end of the full three-year period beginning on the
Start Date and shall apply only if Executive’s employment has continued throughout that three year period.

 

2.           
Employment Duties.

 

(a)           During
the Employment Term, Executive shall be employed in the business of the Company and its affiliates. On the Start Date, Executive
shall serve as a corporate officer of the Company with the title of President. In the performance of his duties, Executive
shall be subject to the direction of (a) the Board of Directors of the Company (the “Board”) and any committee
thereof, and (b) the Chief Executive Officer of the Company (“CEO”), to whom he shall directly report, and
Executive shall not be required to take direction from or report to any other person. As President, Executive’s duties,
authority and responsibilities shall be consistent with the duties, authority and responsibilities normally commensurate with
such position and title (and the Company’s Chief Investment Officer, Chief Operating Officer and Executive Vice President-Development
and Construction (the “Line Executives”) shall report to Executive), except that the Chief Financial Officer
(“CFO”) and the Executive Vice President – General Counsel (“General Counsel”) shall
not report to you and shall instead report to the CEO.

 

On or about January 1, 2022 but in all events
no later than March 31, 2022, the Company shall promote you to the position and title of Chief Executive Officer. As CEO, you will
be the most senior officer in the Company in charge of all day to day operations, with all business and support lines reporting
directly or indirectly to you through the Line Executives, the CFO and the General Counsel and/or through other executive or senior
officers who may report to you from time to time. At such time as you are promoted to the position of CEO, it is anticipated that
the now current CEO may become Executive Chair of the Board, an officer position, with a role to be determined; assumption of the
role of Executive Chair by the now current CEO will not be a violation of this Agreement or give rise to a right by you to terminate
this Agreement for Good Reason (as defined below) so long as you remain the sole CEO, report directly to the full Board and not
the Executive Chair, and are the most senior officer of the Company in charge of day to day operations with all duties and responsibilities
commensurate with the title.

 

     

     

    

 

The Board has adopted, or promptly after the
execution of this Agreement will adopt, a resolution that appoints you to the Board effective upon the Start Date. It is noted
that the Board’s failure to renominate you for election to the Board shall give rise to your right to terminate your employment
for Good Reason, as hereafter defined. You agree that you shall recuse yourself, if requested by the Lead Independent Director
or the chair of a committee of the Board, from portions of Board or Board committee meetings at which your job performance, continued
employment or compensation are discussed and assessed by the Board or a committee of the Board.

 

(b)          
Executive agrees to his employment as described in this Section 2 and agrees to devote substantially all of his working
time and efforts to the performance of his duties under this Agreement, and Executive shall not assume the title of, or perform
the role of, an officer, director, employee or advisor to any other entity or organization without the approval of the Board, provided
that the foregoing shall not apply to religious, charitable or other community or non-profit activities. Executive shall also be
permitted to own no more than two (2) percent of the shares of any publicly traded company without violation of this section.

 

(c)          
In performing his duties hereunder, Executive shall be available for reasonable travel as the needs of the business and
his role require and the Company shall reimburse Executive for the cost of such travel in accordance with and subject to Section
4(a). Executive shall be based in the Company’s Arlington, Virginia headquarters (or otherwise in the Washington Baltimore,
DC-MD-VA-WV Consolidated Metropolitan Statistical Area as defined by the U.S. Census Bureau (“Metropolitan D.C.”)).
You agree to relocate your permanent residence to within daily commuting distance of the Company’s current Arlington, VA
headquarters no later than August 1, 2021; you shall be permitted to partially telecommute from an area outside of such daily commuting
distance until such relocation. You will be entitled to receive the relocation reimbursements and benefits described in Appendix
A hereto, subject to the rules and limitations stated therein.

 

3.           
Compensation/Benefits. In consideration of Executive’s services hereunder, the Company shall provide you with
a base salary, annual cash bonus opportunity, annual restricted stock opportunity, and multiyear performance-based awards; the
annual base salary rate, in addition to the other items at their stated target values (in aggregate, the “Total Compensation
Target”), will initially total $7,500,000. During the Employment Term, your Total Compensation Target will be reviewed
annually by the Compensation Committee of the Board and adjustments may be made thereto in the discretion of the Compensation Committee
of the Board or by vote of a majority of the independent directors of the Board who qualify for service on the Compensation Committee
(referred to jointly herein as the “Compensation Committee”), provided that (a) your annual base salary rate
will not be less than $1,000,000, (b) your annual target cash bonus will not be less than $1,500,000 (unless due to the number
of payroll periods your base salary earned during the year is less than $1,000,000, but this will not apply for 2021 if your Start
Date is on or before February 1, 2021) and (c) your Total Compensation Target will not be less than $7,500,000. Your Total Compensation
Target may be raised in the sole discretion of the Compensation Committee. This does not take into account other routine forms
of compensation and benefits as may be available from time to time at the Company, such as the Company’s current 401(k) match,
insurance benefits, employee stock purchase plan, and deferred compensation plan. The components of your initial Total Compensation
Target and additional details regarding their terms and calculation are described below:

 

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(a)          
Base Salary. Commencing with your Start Date you shall earn a base salary ("Base Salary") paid initially
at the annual rate of $1,000,000 payable in accordance with the Company’s normal business practices, which is currently every
two weeks. Your Base Salary shall be reviewed annually by the Compensation Committee.

 

(b)         
Annual Cash Bonus. Your annual target cash bonus will initially be 150% of base salary earnings earned during the
year, which is $1,500,000 using your initial annual base salary figure, except that for service in 2021 your target cash bonus
will be a fixed $1,500,000 (rather than based on base salary earnings during the year) so long as your Start Date is on or before
February 1, 2021. Actual achievement of the cash bonus (i.e., the dollar value earned) in respect of a year is based on the overall
financial performance of the Company and your individual work performance as determined by the Compensation Committee. The cash
bonus components for you will initially be weighted 80% to corporate and 20% to individual performance, and such weighting shall
be reviewed annually by the Compensation Committee. Annual cash bonuses for each year are typically paid at the beginning of March
of the following year after performance in the prior year is determined and approved by the Compensation Committee. You must be
employed by the Company on the payment date to remain eligible to receive an annual cash bonus in respect of the prior year’s
service except as otherwise provided in Section 7(h)(ii).

 

(c)          
Annual Restricted Stock Bonus. Your annual target restricted stock bonus value will initially be at the annual rate
of $1,250,000 (with no proration for 2021 if your Start Date is on or before February 1, 2021) with actual achievement of the stock
bonus (i.e., the dollar value earned) determined by the Compensation Committee’s assessment of performance against a mix
of business unit metrics to be determined by you and the CEO and approved by the Compensation Committee at the beginning of each
year (or, with respect to 2021, as soon as practicable following your Start Date). The number of restricted shares that you are
granted in respect of a year’s performance will be determined by starting with your target dollar value. This value will
then be increased or decreased depending upon the Compensation Committee’s assessment of performance against the established
business unit metrics as determined by the Compensation Committee early the following year. The actual award value is then converted
into restricted stock that is granted to you using the AvalonBay common stock closing price on the day that our Compensation Committee
approves restricted stock grants in respect of that year’s performance (generally this is done at a Compensation Committee
meeting within 60 days after year end). You must be employed by the Company on the payment date to receive an annual restricted
stock grant in respect of the prior year’s service except as otherwise provided in Section 7(h)(ii) with respect to a cash
payment on account thereof.

 

Annual restricted stock grants are subject
to the terms of our standard restricted stock agreement that is in effect at the time of grant and our Second Amended and Restated
2009 Equity Incentive Plan, as amended (the “Equity Incentive Plan”). The restricted shares vest in three equal
installments (subject to rounding) over approximately three years, with the first third vesting on March 1 following the year of
grant, provided you are employed by the Company on the vesting date, except as otherwise provided herein For example, for 2021
service, your annual restricted stock grant, as determined by the Compensation Committee in early 2022, would be made in or around
February 2022, with the first installment vesting on March 1, 2023 and the two remaining installments vesting on March 1, 2024
and March 1, 2025. At the present time, our standard restricted stock agreement terms as used for our most recent awards, and variations
that will apply on account of this Agreement for you during the Employment Term (as indicated in italicized text), include
the following:

 

		·	Cash dividends are paid on unvested shares as a form of additional compensation and are paid in your regular paycheck.

 

		·	Vesting of unvested shares is accelerated in the event of a termination of the employee’s employment by us without Cause
(as defined in the Equity Incentive Plan, except that for you for grants made during the Employment Term (including, for all
purposes hereto, without limitation, any grant made in or around February 2024 in respect of 2023 service) the definition of Cause
shall be modified, or deemed modified, by the “Cause Provisos” as defined below) or by reason of death or
disability (as defined in the award agreement).

 

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		·	Unvested shares are forfeited in the event the employee voluntarily separates from AvalonBay for any reason (except that
for you for grants made during the Employment Term (including, for all purposes hereto, without limitation, any grant made in or
around February 2024 in respect of 2023 service) the vesting of your unvested shares shall accelerate if you terminate your employment
from AvalonBay with “Good Reason” as defined below) or is terminated with Cause (as defined in the Equity Incentive
Plan, except that for you for grants made during the Employment Term the definition of Cause shall be modified, or deemed modified,
by the Cause Provisos).

 

(d)          
Multiyear Performance-Based Awards. Our multiyear performance based restricted stock unit awards consist of forward-looking
performance awards that have measurement periods of three years. Performance awards are awarded to officers in mid-February each
year. Your 2021 performance award will be for the January 1, 2021 — December 31, 2023 performance cycle and will have a target
dollar value of $3,750,000 (with no proration for 2021 if your Start Date is on or before February 1, 2021). Approximately 50%
of the target performance award is tied to total shareholder return (TSR) metrics and the remaining 50% is tied to operating metrics
(OP) as described below. To determine the target number of units, 100% of the target dollar value will be divided by the average
closing stock price over the 20 trading days preceding the first day of the performance period.

 

If you remain employed by the Company at the
end of a three-year performance cycle, the number of performance units you earn may be larger or smaller than the target number
depending on the Company’s performance against the metrics set forth in the performance award. Performance award metrics
include total shareholder return compared to relative targets (e.g., the NAREIT Equity Index and the NAREIT Apartment Index) as
well as operating performance metrics, such as the Company’s relative Core FFO/share compounded annual growth, Net Debt/EBITDA
and Net Asset Value/share compounded annual growth rate versus a stated multifamily peer group. Your number of earned units will
be determined by the Compensation Committee after the completion of the performance cycle (usually at a meeting held in February
of the following year) and your earned units will be settled (i.e., converted) into fully vested shares of AvalonBay common stock
on or about that time. In addition, at the time the units are settled in vested shares of stock you will be paid, as additional
compensation, cash equal to the cumulative dividends that were paid on that number of shares of stock between the original grant
date of the performance award and its settlement following the end of the performance period (customarily 12 quarterly dividends).
Performance awards are subject to the terms of our performance award agreements as in effect at the time and our Equity Incentive
Plan. Except in the case of a Sale Event as described in clause (iii) of this paragraph below, the earned units under the award
are settled (i.e., converted into shares), and taxable benefits under the award are paid or provided, during the calendar year
following the end of the performance period and within the time stated in the award agreement.

 

The performance award you will receive will contain our current standard terms for performance awards (modified for you for
performance awards you receive during the Employment Term as indicated below in italicized text), including

 

		(i)	that the entire award is forfeited if (x) your employment terminates for any reason prior to the completion of the first year
of a performance period or (y) terminates thereafter for any reason other than a “Qualifying Termination”; “Qualifying
Termination” means a termination due to death, disability (as defined by the award agreement), termination by us without
Cause (including the Cause Provisos), qualifying retirement (as defined by the award agreement), or, termination of employment
by you for Good Reason), and

 

		(ii)	that if your employment terminates after the first year of a performance period in a Qualifying Termination you will vest in
a portion of the target units, based on the number of days served during the three-year performance period in relation to the total
number of days in the performance period, and, when the performance period thereafter ends, you shall earn a pro rata portion of
the units you otherwise would have earned (which could be more or less than the pro rata target units you vested in) had your employment
continued through the end of the performance period, and all shares issued to you at the completion of the performance period will
be fully vested and paid together with a cash payment equal to the cumulative cash dividends thereon during the period from the
original grant date of the performance award through the settlement date of the award, and

 

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		(iii)	if
                                         a Sale Event (as defined below) occurs, then outstanding performance awards vest at their
                                         target number of units and are settled (i.e., converted) into one
                                         unrestricted share of AvalonBay common stock for each unit so vested, and
                                         the Company shall also pay an amount of cash equal to the dividends that would have been
                                         payable on such number of shares during the Performance Period up until the date of the
                                         Sale Event.

 

(e)          
Medical and Disability Insurance. During the Employment Term, the Company shall provide to Executive and Executive’s
immediate family a comprehensive policy of health insurance in accordance with the Company’s general practice applicable
to officers (including payment of all or a portion of the premiums due thereon) and shall provide to Executive a disability policy
and life insurance policy in accordance with the Company's general practice applicable to officers (including payment of all or
a portion of the premiums due thereon), in each case subject to the terms of such policies.

 

You will also be eligible to participate in
AvalonBay’s officer-level term life insurance program, subject to the terms of such program; this program may provide you
term life insurance with a value $750,000. If you participate in the program, you will be responsible for paying the tax on the
annual premium value of this life insurance coverage. A health exam may be required for this insurance program. If you participate
in the officer-level term life insurance program, such insurance will be in addition to the general life insurance program for
associates, which for you at present would provide life insurance coverage of $400,000 (two times base salary but no more than
$400,000).

 

(f)          
Vacations. In place of any Company policy applicable to non-officers, you may take reasonable vacation time in your
discretion subject to the fulfillment of your duties, and at the end of your employment you will be paid in lieu of accrued vacation
a vacation balance of 80 hours.

 

(g)          
Office/Secretary. During the Employment Term, Executive shall be entitled to secretarial services and a private
office commensurate with his title and duties.

 

(h)         
Sign-on Awards. You will receive the following additional one-time awards in connection with the commencement of
your employment with the Company:

 

		1.	A cash payment of $1,500,000, to be paid promptly after your Start Date.

 

		2.	A restricted stock grant to be awarded on the first business day of the month following your Start Date (or on February 1,
2021, if that is your Start Date), with the number of shares determined by dividing (x) $4,500,000 by (y) the average closing stock
price over the last 20 trading days of 2020. These restricted shares will vest in three equal installments on the first three anniversaries
of the grant date and will otherwise contain the standard restricted stock agreement terms as modified for you during the Employment
Term and described above in Section 3(c).

 

		3.	A multiyear performance award for the period January 1, 2020 to December 31, 2022, with 17,813 target units, which number of
target units was determined by dividing $3,750,000 by $210.5235 (the average closing price of AvalonBay stock over the 20 trading
days preceding January 1, 2020, which is also the price used for determining the number of target units for all other officers).
This award will have the same terms as for other officers, which are summarized above, and for purposes of vesting will be deemed
to have been awarded to you on the original grant date for other officers in February 2020 so that for a Qualifying Termination
at any time after your Start Date you will vest in a portion of such award as described in clause (ii) of the third paragraph of
Section 3(d).

 

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We note that the awards described in numbered
paragraph 1 and 2 immediately above are being provided by us on account of (I) unvested equity with your prior employer that otherwise
would have vested in the first half of 2021 but that will be forfeited instead, (II) a cash bonus with your prior employer for
2020 that you will fail to earn, and (III) the lack of a multiyear performance award held by you maturing at the end of 2021 with
either your prior employer or AvalonBay. If these assumptions are wrong (e.g., your unvested equity does vest or you are paid a
cash bonus by your prior employer for 2020) then an adjustment to these one-time awards will be made that is reasonably acceptable
to you and the Company, is approved by our Compensation Committee, and is designed to result in the sum of the awards from us and
your prior employer being approximately equal to the target award date values of the sign-on awards described in numbered paragraphs
1 and 2.

 

(i)            Terms
of other Equity Awards. If, during the Employment Term, you receive other forms of equity awards than those described above,
such as employee stock options, and those other awards provide for accelerated vesting of the award upon a termination without
Cause, then (i) the definition of Cause therein shall contain, or be modified by, the Cause Provisos, as defined above, and (ii)
if you terminate your employment from the Company with “Good Reason” the vesting of the award shall similarly accelerate.

 

4.             
Expenses/Indemnification.

 

(a)          
During the Employment Term, the Company shall reimburse Executive for the reasonable business expenses incurred by Executive
in the course of performing his duties for the Company hereunder, upon submission of invoices, vouchers or other appropriate documentation,
as may be required in accordance with the policies in effect from time to time for executive employees of the Company. The Company
shall reimburse Executive for all reasonable attorneys’ fees and expenses incurred by Executive in connection with the review
and negotiation of this Agreement and related arrangements, including equity award agreements, up to a maximum of $20,000 upon
presentation to the Company of documentation of the fees and expenses.

 

(b)          
During the Employment Term, and thereinafter as regards events occurring during the Employment Term, the Company will indemnify
you to the full extent permitted under its bylaws as of this date, regardless of any future amendment to the bylaws during the
Employment Term, but subject to changes in Maryland law whether expanding or limiting rights to such indemnification. For convenience,
the relevant portions of the Company’s bylaws as of this date are provided immediately below:

 

“7.01        INDEMNIFICATION TO
THE EXTENT PERMITTED BY LAW. The Corporation shall indemnify, to the full extent authorized or permitted by Maryland statutory
or decisional law or any other applicable law, any person made, or threatened to be made, a party to any action or proceeding (whether
civil or criminal or otherwise) by reason of the fact he, his testator or intestate is or was a Director or officer of the Corporation
or any predecessor of the Corporation, or is or was serving at the request of the Corporation or any predecessor of the Corporation
as a director or officer of, or in any other capacity with respect to, any other corporation, partnership, joint venture, trust,
employee benefit plan, or other enterprise (an “Indemnified Person”), including the advancement of expenses under procedures
provided under such law; provided, however, that no indemnification shall be provided for expenses relating to any willful or grossly
negligent failure to make disclosures required by the next to last sentence of Sections 2.02 or 4.03 hereof as applied to Directors
and officers respectively [the referenced sections of the bylaws relate to disclosure by a director or officer of an interest in
an investment opportunity presented to the Company within 10 days after the later of becoming aware of the interest or that the
Company is considering such investment opportunity]. The Corporation shall indemnify any Indemnified Person’s spouse (whether
by statute or at common law and without regard to the location of the governing jurisdiction) and children to the same extent and
subject to the same limitations applicable to any Indemnified Person hereunder for claims arising out of the status of such person
as a spouse or child of such Indemnified Person, including claims seeking damages from marital property (including community property)
or property held by such Indemnified Person and such spouse or property transferred to such spouse or child, but such indemnity
shall not otherwise extend to protect the spouse or child against liabilities caused by the spouse’s or child’s own
acts. The provisions of this Section 7.01 shall constitute a contract with each Indemnified Person who serves at any time while
these provisions are in effect and may be modified adversely only with the consent of affected Indemnified Persons and each such
Indemnified Person shall be deemed to be serving as such in reliance on these provisions.”

 

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“7.07        RIGHT
OF CLAIMANT TO BRING SUIT. If a claim under Section 7.01 of this Article VII is not paid in full by the Corporation within
ninety (90) days after a written claim has been received by the Corporation, the claimant may at any time thereafter bring suit
against the Corporation to recover the unpaid amount of the claim and, if successful in whole or in part, the claimant shall be
entitled to be paid also the expense of prosecuting such claim. It shall be a defense to any such action (other than an action
brought to enforce a claim for expenses incurred in defending any proceeding in advance of its final disposition where the required
undertaking, if any, has been tendered to the Corporation) that the claimant has not met the standards of conduct which make it
permissible under the MGCL [Maryland General Corporation Law] for the Corporation to indemnify the claimant for the amount claimed,
but the burden of proving such defense shall be on the Corporation. Neither the failure of the Corporation (including its Board
of Directors, independent legal counsel or Stockholders) to have made a determination prior to the commencement of such action
that indemnification of the claimant is proper in the circumstances because he or she has met the applicable standard of conduct
set forth in the MGCL, nor an actual determination by the Corporation (including its Board of Directors, independent legal counsel
or Stockholders) that the claimant has not met such applicable standard of conduct, shall be a defense to the action or create
a presumption that claimant has not met the applicable standard of conduct.”

 

5.           
Employer’s Authority/Policies.

 

(a)          
General. Executive agrees to observe and comply with the rules and regulations of the Company as adopted by its Board
respecting the performance of his duties and to carry out and perform lawful orders, directions and policies communicated to him
consistent with his title from time to time by the Board or the CEO and, after his elevation to the CEO role, solely by the Board.

 

(b)          
Code of Business Conduct and Ethics. Executive agrees to comply with and be bound by the Company’s Code of
Business Conduct and Ethics. Executive agrees to comply with and be bound by the Company’s insider trading policies and procedures
that are generally applicable to employees and/or senior officers. Executive agrees to comply with other policies of the Company
including those contained in, or referenced in, the Company’s Code of Business Conduct and Ethics and the Associate Handbook.

 

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6.           
Records; Company Property. All records, manuals, financial statements and other documents and memos relating to or
produced by or for the Company and that are obtained, reviewed or compiled by Executive in the course of the performance by him
of services for the Company, whether or not confidential information or trade secrets, shall be the exclusive property of the Company.
Executive shall have no rights in such documents upon any termination of this Agreement. For the sake of clarity, Executive may
retain any documents evidencing his terms of employment, compensation, or equity ownership without violation hereto.

 

7.           
Termination; Severance and Related Matters.

 

(a)          
At-Will Employment. Executive’s employment hereunder is “at will” and, therefore, may be terminated
at any time, with or without Cause, at the option of the Company, subject only to the severance obligations under this Section
7. Upon any termination hereunder, the Employment Term shall terminate.

 

(b)          
Definition of Cause. For purposes of this Section 7, the term Cause as used herein shall have the meaning set forth
in the Equity Incentive Plan (with the words “the grantee” and “grantee’s” to be read as “you”
and “your” when applied in this Agreement), but with the addition of the Cause Provisos as defined in this Section
7(b). For convenience, the definition of Cause as set forth in the Equity Incentive Plan is set forth in full immediately below:

 

“Cause” means:

 

(i) any material or willful breach by the grantee
of any agreement to which the grantee and the Company are parties or of any published policy of the Company that is generally applicable
to all employees of the Company (or to a subset of employees applicable to grantee, e.g., all officers or employees of a particular
business unit), including, but not limited to, policies concerning insider trading, misuse of confidential information, sexual
harassment or policies contained in the Company’s Code of Conduct or Associate Handbook as the same may be amended from time
to time; the materiality or willfulness of a breach shall be determined in the sole discretion of the Company;

 

(ii) any act (other than retirement or other termination
of employment) or omission to act by the grantee which may, as determined in the sole discretion of the Company, have a material
and adverse effect on the interests of the Company or any Subsidiary or on the grantee’s ability to perform services for
the Company or any Subsidiary, including, without limitation, the commission of or indictment for any crime (other than ordinary
traffic violations);,

 

(ii) any material misconduct or neglect of duties
by the grantee in connection with the business or affairs of the Company or any Subsidiary, including without limitation due to
alcohol abuse or use of controlled substances other than in accordance with a valid prescription, as determined by the Company
in its sole discretion;

 

(iv) any willful failure, as determined by the Company
in its sole discretion, to cooperate fully with a Company internal investigation or an investigation of the Company by regulatory
or law enforcement authorities whether or not related to the grantee’s employment with the Company (an “Investigation”),
after being instructed by the Company (including any instruction by legal, internal audit, or human resources personnel) to cooperate,
or the grantee’s willful destruction of or knowing and intentional failure to preserve documents or other material (including
emails, text messages or electronic data) known by the grantee to be relevant to any investigation; or

 

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(v) any fraud or misappropriation, embezzlement or
misuse of funds or property belonging to the Company (including through the misapplication of Company property to personal use
or fraudulent expense reimbursement reports);

 

provided, that the following shall apply in
connection with and for twenty-four months following a Sale Event: (i) if any act or omission is, in the reasonable judgment of
the Company, capable of cure, the grantee first shall have received written notice of the act or omission alleged to constitute
Cause and shall have failed to cure after 15 days following such notice from the Company which notice shall specifically identify
the act or omission which the Company believes constitutes Cause; and (ii) in the case of an officer, a dismissal of such officer
for Cause must be made pursuant to a vote of the Board (after the expiration of any applicable 15 day cure period).

 

As used in this definition of Cause, an act or omission
to act shall be considered “willful” if done, or omitted to be done, by the grantee with knowledge and intent.

 

The foregoing definition does not in any way limit
the Company’s ability to terminate the grantee’s employment at any time, nor will it limit the Company’s ability
to terminate the grantee’s employment for poor performance or for “Cause” as defined for other purposes by the
Company (e.g., with respect to other severance arrangements or guidelines).

 

“Cause Provisos”
mean the following:

 

(I) That in addition to the acts,
failures to act, and events described in clauses (i) to (v) of the definition of Cause, an additional, independent meaning of Cause
is Executive’s failure to relocate his permanent residence to within daily commuting distance of the Company’s headquarters
in Arlington, VA, by August 1, 2021, or, having so relocated, if Executive subsequently moves his permanent residence outside of
such daily commuting distance.

 

(II) That notwithstanding the foregoing
definition of Cause (including the expanded definition on account of clause (I) immediately above), no termination of Executive’s
employment by the Company during the Employment Term shall be treated as for Cause or be effective until and unless all of the
steps described in subparagraphs (A) through (C) immediately below have been complied with:

 

		(A)	Written notice of intention to terminate for Cause has been given by the Company within 45 days after the Board learns of the
act, failure or event constituting “Cause,” which notice shall specifically identify the act, failure or event which
the Company believes constitutes Cause;

 

		(B)	If the act, failure or event cited by the Board in the notice pursuant to clause (A) immediately above is susceptible to cure,
Executive shall have been afforded 30 days to cure such act, failure or event and has failed to do so to the Company’s reasonable
satisfaction by the 30th day following such notice from the Company, provided, that this opportunity to cure
shall not be provided if Executive previously received a notice of intention to terminate for Cause on account of the same or a
similar act, failure or event and has, within the prior three months of the current notice, cured such act, failure or event;

 

		(C)	The Board has voted, at a meeting of the Board duly called and held as to which termination of Executive is an agenda item,
to terminate Executive for Cause after Executive has been given notice of the particular acts or circumstances which are the basis
for the termination for Cause and has been afforded at least 20 days’ notice of the meeting and an opportunity to present
his position in writing and in person (including by means of telecommunications); and

 

    Page 9 of 22

     

    

 

		(D)	The Board has given a final “Notice of Termination” to Executive within 20 days after such Board meeting.

 

At the meeting of the Board referred
to in subclause (C) immediately above in this clause (II) of this definition of “Cause Provisos,” Executive shall not
be permitted to have his counsel present if the Company has no internal or external counsel present; if the Company does have internal
or external counsel present at the meeting, then Executive may have his counsel present at the meeting, but both the counsel for
the Company and the counsel for Executive will only be permitted to give “side bar” advice to their respective clients
and shall not give a presentation, question attendees, or have any other speaking role. The Company shall provide Executive with
timely notice of whether it intends to have its counsel present at such meeting.

 

(III) That any act, or failure to
act, based upon authority given pursuant to a resolution duly adopted by the Board or based upon advice of counsel for the Company
shall be conclusively presumed to be done, or omitted to be done, by Executive in good faith and in the best interests of the Company,
and shall therefore not be considered “willful.”

 

(IV) Executive or the Company may,
at any time after the expiration of Executive’s cure period and either prior to or up until four months after the Company
gives a final Notice of Termination, commence an arbitration proceeding in accordance with Section 13 of this Agreement to determine
the question of whether, taking into account the actions complained of by the Company and any efforts made by Executive to cure
such actions, a termination of Executive’s employment should be treated as a termination for Cause for purposes of this Agreement.

 

(c)          
Definition of Sale Event. For purposes of this Section 7, the term “Sale Event” shall have the
meaning set forth in the Company’s Officer Severance Plan as in effect on this day, which is set forth immediately below
for convenience:

 

Sale Event.  For purposes
of this Plan, a “Sale Event” shall mean the occurrence of any one of the following events:

 

(a)       the
sale of all or substantially all of the assets of the Company on a consolidated basis to one or more unrelated persons or entities,
or

 

(b)       the
sale or other transfer of all or substantially all of the shares of common stock of the Company to one or more unrelated persons
or entities (including by way of a merger, reorganization or consolidation in which the outstanding shares of common stock of the
Company are converted into or exchanged for securities of the successor entity) where the stockholders of the Company, immediately
prior to such sale or other transfer, would not, immediately after such sale or transfer, beneficially own shares representing
in the aggregate more than fifty percent (50%) of the voting shares of the acquirer or surviving entity (or its ultimate parent
corporation, if any).  For this purpose, only voting shares of the acquirer or surviving entity (or its ultimate parent, if
any) received by stockholders of the Company in exchange for the common stock of the Company shall be counted, and any voting shares
of the acquirer or surviving entity (or its ultimate parent, if any) already owned by stockholders of the Company prior to the
transaction shall be disregarded.

 

    Page 10 of 22

     

    

 

(d)          
Definition of Good Reason. For purposes of this Section 7 the term “Good Reason” shall mean:

 

		(i)	the Board’s failure to appoint you to the Board on or about your Start Date, or you are removed from the Board or not
renominated for election to the Board,

 

		(ii)	one or more of the Line Executives (or, in the event of a reorganization, officers in charge of the activities the Line Executives
were in charge of before the reorganization) cease to report to you,

 

		(iii)	you are not promoted to the position of sole Chief Executive Officer by March 31, 2022 (with the Line Executives and the Chief
Financial Officer and Chief Legal Officer or equivalents thereafter reporting to you), and with all duties and responsibilities
commensurate with the title,

 

		(iv)	a material adverse change occurs in your functions, duties, reporting line, or responsibilities which would meaningfully reduce
the level, importance or scope of your position, it being understood that it shall constitute a material adverse change in Executive’s
position within the meaning of this provision if Executive is, following a transaction in which the Company is a participant, no
longer the chief executive officer of the successor entity,

 

		(v)	your rate of annual base salary is reduced, your rate of annual target cash bonus is reduced, or your overall Total Target
Compensation is reduced, in each case below the level described in the first paragraph of Section 3 above, or there occurs another
material breach by the Company of your employment agreement or of any other agreement referred to herein with respect to terms
in such agreement which are provided for in this Agreement; for clarity, it is noted that the actual cash bonus and total compensation
in respect of any year may be more or less than the target cash bonus or total target compensation for the year, respectively,
depending on the performance of the Company, Executive and performance against business unit metrics, and that earning less than
target cash bonus or less than target total compensation shall not be a Good Reason for Executive to terminate this Agreement if
the compensation was determined by the Compensation Committee in good faith after evaluating achievement against relevant goals,
metrics and performance, or

 

		(vi)	the failure of the Company to obtain an agreement, satisfactory to
Executive, from any successor or assign of the Company, to assume and agree to perform this Agreement, as contemplated in
Section 10 of this Agreement;

 

provided,
that (x) you notify the Company within 45 days after you learn of an act, failure or event constituting "Good Reason,"
which notice shall specifically identify the act, failure or event which you believe constitutes Good Reason, (y) the Company fails
to cure such act, failure or event to Executive’s reasonable satisfaction by the 30th day following such notice
from Executive (except that the Company shall not have an opportunity to cure if Executive previously gave notice to the Company
of the same or a similar act, failure or event and the Company cured such act, failure or event within the three months prior to
the current notice), and (z) you give a final Notice of Termination delivered to the Company within 30 days after the expiration
of the Company’s 30 day cure period and separate from employment immediately thereafter.

 

Executive or the Company may, at any time
after the expiration of the Company’s cure period and either prior to or up until four months after Executive gives a final
Notice of Termination, commence an arbitration proceeding in accordance with Section 13 of this Agreement to determine the question
of whether, taking into account the actions complained of by Executive and any efforts made by the Company to cure such actions,
a termination by Executive of his employment should be treated as a termination for Good Reason for purposes of this Agreement.

 

    Page 11 of 22

     

    

 

(e)          
Definition of Covered Compensation. "Covered Compensation” means the sum of Executive’s base
salary and target cash bonus, each as of the time that the definition of Covered Compensation is being used for purposes of a calculation,
and in each case prior to any reduction of each, if any, which provided the underlying factual predicate for a claim of Good Reason.

 

(f)           
Definition of Pro Rata Annual Bonus Compensation. “Pro Rata Annual Bonus Compensation” means a
pro rata amount (based on the number of days Executive served during the calendar year of termination of employment divided by
365 days (or 366 for a leap year)) of the sum of Executive’s target Annual Cash Bonus and target Annual Restricted Stock
Bonus, each as in effect with respect to the year of termination of employment, and in each case prior to any reduction of each,
if any, which provided the underlying factual predicate for a claim of Good Reason, with the resulting dollar amount paid fully
in cash (i.e., no restricted or vested shares on account of the Annual Restricted Stock Bonus are paid or delivered).

 

(g)          
Definition of Disability. “Disability” has the meaning set forth in the Company’s standard
form of restricted stock agreement, which for convenience is set forth below (with the word “Employee’s” to
be read as “Executive’s” when applied in this Agreement):

 

“Disability” shall
mean the Employee’s inability to perform his normal required services for the Company and its Subsidiaries for a period of
six consecutive months by reason of the individual’s mental or physical disability, as determined by the Committee in good
faith in its sole discretion.

 

(h)          
Rights Upon Termination.

 

(i)       
Payment of Base Salary Earned Through Date of Termination. Upon any termination of Executive’s employment during
the Employment Term, Executive, or his estate, shall in all events be paid all accrued but unpaid Base Salary and the 80 hours
vacation balance referred to in Section 3(f).

 

(ii)      
Payment of Pro Rata Annual Bonus Compensation for Current Year; Payment of Bonuses for Prior Year (if not previously
paid). Executive shall be paid Pro Rata Annual Bonus Compensation upon termination of Executive’s employment before the
expiration of the Employment Term for any one of the following reasons, subject to Executive (or his estate) first signing a Release
(as defined below) and it becoming effective upon the lapse of any legally required revocation period:

 

(I) Death

 

(II) Disability

 

(III) Termination by the Company
without Cause

 

(IV) Termination by Executive
with Good Reason

 

No Pro Rata Annual Bonus Compensation
will be paid if Executive’s Employment is terminated by the Company for Cause or by Executive without Good Reason.

 

    Page 12 of 22

     

    

 

In addition, if, as of the date
of termination of employment for one of the reasons in clauses (I), (II), (III) or (IV) immediately above in this Section 7(h)(ii),
the annual cash bonus and the annual restricted stock bonus for the prior completed calendar year have not yet been paid (e.g.,
the termination of employment occurs on or after January 1 of the relevant year but before annual bonuses for the prior year are
determined and paid or delivered in mid- to late-February), then the annual cash bonus and the annual restricted stock bonus (paid
in cash based on the determined dollar value of the restricted stock bonus) shall be paid to Executive when such compensation is
determined and paid to other officers of the Company in the ordinary course; such annual cash bonus and the dollar value of such
annual restricted stock bonus shall be determined using the Compensation Committee’s assessment in its sole discretion of
the achievement of corporate metrics and business unit metrics but using target achievement for Executive’s individual performance.
The provisions of this paragraph will apply with respect to the annual cash and restricted stock bonuses earned in respect of service
during and for the completed years of 2021, 2022 and (even if the date of termination of employment is after the expiration in
2024 of the Employment Term) 2023. For the sake of clarity, if Executive’s employment does not terminate, but continues at-will,
any annual cash and restricted stock bonuses earned in respect of service for 2023 shall be paid or granted to Executive, as the
case may be, in accordance with the terms stated in Sections 3(b) and 3(c), respectively. Notwithstanding the above, payment on
account of the prior completed year cash and restricted stock bonuses as described in this paragraph will not be paid if Executive’s
employment was terminated before such payment for Cause or by Executive without Good Reason.

 

(iii)      Vesting
of Restricted Stock. Executive’s unvested restricted stock shall vest upon a termination of Executive’s employment
before the expiration of the Employment Term (and after the Employment Term with respect to grants of restricted stock made during
the Employment Term which shall include, for the sake of clarity, any grants made in 2024 in respect of service for 2023) for any
one of the following reasons, subject to Executive (or his estate) first signing a Release and it becoming effective upon the lapse
of any legally required revocation period:

 

(I) Death

 

(II) Disability

 

(III) Termination by the Company
without Cause

 

(IV) Termination by Executive
with Good Reason

 

Unvested shares of restricted stock
shall be forfeited upon a termination of Executive’s employment by the Company for Cause or by Executive without Good Reason.

 

(iv)      Pro
Rata Vesting of Multiyear Performance Awards. Executive’s multiyear performance awards will be treated as described above
in Sections 3(d) and the last sentence of Section 3(h)(3) (including forfeiture in full in some circumstances and potential pro
rata vesting with future settlement based on actual results in some circumstances) upon a termination of Executive’s employment
before the expiration of the Employment Term (or after the Employment Term with respect to performance awards awarded during the
Employment Term) for any one of the following reasons, subject to Executive (or his estate) first signing a Release and it becoming
effective upon the lapse of any legally required revocation period:

 

(I) Death

 

(II) Disability

 

(III) Termination by the Company
without Cause

 

(IV) Termination by Executive
with Good Reason

 

    Page 13 of 22

     

    

 

Multiyear performance awards shall
be forfeited in full upon a termination by the Company for Cause or by Executive without Good Reason.

 

(v)      COBRA
Subsidy. The Company shall, subject to Executive (or his estate) entering into a Release (and it becoming effective upon the
lapse of any legally required revocation period) and if Executive (or his family) properly elects to continue health coverage under
Company’s medical plan in accordance with the continuation requirements of COBRA, subsidize 100% of the cost of said coverage
for six months beginning on the first day of the month following Executive's last day of employment upon a termination of Executive’s
employment before the expiration of the Employment Term for any one of the following reasons:

 

(I) Death

 

(II) Disability

 

(III) Termination by the Company
without Cause

 

(IV) Termination by Executive
with Good Reason

 

Thereafter, Employee shall be entitled
to elect to continue such COBRA coverage for the remainder of the COBRA period, at his own expense. Notwithstanding the above,
in the event that Executive’s employment is terminated in a manner satisfying the conditions of Section 7(h)(vi)(II) relating
to a Sale Event, the subsidy cited above shall be for 18 months rather than six months.

 

The COBRA Subsidy shall not be provided
for a termination of Executive’s employment by the Company for Cause or by Executive without Good Reason.

 

(vi)   Covered
Compensation (Severance). 

 

(I) Non-Sale Event. In the
event the Company or any successor to the Company terminates Executive’s employment without Cause before the expiration of
the Employment Term, or if Executive terminates his employment for Good Reason before the expiration of the Employment Term, in
either case not in connection with a Sale Event and not within twenty-four (24) months following a Sale Event, and subject
to Executive first entering into a Release and it becoming effective upon the lapse of any legally required revocation period,
the Company shall pay to Executive, in one lump sum no later than the Company’s next regular payroll period after the effective
date of the Release, an amount equal to two times Executive’s Covered Compensation.

 

(II) Sale Event. In the
event the Company or any successor to the Company terminates Executive’s employment without Cause before the expiration of
the Employment Term, or if Executive terminates his employment for Good Reason before the expiration of the Employment Term, in
either case in connection with or within twenty-four (24) months following a Sale Event that occurred during the Employment
Term, and subject to Executive first entering into a Release and it becoming effective upon the lapse of any legally required
revocation period, the Company shall pay to Executive, in one lump sum no later than the Company’s next regular payroll period
after the effective date of the Release, an amount equal to three times Executive’s Covered Compensation.

 

    Page 14 of 22

     

    

 

(vii)  Termination for Cause; Termination
by Executive Without Good Reason. For clarification it is noted that, in the event Executive’s employment terminates
during the Employment Term other than in connection with death, Disability, termination by the Company without Cause, or termination
by Executive with Good Reason, Executive shall receive the amounts set forth in Section 7(h)(i) in full satisfaction of all of
his entitlements from the Company related to termination of employment (but without limiting Executive’s rights under any
Company benefits plans he is participating in). All equity-based awards not vested as of the date of termination in either such
event shall terminate (unless otherwise provided in the applicable award agreement) and Executive shall have no further entitlements
with respect thereto.

 

(viii)   Clarification
Regarding Equity Award Agreements. The restricted stock agreements and the multiyear performance award agreements (the “Equity
Award Agreements”) that Executive may receive electronically or otherwise may contain language regarding the effect
of a termination of Executive's employment under certain circumstances. Notwithstanding the definition of “Cause”
which may appear in the Equity Award Agreements, for any awards granted during the Employment Term (X) any “for Cause”
termination must be in compliance with the terms of this Agreement, including the definition of “Cause” as modified
by the Cause Provisos as set forth herein, and (Y) a termination by Executive for Good Reason as defined hereunder would be the
equivalent of a termination by the Company without Cause.

 

(ix)    Limitations
on Payments (Net-Best Provision for Change in Control Golden Parachute Payments). Anything in this Agreement to the
contrary notwithstanding, in the event that any compensation, payment or distribution by the Company to or for the benefit of Executive,
whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise (the “Severance
Payments”), would be subject to the excise tax imposed by Section 4999 of the Internal Revenue Code of 1986, as amended
(the “Code”), the following provisions shall apply:

 

(I) If the Severance Payments,
reduced by the sum of (1) the Excise Tax (as defined below) and (2) the total of the Federal, state, and local income and employment
taxes payable by Executive on the amount of the Severance Payments which are in excess of the Threshold Amount (as defined below),
are greater than or equal to the Threshold Amount, Executive shall be entitled to the full benefits payable under this Agreement.

 

(II) If the Threshold Amount is
less than (x) the Severance Payments, but greater than (y) the Severance Payments reduced by the sum of (1) the Excise Tax and
(2) the total of the Federal, state, and local income and employment taxes on the amount of the Severance Payments which are in
excess of the Threshold Amount, then the benefits payable under this Agreement shall be reduced (but not below zero) to the extent
necessary so that the maximum Severance Payments shall not exceed the Threshold Amount. In such event, the payments shall be reduced
in the following order: (A) cash payments not subject to Section 409A of the Code; (B) cash payments subject to Section 409A of
the Code; and (D) non-cash form of benefits. To the extent any payment is to be made over time, then the payment shall be reduced
in reverse chronological order.

 

For the purposes of this Section 7(h)(ix), “Threshold
Amount” shall mean three (3) times Executive’s “base amount” within the meaning of Section 280G(b)(3) of
the Code and the regulations promulgated thereunder less one dollar ($1.00); and “Excise Tax” shall mean the excise
tax imposed by Section 4999 of the Code, or any interest or penalties incurred by Executive with respect to such excise tax.

 

    Page 15 of 22

     

    

 

The determination as to which of the alternative
provisions of alternative (I) or (II) above in this Section 7(h)(ix) shall apply to Executive shall be made by such nationally
recognized accounting firm as may at that time be the Company’s independent public accountants immediately prior to the Sale
Event (the “Accounting Firm”), which shall provide detailed supporting calculations both to the Company and
Executive within fifteen (15) business days of the date of termination of Executive’s employment, if applicable, or at such
earlier time as is reasonably requested by the Company or Executive. For purposes of determining which of the alternative provisions
of this Section 7(h)(ix) shall apply, Executive shall be deemed to pay federal income taxes at the highest marginal rate of federal
income taxation applicable to individuals for the calendar year in which the determination is to be made, and state and local income
taxes at the highest marginal rates of individual taxation in the state and locality of Executive’s residence on the date
of termination of his employment, net of the maximum reduction in federal income taxes which could be obtained from deduction of
such state and local taxes. Any determination by the Accounting Firm shall be binding upon the Company and Executive.

 

(i)           
Definition of Release. As used herein, the term “Release” means a written agreement between Executive
and the Company, in such form as the Company may reasonably require, entered into and effective (including through the lapse of
any revocation period) within 30 days of Executive’s termination date, providing as follows:

 

		·	Executive provides a full release of any actual or potential claim against the Company and its
current and former directors, officers, associates, agents and affiliates, under any applicable law and theory of claim, to the
maximum extent permitted by law, other than claims for indemnification pursuant to this Agreement, which are expressly reserved;

 

		·	Executive agrees to provide reasonable cooperation with respect to investigation and litigation
matters (and the Company agrees to reimburse Executive for out-of-pocket expenses and compensate Executive for time spent providing
such cooperation as provided for in the “Reference Releases” as defined below);

 

		·	Executive acknowledges and agrees to return all Company property and not use any Company property
or proprietary information, and to maintain the confidentiality of Company information, subject to various exceptions required
by law;

 

		·	Executive agrees not to take any action or make any statement, written or oral, which disparages
or criticizes the Company or its officers, directors, agents, or management and business practices, or which disrupts or impairs
the Company’s normal operations, and the Company agrees to instruct its directors and executive officers not to take any
action or make any statement, written or oral, which disparages or criticizes you or your management and business practices, subject
in each case to reasonable exceptions set forth in the agreement; and

 

		·	Executive acknowledges and agrees to any non-compete terms or non-solicitation terms that apply
pursuant to the terms of this Agreement (but no additional restrictions pertaining to non-competition or non-solicitation).

 

The above is just a summary of the terms
of the Release, which will be substantially similar to the provisions in Retirement Agreements for executive officers entered
into in 2019 that the Company filed as Exhibits 10.20 and 10.21 to the Company’s Annual Report on Form 10-K for the year
ended December 31, 2019 (the “Reference Releases”), except that provisions relating to non-competition and
non-solicitation of employees will be in accordance with the terms of this Agreement.

 

    Page 16 of 22

     

    

 

(j)           
No Mitigation. The Company agrees that, if Executive’s employment by the Company is terminated before the expiration
of the Employment Term, Executive is not required to seek other employment or to attempt in any way to reduce any amounts payable
to Executive by the Company hereunder. Further, the amount of any payment provided for in this Agreement shall not be reduced by
any compensation earned by Executive as the result of employment by another employer, or by retirement benefits.

 

(k)          
Nature of Payments. The amounts due under this Section 7 are in the nature of severance payments considered to be
reasonable by the Company and are not in the nature of a penalty. Such amounts are in full satisfaction of all claims Executive
may have in respect of his employment by the Company or its affiliates and are provided as the sole and exclusive benefits to be
provided to Executive, his estate, or his beneficiaries in respect of his termination of employment from the Company or its affiliates,
subject to Executive’s on-going rights of indemnification and rights under various benefit plans.

 

(l)           
409A Provisions.

 

(i)           
Payments required under this Section 7 (except for payments by their terms which require the occurrence of further events, such
as the settlement of performance units that have vested) will be made as soon as reasonably practicable, as determined by the
Company, after the effectiveness of a Release meeting the form and time limits described in the definition of such term, but in
all events by March 15 of the calendar year following the date of termination.

 

(ii)          
Anything in this Agreement to the contrary notwithstanding, if at the time of Executive’s separation from service within
the meaning of Section 409A of the Code, the Company determines that the Executive is a “specified employee” within
the meaning of Section 409A(a)(2)(B)(i) of the Code, then to the extent any payment or benefit that the Executive becomes entitled
to under this Agreement on account of Executive’s separation from service would be considered deferred compensation subject
to the 20 percent additional tax imposed pursuant to Section 409A(a) of the Code as a result of the application of Section 409A(a)(2)(B)(i)
of the Code, such payment shall not be payable and such benefit shall not be provided until the date that is the earlier of (A)
the first day of the 7th month following termination of employment, or (B) the Executive’s death. If any such
delayed cash payment is otherwise payable on an installment basis, the first payment shall include a catch-up payment covering
amounts that would otherwise have been paid during the six-month period but for the application of this provision, and the balance
of the installments shall be payable in accordance with their original schedule.

 

(iii)         
To the extent that any payment or benefit described in this Agreement constitutes “non-qualified deferred compensation”
under Section 409A of the Code, and to the extent that such payment or benefit is payable upon the Executive’s termination
of employment, then such payments or benefits shall be payable only upon the Executive’s “separation from service.”
The determination of whether and when a separation from service has occurred shall be made in accordance with the presumptions
set forth in Treasury Regulation Section 1.409A 1(h).

 

(iv)         
The parties intend that this Agreement will be administered in accordance with Section 409A of the Code. To the extent that any
provision of this Agreement is ambiguous as to its compliance with Section 409A of the Code, the provision shall be read in such
a manner so that all payments hereunder comply with Section 409A of the Code. Each payment pursuant to this Agreement is intended
to constitute a separate payment for purposes of Treasury Regulation Section 1.409A-2(b)(2). The parties agree that this Agreement
may be amended, as reasonably requested by either party, and as may be necessary to fully comply with Section 409A of the Code
and all related rules and regulations in order to preserve the payments and benefits provided hereunder without additional cost
to either party.

 

    Page 17 of 22

     

    

 

(v)          
The Company makes no representation or warranty and shall have no liability to the Executive or any other person if any provisions
of this Agreement are determined to constitute deferred compensation subject to Section 409A of the Code but do not satisfy an
exemption from, or the conditions of, such Section.

 

(m)         
Resignations upon Termination of Employment. Upon Executive’s termination of employment for any reason, Executive
shall be deemed to have (i) resigned as of such date as an officer of the Company and, to the extent applicable, as an officer
or director of all subsidiaries of the Company, and (ii) tendered (i.e., offered) his resignation from the Board, which resignation
the Board may accept or reject in its sole discretion.

 

8.           
Non-Competition; Non-Solicitation; Specific Enforcement.

 

(a)          
Non-Competition. Because Executive’s services to the Company are special and because Executive has access to
the Company’s confidential information, Executive covenants and agrees that, during the Employment Term and, if Executive
terminates his employment without Good Reason before the expiration of the Employment Term, then for one additional year following
the Employment Term, Executive shall not, without the prior written consent of the Company, which may be withheld in its sole discretion,
engage in executive, managerial, directorial, administrative, strategic, business development or supervisory responsibility for
any Competing Entity. The term “Competing Entity” means an entity for whom either (i) 50% or more of the assets
that it has an interest in, in the United States, either directly or indirectly and in whole or in part, and valued at gross fair
market value without any reduction for debt or the equity interests of third parties, are attributable to “multifamily residential
rental assets” or (ii) 50% or more of the net operating income (calculated in the manner that AvalonBay calculates net operating
income) of the assets that it has an interest in, in the United States, either directly or indirectly and in whole or in part,
is attributable to “multifamily residential real estate”. As used in this Section 8(a), “multifamily residential
real estate” means a real property asset for which at least 70% of the net operating income is on account of residential
units.

 

(b)          
Non-Solicitation. For so long as Executive remains employed by the Company (or any successor thereto) and, if Executive's
employment terminates (for any reason) before the expiration of the Employment Term, then for two additional years after the Employment
Term, Executive shall not, without the prior written consent of the Company, directly or indirectly solicit or attempt to solicit
(or advise the solicitation of) for employment with or on behalf of any corporation, partnership, venture or other business entity,
any employee of the Company or any of its affiliates or any person who was formerly employed by the Company or any of its affiliates
within the preceding six months, unless such person’s employment was terminated by the Company or any of such affiliates.
General or industry advertisements or web postings shall not be considered “solicitation” even if a Company employee
responds to the advertisement. For the avoidance of doubt, prohibited solicitation includes, without limitation, (i) phone calls,
emails or letters to AvalonBay officers or associates, (ii) directions to others recommending the solicitation or hire of AvalonBay
officers or associates, and (iii) having any involvement in the solicitation or hire of an AvalonBay officer or associates regardless
of which party initially expressed interest in employment.

 

(c)          
Specific Enforcement. Executive and the Company agree that the restrictions, prohibitions and other provisions of
this Section 8 are reasonable, fair and equitable in scope, terms, and duration, are necessary to protect the legitimate business
interests of the Company and are a material inducement to the Company to enter into this Agreement. Should a decision be made by
a court of competent jurisdiction that the character, duration or geographical scope of the provisions of this Section 8 is
unreasonable, the parties intend and agree that this Agreement shall be construed by the court in such a manner as to impose all
of those restrictions on Executive’s conduct that are reasonable in light of the circumstances and as are necessary to assure
to the Company the benefits of this Agreement. The Company and Executive further agree that the services to be rendered under this
Agreement by Executive are special, unique and of extraordinary character, and that in the event of the breach by Executive of
the terms and conditions of this Agreement or if Executive, without the prior consent of the Board, shall take any action in violation
of this Section 8, the Company will suffer irreparable harm for which there is no adequate remedy at law. Accordingly, Executive
hereby consents to the entry of a temporary restraining order or ex parte injunction, in addition to any other remedies available
at law or in equity, to enforce the provisions hereof. Any proceeding or action seeking equitable relief for violation of this
Section 8 must be commenced in the federal or state courts, in either case in Virginia. Executive and the Company irrevocably and
unconditionally submit to the jurisdiction of such courts and agree to take any and all future action necessary to submit to the
jurisdiction of and venue in such courts.

 

    Page 18 of 22

     

    

 

9.           
Notice. Any notice required or permitted hereunder shall be in writing and shall be deemed sufficient when given
by hand or by nationally recognized overnight courier and addressed, (a) if to the Company, at 4040 Wilson Blvd, Arlington VA 22203,
Attention: Chief Executive Officer, provided that if at the time of notice Executive is the Chief Executive Officer he shall send
the notice to the Board’s Lead Independent Director at the address of record in the Company’s books for such person
(in either case with a second copy, sent by the same means and to the Company’s address, Attention: General Counsel), and
(b) if to Executive at the address set forth in the Company’s records (or to such other address as may be provided by notice)
with a copy, that will not constitute notice, to Steven Eckhaus at McDermott Will & Emery, 340 Madison Avenue, New York, New
York 10173. In addition to written notice as provided in the prior sentence, notice shall also be delivered by email to the email
address for each such person in the Company’s records. Notice shall be deemed received the next business day after delivery
by overnight courier.

 

10.         
Miscellaneous: Entire Agreement; Assignment; Headings; Construction

 

(a)          
This Agreement, together with any Equity Award Agreements now or hereafter in effect, constitutes the entire agreement between
the parties concerning the subjects hereof and supersedes any and all prior agreements or understandings, including, without limitation,
any plan or agreement providing benefits in the nature of severance, but excluding benefits provided under other Company plans
or agreements, except to the extent this Agreement provides greater rights than are provided under such other plans or agreements.

 

(b)          
This Agreement may not be assigned by Executive without the prior written consent of the Company, and may only be assigned
by the Company in connection with a Sale Event, and shall be binding upon, and inure to the benefit of, the Company’s successors
and assigns. The Company will require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise)
to all or substantially all of the business and/or assets of the Company to assume expressly and agree to perform this Agreement
in the same manner and to the same extent that the Company would be required to perform it if no such succession had taken place.

 

(c)          
Headings herein are for convenience of reference only and shall not define, limit or interpret the contents hereof.

 

(d)          
Executive and Company each acknowledge that each was actively involved in the negotiation and drafting of this Agreement
and that no law or rule of construction shall be raised or used in which the provisions of this Agreement shall be construed in
favor of or against either party hereto because one is deemed to be the author thereof.

 

11.         
Amendment. This Agreement may be amended, modified or supplemented by the mutual consent of the parties in writing,
but no oral amendment, modification or supplement shall be effective. No waiver by either party of any breach by the other party
of any condition or provision contained in this Agreement to be performed by such other party shall be deemed a waiver of a similar
or dissimilar condition or provision at the same or any prior or subsequent time. Any waiver must be in writing and signed by Executive
or an authorized officer of the Company, as the case may be.

 

    Page 19 of 22

     

    

 

12.         
Severability. The provisions of this Agreement are severable. The invalidity of any provision shall not affect the
validity of any other provision, and each provision of this Agreement shall be valid and enforceable to the fullest extent permitted
by law.

 

13.         
Resolution of Disputes.

 

(a)          
Procedures and Scope of Arbitration. Except for any controversy or claim seeking equitable relief pursuant to Section
8 of this Agreement, all controversies and claims arising under or in connection with this Agreement or relating to the interpretation,
breach or enforcement thereof and all other disputes between the parties, shall be resolved by expedited, binding arbitration,
to be held in Metropolitan D.C. in accordance with the applicable rules of the American Arbitration Association governing employment
disputes (the "National Rules"). In any proceeding relating to the amount owed to Executive in connection with
his termination of employment, it is the contemplation of the parties that the only remedy that the arbitrator may award in such
a proceeding is an amount equal to the termination payments, if any, required to be provided under the applicable provisions of
Section 7 hereof, to the extent not previously paid, plus the costs of arbitration and Executive’s reasonable attorneys’
fees and expenses as provided below. Any award made by such arbitrator shall be final, binding and conclusive on the parties for
all purposes, and judgment upon the award rendered by the arbitrator may be entered in any court having jurisdiction thereof.

 

(b)         
Attorneys’ Fees.

 

(i)               
Reimbursement After Executive Prevails. Except as otherwise provided in this paragraph, each party shall pay the
cost of his or its own legal fees and expenses incurred in connection with an arbitration proceeding. Provided that Executive is
the prevailing party in such proceeding, all of his reasonable attorneys’ fees and expenses incurred in pursuing or defending
such proceeding (subject to the next sentence) shall be promptly reimbursed to Executive by the Company within five days of the
entry of the award. Any award of reasonable attorneys' fees shall take into account any offer of settlement made by the Company,
such that an award of attorneys' fees to Executive may be limited or eliminated to the extent that the final decision in favor
of Executive does not represent a material increase in value over the offer that was made by the Company during the course of such
proceeding. However, any elimination or limitation on attorneys’ fees shall only apply to those attorneys’ fees incurred
after the offer by the Company.

 

(ii)              
Reimbursement in Actions to Stay, Enjoin or Collect. In any case where the Company or any other person seeks to stay
or enjoin the commencement or continuation of an arbitration proceeding, whether before or after an award has been made, or where
Executive seeks recovery of amounts due after an award has been made, or where the Company brings any proceeding challenging or
contesting the award, all of Executive’s reasonable attorneys’ fees and expenses incurred in connection therewith shall
be promptly reimbursed by the Company to Executive, within five days of presentation of an itemized request for reimbursement,
regardless of whether Executive prevails, regardless of the forum in which such proceeding is brought, and regardless of whether
a Sale Event has occurred.

 

(iii)             
Reimbursement After a Sale Event. Without limiting the foregoing, solely in a proceeding commenced by the Company
or by Executive after a Sale Event has occurred, the Company shall advance to Executive, within five days of presentation of an
itemized request for reimbursement, all of Executive’s legal fees and expenses incurred in connection therewith, regardless
of the forum in which such proceeding was commenced, subject to delivery of an undertaking by Executive to reimburse the Company
for such advance if he does not prevail in such proceeding (unless such fees are to be reimbursed regardless of whether Executive
prevails as provided in clause (ii) above).

 

    Page 20 of 22

     

    

 

14.         
Survivorship. The provisions of Sections 4(b), 6, 7, 8(a) and (b) (but only with respect to restrictions first triggered
before the expiration of the Employment Term), 8(c), 9, 10, 13, 19, 21 and this Section 14 of this Agreement shall survive Executive’s
termination of employment. Other provisions of this Agreement shall survive any termination of Executive’s employment to
the extent necessary to the intended preservation of each party’s respective rights and obligations. For the avoidance of
doubt, neither Section 8(a) nor 8(b) shall apply in the event that Executive’s employment terminates upon or after the expiration
of the Employment Term; provided however, a non-competition agreement or a non-solicitation agreement may apply to a termination
of employment after the expiration of the Employment Term pursuant to other agreements, such as Equity Award Agreements.

 

15.         
Board Action. Where an action called for under this Agreement is required to be taken by the Board of Directors,
such action shall be taken by the vote of not less than a majority of the members then in office and authorized to vote on the
matter (or by a vote of not less than a majority of the independent Board members authorized to vote on the matter).

 

16.         
No Conflicts with Prior Employers. You represent that you are able to enter into this Agreement and carry out the
work that it involves as of the Start Date without breaching any legal restrictions on your activities, such as non-competition,
non-solicitation or other work-related restrictions imposed by a current or former employer. You also represent that you will inform
the Company about any such restrictions and provide the Company with as much information about them as possible, including any
agreements between you and your current or former employer describing such restrictions on your activities. You further confirm
that you will not remove or take any documents or proprietary data or materials of any kind, electronic or otherwise, with you
from your current or former employer to the Company without written authorization from your current or former employer, nor will
you use or disclose any such confidential information during the course and scope of your employment with the Company. If you have
any questions about the ownership of documents or other information, you should discuss such questions with your former employer
before removing or copying the documents or information.

 

17.         
Conditions to Employment. As with all of our offers of employment, this Agreement will become null and void with
no further obligation on our part if you are not able to timely provide to us satisfactory proof of your identity and of your legal
authorization to work in the United States, e.g. passport, driver’s license. If you fail to submit this proof, federal law
prohibits us from hiring you.

 

18.         
Future Changes to Plans. As you know, in the ordinary course of business, pay and benefit plans and employment policies
and practices continue to evolve as business needs and laws change. To the extent that it becomes necessary or desirable for the
Company to change any of the plans in which you participate or its employment policies and practices, such changes will immediately
apply to you as well so long as such changes don’t affect your compensation (including compensation upon termination) as
herein provided and are applied to all similarly situated participants in the plans, policies, or practices.

 

19.         
Withholding. All amounts required to be paid by the Company shall be subject to reduction in order to comply with
applicable federal, state and local tax withholding requirements. Executive shall not receive any gross up or reimbursement on
any taxable amounts payable herein except as provided with respect to relocation benefits as provided in Appendix A hereto.

 

20.         
Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed to be an
original but all of which together shall constitute one and the same instrument. The execution of this Agreement may be by actual
or facsimile signature.

 

    Page 21 of 22

     

    

 

21.         
Governing Law. This Agreement shall be construed and regulated in all respects under the laws of the State of Maryland.

 

IN WITNESS WHEREOF, this Agreement is entered
into as of the date and year first written or described above.

 

	 	AVALONBAY
    COMMUNITIES, INC.
	 	 
	 	By:	/s/
    Timothy J. Naughton
	 	 	By:	Timothy
    J. Naughton
	 	 	Title:	Chairman
    and Chief Executive Officer
	 	 	Date:	December
    3, 2020

 

	 	/s/
    Benjamin W. Schall
	 	Benjamin
    W. Schall
	 	Date:
    December 4, 2020

 

    Page 22 of 22EX-4.1

 Exhibit 4.1 

EXECUTION VERSION 

SEVENTH SUPPLEMENTAL INDENTURE 

between 
 FS KKR CAPITAL
CORP. 
 and 

U.S. BANK NATIONAL ASSOCIATION, 

as Trustee 
 Dated as of
December 10, 2020 
  
  

SEVENTH SUPPLEMENTAL INDENTURE 

THIS SEVENTH SUPPLEMENTAL INDENTURE (this “Seventh Supplemental Indenture”), dated as of December 10, 2020, is between
FS KKR Capital Corp., a Maryland corporation (the “Company”), and U.S. Bank National Association, as trustee (the “Trustee”). All capitalized terms used herein shall have the meaning set forth in the Base Indenture
(as defined below) unless otherwise defined herein. 
 RECITALS OF THE COMPANY 

The Company and the Trustee executed and delivered an Indenture, dated as of July 14, 2014 (the “Base Indenture”), as
amended and supplemented by the First Supplemental Indenture, dated as of July 14, 2014, the Second Supplemental Indenture, dated as of December 3, 2014, the Third Supplemental Indenture, dated as of April 30, 2015, the Fourth
Supplemental Indenture, dated as of July 15, 2019, the Fifth Supplemental Indenture, dated November 20, 2019, the Sixth Supplemental Indenture, dated as of April 30, 2020, and this Seventh Supplemental Indenture (the “Seventh
Supplemental Indenture,” and together with the Base Indenture, the “Indenture”), to provide for the issuance by the Company from time to time of the Company’s unsecured debentures, notes or other evidences of
indebtedness (the “Securities”), to be issued in one or more series as provided in the Base Indenture. 
 The Company
desires to issue and sell $1,000,000,000 aggregate principal amount of the Company’s 3.400% Notes due 2026 (the “Notes”). 

Sections 901(4) and 901(6) of the Base Indenture provide that without the consent of Holders of the Securities of any series issued under the
Base Indenture (as supplemented or amended from time to time by one or more indentures supplemental thereto), the Company, when authorized by or pursuant to a Board Resolution, and the Trustee, at any time and from time to time, may enter into one
or more indentures supplemental to the Base Indenture to (i) change or eliminate any of the provisions of the Base Indenture (as supplemented or amended from time to time by one or more indentures supplemental thereto) when there is no Security
Outstanding of any series created prior to the execution of the supplemental indenture that is entitled to the benefit of such provision and (ii) establish the form or terms of Securities of any series as permitted by Section 201 and
Section 301 of the Base Indenture. 
 The Company desires to establish the form and terms of the Notes and to modify, alter, supplement
and change certain provisions of the Base Indenture for the benefit of the Holders of the Notes (subject to amendment as may be provided in a future supplemental indenture to the Indenture (“Future Supplemental Indenture”)). 

The Company has duly authorized the execution and delivery of this Seventh Supplemental Indenture to provide for the issuance of the Notes and
all acts and things necessary to make this Seventh Supplemental Indenture a valid, binding, and legal obligation of the Company and to constitute a valid agreement of the Company, in accordance with its terms, have been done and performed. 

 NOW, THEREFORE, for and in consideration of the premises and the purchase of the Notes by
the Holders thereof, it is mutually agreed, for the equal and proportionate benefit of all Holders of the Notes, as follows: 
 ARTICLE I

 TERMS OF THE NOTES 

Section 1.01. The following terms relating to the Notes are hereby established: 

(a) The Notes shall constitute a series of Senior Securities having the title “3.400% Notes due 2026”. The Notes shall bear a CUSIP
number of 302635 AG2 and an ISIN number of US302635AG21. 
 (b) The aggregate principal amount of the Notes that may be initially
authenticated and delivered under the Indenture (except for Notes authenticated and delivered upon registration of, transfer of, or in exchange for, or in lieu of, other Notes pursuant to Sections 304, 305, 306, 906, 1107 or 1305 of the Base
Indenture, and except for any Securities that, pursuant to Section 303 of the Base Indenture, are deemed never to have been authenticated and delivered under the Indenture) shall be $1,000,000,000. Under a Board Resolution, Officers’
Certificate pursuant to Board Resolutions or an indenture supplement, the Company may from time to time, without the consent of the Holders of Notes, issue additional Notes (in any such case “Additional Notes”) having the same
ranking and the same interest rate, maturity and other terms as the Notes; provided that, if such Additional Notes are not fungible with the Notes (or any other tranche of Additional Notes) for U.S. federal income tax purposes, then such
Additional Notes will have different CUSIP numbers from the Notes (and any such other tranche of Additional Notes). Any Additional Notes and the existing Notes will constitute a single series under the Indenture and all references to the relevant
Notes herein shall include the Additional Notes unless the context otherwise requires. 
 (c) The entire outstanding principal of the Notes
shall be payable on January 15, 2026, unless earlier redeemed or repurchased in accordance with the provisions of this Seventh Supplemental Indenture. 

(d) The rate at which the Notes shall bear interest shall be 3.400% per annum (the “Applicable Interest Rate”). The date from
which interest shall accrue on the Notes shall be December 10, 2020, or the most recent Interest Payment Date to which interest has been paid or provided for; the Interest Payment Dates for the Notes shall be January 15 and July 15 of
each year, commencing July 15, 2021 (if an Interest Payment Date falls on a day that is not a Business Day, then the applicable interest payment will be made on the next succeeding Business Day and no additional interest will accrue as a
result of such delayed payment); the initial interest period will be the period from and including December 10, 2020 (or the most recent Interest Payment Date to which interest has been paid or provided for), to, but excluding, the
initial Interest Payment Date, and the subsequent interest periods will be the periods from and including an Interest Payment Date to, but excluding, the next Interest Payment Date or the Stated Maturity, as the case may be. Interest so payable, and
punctually paid or duly provided for, on any Interest Payment Date, will be paid to the Person in whose name the Note (or one or more Predecessor Securities) is registered at 5:00 p.m. New York City time, or the close of business, on the Regular
Record Date for such interest, which shall be January 1 and July 1 (whether or not a Business Day), as the case may be, next preceding such Interest Payment Date. Payment of principal of (and premium, if any, on) and any such
interest on the Notes will be made at the office of the Trustee located at One Federal Street, 10th Floor, Boston, MA 02110 and at such other address as designated by the Trustee, in such coin or currency of the United States of America as at the
time of payment is legal tender for payment of public and private debts; provided, however, that at the option of the Company, payment of interest may be made by check mailed to the address of the Person entitled thereto as such
address shall appear in the Security Register. Interest on the Notes will be computed on the basis of a 360-day year of twelve 30-day months. 

(e) The Notes shall be initially issuable in global form (each such Note, a “Global Note”). The Global Notes and the
Trustee’s certificate of authentication thereon shall be substantially in the form of Exhibit A to this Seventh Supplemental Indenture. Each Global Note shall represent the outstanding Notes as shall be specified therein and each shall
provide that it shall represent the aggregate amount of outstanding Notes from time to time endorsed thereon and that the aggregate amount of outstanding Notes represented thereby may from time to time be reduced or increased, as appropriate, to
reflect exchanges and redemptions. Any endorsement of a Global Note to reflect the amount of any increase or decrease in the amount of outstanding Notes represented thereby shall be made by the Trustee or the Security Registrar, in accordance with
Sections 203 and 305 of the Base Indenture. 

  
 2 

 (f) The depositary for such Global Notes (the “Depositary”) shall be The
Depository Trust Company, New York, New York, until a successor shall have been appointed and becomes such person, and thereafter, Depositary shall mean or include such successor. The Security Registrar with respect to the Global Notes shall be the
Trustee. 
 (g) The Notes shall be defeasible pursuant to Section 1402 or Section 1403 of the Base Indenture. Covenant defeasance
contained in Section 1403 of the Base Indenture shall apply to the covenants contained in Sections 1007 and 1008 of the Indenture. 

(h) The Notes shall be redeemable pursuant to Section 1101 of the Base Indenture and as follows: 

(i) The Notes will be redeemable, in whole or in part, at any time, or from time to time, at the option of the Company, at a
Redemption Price equal to the greater of the following amounts, plus, in each case, accrued and unpaid interest, if any, to, but excluding, the Redemption Date: 
  

	 	(A)	 100% of the principal amount of the Notes to be redeemed, or 

 

	 	(B)	 the sum of the present values of the remaining scheduled payments of principal and interest (exclusive of
accrued and unpaid interest to the Redemption Date) on the Notes to be redeemed through the Par Call Date, discounted to the Redemption Date on a semi-annual basis (assuming a 360-day year consisting of twelve
30-day months) using the applicable Treasury Rate plus 50 basis points. 

(ii) Notwithstanding the foregoing, at any time on or after December 15, 2025, the Company may redeem some or all of the
Notes at any time, or from time to time, at a Redemption Price equal to 100% of the principal amount of the Notes to be redeemed plus, in each case, accrued and unpaid interest, if any, to, but excluding, the Redemption Date. 

For purposes of calculating the Redemption Price in connection with the redemption of the Notes, on any Redemption Date, the following terms
have the meanings set forth below: 
 “Comparable Treasury Issue” means the United States Treasury security selected by the
Reference Treasury Dealer as having a maturity comparable to the remaining term of the Notes to be redeemed (assuming the notes matured on the applicable Par Call Date) that would be utilized, at the time of selection and in accordance with
customary financing practice, in pricing new issues of corporate debt securities of comparable maturity to the remaining term of the Notes being redeemed. 

“Comparable Treasury Price” means (1) the average of the remaining Reference Treasury Dealer Quotations for the
Redemption Date, after excluding the highest and lowest Reference Treasury Dealer Quotations, or (2) if the Quotation Agent obtains fewer than four such Reference Treasury Dealer Quotations, the average of all such quotations. 

“Par Call Date” means December 15, 2025, which is the date that is one month prior to the maturity date of the Notes.

 “Quotation Agent” means a Reference Treasury Dealer selected by the Company. 

“Reference Treasury Dealer” means each of (1) BofA Securities, Inc., (2) BMO Capital Markets Corp., (3) a primary
U.S. government securities dealer selected by ING Financial Markets LLC, (4) a primary U.S. government securities dealer selected by MUFG Securities Americas Inc., (5) a primary U.S. government securities dealer selected by SMBC Nikko
Securities America, Inc. and (6) a primary U.S. government securities dealer selected by Truist Securities, Inc., or their respective affiliates which are primary U.S. government securities dealers and their respective successors; provided,
however, that if any of the foregoing or their affiliates shall cease to be a primary U.S. government securities dealer in the United States, or a Primary Treasury Dealer, the Company shall select another Primary Treasury Dealer. 

  
 3 

 “Reference Treasury Dealer Quotations” means, with respect to each
Reference Treasury Dealer and any Redemption Date, the average, as determined by the Quotation Agent, of the bid and asked prices for the Comparable Treasury Issue (expressed in each case as a percentage of its principal amount) quoted in writing to
the Quotation Agent by such Reference Treasury Dealer at 3:30 p.m. New York City time on the third Business Day preceding such Redemption Date. 

“Treasury Rate” means, with respect to any Redemption Date, the rate per annum equal to the semi-annual equivalent yield-to-maturity of the Comparable Treasury Issue (computed as of the third Business Day immediately preceding the redemption), assuming a price for the Comparable Treasury
Issue (expressed as a percentage of its principal amount) equal to the Comparable Treasury Price for such Redemption Date. The Redemption Price and the Treasury Rate will be determined by the Company. 

All determinations made by any Reference Treasury Dealer, including the Quotation Agent, with respect to determining the Redemption Price will
be final and binding absent manifest error. 
 (i) Notice of redemption shall be given in writing and mailed, first-class
postage prepaid or by overnight courier guaranteeing next-day delivery, to each Holder of the Notes to be redeemed, not less than thirty (30) nor more than sixty (60) days prior to the Redemption
Date, at the Holder’s address appearing in the Security Register. All notices of redemption shall contain the information set forth in Section 1104 of the Base Indenture. 

(ii) Any exercise of the Company’s option to redeem the Notes will be done in compliance with the Investment Company Act,
to the extent applicable. 
 (iii) If the Company elects to redeem only a portion of the Notes, the particular Notes to be
redeemed will be selected in accordance with the applicable procedures of the Trustee and, so long as the Notes are registered to the Depositary or its nominee, the Depositary; provided, however, that no such partial redemption shall reduce
the portion of the principal amount of a Note not redeemed to less than $2,000. 
 (iv) Unless the Company defaults in
payment of the Redemption Price, on and after the Redemption Date, interest will cease to accrue on the Notes called for redemption hereunder. 

(i) The Notes shall not be subject to any sinking fund pursuant to Section 1201 of the Base Indenture. 

(j) The Notes shall be issuable in denominations of $2,000 and integral multiples of $1,000 in excess thereof. 

(k) Holders of the Notes will not have the option to have the Notes repaid prior to the Stated Maturity other than in accordance with Article
Thirteen of the Indenture. 
 ARTICLE II 

DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION 

Section 2.01. Except as may be provided in a Future Supplemental Indenture, for the benefit of the Holders of the
Notes but no other series of Securities under the Base Indenture (as supplemented or amended from time to time by one or more indentures supplemental thereto), whether now or hereafter issued and Outstanding, Article One of the Base Indenture shall
be amended by adding the following defined terms to Section 101 in appropriate alphabetical sequence, as follows: 

  
 4 

 “Below Investment Grade Rating Event” means the Notes are downgraded below
Investment Grade by both Rating Agencies on any date from the date of the public notice of an arrangement that results in a Change of Control until the end of the 60-day period following public notice of the
occurrence of a Change of Control (which period shall be extended so long as the rating of the Notes is under publicly announced consideration for possible downgrade by either of the Rating Agencies); provided that a Below Investment Grade
Rating Event otherwise arising by virtue of a particular reduction in rating shall not be deemed to have occurred in respect of a particular Change of Control (and thus shall not be deemed a Below Investment Grade Rating Event for purposes of the
definition of Change of Control Repurchase Event hereunder) if the Rating Agencies making the reduction in rating to which this definition would otherwise apply do not announce or publicly confirm or inform the Trustee in writing at its request that
the reduction was the result, in whole or in part, of any event or circumstance comprised of or arising as a result of, or in respect of, the applicable Change of Control (whether or not the applicable Change of Control shall have occurred at the
time of the Below Investment Grade Rating Event). 
 “Change of Control” means the occurrence of any of the following: 

(1) the direct or indirect sale, lease, transfer, conveyance or other disposition (other than by way of merger or consolidation) in one or a
series of related transactions, of all or substantially all of the assets of the Company and its Controlled Subsidiaries taken as a whole to any “person” or “group” (as those terms are used in Section 13(d)(3) of the
Exchange Act), other than to any Permitted Holders; provided that, for the avoidance of doubt, a pledge of assets pursuant to any secured debt instrument of the Company or its Controlled Subsidiaries shall not be deemed to be any such sale,
lease, transfer, conveyance or disposition; 
 (2) the consummation of any transaction (including, without limitation, any merger or
consolidation) the result of which is that any “person” or “group” (as those terms are used in Section 13(d)(3) of the Exchange Act) (other than any Permitted Holders) becomes the “beneficial owner” (as defined in
Rules 13d-3 and 13d-5 promulgated under the Exchange Act), directly or indirectly, of more than 50% of the outstanding Voting Stock of the Company, measured by voting
power rather than number of shares; or 
 (3) the approval by the Company’s stockholders of any plan or proposal relating to the
liquidation or dissolution of the Company. 
 For the avoidance of doubt, the Merger shall not constitute a Change of Control. 

“Change of Control Repurchase Event” means the occurrence of a Change of Control and a Below Investment Grade Rating Event.

 “Controlled Subsidiary” means any Subsidiary of the Company, 50% or more of the outstanding equity interests of which
are owned by the Company and its direct or indirect Subsidiaries and of which the Company possesses, directly or indirectly, the power to direct or cause the direction of the management or policies, whether through the ownership of voting equity
interests, by agreement or otherwise. 
 “Fitch” means Fitch Ratings, Inc., also known as Fitch Ratings, or any successor
thereto. 
 “GAAP” means generally accepted accounting principles in the United States set forth in the opinions and
pronouncements of the Accounting Principles Board of the American Institute of Certified Public Accountants, the opinions and pronouncements of the Public Company Accounting Oversight Board and the statements and pronouncements of the Financial
Accounting Standards Board or in such other statements by such other entity as have been approved by a significant segment of the accounting profession in the United States, which are in effect from time to time. 

“Investment Company Act” means the Investment Company Act of 1940, as amended, and the rules, regulations and interpretations
promulgated thereunder, to the extent applicable, and any statute successor thereto. 
 “Investment Grade” means a rating
of BBB- or better by Fitch (or its equivalent under any successor rating categories of Fitch) and Baa3 or better by Moody’s (or its equivalent under any successor rating categories of Moody’s) (or,
in each case, if such Rating Agency ceases to rate the Notes for reasons outside of the Company’s control, the equivalent investment grade credit rating from any Rating Agency selected by the Company as a replacement Rating Agency). 

  
 5 

 “Merger” means the transactions entered into pursuant to the Agreement and
Plan of Merger, dated November 23, 2020 (and as the same may be amended), among the Company, FS KKR Capital Corp. II (“FSKR”), Rocky Merger Sub, Inc. (“Merger Sub”), and FS/KKR Advisor, LLC, pursuant to which Merger Sub will
merge with and into FSKR, with FSKR continuing as the surviving company and as a wholly-owned subsidiary of FSK, and, immediately thereafter, FSKR will merge with and into FSK, with FSK continuing as the surviving company. 

“Moody’s” means Moody’s Investors Service or any successor thereto. 

“Permitted Holders” means (i) the Company, (ii) one or more of the Company’s Controlled Subsidiaries and
(iii) FS/KKR Advisor, LLC, any Affiliate of FS KKR Advisor, LLC or any entity that is managed by FS/KKR Advisor, LLC that is organized under the laws of a jurisdiction located in the United States of America and in the business of managing or
advising clients. 
 “Rating Agency” means (1) each of Fitch and Moody’s; and (2) if either Fitch or
Moody’s ceases to rate the Notes or fails to make a rating of the Notes publicly available for reasons outside of the Company’s control, a “nationally recognized statistical rating organization” as defined in
Section 3(a)(62) of the Exchange Act selected by the Company as a replacement agency for Fitch or Moody’s, or both, as the case may be. 

“Significant Subsidiary” means any Subsidiary that would be a “significant subsidiary” as defined in Article 1,
Rule 1-02 of Regulation S-X under the Exchange Act, as such regulation is in effect on the date of this Indenture (but excluding any Subsidiary which is (a) a non-recourse or limited recourse Subsidiary, (b) a bankruptcy remote special purpose vehicle or (c) is not consolidated with the Company for purposes of GAAP). 

“Voting Stock” as applied to stock of any Person, means shares, interests, participations or other equivalents in the equity
interest (however designated) in such Person having ordinary voting power for the election of a majority of the directors (or the equivalent) of such Person, other than shares, interests, participations or other equivalents having such power only by
reason of the occurrence of a contingency. 
 Section 2.02. Except as may be provided in a Future Supplemental
Indenture, for the benefit of the Holders of the Notes but no other series of Securities under the Base Indenture (as supplemented or amended from time to time by one or more indentures supplemental thereto), whether now or hereafter issued and
Outstanding, Article One of the Base Indenture shall be amended by amending and restating the definitions of “Business Day” and “Subsidiary” in Section 101 as follows: 

“Business Day” means, with respect to any Note, any day other than a Saturday, Sunday or a day on which banking institutions
in New York are authorized or obligated by law or executive order to close. 
 “Subsidiary” means (1) any corporation
a majority of the outstanding voting stock of which is owned, directly or indirectly, by the Company or by one or more other Subsidiaries of the Company, (2) any other Person (other than a corporation) in which such Person, one or more
Subsidiaries of such Person, or such Person and one or more Subsidiaries of such Person, directly or indirectly, at the date of determination thereof has a majority ownership interest, or (3) a partnership in which such Person or Subsidiary of
such Person is, at the time, a general partner and in which such Person, directly or indirectly, at the date of determination thereof has a majority ownership interest. For the purposes of this definition, “voting stock” mean stock having
voting power for the election of directors, whether at all times or only so long as no senior class of stock has such voting power by reason of any contingency. In addition, for purposes of this definition, “Subsidiary” shall exclude any
investments held by the Company in the ordinary course of business which are not, under GAAP, consolidated on the financial statements of the Company and its Subsidiaries. 

  
 6 

 ARTICLE III 

SECURITIES FORMS 

Section 3.01. Except as may be provided in a Future Supplemental Indenture, for the benefit of the Holders of the
Notes but no other series of Securities under the Base Indenture (as supplemented or amended from time to time by one or more indentures supplemental thereto), whether now or hereafter issued and Outstanding, Article Two of the Base Indenture shall
be amended by adding the following new Section 204 thereto, as set forth below: 
 “Section 204. Certificated Notes.

 Notwithstanding anything to the contrary in the Indenture, Notes in physical, certificated form will be issued and
delivered to each person that the Depositary identifies as a beneficial owner of the related Notes only if: 
 (a) the Depositary notifies
the Company at any time that it is unwilling or unable to continue as depositary for the Notes in global form and a successor depositary is not appointed within 90 days; 

(b) the Depositary ceases to be registered as a clearing agency under the Exchange Act and a successor depositary is not appointed within 90
days; or 
 (c) an Event of Default with respect to the Notes has occurred and is continuing and such beneficial owner requests that its
Notes be issued in physical, certificated form.” 
 ARTICLE IV 

REMEDIES 

Section 4.01. Except as may be provided in a Future Supplemental Indenture, for the benefit of the Holders of the
Notes but no other series of Securities under the Base Indenture (as supplemented or amended from time to time by one or more indentures supplemental thereto), whether now or hereafter issued and Outstanding, Article Five of the Base Indenture shall
be amended by replacing clause (2) of Section 501 thereof with the following: 
  

	 	“(2)	 default in the payment of the principal of (or premium, if any, on) any Note when it becomes due and payable at
its Maturity including upon any Redemption Date or required repurchase date; or” 

Section 4.02. Except as may be provided in a Future Supplemental Indenture, for the benefit of the Holders of the
Notes but no other series of Securities under the Base Indenture (as supplemented or amended from time to time by one or more indentures supplemental thereto), whether now or hereafter issued and Outstanding, Section 501 of the Base Indenture
shall be amended by replacing clause (4) thereof with the following: 
  

	 	“(4)	 default in the performance, or breach, of any covenant or agreement of the Company in this Indenture or the
Notes (other than a covenant or agreement a default in whose performance or whose breach is elsewhere in this Section specifically dealt with or which has expressly been included in this Indenture solely for the benefit of a series of securities
other than the Notes), and continuance of such default or breach for a period of 60 consecutive days after there has been given, by registered or certified mail, to the Company by the Trustee or to the Company and the Trustee by the Holders of at
least 25% in principal amount of the Outstanding Notes a written notice specifying such default or breach ad requiring it to be remedied and stating that such notice is a “Notice of Default” hereunder; or” 

  
 7 

 Section 4.03. Except as may be provided in a Future Supplemental
Indenture, for the benefit of the Holders of the Notes but no other series of Securities under the Base Indenture (as supplemented or amended from time to time by one or more indentures supplemental thereto), whether now or hereafter issued and
Outstanding, Article Five of the Base Indenture shall be amended by adding as clause (9) of Section 501 thereof the following: 
  

	 	“(9)	 default by the Company or any of its Significant Subsidiaries, with respect to any mortgage, agreement or other
instrument under which there may be outstanding, or by which there may be secured or evidenced, any indebtedness for money borrowed in excess of $100 million in the aggregate of the Company and/or any such Significant Subsidiary, whether such
indebtedness now exists or shall hereafter be created (i) resulting in such indebtedness becoming or being declared due and payable or (ii) constituting a failure to pay the principal or interest of any such debt when due and payable at
its stated maturity, upon required repurchase, upon declaration of acceleration or otherwise, unless, in either case, such indebtedness is discharged, or such acceleration is rescinded, stayed or annulled, within a period of 30 calendar days after
written notice of such failure is given to the Company by the Trustee or to the Company and the Trustee by the Holders of at least 25% in aggregate principal amount of the Notes then Outstanding.” 

Section 4.04. Except as may be provided in a Future Supplemental Indenture, for the benefit of Holders of the Notes
but no other series of Securities under the Base Indenture (as supplemented or amended from time to time by one or more indentures supplemental thereto), whether now or hereafter issued and Outstanding, Section 501 of the Base Indenture shall
be amended by replacing clause (7) thereof with the following: 
  

	 	“(7)	 if, pursuant to Section 18(a)(1)(C)(ii) and Section 61 of the Investment Company Act, on the last
business day of each of 24 consecutive calendar months, any class of securities shall have an asset coverage (as such term is used in the Investment Company Act) of less than 100% giving effect to any exemptive relief granted to the Company by the
Commission;” 

 Section 4.05. Except as may be provided in a Future Supplemental Indenture,
for the benefit of Holders of the Notes but no other series of Securities under the Base Indenture (as supplemented or amended from time to time by one or more indentures supplemental thereto), whether now or hereafter issued and Outstanding,
Article Five of the Base Indenture shall be amended by amending clause (6) of Section 501 thereof as follows: the words “90 consecutive days” in the final clause thereof shall be replaced with the words “60 consecutive
days”. 
 Section 4.06. Except as may be provided in a Future Supplemental Indenture, for the benefit of the
Holders of the Notes but no other series of Securities under the Base Indenture (as supplemented or amended from time to time by one or more indentures supplemental thereto), whether now or hereafter issued and Outstanding, Article Five of the Base
Indenture shall be amended by replacing the first paragraph of Section 502 thereof with the following: 
 “If an Event of Default
with respect to the Notes occurs and is continuing, then and in every such case (other than an Event of Default specified in Section 501(5) or 501(6)), the Trustee or the Holders of not less than 25% in principal amount of the Outstanding Notes
may (and the Trustee shall at the request of such Holders) declare the principal of all the Outstanding Notes to be due and payable immediately, by a notice in writing to the Company (and to the Trustee if given by the Holders), and upon any such
declaration such principal or specified portion thereof shall become immediately due and payable; provided that 100% of the principal of, and accrued and unpaid interest on, the Notes will automatically become due and payable in the case of an Event
of Default specified in Section 501(5) or 501(6) hereof.” 
 Section 4.07. Except as may be provided in
a Future Supplemental Indenture, for the benefit of Holders of the Notes but no other series of Securities under the Base Indenture (as supplemented or amended from time to time by one or more indentures supplemental thereto), whether now or
hereafter issued and Outstanding, Article Five of the Base Indenture shall be amended by replacing clause (3) of Section 512 thereof with the following: 
  

	 	“(3)	 the Trustee need not take any action that it determines in good faith may involve it in personal liability or
be unjustly prejudicial to the Holders of the Notes not consenting; and” 

  
 8 

 ARTICLE V 

THE TRUSTEE 

Section 5.01. Except as may be provided in a Future Supplemental Indenture, for the benefit of Holders of the Notes
but no other series of Securities under the Base Indenture (as supplemented or amended from time to time by one or more indentures supplemental thereto), whether now of hereafter issued and Outstanding, Article Six of the Base Indenture shall be
amended by replacing the final proviso of Section 601 thereof with the following: 
 “and provided further that in
the case of any Default or breach of the character specified in Section 501(4) with respect to the Securities of such series, no such notice to Holders shall be given until at least 60 days after the occurrence thereof” 

ARTICLE VI 
 COVENANTS

 Section 6.01. Except as may be provided in a Future Supplemental Indenture, for the benefit of Holders of
the Notes but no other series of Securities under the Base Indenture (as supplemented or amended from time to time by one or more indentures supplemental thereto), whether now or hereafter issued and Outstanding, Article Ten of the Base Indenture
shall be amended by replacing clause (1) of Section 1005 thereof with the following: 
  

	 	“(1)	 The Company will deliver to the Trustee within 120 days after the end of each fiscal year ending after the date
hereof (which fiscal year ends on December 31), so long as any Notes are Outstanding hereunder, a brief Officers’ Certificate as to the knowledge of the signers of the Company’s compliance with all of the terms, provisions or conditions of
this Indenture. For purposes of this Section 1005, such compliance shall be determined without regard to any period of grace or requirement of notice under this Indenture.” 

Section 6.02. Except as may be provided in a Future Supplemental Indenture, for the benefit of the Holders of the
Notes but no other series of Securities under the Base Indenture (as supplemented or amended from time to time by one or more indentures supplemental thereto), whether now or hereafter issued and Outstanding, Article Ten of the Base Indenture shall
be amended by adding the following new Sections 1007 and 1008 thereto, each as set forth below: 
 “Section 1007
Section 18(a)(1)(A) of the Investment Company Act. 
 The Company hereby agrees that for the period of time during
which the Notes are Outstanding, the Company will not violate, whether or not it is subject to, Section 18(a)(1)(A) of the Investment Company Act as modified by Section 61(a)(1) and (2) of the Investment Company Act or any successor
provisions, as such obligations may be amended or superseded, giving effect to any exemptive relief granted to the Company by the Securities and Exchange Commission.” 

“Section 1008 Commission Reports and Reports to Holders. 

If, at any time, the Company is not subject to the reporting requirements of Sections 13 or 15(d) of the Exchange Act to file any periodic
reports with the Commission, the Company agrees to furnish to the Holders of the Notes and the Trustee for the period of time during which the Notes are Outstanding: (i) within 90 days after the end of each fiscal year of the Company, audited
annual consolidated financial statements of the Company and (ii) within 45 days after the end of each fiscal quarter of the Company (other than the Company’s fourth fiscal quarter), unaudited interim consolidated financial statements of
the Company. All such financial statements shall be prepared, in all material respects, in accordance with GAAP, as applicable.” 

  
 9 

 ARTICLE VII 

CONSOLIDATION, MERGER, CONVEYANCE OR TRANSFER 

Except as may be provided in a Future Supplemental Indenture, for the benefit of the Holders of the Notes but no other series of Securities
under the Base Indenture (as supplemented or amended from time to time by one or more indentures supplemental thereto), whether now or hereafter issued and Outstanding, Article Eight of the Base Indenture shall be amended by replacing
Section 801 with the following: 
 “Section 801 Merger, Consolidation or Sale of Assets. 

The Company shall not merge or consolidate with or into any other Person (other than a merger of a wholly owned Subsidiary of the Company into
the Company), or sell, transfer, lease, convey or otherwise dispose of all or substantially all of its property (provided that, for the avoidance of doubt, a pledge of assets pursuant to any secured debt instrument of the Company or its Controlled
Subsidiaries shall not be deemed to be any such sale, transfer, lease, conveyance or disposition) in any one transaction or series of related transactions unless: 

(1) the Company shall be the surviving Person (the “Surviving Person”) or the Surviving Person (if other than the Company)
formed by such merger or consolidation or to which such sale, transfer, lease, conveyance or disposition is made shall be a corporation or limited liability company organized and existing under the laws of the United States of America or any state
or territory thereof; 
 (2) the Surviving Person (if other than the Company) expressly assumes, by supplemental indenture in form reasonably
satisfactory to the Trustee, executed and delivered to the Trustee by such Surviving Person, the due and punctual payment of the principal of, and premium, if any, and interest on, all the Notes Outstanding, and the due and punctual performance and
observance of all the covenants and conditions of this Indenture to be performed by the Company; 
 (3) immediately before and immediately
after giving effect to such transaction or series of related transactions, no Default or Event of Default shall have occurred and be continuing; and 

(4) the Company shall deliver, or cause to be delivered, to the Trustee, an Officers’ Certificate and an Opinion of Counsel, each stating
that such transaction and the supplemental indenture, if any, in respect thereto, comply with this Section 801 and that all conditions precedent in this Indenture relating to such transaction have been complied with. 

For the purposes of this Section 801, the sale, transfer, lease, conveyance or other disposition of all the property of one or more
Subsidiaries of the Company, which property, if held by the Company instead of such Subsidiaries, would constitute all or substantially all the property of the Company on a consolidated basis, shall be deemed to be the transfer of all or
substantially all the property of the Company.” 
 ARTICLE VIII 

OFFER TO REPURCHASE UPON A CHANGE OF CONTROL REPURCHASE EVENT 

Except as may be provided in a Future Supplemental Indenture, for the benefit of the Holders of the Notes but no other series of Securities
under the Base Indenture (as supplemented or amended from time to time by one or more indentures supplemental thereto), whether now or hereafter issued and Outstanding, Article Thirteen of the Base Indenture shall be amended by replacing Sections
1301 to 1305 with the following: 
 “Section 1301 Change of Control. 

If a Change of Control Repurchase Event occurs, unless the Company shall have exercised its right to redeem the Notes in full, the Company
shall make an offer to each Holder of the Notes to repurchase all or any part (in minimum denominations of $2,000 and integral multiples of $1,000 principal amount in excess thereof) of that Holder’s Notes at a repurchase price in cash equal to
100% of the aggregate principal amount of Notes repurchased plus any accrued and unpaid interest on the Notes repurchased to, but not including, the date of purchase. Within 30 days following any Change of Control Repurchase Event or, at the
Company’s option, prior to any Change of Control, but after the public announcement of the Change of Control, the Company shall mail a notice to each Holder describing the 

  
 10 

 
transaction or transactions that constitute or may constitute the Change of Control Repurchase Event and offering to repurchase Notes on the payment date specified in the notice, which date will
be no earlier than 30 days and no later than 60 days from the date such notice is mailed. The notice shall, if mailed prior to the date of consummation of the Change of Control, state that the offer to purchase is conditioned on the Change of
Control Repurchase Event occurring on or prior to the payment date specified in the notice. The Company shall comply with the requirements of Rule 14e-1 promulgated under the Exchange Act and any other
securities laws and regulations thereunder to the extent those laws and regulations are applicable in connection with the repurchase of the Notes as a result of a Change of Control Repurchase Event. 

To the extent that the provisions of any securities laws or regulations conflict with this Section 1301, the Company shall comply with
the applicable securities laws and regulations and shall not be deemed to have breached its obligations under this Section 1301 by virtue of such conflict. 

On the Change of Control Repurchase Event payment date, subject to extension if necessary to comply with the provisions of the Investment
Company Act, the Company shall, to the extent lawful: 
 (1) accept for payment all Notes or portions of Notes properly tendered pursuant to
its offer; 
 (2) deposit with the Paying Agent an amount equal to the aggregate purchase price in respect of all Notes or portions of Notes
properly tendered; and 
 (3) deliver or cause to be delivered to the Trustee the Notes properly accepted, together with an Officers’
Certificate stating the aggregate principal amount of Notes being purchased by the Company. 
 The Paying Agent will promptly remit to each
Holder of Notes properly tendered the purchase price for the Notes, and the Trustee will promptly authenticate and mail (or cause to be transferred by book-entry) to each Holder a new Note equal in principal amount to any unpurchased portion of any
Notes surrendered; provided that each new Note will be in a minimum principal amount of $2,000 or an integral multiple of $1,000 in excess thereof. 

If any Repayment Date upon a Change of Control Repurchase Event falls on a day that is not a Business Day, then the required payment will be
made on the next succeeding Business Day and no additional interest will accrue as a result of such delayed payment. 
 The Company will not
be required to make an offer to repurchase the Notes upon a Change of Control Repurchase Event if a third party makes an offer in respect of the Notes in the manner, at the time and otherwise in compliance with the requirements for an offer made by
the Company and such third party purchases all Notes properly tendered and not withdrawn under its offer.” 
 ARTICLE IX 

MISCELLANEOUS 

Section 9.01. This Seventh Supplemental Indenture and the Notes shall be governed by and construed in accordance
with the laws of the State of New York, without regard to principles of conflicts of laws that would cause the application of laws of another jurisdiction. This Seventh Supplemental Indenture is subject to the provisions of the Trust Indenture Act
that are required to be part of the Indenture and shall, to the extent applicable, be governed by such provisions. 

Section 9.02. In case any provision in this Seventh Supplemental Indenture or in the Notes shall be invalid, illegal
or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby. 

  
 11 

 Section 9.03. This Seventh Supplemental Indenture may be executed
in counterparts, each of which will be an original, but such counterparts will together constitute but one and the same Seventh Supplemental Indenture. The exchange of copies of this Seventh Supplemental Indenture and of signature pages by
facsimile, .pdf transmission, email or other electronic means shall constitute effective execution and delivery of this Seventh Supplemental Indenture for all purposes. Signatures of the parties hereto transmitted by facsimile, .pdf transmission,
email or other electronic means shall be deemed to be their original signatures for all purposes. For the avoidance of doubt, all notices, approvals, consents, requests and any communications hereunder or with respect to the Notes must be in writing
(provided that any communication sent to the Trustee hereunder must be in the form of a document that is signed manually or by way of a digital signature provided by DocuSign or Adobe (or such other digital signature provider as specified in writing
to the Trustee by the authorized representative), in English. The Company agrees to assume all risks arising out of the use of using digital signatures and electronic methods to submit communications to the Trustee, including without limitation
the risk of the Trustee acting on unauthorized instructions, and the risk of interception and misuse by third parties. 

Section 9.04. The Base Indenture, as supplemented and amended by this Seventh Supplemental Indenture, is in all
respects ratified and confirmed, and the Base Indenture and this Seventh Supplemental Indenture shall be read, taken and construed as one and the same instrument with respect to the Notes. All provisions included in this Seventh Supplemental
Indenture supersede any conflicting provisions included in the Base Indenture with respect to the Notes, unless not permitted by law. The Trustee accepts the trusts created by the Base Indenture, as supplemented by this Seventh Supplemental
Indenture, and agrees to perform the same upon the terms and conditions of the Base Indenture, as supplemented by this Seventh Supplemental Indenture. 

Section 9.05. The provisions of this Seventh Supplemental Indenture shall become effective as of the date hereof.

 Section 9.06. Notwithstanding anything else to the contrary herein, the terms and provisions of this Seventh
Supplemental Indenture shall apply only to the Notes and shall not apply to any other series of Securities under the Base Indenture (as supplemented or amended from time to time by one or more indentures supplemental thereto) and this Seventh
Supplemental Indenture shall not and does not otherwise affect, modify, alter, supplement or change the terms and provisions of any other series of Securities under the Base Indenture (as supplemented or amended from time to time by one or more
indentures supplemental thereto), whether now or hereafter issued and Outstanding. 
 Section 9.07. The recitals
contained herein and in the Notes shall be taken as the statements of the Company, and the Trustee assumes no responsibility for their correctness. The Trustee makes no representations as to the validity or sufficiency of this Seventh Supplemental
Indenture, the Notes or any Additional Notes, except that the Trustee represents that it is duly authorized to execute and deliver this Seventh Supplemental Indenture, authenticate the Notes and any Additional Notes and perform its obligations
hereunder. The Trustee shall not be accountable for the use or application by the Company of the Notes or any Additional Notes or the proceeds thereof. 

  
 12 

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

			
	FS KKR CAPITAL CORP.
		
	By:	 	 /s/ Michael C. Forman

		 	Name: Michael C. Forman
		 	Title: Chief Executive Officer
	
	U.S. BANK NATIONAL ASSOCIATION, as Trustee
		
	By:	 	 /s/ Karen R. Beard

		 	Name: Karen R. Beard
		 	Title: Vice President

 [Signature page to Seventh Supplemental Indenture] 

 Exhibit A – Form of Global Note 

This Security is a Global Note within the meaning of the Indenture hereinafter referred to and is registered in the name of The Depository Trust Company or
a nominee thereof. This Security may not be exchanged in whole or in part for a Security registered, and no transfer of this Security in whole or in part may be registered, in the name of any Person other than The Depository Trust Company or a
nominee thereof, except in the limited circumstances described in the Indenture. 
 Unless this certificate is presented by an authorized
representative of The Depository Trust Company to the issuer or its agent for registration of transfer, exchange or payment and such certificate issued in exchange for this certificate is registered in the name of Cede & Co., or such other
name as requested by an authorized representative of The Depository Trust Company, any transfer, pledge or other use hereof for value or otherwise by or to any person is wrongful, as the registered owner hereof, Cede & Co., has an interest
herein. 
 FS KKR Capital Corp. 
  

			
	No. ____	  	$
		  	 CUSIP No.

ISIN No.

 3.400% Notes due 2026 

FS KKR Capital Corp., a corporation duly organized and existing under the laws of Maryland (herein called the “Company”,
which term includes any successor Person under the Indenture hereinafter referred to), for value received, hereby promises to pay to Cede & Co., or registered assigns, the principal sum of ______________ (U.S. $_____________) on
January 15, 2026, and to pay interest thereon from December 10, 2020 or from the most recent Interest Payment Date to which interest has been paid or duly provided for, semi-annually on January 15 and July 15 of each year,
commencing July 15, 2021, at the rate of 3.400% per annum until the principal hereof is paid or made available for payment. The interest so payable, and punctually paid or duly provided for, on any Interest Payment Date will, as provided in
such Indenture, be paid to the Person in whose name this Security is registered at the close of business on the Regular Record Date for such interest, which shall be January 1 and July 1 (whether or not a Business Day), as the case may be,
next preceding such Interest Payment Date. Any such interest not so punctually paid or duly provided for will forthwith cease to be payable to the Holder on such Regular Record Date and may either be paid to the Person in whose name this Security is
registered at the close of business on a Special Record Date for the payment of such Defaulted Interest to be fixed by the Trustee, notice whereof shall be given to Holders of Securities of this series not less than 10 days prior to such
Special Record Date, or be paid at any time in any other lawful manner not inconsistent with the requirements of any securities exchange on which the Securities of this series may be listed, and upon such notice as may be required by such exchange,
all as more fully provided in said Indenture. This Security may be issued as part of a series. 
 Payment of the principal of (and premium,
if any, on) and any such interest on this Security will be made at the office of the Trustee located at One Federal Street, 10th Floor, Boston, MA 02110 and at such other address as designated by the Trustee, in such coin or currency of the United
States of America as at the time of payment is legal tender for payment of public and private debts; provided, however, that at the option of the Company payment of interest may be made by check mailed to the address of the
Person entitled thereto as such address shall appear in the Security Register; provided, further, however, that so long as this Security is registered to Cede & Co., such payment will be made by wire transfer in
accordance with the procedures established by The Depository Trust Company and the Trustee. 
 Reference is hereby made to the further
provisions of this Security set forth on the reverse hereof, which further provisions shall for all purposes have the same effect as if set forth at this place. 

Unless the certificate of authentication hereon has been executed by the Trustee referred to on the reverse hereof by manual signature, this
Security shall not be entitled to any benefit under the Indenture or be valid or obligatory for any purpose. 

  
 A-1 

 IN WITNESS WHEREOF, the Company has caused this
instrument to be duly executed. 
 Dated: December 10, 2020 

 

			
	FS KKR CAPITAL CORP.
		
	By:	 	
                     
    

		 	Name:
		 	Title:

  

			
	Attest	 	
		
	By:	 	
                     
    

		 	Name:
		 	Title:

  
 A-2 

 This is one of the Securities of the series designated therein referred to in the
within-mentioned Indenture. 
 Dated: December 10, 2020 
  

			
	 U.S. BANK NATIONAL ASSOCIATION,
 as
Trustee

		
	By:	 	
                     
        

		 	Authorized Signatory

  
 A-3 

 FS KKR Capital Corp. 

3.400% Notes due 2026 
 This
Security is one of a duly authorized issue of Senior Securities of the Company (herein called the “Securities”), issued and to be issued in one or more series under an Indenture, dated as of July 14, 2014 (herein called the
“Base Indenture”, which term shall have the meaning assigned to it in such instrument), between the Company and U.S. Bank National Association, as Trustee (herein called the “Trustee”, which term includes any
successor trustee under the Base Indenture), and reference is hereby made to the Base Indenture for a statement of the respective rights, limitations of rights, duties and immunities thereunder of the Company, the Trustee, and the
Holders of the Securities and of the terms upon which the Securities are, and are to be, authenticated and delivered, as amended and supplemented by the First Supplemental Indenture, dated as of July 14, 2014, the Second Supplemental Indenture,
dated as of December 3, 2014, the Third Supplemental Indenture, dated as of April 30, 2015, the Fourth Supplemental Indenture, dated as of July 15, 2019, the Fifth Supplemental Indenture, dated November 20, 2019, the Sixth
Supplemental Indenture, dated as of April 30, 2020 and this Seventh Supplemental Indenture, relating to the Securities, dated as of December 10, 2020, by and between the Company and the Trustee (herein called the “Seventh
Supplemental Indenture”; and the Seventh Supplemental Indenture and the Base Indenture collectively are herein called the “Indenture”). In the event of any conflict between the Base Indenture and the Seventh Supplemental
Indenture, the Seventh Supplemental Indenture shall govern and control. 
 This Security is one of the series designated on the face
hereof, initially limited in aggregate principal amount to $_______________. Under a Board Resolution, Officers’ Certificate pursuant to Board Resolutions or an indenture supplement, the Company may from time to time, without the consent
of the Holders of Securities, issue additional Securities of this series (in any such case “Additional Securities”) having the same ranking and the same interest rate, maturity and other terms as the Securities, provided that, if
such Additional Securities are not fungible with the Securities (or any other tranche of Additional Securities) for U.S. federal income tax purposes, then such Additional Securities will have different CUSIP numbers from the Securities represented
hereby (and any such other tranche of Additional Securities). Any Additional Securities and the existing Securities will constitute a single series under the Indenture and all references to the relevant Securities herein shall include the Additional
Securities unless the context otherwise requires. The aggregate amount of outstanding Securities represented hereby may from time to time be reduced or increased, as appropriate, to reflect exchanges and redemptions. 

The Securities of this series are subject to redemption in whole or in part at any time or from time to time, at the option of the Company, at
a Redemption Price per security equal to the greater of the following amounts, plus, in each case, accrued and unpaid interest, if any, to, but excluding, the Redemption Date: 
  

	 	(A)	 100% of the principal amount of the Notes to be redeemed, or 

 

	 	(B)	 the sum of the present values of the remaining scheduled payments of principal and interest (exclusive of
accrued and unpaid interest to the Redemption Date) on the Notes to be redeemed through the Par Call Date, discounted to the Redemption Date on a semi-annual basis (assuming a 360-day year consisting of twelve
30-day months) using the applicable Treasury Rate plus 50 basis points. 

Notwithstanding the foregoing, at any time on or after December 15, 2025, the Company may redeem some or all of the Notes, at any time,
or from time to time, at a Redemption Price equal to 100% of the principal amount of the Notes to be redeemed plus, in each case, accrued and unpaid interest, if any, to, but excluding, the Redemption Date. 

For purposes of calculating the Redemption Price in connection with the redemption of the Notes, on any Redemption Date, the following terms
have the meanings set forth below: 

  
 A-4 

 “Comparable Treasury Issue” means the United States Treasury security
selected by the Reference Treasury Dealer as having a maturity comparable to the remaining term of the Notes to be redeemed (assuming the notes matured on the applicable Par Call Date) that would be utilized, at the time of selection and in
accordance with customary financing practice, in pricing new issues of corporate debt securities of comparable maturity to the remaining term of the Notes being redeemed. 

“Comparable Treasury Price” means (1) the average of the remaining Reference Treasury Dealer Quotations for the
Redemption Date, after excluding the highest and lowest Reference Treasury Dealer Quotations, or (2) if the Quotation Agent obtains fewer than four such Reference Treasury Dealer Quotations, the average of all such quotations. 

“Par Call Date” means December 15, 2025, which is the date that is one month prior to the maturity date of the Notes.

 “Quotation Agent” means a Reference Treasury Dealer selected by the Company. 

“Reference Treasury Dealer” means each of (1) BofA Securities, Inc., (2) BMO Capital Markets Corp., (3) a primary
U.S. government securities dealer selected by ING Financial Markets LLC, (4) a primary U.S. government securities dealer selected by MUFG Securities Americas Inc., (5) a primary U.S. government securities dealer selected by SMBC Nikko
Securities America, Inc. and (6) a primary U.S. government securities dealer selected by Truist Securities, Inc., or their respective affiliates which are primary U.S. government securities dealers and their respective successors; provided,
however, that if any of the foregoing or their affiliates shall cease to be a primary U.S. government securities dealer in the United States, or a Primary Treasury Dealer, the Company shall select another Primary Treasury Dealer. 

“Reference Treasury Dealer Quotations” means, with respect to each Reference Treasury Dealer and any Redemption Date, the
average, as determined by the Quotation Agent, of the bid and asked prices for the Comparable Treasury Issue (expressed in each case as a percentage of its principal amount) quoted in writing to the Quotation Agent by such Reference Treasury Dealer
at 3:30 p.m. New York City time on the third Business Day preceding such Redemption Date. 
 “Treasury Rate” means, with
respect to any Redemption Date, the rate per annum equal to the semi-annual equivalent yield-to-maturity of the Comparable Treasury Issue (computed as of the third
Business Day immediately preceding the redemption), assuming a price for the Comparable Treasury Issue (expressed as a percentage of its principal amount) equal to the Comparable Treasury Price for such Redemption Date. The Redemption Price and the
Treasury Rate will be determined by the Company. 
 All determinations made by any Reference Treasury Dealer, including the Quotation Agent,
with respect to determining the Redemption Price will be final and binding absent manifest error. 
 Notice of redemption shall be given in
writing and mailed, first-class postage prepaid or by overnight courier guaranteeing next-day delivery, to each Holder of the Securities to be redeemed, not less than thirty (30) nor more than sixty
(60) days prior to the Redemption Date, at the Holder’s address appearing in the Security Register. All notices of redemption shall contain the information set forth in Section 1104 of the Base Indenture. 

Any exercise of the Company’s option to redeem the Securities will be done in compliance with the Investment Company Act, to the extent
applicable. 
 If the Company elects to redeem only a portion of the Securities, the particular Securities to be redeemed will be selected
in accordance with the applicable procedures of the Trustee and, so long as the Securities are registered to the Depositary or its nominee, the Depositary. In the event of redemption of this Security in part only, a new Security or Securities of
this series and of like tenor for the unredeemed portion hereof will be issued in the name of the Holder hereof upon the cancellation hereof; provided, however, that no such partial redemption shall reduce the portion of the principal
amount of a Security not redeemed to less than $2,000. 

  
 A-5 

 Unless the Company defaults in payment of the Redemption Price, on and after the Redemption
Date, interest will cease to accrue on the Securities called for redemption. 
 Holders will have the right to require the Company to
repurchase their Securities upon the occurrence of a Change of Control Repurchase Event as set forth in the Indenture. 
 The Indenture
contains provisions for defeasance at any time of the entire indebtedness of this Security or certain restrictive covenants and Events of Default with respect to this Security, in each case upon compliance with certain conditions set forth in the
Indenture. 
 If an Event of Default with respect to Securities of this series shall occur and be continuing (other than Events of Default
related to certain events of bankruptcy, insolvency or reorganization as set forth in the Indenture), the principal of the Securities of this series may be declared due and payable in the manner and with the effect provided in the Indenture. In the
case of certain events of bankruptcy, insolvency or reorganization described in the Indenture, 100% of the principal of and accrued and unpaid interest on the Securities will automatically become due and payable. 

The Indenture permits, with certain exceptions as therein provided, the amendment thereof and the modification of the rights and obligations
of the Company and the rights of the Holders of the Securities of each series to be affected under the Indenture at any time by the Company and the Trustee with the consent of the Holders of not less than a majority in principal amount of the
Securities at the time Outstanding of each series to be affected. The Indenture also contains provisions permitting the Holders of specified percentages in principal amount of the Securities of each series at the time Outstanding, on behalf of the
Holders of all Securities of such series, to waive compliance by the Company with certain provisions of the Indenture and certain past defaults under the Indenture and their consequences. Any such consent or waiver by the Holder of this Security
shall be conclusive and binding upon such Holder and upon all future Holders of this Security and of any Security issued upon the registration of transfer hereof or in exchange herefor or in lieu hereof, whether or not notation of such consent or
waiver is made upon this Security. 
 As provided in and subject to the provisions of the Indenture, the Holder of this Security shall not
have the right to institute any proceeding with respect to the Indenture or for the appointment of a receiver or trustee or for any other remedy thereunder, unless such Holder shall have previously given the Trustee written notice of a continuing
Event of Default with respect to the Securities of this series, the Holders of not less than 25% in principal amount of the Securities of this series at the time Outstanding shall have made written request to the Trustee to institute proceedings in
respect of such Event of Default as Trustee and offered the Trustee indemnity, security, or both, satisfactory to the Trustee, against the costs, expenses and liabilities to be incurred in compliance with such request, and the Trustee shall not have
received from the Holders of a majority in principal amount of Securities of this series at the time Outstanding a direction inconsistent with such request, and shall have failed to institute any such proceeding, for sixty (60) days after
receipt of such notice, request and offer of indemnity and/or security. The foregoing shall not apply to any suit instituted by the Holder of this Security for the enforcement of any payment of principal hereof or any premium or interest hereon on
or after the respective due dates expressed herein. 
 No reference herein to the Indenture and no provision of this Security or of the
Indenture shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of and any premium and interest on this Security at the times, place and rate, and in the coin or currency, herein prescribed.

 As provided in the Indenture and subject to certain limitations therein set forth, the transfer of this Security is registrable in the
Security Register, upon surrender of this Security for registration of transfer at the office or agency of the Company in any place where the principal of and any premium and interest on this Security are payable, duly endorsed by, or accompanied by
a written instrument of transfer in form satisfactory to the Company and the Security Registrar duly executed by, the Holder hereof or his attorney duly authorized in writing, and thereupon one or more new Securities of this series and of like
tenor, of authorized denominations and for the same aggregate principal amount, will be issued to the designated transferee or transferees. 

The Securities of this series are issuable only in registered form without coupons in denominations of $2,000 and any integral multiples of
$1,000 in excess thereof. As provided in the Indenture and subject to certain limitations therein set forth, Securities of this series are exchangeable for a like aggregate principal amount of Securities of this series and of like tenor of a
different authorized denomination, as requested by the Holder surrendering the same. 

  
 A-6 

 No service charge shall be made for any such registration of transfer or exchange, but the
Company or Trustee may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection therewith. 

Prior to due presentment of this Security for registration of transfer, the Company, the Trustee and any agent of the Company or the Trustee
may treat the Person in whose name this Security is registered as the owner hereof for all purposes, whether or not this Security be overdue, and neither the Company, the Trustee nor any such agent shall be affected by notice to the contrary. 

All terms used in this Security which are defined in the Indenture shall have the meanings assigned to them in the Indenture. 

To the extent any provision of this Security conflicts with the express provisions of the Indenture, the provisions of the Indenture shall
govern and be controlling. 
 The Indenture and this Security shall be governed by and construed in accordance with the laws of the State of
New York, without regard to principles of conflicts of laws. 

  
 A-7

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