Document:

EXECUTION VERSION

 

 

November 29,
2016

 

Patrick Dalton

c/o Fifth Street

777 West Putnam Avenue, 3rd Floor

Greenwich, CT 06830

 

Re:       Employment
Offer

 

Dear Patrick:

 

We are pleased to present you with this
offer of employment to join Fifth Street Management LLC (the “Company”) and FSC CT LLC. The terms and conditions of
the Company’s offer of employment are set forth in this letter agreement and the annexes and exhibits attached hereto and
incorporated herein. The Company and its affiliates take employee development seriously and are dedicated to providing resources
and pathways for personal growth and advancement. We believe that your experience and background will contribute much to our organization.
If you accept the Company’s offer, your anticipated start date will be January 2, 2017 (the “Commencement Date”).

 

1. Title; Duties. You will
serve as the Company’s Co-President and will report to the Company’s Executive Committee, which, effective on the Commencement
Date, shall initially consist of you, Leonard Tannenbaum, Bernard Berman and Alex Frank, it being understood that the composition
of the Executive Committee may be changed by Leonard Tannenbaum, or in his absence, Bernard Berman or the Board of Directors of
Fifth Street Asset Management Inc. (“FSAM”), provided that (x) no more than two (2) members of the Executive Committee
may be replaced without your prior consent, which shall not be unreasonably withheld, conditioned or delayed and (y) you and the
Company agree to the Executive Committee composition provisions set forth on Annex A attached hereto. In your capacity as Co-President,
you will have the duties, authorities and responsibilities set forth on Annex A attached hereto, as well as such additional duties,
authorities and responsibilities that may be assigned to you from time to time by the Board of Directors of FSAM or the Chief Executive
Officer and that are consistent with your role as Co-President. In addition, you will serve as the Co-President of FSAM. We may,
in our discretion, also request that you serve as an officer of various affiliates of the Company, which you agree to do under
the terms of this employment offer. The Company agrees to recommend to the Boards of Directors of each of Fifth Street Finance
Corp. (“FSC”) and Fifth Street Senior Floating Rate Corp. (“FSFR”) that you be appointed as chief executive
officer and a member of the Board of Directors of each of FSC and FSFR, and if so appointed, you agree to serve in such capacities
and shall have the duties, authorities and responsibilities set forth on Annex A attached hereto. Upon your termination of employment
for any reason, you acknowledge and agree that, upon the request of the Company, you will resign as a director and officer of the
Company’s affiliates and agree to execute such documents as are reasonably necessary to effectuate the foregoing.

 

 

Fifth Street
| 777 West Putnam Avenue, 3rd Floor | Greenwich, CT 06830 | 203-681-3600 | 203-681-3879 (fax) | www.fifthstreetfinance.com

 

     

     

    

 

Patrick Dalton

November 29, 2016

Page 2

 

 

You will perform your duties diligently
and to the best of your ability and will comply with the written policies and procedures of FSAM, Fifth Street Holdings L.P. and
its subsidiaries, FSC and FSFR (“Fifth Street”), which will be provided to you at the start of your employment. It
is your responsibility to read and understand these policies and procedures, and if you have any questions now or in the future,
it is your responsibility to make the appropriate inquiries.

 

2. Salary; Bonus; Equity.
As of the Commencement Date, your annual salary will be $500,000; paychecks will be issued semi-monthly on the fifteenth day of
each month and the last business day of each month. If the fifteenth day of the month falls on a weekend, paychecks will be issued
the Friday prior to or the Monday following the weekend. If the day is a holiday, paychecks will be issued the following business
day. You will receive a performance review each year and will be considered eligible for annual salary increases based on your
performance.

 

During your employment, you will be eligible
to receive an annual bonus with a target range of $1.0 to $1.5 million that will be based on performance criteria to be established
by the Compensation Committee of the Company’s Board of Directors (the “Committee”) in consultation with you.
The Executive Committee and you will work in good faith prior to the Commencement Date to create a bonus formula that yields a
bonus of $1.0 to $1.5 million based on 2016 profitability of the Company (excluding extraordinary expenses and one-time items)
and which would result in the bonus being adjusted proportionally as the Company’s profits increase or decrease. For your
service in each of 2017 and 2018, your annual bonuses will be no less than $1.0 million.

 

Prior to the Commencement Date, you and
the Executive Committee will work in good faith to develop a total compensation program covering all employees under your direct
and indirect supervision, which shall be subject to the approval of any applicable board of directors (or committee thereof) that
is required by applicable law or regulation or by the terms of a relevant plan document as in effect on the date hereof.

 

All bonuses shall be paid in accordance
with the Fifth Street Asset Management Inc. Amended and Restated Deferred Bonus and Retention Plan (the “Plan”), a
copy of which is attached hereto, so long as the Plan remains in effect; provided that, (i) for purposes of amounts that may be
deferred under the Plan, the definition of “Cause” shall be as defined in Annex C hereto, (ii) for purposes of the
Plan your resignation for “Good Reason” (as defined in Annex C hereto) will be treated in the same manner as a termination
by the Company without Cause and (iii) while you are employed, 87.5% of the first $1.0 million of any annual bonus paid to you
will be paid to you in cash and the remainder of any such bonus payment shall be subject to the terms of the Plan.

 

The terms and conditions of the grant of
Options and RSUs you will receive, subject to Committee approval, are set forth in Annex B attached hereto. The grants of Options
and RSUs will be made as soon as reasonably practicable following the Commencement Date.

 

3. Benefits. You will become
eligible to join FSC CT LLC’s health insurance plan on the first of the month following the completion of 60 days of full-time
employment in accordance with the terms and conditions of such plan. FSC CT LLC’s health insurance plan is currently structured
so that we offer a choice of three plans: a basic plan, a mid-level plan and a high-level plan. The Company will pay your medical
premiums for the basic plan on a basis no less favorable than that provided to any other senior executive of the Company, and you
will be responsible for the remaining portion of such premiums. If you choose either the mid-level or high-level plan, you will
be responsible for the excess cost over the basic plan. We also currently will pay a portion of your dental policy premiums. From
time to time, we may make changes to such plans in the future and you will be notified of any such changes.

 

 

Fifth Street
| 777 West Putnam Avenue, 3rd Floor | Greenwich, CT 06830 | 203-681-3600 | 203-681-3879 (fax) | www.fifthstreetfinance.com

 

     

     

    

 

Patrick Dalton

November 29, 2016

Page 3

 

You will be entitled to 25 days paid vacation
each year (which shall accrue and be earned pro rata over the course of the year), starting with your third full month of employment,
five sick days and holidays in accordance with the Company’s written policies. You will be provided with a copy of our written
policies on your start date.

 

You will become eligible to join the Company’s
401(k) plan the first of the month after completing three months as a full-time employee (credit for your first month will be given
as long as you have had at least one day of service during the month). Your participation is subject to the terms of the plan which
may be amended from time to time.

 

Your business expenses will be reimbursed
under the Company’s expenses and reimbursement policies as in effect from time to time.

 

Notwithstanding the foregoing, you will
be entitled to at least a comparable level of benefits, in the aggregate, provided to other senior executives of the Company of
comparable status (other than the Chairman) during the term of your employment by the Company.

 

4. At-Will Employment; Policies.
While we hope that we both find our professional relationship mutually beneficial, you understand that your employment is “at-will.”
This means that either you or we may terminate your employment at any time, for any or no reason.

 

In the event that your employment is terminated
by the Company without Cause or you resign for Good Reason, in addition to the payment to you of any unpaid salary and benefits
(including reimbursement for reimbursable business expenses incurred prior to such termination) owed to you as of the date of such
termination, you shall be entitled to (i) receive monthly severance payments over a twelve month period totaling $2.0 million (subject
to applicable taxes and withholding), (ii) accelerated vesting of the Options and RSUs as provided for in Annex B, and (iii) a
pro rata bonus under the Plan for the year of termination, the amount of which will be determined based upon the formula agreed
by the Executive Committee and you, in each case conditioned on your compliance with your post-termination obligations and your
execution, delivery and non-revocation, within thirty days following the date of such termination or resignation, of a general
release in favor of the Company and its affiliates in the form attached hereto as Exhibit A, and subject to paragraph 2(f) of the
Non-Competition, Non-Solicitation and Non-Disclosure Agreement dated as of November 29, 2017.

 

5. Non-Solicitation and Non-Disclosure. As a condition to your employment, you will be required to execute a
Non-Competition, Non-Solicitation and Non-Disclosure Agreement, a copy of which is provided with this offer letter.

 

 

Fifth Street
| 777 West Putnam Avenue, 3rd Floor | Greenwich, CT 06830 | 203-681-3600 | 203-681-3879 (fax) | www.fifthstreetfinance.com

 

     

     

    

 

Patrick Dalton

November 29, 2016

Page 4

 

6. Representations. As a condition
to your employment, you represent and warrant as to the matters set forth in Annex D hereto.

 

7. Miscellaneous. We are required
by law to confirm your eligibility for employment in the United States. Thus, you will be required to provide proof of your eligibility
to work in the U.S. on your start date. The invalidity or unenforceability of any provision of this
offer shall not affect the validity or enforceability of any other provision of this offer, which shall remain in full force and
effect. This offer, and the payments and benefits provided herein, are also subject to the provisions of Annex E hereto,
with respect to matters arising under Sections 409A and 4999/280G of the Internal Revenue Code.

 

8. Indemnification. You will
be indemnified to the fullest extent permitted by law and the Fifth Street’s organizational documents to the same extent
provided to similarly situated senior executives and members of the boards of directors of the Fifth Street entities with respect
to which you render services.

 

9. Legal Fees. The Company
shall promptly reimburse you for legal fees up to $25,000 incurred by you in connection with the negotiation of the commencement
of your employment with the Company within 10 days following the receipt of an invoice for such fees.

 

This offer letter (together with the Non-Competition,
Non-Solicitation and Non-Disclosure Agreement) sets forth the entire agreement and understanding between us and you relating to
your employment and supersedes all prior discussions between us.

 

All payments pursuant to this offer letter
will be subject to applicable withholding taxes.

 

If this offer of employment is acceptable
to you, please sign a copy of this letter and return it to me on or before November 29, 2016.

 

 

Fifth Street
| 777 West Putnam Avenue, 3rd Floor | Greenwich, CT 06830 | 203-681-3600 | 203-681-3879 (fax) | www.fifthstreetfinance.com

 

     

     

    

 

Patrick Dalton

November 29, 2016

Page 5

 

We look forward to having you join our team!

 

Sincerely,

 

/s/ Bernard D. Berman

 

Bernard D. Berman

 

I accept your offer of employment. I represent that I have never
been convicted of a felony or a crime involving moral turpitude, and I have not engaged in any conduct which could reasonably tend
to bring the Company or any of its affiliates into public disgrace or disrepute. I have never been sanctioned, reprimanded or otherwise
punished by the U.S. Securities and Exchange Commission. No oral commitments have been made concerning my employment. I understand
that my employment is at-will and can be terminated by either party at any time, with or without cause and with or without notice.
I specifically acknowledge and agree that I am an exempt employee and am therefore not eligible to receive overtime pay.

 

 

Signature _/s/ Patrick Dalton__

 

Print Name __Patrick Dalton      

 

Date      11/29/2016     

 

 

Fifth Street
| 777 West Putnam Avenue, 3rd Floor | Greenwich, CT 06830 | 203-681-3600 | 203-681-3879 (fax) | www.fifthstreetfinance.com

 

     

     

    

 

Patrick Dalton

November 29, 2016

Page 6

 

Annex A – Duties, Authorities and Responsibilities;
Executive Committee Composition

 

Duties, Authorities and Responsibilities as Co-President
of the Company

•Authority to hire, terminate and set compensation
levels (subject to a compliance with a budget/Incentive Plan approved by the Board of Directors of Fifth Street Asset Management
Inc. (“FSAM”) (or Committee thereof)) for all employees of FSAM other than Leonard Tannenbaum, Bernard Berman, Alexander
Frank and Ivelin Dimitrov.

•Authority to approve new hires at or above MD level
after vetting by executive committee (membership to be determined by Messrs. Tannenbaum and Berman and can be changed) and subject
to minimum intelligence test score.

•Quarterly goals and reporting to FSAM Board of Directors.

•Weekly communication to executive committee with quarterly
feedback.

•Authority to set organizational structure and determine
roles, responsibilities and resources available for each role.

•Develop (with Messrs. Tannenbaum and Berman) a Management
Incentive Plan.

•Manage the implementation of the Management Incentive
Plan and allocation of Bonus Pool.

•Coordinate all financings and equity and debt capital
raises for FSF and FSFR with Mr. Tannenbaum and manage the implementation thereof.

•Reasonable control of all expenses that are tied into
the management bonus program.

 

Duties, Authorities and Responsibilities as Chief Executive
Officer of FSC and FSFR

For so long as Fifth Street Management LLC is the investment
adviser of FSC and FSFR, you shall have the following duties, authorities and responsibilities in your role as Chief Executive
Officer of FSC and FSFR:

 

•Co-develop with Mr. Tannenbaum & Boards of Directors
all Corporate Strategies for FSC and FSFR. Macro-economic decisions, including sector allocation targets and leverage targets,
to be approved by executive committee.

•Manage the
implementation of all Corporate Actions for FSC and FSFR.

•Manage all FSC and FSFR deal related decisions, including
Originations, Underwriting, Portfolio Management, Capital Allocation (subject to previously adopted compliance rules).

•Oversee, develop, coordinate, schedule and present
all communications with internal and external constituents related to all matters of FSC and FSFR (subject to coordination and
communication with Mr. Tannenbaum and the respective Boards of Directors of FSC and FSFR) and manage the implementation thereof.

•Credit Committee (members to be appointed by Patrick
Dalton) has sole deal approval decision making for FSC and FSFR. Changes to the composition of the Credit Committee will require
majority approval of the Executive Committee, which consent shall not be unreasonably withheld. Five person committee with each
member having one vote with Patrick Dalton also having veto rights on approvals on all new capital commitments.

 

References to Mr. Tannenbaum or Mr. Berman, as applicable, in
the duties, authorities and responsibilities set forth above will be deemed to refer to the successor to Mr. Tannenbaum or Mr.
Berman, as applicable.

 

 

Fifth Street
| 777 West Putnam Avenue, 3rd Floor | Greenwich, CT 06830 | 203-681-3600 | 203-681-3879 (fax) | www.fifthstreetfinance.com

 

     

     

    

 

Patrick Dalton

November 29, 2016

Page 7

 

 

Executive Committee Composition

You and the Company agree that, while you are employed, if Mr.
Tannenbaum accepts a governmental position, including without limitation, any position with a governmental agency, authority or
instrumentality, whether federal, state or local, Mr. Tannenbaum may designate his replacement to the Executive Committee without
your consent, provided that Mr. Berman consents to such replacement (which consent will not be unreasonably withheld).

 

 

Fifth Street
| 777 West Putnam Avenue, 3rd Floor | Greenwich, CT 06830 | 203-681-3600 | 203-681-3879 (fax) | www.fifthstreetfinance.com

 

     

     

    

 

Patrick Dalton

November 29, 2016

Page 8

 

 

Annex B – Option and RSU Terms

 

		1.	Option Category and Term: You will be granted an option to purchase an aggregate of 1,000,000 shares of FSAM
Class A common stock in two grants, as follows: (i) the first grant will be an option to purchase 750,000 shares of FSAM Class
A common stock and will have a five year term (the “First Option Grant”) and (ii) the second grant will be an option
to purchase 250,000 shares of FSAM Class A common stock and will have a six year term (the “Second Option Grant”).
The options granted to you will have an exercise price equal to the greater of (x) $6.00 per share or (y) 100% of the fair market
value of FSAM’s Class A common stock on the date of grant.

 

		2.	Restricted Stock Units: You will be granted a number of RSUs having a grant date fair value equal to $2,000,000,
based on the closing price of FSAM Class A common stock on the Commencement Date. The RSUs representing the right to receive shares
of FSAM Class A common stock subject to fulfillment of vesting and other conditions.

 

		3.	Vesting and Exercise:

		a.	Options – 1/3rd of the shares subject to the First Option Grant will vest on each of the first three anniversaries
of the grant date, subject to continued employment. 100% of the shares subject to the Second Option Grant will vest on the fourth
anniversary of the grant date, subject to continued employment.

		b.	RSUs – 1/4th of the RSUs will vest on each of the first four anniversaries of the grant date, subject to continued
employment.

		c.	Accelerated Vesting of Options and RSUs

		i.	Upon a termination by the Company without Cause or termination by you for Good Reason:

		1.	Options – Vesting to be determined based on full months of service from date of grant plus 12 months as a percentage
of 48 months (without regard to the vesting schedule set forth in 3a. above).

		2.	RSUs – Vesting to be determined based on full months of service from date of grant plus 12 months as a percentage of
48 months (without regard to the vesting schedule set forth in 3b. above).

		ii.	Upon a “Change in Control” while you are employed, 100% of your then unvested Options and RSUs shall vest. “Change
in Control” shall have the meaning set forth in the Fifth Street Asset Management Inc. 2014 Omnibus Incentive Plan.

		d.	Exercise – All Options will be exercisable within 1 year following termination by the Company without Cause or by you
for Good Reason; in other cases, exercise terms will be as provided for under the terms of grant.

		e.	Manner of Exercise – Options to be subject to the same manner of exercise afforded to other senior executives receiving
options in FSAM, including broker assisted cashless exercise if available or net settlement in shares of FSAM Class A common stock.

 

 

Fifth Street
| 777 West Putnam Avenue, 3rd Floor | Greenwich, CT 06830 | 203-681-3600 | 203-681-3879 (fax) | www.fifthstreetfinance.com

 

     

     

    

 

Patrick Dalton

November 29, 2016

Page 9

 

 

		f.	Settlement of RSUs – No later than 60 days following each vesting date, one share of FSAM Class A common stock shall
be issued for each RSU that becomes vested on such vesting date.

 

		4.	Liquidity on Shares Realized Upon Exercise and Settlement

		a.	Options – 100% of the net option shares acquired upon exercise of the vested Options may be sold as follows: 25% after
the 4th anniversary of the Grant Date, an additional 25% after the 5th anniversary of the Grant Date, an
additional 25% after the 6th anniversary of the Grant Date, and an additional 25% after the 7th anniversary
of the Grant Date.

		b.	RSUs – 100% of the net shares acquired upon settlement of vested RSUs may be sold as follows: 25% after the 4th
anniversary of the Grant Date, an additional 25% after the 5th anniversary of the Grant Date, an additional 25% after
the 6th anniversary of the Grant Date, and an additional 25% after the 7th anniversary of the Grant Date.

		c.	Following Termination By Company without Cause/Termination by you for Good Reason – 50% of option shares held by you
resulting from your exercise of the Options may be sold within the first year immediately following such termination, and all option
shares held by you resulting from your exercise of Options may be sold after the 1st anniversary of such termination.
50% of the shares received upon vesting of RSUs may be sold within the first year immediately following such termination, and all
such shares received upon vesting of RSUs may be sold after the 1st anniversary of such termination.

 

Other Restrictions – In all cases, you shall
remain subject to any restrictions on the sale of options shares or RSUs arising under applicable law or imposed by the Company
or its underwriters in connection with any capital markets transactions or securities trading policies, in each case to the extent
equally applicable to all current senior executives of comparable status (other than the Chairman).

 

		5.	Other Provisions

		a.	The foregoing terms will be reflected in, and subject to, one or more written Option and RSU agreements as soon as reasonably
practicable following the effective date of grant, dated as of such grant date. Except as provided for above, the terms of the
Options and RSUs will be subject to the provisions of plan pursuant to which such Options and RSUs are granted, as well as the
provisions of the Option and RSU grants, as the case may be, otherwise applicable to all senior executives of the Company (e.g.
with respect to forfeiture, clawbacks and post-termination exercise periods).

 

 

Fifth Street
| 777 West Putnam Avenue, 3rd Floor | Greenwich, CT 06830 | 203-681-3600 | 203-681-3879 (fax) | www.fifthstreetfinance.com

 

     

     

    

 

Patrick Dalton

November 29, 2016

Page 10

 

 

Annex C – “Cause” and “Good Reason”

 

“Cause” for termination means: (i) your conviction
or admission of, or plea of guilty or nolo contendere with respect to, a felony or a crime involving moral turpitude (other
than a motor vehicle offense); (ii) misconduct by you that brings the Company or its affiliates into public disgrace or disrepute
or is otherwise materially injurious to their business, reputation or goodwill; (iii) a demonstrable act of fraud, embezzlement
or material misappropriation committed by you in connection with the performance of your duties under the offer letter; (iv) your
gross negligence or willful misconduct in connection with the performance of your duties that causes or could reasonably be expected
to cause material harm to the business, reputation or goodwill of the Company or its affiliates; (v) your material breach of fiduciary
duty in connection with the performance of your duties under the offer letter; (vi) your material breach of the Non-Competition,
Non-Solicitation and Non-Disclosure Agreement; (vii) your breach of a term of this offer letter that causes or could reasonably
be expected to cause material harm to the business, reputation or goodwill of the Company or its affiliates; (viii) your breach
of a representation in Annex D of this offer letter that causes material harm to the Company or impacts your ability to perform
your duties under the offer letter; (ix) your commission of a material violation of any applicable banking, securities or commodities
laws, rules or regulations; (x) your violation of any securities trading, conflict of interest or material code of conduct policies
which has been provided or made available to you prior to any alleged violation; or (xi) your willful and continuing failure to
follow the lawful directives of the Board or other governing body of the Company or material breach in the performance of your
obligations under the offer letter, and in the case of sub-clauses (x) or (xi), which remains uncured by you after you have been
provided with notice and ten (10) days to cure (to the extent curable). To the extent that within sixty (60) days following your
resignation or termination other than for “Cause,” the Company reasonably determines that facts or circumstances existed
that would have otherwise constituted “Cause” under sub-clauses (i) – (iii) or (ix) above, and such facts or
circumstances were not actually known by the Executive Committee at the time of such resignation or termination, the Company may
treat such resignation or termination as a termination for “Cause” for all purposes. In order to terminate you for
“Cause” (including a determination to terminate you for “Cause” after your resignation or termination as
provided in the preceding sentence) the existence of such “Cause” must be determined in good faith by a resolution
of a majority of the Board and you must be provided with (A) written notice setting forth the specific details of the act or acts
alleged to constitute “Cause” and (B) an opportunity to appear, together with your legal counsel, before a meeting
of the Board called for such purpose.

 

“Good Reason” shall mean the occurrence of any of
the following events, without your express written consent, unless such events are cured by the Company within thirty (30) days
following written notification by you to the Company that you intend to terminate your employment for one of the reasons set forth
below:

 

		(i)	The failure of the Board of Directors of FSAM to appoint you as Co-President of FSAM, the failure of the Board of Directors
of FSC to appoint you as FSC’s chief executive officer and as a member of the FSC Board of Directors, and/or the failure
of the Board of Directors of FSFR to appoint you as FSFR’s chief executive officer and as a member of the FSFR Board of Directors,
in each case as of the Commencement Date.

 

 

Fifth Street
| 777 West Putnam Avenue, 3rd Floor | Greenwich, CT 06830 | 203-681-3600 | 203-681-3879 (fax) | www.fifthstreetfinance.com

 

     

     

    

 

Patrick Dalton

November 29, 2016

Page 11

 

 

		(ii)	Material diminution in your base salary or your annual target bonus opportunity at the rate in effect immediately prior to
the reduction or the failure to pay you any salary or any earned and due bonus or incentive payments; or

 

		(iii)	Material diminution in your duties, authorities or responsibilities as set forth in Annex A or that otherwise exist in connection
with your position (other than temporarily while physically or mentally incapacitated or as required by applicable law), including
(without limitation) your removal without Cause (as defined above) from (A) the position of Co-President of the Company or FSAM
or of the position of CEO of FSC and/or FSFR, (B) the FSC and/or FSFR Board of Directors, or (C) the Executive Committee, or a
change in the membership of the Executive Committee other than as set forth in the first paragraph of Section 1 of the offer letter
or in Annex A; provided, however, a diminution in your duties that is the result of (X) Fifth Street Management LLC ceasing to
be the investment adviser of FSC and/or FSFR for any reason, or (Y) a sale, merger, consolidation, sale of all or substantially
all assets, winding up or other corporate event involving FSC or FSFR, shall not constitute “Good Reason”; or

 

		(iv)	the termination of your rights to any material employee benefits, except to the extent that any such benefit is replaced with
a comparable benefit, or a material reduction in scope or value thereof, other than as a result of across-the-board reductions
or terminations affecting senior executives of comparable status of the Company generally; or

 

		(v)	a change by the Company in the location at which you perform your principal duties for the Company to a new location that is
either (x) more than sixty (60) miles from Greenwich, CT or (y) not at the Company’s principal executive offices.

 

You shall provide the Company with a written notice detailing
the specific circumstances alleged to constitute Good Reason within sixty (60) days after the first occurrence of such circumstances
(or any claim of such circumstances as “Good Reason” shall be deemed irrevocably waived by you), and in no event shall
you be entitled to resign for “Good Reason” more than one hundred and eighty (180) days following the occurrence of
any event alleged to constitute “Good Reason.”

 

 

Fifth Street
| 777 West Putnam Avenue, 3rd Floor | Greenwich, CT 06830 | 203-681-3600 | 203-681-3879 (fax) | www.fifthstreetfinance.com

 

     

     

    

 

Patrick Dalton

November 29, 2016

Page 12

 

 

Annex D – Representations and Warranties

 

You represent and warrant
as to the following:

 

		(i)	You are not in breach of any agreement requiring you to preserve the confidentiality of any information,
client lists, trade secrets or other confidential information or any agreement not to compete, solicit clients or employees of,
or interfere with, any prior employer, and that neither the execution of this offer letter nor the performance by you of your obligations
hereunder as of the anticipated commencement date will conflict with, result in a breach of, or constitute a default under, any
agreement or policy to which you are a party or to which you may be subject, including any garden leave or notice requirement prior
to resigning your prior employment.

 

		(ii)	You have not taken and will not take any confidential information from any prior employer and will
not use any such information in performing your obligations hereunder but instead will rely on your generalized knowledge and skill
in performing your services hereunder.

 

		(iii)	You are not currently and have never been (a) the subject of any investigation by any prior employer
or a party in any securities-related or banking litigation or arbitration proceeding; (b) the subject or target of any pending
investigation, charge or complaint before a securities regulatory or self-regulatory organization, grand jury or any other forum;
or (c) fined, sanctioned or otherwise found to have violated any securities related regulation by any governmental agency or self-regulatory
organization, whether or not such finding resulted in statutory disqualification.

 

		(iv)	You have disclosed any material information to the Company regarding your personal investments,
professional affairs or any legal or regulatory matter of which you are aware that, if publicly disclosed hereafter, would adversely
affect the business, reputation or goodwill of the Company or its affiliates.

 

		(v)	You have not, within the preceding twenty-four (24) months, made a contribution to: (i) any person
(including any election committee for the person) who is an incumbent, candidate or successful candidate for state or local office,
including any such person who is running for federal office; (ii) a political action committee; or (iii) a state or local political
party, other than those contributions that have been previously disclosed to the Company in writing.

 

 

Fifth Street
| 777 West Putnam Avenue, 3rd Floor | Greenwich, CT 06830 | 203-681-3600 | 203-681-3879 (fax) | www.fifthstreetfinance.com

 

     

     

    

 

Patrick Dalton

November 29, 2016

Page 13

 

 

		(vi)	You have not had an event described in paragraph 9(d)(1)(i)-(viii) of Rule 506 under the Securities Act of 1933 (“Disqualifying
Events”), copy of which has been provided to you, except as expressly disclosed in writing to the Company, and you (a) will
immediately update any information provided to the Company in accordance with the foregoing sentence whenever it ceases to be accurate
in any way and (b) agree to notify the Company immediately of the occurrence after the date hereof of any Disqualifying Event and
provide the Company with such further information as the Company or its affiliates may request concerning any Disqualifying Events
and consent to the disclosure of any such information as the Company or its affiliates may deem appropriate.

 

 

Fifth Street
| 777 West Putnam Avenue, 3rd Floor | Greenwich, CT 06830 | 203-681-3600 | 203-681-3879 (fax) | www.fifthstreetfinance.com

 

     

     

    

 

Patrick Dalton

November 29, 2016

Page 14

 

 

Annex E – Section 409A Matters

 

		a.	It is intended that the provisions of the offer letter comply with Code Section
409A of the Internal Revenue Code, and all provisions of the offer letter shall be construed in a manner consistent with the requirements
for avoiding taxes or penalties under Code Section 409A. Notwithstanding the foregoing, the Company shall have no liability with
regard to any failure to comply with Code Section 409A so long as it has acted in good faith with regard to compliance therewith.

 

		b.	If, under the offer letter, an amount is to be paid in two or more installments,
for purposes of Code Section 409A, each installment shall be treated as a separate payment.

 

		c.	A termination of employment shall not be deemed to have occurred for purposes
of any provision of the offer letter providing for the payment of amounts or benefits upon or following a termination of employment
unless such termination is also a “Separation from Service” within the meaning of Code Section 409A and, for purposes
of any such provision of the Agreement, references to a “resignation,” “voluntary termination,” “termination,”
“termination of employment” or like terms shall mean Separation from Service.

 

		d.	If you are deemed on the date of termination of your employment to be a “specified
employee” within the meaning of that term under Section 409A(a)(2)(B) of the Code and using the identification methodology
selected by the Company from time to time, or if none, the default methodology, then:

 

		i.	With regard to any payment, the providing of any benefit or any distribution
of equity upon separation from service that constitutes “deferred compensation” subject to Code Section 409A, such
payment, benefit or distribution shall not be made or provided prior to the earlier of (i) the expiration of the six-month period
measured from the date of your Separation from Service or (ii) the date of your death; and

 

		ii.	On the first day of the seventh month following the date of your Separation
from Service or, if earlier, on the date of your death, (x) all payments delayed pursuant to this Section (d) (whether they would
otherwise have been payable in a single sum or in installments in the absence of such delay) shall be paid or reimbursed to you
in a lump sum, and any remaining payments and benefits due under the Agreement shall be paid or provided in accordance with the
normal dates in accordance with the terms of the Agreement, and (y) all distributions of equity delayed pursuant to this Section
(d) shall be made to you.

 

 

Fifth Street
| 777 West Putnam Avenue, 3rd Floor | Greenwich, CT 06830 | 203-681-3600 | 203-681-3879 (fax) | www.fifthstreetfinance.com

 

     

     

    

 

Patrick Dalton

November 29, 2016

Page 15

 

 

In determining the amounts
that are subject to the six-month delay requirement described above, the Company shall use all exclusions from the six-month delay
rule that are available to the payments made to you. Please be advised that the Company reserves the right to adopt an alternate
method of complying with the six-month delay requirement which may result in you being deemed a specified employee.

 

		e.	Whenever a payment under the offer letter specifies a payment period with
reference to a number of days (e.g., “payment shall be made within thirty (30) days following the date of termination”),
the actual date of payment within the specified period shall be within the sole discretion of the Company.

 

		f.	With regard to any provision in the offer letter that provides for reimbursement
of costs and expenses or in-kind benefits, except as permitted by Code Section 409A, (i) the right to reimbursement or in-kind
benefits shall not be subject to liquidation or exchange for another benefit, (ii) the amount of expenses eligible for reimbursement,
of in-kind benefits, provided during any taxable year shall not affect the expenses eligible for reimbursement, or in-kind benefits
to be provided, in any other taxable year, provided that the foregoing clause (ii) shall not be violated without regard to expenses
reimbursed under any arrangement covered by Section 105(b) of the Code solely because such expenses are subject to a limit related
to the period the arrangement is in effect and (iii) such payments shall be made on or before the last day of your taxable year
following the taxable year in which the expense occurred.

 

Annex E – Section 4999/280G
Matters

 

In the event a nationally recognized
accounting firm as shall be designated by the Company (the “Accounting Firm”) shall determine that receipt of all payments
or distributions by the Company or any affiliate in the nature of compensation to or for your benefit, whether paid or payable
pursuant to this offer letter or otherwise (collectively, the “Total Payments”)) would subject you to the excise tax
under Section 4999 of the Code (the “Excise Tax”), then, after taking into account any reduction in the Total Payments,
the Company will reduce the Total Payments to the extent necessary so that no portion of the Total Payments is subject to the Excise
Tax (but in no event to less than zero); provided, however, that the Total Payments will only be reduced if (i) the net amount
of such Total Payments, as so reduced (and after subtracting the net amount of federal, state, municipal and local income taxes
on such reduced Total Payments and after taking into account the phase out of itemized deductions and personal exemptions attributable
to such reduced Total Payments), is greater than or equal to (ii) the net amount of such Total Payments without such reduction
(but after subtracting the net amount of federal, state, municipal and local income taxes on such Total Payments and the amount
of Excise Tax to which you would be subject in respect of such unreduced Total Payments and after taking into account the phase
out of itemized deductions and personal exemptions attributable to such unreduced Total Payments).

 

 

Fifth Street
| 777 West Putnam Avenue, 3rd Floor | Greenwich, CT 06830 | 203-681-3600 | 203-681-3879 (fax) | www.fifthstreetfinance.com

 

     

     

    

 

 

 

EXHIBIT A

 

WAIVER AND RELEASE AGREEMENTEXECUTION VERSION

 

NON-COMPETITION, NON-SOLICITATION

AND NON-DISCLOSURE AGREEMENT 

 

This Non-Competition, Non-Solicitation and
Non-Disclosure Agreement (“Agreement”) is entered into between Patrick Dalton (“Employee”)
and FSC CT LLC (“Fifth Street”), a Connecticut corporation, as of November 29, 2016. In this Agreement, Employee
and Fifth Street are collectively referred to as the “parties”. The term “Company” as used in this
Agreement includes Fifth Street and all direct and indirect subsidiaries and affiliates of Fifth Street, including, without limitation,
Fifth Street Management LLC (the “Advisor”), Fifth Street Asset Management Inc. (“FSAM”),
Fifth Street Holdings, L.P., Fifth Street Finance Corp. (the “BDC”), Fifth Street Senior Floating Rate Corp.
(the “BDC II”), Fifth Street Senior Loan Fund I Operating Entity, LLC, Fifth Street Senior Loan Fund II Operating
Entity, LLC, Fifth Street Credit Opportunities Fund, L.P., Fifth Street Mezzanine Partners II, L.P., Fifth Street Capital LLC,
Fifth Street Capital West, Inc., FSC, Inc., FSC Midwest, Inc. and any entities formed after the date hereof which engage the Company
to provide services, and any affiliates of Fifth Street formed after the date hereof.

 

1. 
Consideration. Employee acknowledges that he has been advised by Fifth Street that the restrictions
and covenants contained in this Agreement, and Employee's agreement to such terms, are of the essence to this Agreement and constitute
a material inducement to Fifth Street (i) to enter into this Agreement (including, without limitation, agreeing to the terms of
Section 2) for the benefit of the Company, and (ii) to employ Employee. Employee acknowledges that the Company will not employ
Employee without Employee’s agreement to comply with the restrictions and covenants contained in this Agreement and without
Employee’s execution of this Agreement. Employee acknowledges and agrees that the Company’s providing employment to
Employee is full and complete consideration for the promises and agreements made by Employee herein.

 

2. 
Non-Compete.

 

(a) 
Non-Competition Period. As used in this Agreement, the term “Non-Competition Period” shall mean
the period of Employee's employment with the Company and the one-year period commencing on the date that Employee’s employment
with the Company terminates, regardless of the reason for such termination and regardless of whether the termination was voluntary
or involuntary; provided that if either (i) Employee’s employment with the Company is terminated by Employee for “Good
Reason” or by the Company other than for “Cause” (each as defined in Exhibit A) within ninety (90) days prior
to a “Change in Control” (as defined in Section (4) below), or (ii) Employee’s employment is terminated at any
time (and for any reason) on or after a “Change in Control”, then the “Non-Competition Period” shall
mean the period of Employee’s employment with the Company and the three (3) month period commencing on the date Employee’s
employment terminates. In the event of a termination of Employee’s employment for any reason other than for Cause, the Company
shall, subject to the following conditions, pay Employee during the Non-Competition Period the sum of (i) his base salary (or a
pro-rata portion, if the Non-Competition Period is less than one year in duration) pursuant to the Company’s customary payroll
policies, plus (ii) a bonus (or a pro-rata portion, if the Non-Competition Period is less than one year in duration) equal to the
average of the discretionary

 

    	 	 	 

     

    

bonuses received by Employee over the preceding two years (but
no less than $1.0 million with respect to any termination in 2017, with respect to a termination prior to the payment of the 2017
bonus); provided that (I) the commencement of the foregoing payments are conditioned on the effectiveness (i.e., the expiration
of any applicable revocation period without a revocation by Employee) of a release and waiver of all claims (the “Release”)
by Employee, in the form attached as Exhibit A to the Offer Letter from Fifth Street to Employee dated as of November 29, 2016
(the “Offer Letter”), within 30 days from the date of termination; (II) the foregoing payments are conditioned
on Employee’s compliance in all material respects with the post-termination obligations set forth in this Agreement, (III)
the post-termination obligations of Employee under this Agreement shall remain in full force and effect, and Employee shall remain
bound in full by such obligations, regardless of whether Employee elects to accept payment of such amounts, (IV) if the Company,
in its sole discretion, waives compliance with Section 2(a) of the Agreement in writing, the payments provided for in this sub-clause
(a) shall no longer be paid from and after the effective date of such waiver (it being understood that no such waiver shall affect
the Company’s payment obligations under the Offer Letter, including its obligations under Section 4 thereof. In the event
of such a waiver, the other covenants contained in this Agreement shall not be affected and will continue in full force and effect
in accordance with the terms of this Agreement), (V) if the termination occurs within 90 days prior to, or at any time on or after
a “Change in Control” (as defined in Section (4) below) the payment under this sub-clause (a) shall equal three (3)
months of base salary and a pro rata portion of the applicable bonus equal to three (3) months and (VI) any payment obligations
under this Agreement shall be reduced by all post-termination separation payments paid to the Employee under the Offer Letter.
Employee covenants, during the one year period following the termination of his employment, to provide to the Company, as promptly
as reasonably practicable prior to commencing employment, with advance written notice of the name of his new employer. For purposes
of this Agreement, “base salary” shall mean an amount equal to the highest base salary ever paid to Employee during
his employment by the Company.

 

(b) 
Non-Competition. In order to protect the Company’s Confidential or Protected Information, Employee agrees that,
during the Non-Competition Period, Employee shall not, directly or indirectly, own, manage, operate, control or participate in
the ownership, management, operation or control of, or be connected as an officer, employee, director, consultant, advisor, agent,
independent contractor, partner, member, stockholder, trustee, or otherwise with, or have any financial interests in, or aid or
assist anyone else in the conduct of, or in any other capacity be engaged directly or indirectly in, any entity or business (i)
that is in competition with the Company's business of arranging and/or providing financing solutions to sponsor-led, middle market
acquisitions or (ii) that is in competition with any other type of business in which the Company is also then engaged, or is a
business that the Executive Committee of the Advisor has discussed and is a planned expansion of the Company’s then business
(each, a “Competitive Business”). The ownership of less than two percent (2%) of any class of the outstanding
securities of any corporation whose shares are traded on a U.S. national securities exchange or quoted on The Nasdaq Stock Market,
even though such corporation may be a Competitive Business, shall not be deemed to constitute an interest in such competitor which
violates this paragraph. Following the termination of Employee’s employment, the foregoing shall not prevent Employee from
providing services to any enterprise engaged in a Competitive Business to the extent that such services, or any supervisory responsibility
of Employee associated with such position, are related only to
the products or lines of business of such entity which, standing alone, would not constitute a Competitive Business, so long as
the portion of the enterprise that is a Competitive Business does not represent more than fifty percent (50%) of the revenues of
such enterprise at any time.

 

    	 	2	 

     

    

(c) 
Timing of Payments. The payments described in Section 2(a) above shall be paid, minus applicable deductions, including
deductions for tax withholding, in equal payments on the regular payroll dates during the Non-Competition Period following Employee’s
termination of employment. Commencement of payments described in Section 2(a) shall begin on the payroll date within 30 days of
the effective date of the Release. The first payment shall include those payments that would have previously been paid if the payments
described in Section 2(a) had begun on the first payroll date following Employee’s termination of employment. This timing
of the commencement of payments is subject to Section 22 below and Annex E to the Offer Letter.

 

(d) 
For purposes of this Agreement, “termination of employment” shall mean a “separation of service”
as defined in Section 409A of the Internal Revenue Code of 1986, as amended, (the “Code”) and Treasury Regulations
Section 1.409A-1(h) without regard to the optional alternative definitions available thereunder.

 

(e) The payments described in Section 2(a) shall be treated as a series of separate payments for purposes of Section 409A of
the Code.

 

(f) 
Any amounts payable to Employee by the Company under this Agreement or under any other plan or arrangement of the Company
which are subject to Section 409A and are conditioned upon execution of a waiver and release that may be executed and/or revoked
in a calendar year following the calendar year in which the payment event (such as termination of employment) occurs shall commence
payment only in such following calendar year, to the extent necessary to comply with Section 409A.

 

3. 
Non-Solicitation Covenants. 

 

(a) 
Restricted Period.

 

		i.	As used in this Agreement, the term “Investor Restricted Period” shall mean (x) the term of Employee's employment
with the Company, and (y) (I) the one-year period commencing on the date that Employee's employment with the Company terminates,
regardless of the reason for such termination and regardless of whether the termination was voluntary or involuntary, or, if applicable,
(II) the six (6) month period commencing on the date that Employee’s employment with the Company terminates, provided that
(i) such termination was by the Company other than for “Cause” or by Employee for “Good Reason” (each as
defined in Exhibit A) and was within ninety (90) days prior to a “Change in Control” (as defined in Section (4) below)
or (ii) such termination (for any reason) was on or after a “Change in Control” (as defined in Section (4) below).

 

    	 	3	 

     

    

		ii.	As used in this Agreement, the term “Customer Restricted Period” shall mean (x) the term of Employee's employment
with the Company, and (y) (I) the one-year period commencing on the date that Employee's employment with the Company terminates,
regardless of the reason for such termination and regardless of whether the termination was voluntary or involuntary, or, if applicable,
(II) the six (6) month period commencing on the date that Employee’s employment with the Company terminates, provided that
(i) such termination was by the Company other than for “Cause” or by Employee for “Good Reason” (each as
defined in Exhibit A) and was within ninety (90) days prior to a “Change in Control” (as defined in Section (4) below)
or (ii) such termination was on or after a “Change in Control” (as defined in Section (4) below).

 

		iii.	As used in this Agreement, the term “Employee Restricted Period” shall mean (x) the term of Employee's employment
with the Company, and (y) (I) the two-year period commencing on the date that Employee's employment with the Company terminates,
regardless of the reason for such termination and regardless of whether the termination was voluntary or involuntary, or, if applicable,
(II) the six (6) month period commencing on the date that Employee’s employment with the Company terminates, provided that
(i) such termination was by the Company other than for “Cause” or by Employee for “Good Reason” (each as
defined in Exhibit A) and was within ninety (90) days prior to a “Change in Control” (as defined in Section (4) below)
or (ii) such termination was on or after a “Change in Control” (as defined in Section (4) below).

 

(b) 
Non-Solicitation of Investors. Employee agrees that, during the Investor Restricted Period, Employee shall not, directly
or indirectly, for himself or for any person or entity other than the Company: (i) solicit or accept any investment from any person
or entity that was an Investor, at any time prior to the termination of Employee's employment with the Company; (ii) induce or
influence any such Investor to discontinue, modify, or reduce its business relationship with the Company; or (iii) assist or cause
any person or entity to engage in any of the actions in which Employee has agreed not to engage under this paragraph. The term
“Investor” means the investors, and the affiliates of such investors, that, in each case, did business with
the Company, or any account, fund or other entity for which the Advisor or any affiliate of the Advisor provided investment advisory
or management services at any time during Employee's employment and all potential investors which, as of the last day of Employee's
employment, the Company was soliciting or marketing (including, without limitation, any potential investor (or affiliate thereof)
that could reasonably be expected to do business with the Company to which the Company had delivered a PPM or similar offering
memorandum and with which the Company had at least two conversations regarding a potential investment within the one year preceding
the termination of Employee's employment). Notwithstanding the foregoing, no person shall be deemed to be an Investor solely based
on the fact that such person is or was a stockholder of FSAM, the BDC, BDC II, or any other affiliate of the Company that is publicly
traded.

 

    	 	4	 

     

    

(c) 
Non-Solicitation of Customers. Employee agrees that, during the Customer Restricted Period, Employee shall not, directly
or indirectly, for himself or for any person or entity other than the Company: (i) solicit business (unless such business is noncompetitive
to the Company's business) from any customer or client of the Company (a “Covered Customer”); (ii) induce or
influence any Covered Customer to discontinue, modify, or reduce its business relationship with the Company; (iii) solicit, induce
or influence any entity to not accept a written term sheet or commitment letter that was issued in the six months prior to Employee's
termination from the Company or discontinue a loan arrangement with the Company that that was in existence at the time of Employee's
termination; or (iv) assist or cause any person or entity to engage in any of the actions in which Employee has agreed not to engage
under this paragraph.

 

(d) 
Non-Solicitation of Employees. Employee agrees that, during the Employee Restricted Period, Employee shall
not, directly or indirectly, for himself or for any person or entity other than the Company: (i) induce, encourage, or solicit
any individual who is employed by the Company as of the date of Employee's termination of employment, or within one year prior
thereto, to leave such employment or to become employed by or provide services to any person or entity other than the Company,
or (ii) assist or cause any person or entity to engage in any of the actions in which Employee has agreed not to engage under this
paragraph.

 

4. 
Definition of “Change in Control”. As used in this Agreement, the term “Change
in Control” shall have the meaning set forth in the Fifth Street Asset Management Inc. 2014 Omnibus Incentive Plan.

 

5. 
Confidential or Protected Information. As used in this Agreement, “Confidential or Protected
Information” means:

 

(a) 
confidential, proprietary or trade secret information (including, without limitation, all information as to which
the Company has made efforts to maintain secrecy or that the law protects from disclosure) made available to Employee, or to which
Employee has access during his employment or other service, or of which Employee becomes aware through his employment, including,
without limitation, information related to investments made by the Company, information related to the Company's or any other entity's
businesses, systems, operations, finances, investments, transactions, negotiations, claims, potential claims, sales, marketing,
plans, pricing, customers, prospective customers, policies, practices, procedures, products, services, finances, accounting practices
or procedures, financial or investment performance (including, without limitation, any “track record” data or information),
return on investment or capital, internal rate of return (“IRR”), relationships with third parties, ownership,
investors, partners, employees, and management, as well as the Company's or any other entity's software (in any stage of development),
programs (whether or not in final form), ideas, inventions, concepts, formulas, methods, development, research, designs, drawings,
schematics, specifications, techniques, models, data, source code, object code, flow diagrams, and documentation; and

 

    	 	5	 

     

    

(b)  all
information concerning any Inventions or Copyright Works. The term “Invention” means any new or useful
art, discovery, contribution, finding, or improvement, whether or not patentable. The term “Copyright
Works” means materials for which copyright protection may be obtained, including, but not limited to, computer
programs, artistic works (including designs, graphs, drawings, blueprints and other works), literary works, recordings,
photographs, slides, motion pictures, and audiovisual works.

 

The forgoing description of “Confidential
or Protected Information” includes all such information in any and all forms, whether written, oral, on a computer, tape,
chip, or disk, whether prepared by Employee, by the Company, or by others, whether or not fixed in tangible form, and includes
all originals, summaries, portions, and copies of any and all such information.

 

6. 
Nondisclosure of Confidential or Protected Information. Except as provided below in Paragraph 7,
Employee agrees that during Employee's employment with the Company and after Employee's employment with the Company terminates,
regardless of why such employment terminated and regardless of whether the termination was voluntary or involuntary, Employee will
not disclose to anyone, publish, sell, assign, license, or attempt to do so, and will not use for Employee's own personal benefit
or the benefit of anyone other than the Company, whether directly or indirectly, any Confidential or Protected Information. Employee
also agrees to:

 

(a) 
maintain in a confidential and protected manner all Confidential or Protected Information that is within his possession;

 

(b) 
take no action reasonably likely to subvert or obstruct the Company’s right and ability to protect Confidential
or Protected Information; and

 

(c) 
promptly report to the Chief Executive Officer of Fifth Street whenever Employee learns it is likely that any unauthorized
person or entity seeks or plans to obtain, disseminate, or use any Confidential or Protected Information.

 

7. 
Exceptions. The restrictions relating to Confidential or Protected Information set forth in Paragraph
6 above do not apply:

 

(a) 
where such disclosure or use is necessary for Employee to faithfully perform his duties as an employee for the Company
or for other employees to faithfully perform their duties for the Company;

 

(b) 
to information which is now or hereafter becomes known or generally available to the public at large, except if such
knowledge results from a breach of this Agreement or another obligation of confidentiality owed to the Company;

 

(c) 
where Employee has the prior written permission of the Chief Executive Officer of Fifth Street; and

 

    	 	6	 

     

    

(d) 
where necessary to comply with any legal obligation applicable to Employee; provided, however, that before disclosing
or permitting disclosure of any Confidential or Protected Information pursuant to a legal obligation, Employee agrees to (i) promptly
notify the Chief Executive Officer of Fifth Street of the legal obligation
that Employee believes requires that he make or permit such disclosure, and (ii) delay, if and to the extent lawful to do so, making
such disclosure to afford the Company a reasonable opportunity to oppose disclosure, or restrict, limit or condition such disclosure.

 

Notwithstanding the foregoing, nothing contained
in this Agreement will prohibit Employee from reporting possible violations of federal or state law or regulations to any governmental
agency or self-regulatory organization, or making other disclosures that are protected under whistleblower or other provisions
of any applicable federal or state law or regulations.

 

8. 
Intellectual Property.

 

(a) 
Ownership of Confidential or Protected Information, Inventions, and Copyright Works. Upon conception, all
Confidential or Protected Information, Inventions, and Copyright Works shall become the exclusive property of Fifth Street whether
or not patent or copyright applications are filed on the subject matter of the conception.

 

(b) 
Rights in Copyrights. Unless otherwise agreed in writing by the Chief Executive Officer of Fifth Street, original
works of authorship fixed in any tangible form that are or were prepared by Employee (alone or jointly with others) within the
scope of Employee's employment with Fifth Street shall be deemed “works made for hire” under copyright laws and shall
be owned by Fifth Street. Employee understands that any sale, assignment, license, or release of such works can only be made by
Fifth Street. Employee will do everything reasonably necessary to enable Fifth Street or its nominee to protect its rights in such
works, including, without limitation, assigning the copyright and all rights, throughout the world, in and to the work product
to Fifth Street and hereby assigns to Fifth Street all such copyright and rights as of the date hereof.

 

(c) 
Non-compliance with the disclosure provisions of this Release shall not subject the Employee to criminal or civil
liability under any federal or state trade secret law for the disclosure of a Company trade secret with respect to the following:
(i) in confidence to a federal, state or local government official, either directly or indirectly, or to an attorney in confidence
solely for the purpose of reporting or investigating a suspected violation of law; (ii) in a complaint or other document filed
in a lawsuit or other proceeding, provided that any complaint or document containing the trade secret is filed under seal; or (iii)
to an attorney representing the Employee in a lawsuit for retaliation by the Company for reporting a suspected violation of law
or to use the trade secret information in that court proceeding, provided that any document containing the trade secret is filed
under seal and the Employee does not disclose the trade secret, except pursuant to court order.

 

9. 
Company's Property. Upon termination of Employee's employment with the Company, regardless of the
reason (whether voluntary or involuntary), Employee agrees immediately to surrender to Fifth Street all property of the Company
in Employee's possession, control, or custody, including, but not limited to, the equipment, computers, software, credit cards,
books, records, reports, files, manuals, literature, the work product of Employee and all other Company employees and all property
containing Confidential or Protected Information (including all originals, summaries, portions, and copies).

 

    	 	7	 

     

    

10. 
Nondisparagement.

 

(a) Employee
agrees that, during and at any time after Employee’s employment with the Company, regardless of the reason (whether voluntary
or involuntary), Employee will not, directly or indirectly, through any agent or affiliate, make any comments or criticisms (whether
of a professional or personal nature) to any individual or other third party or entity regarding the Company (or the terms of any
agreement or arrangement of the Company) or any of its respective affiliates, members, partners or employees, disparaging the business
or reputation of the Company or any of its affiliates, members, partners or employees.

 

(b) 
The Company agrees to (i) instruct the members the Board of Directors of FSAM and (ii) require the members of the Executive Committee
of the Advisor during their employment with the Advisor to not, during and at any time after Employee’s employment with the
Company, regardless of the reason Employee’s employment terminates (whether voluntary or involuntary), directly or indirectly,
make any comments or criticisms (whether of a professional or personal nature) to any individual not affiliated with the Company
or other third party or entity other than the Company regarding Employee (or the terms of any agreement or arrangement with Employee)
or any of Employee’s family members, disparaging Employee or any of his family members.

 

11. 
Remedies. The parties acknowledge and agree that monetary damages may not be a sufficient remedy
for any breach of this Agreement, including, without limitation, a breach of the covenants contained in Paragraphs 2, 3, and 10
or the unauthorized use or disclosure of Confidential or Protected Information, and that the non-breaching party shall be entitled,
without waiving any other rights or remedies, to obtain injunctive or equitable relief as may be deemed proper by a court of competent
jurisdiction, without obligation to post any bond. The periods of time during which a court of competent jurisdiction determines
Employee is in violation of the covenants set forth in this Agreement shall be added to the Investor Restricted Period, the Customer
Restricted Period, the Employee Restricted Period and the Non-Competition Period, as applicable.

 

12. 
Reasonableness. Employee acknowledges and agrees that the restrictions contained in this Agreement
are reasonable and will not prevent him from finding other employment if his employment with the Company ends. Employee also acknowledges
and agrees that if Employee uses the Company's confidential information, or competes with the Company in violation of the terms
of this Agreement, that he will be causing the Company irreparable harm.

 

13. 
Severability; Revision by Court.  The provisions of this Agreement shall be deemed severable and
the invalidity or unenforceability of any provision shall not affect the validity or enforceability of the other provisions hereof.
If any provision in this Agreement is found by a court of competent jurisdiction to be unenforceable or unreasonable as written,
Employee and Fifth Street hereby specifically and irrevocably authorize and request said court to revise the unenforceable or unreasonable
provisions in a manner that shall result in the provision being enforceable while remaining as similar as legally possible to the
purpose and intent of the original.

 

    	 	8	 

     

    

14. 
Entire Agreement.  This Agreement constitutes the entire agreement and understanding of the parties
hereto with respect to the obligations addressed herein and supersedes all prior or contemporaneous oral or written agreements
regarding the subject matter hereof, except that Nondisclosure Agreement between Employee and the Advisor dated as of September
26, 2016 shall remain in full force and effect in accordance with its terms.

 

15. 
Amendments; Waivers. Any addition or modification to this Agreement, or waiver of any provision
hereof, must be in writing and signed by the parties hereto.

 

16. 
Successors and Assigns. Employee understands and agrees that he cannot assign or otherwise transfer
any of his obligations under this Agreement. Employee understands and agrees that Fifth Street may, at its option, assign or transfer
its rights under this Agreement to another organization or individual. Employee understands and agrees that if there is an assignment
or transfer of Fifth Street's rights under this Agreement, then this Agreement will continue to be effective, will continue to
bind Employee, and will inure to the benefit of the organization or individual to whom the transfer or assignment is made.

 

17. 
Choice of Law. This Agreement shall be governed by, construed, and enforced in accordance with
the laws of the State of Connecticut, excluding its conflicts of laws principles.

 

18. 
Jurisdiction. Any action or proceeding seeking to enforce any provision of, or based on any right
arising out of, this Agreement may be brought against either party only in the courts of the State of Connecticut located in Fairfield
County. Both parties hereby irrevocably consent to the jurisdiction of any such court in any such action or proceeding and waive
any objection to venue laid in such courts.

 

19. 
Counterparts. This Agreement may be executed in any number of counterparts, each of which shall
be deemed an original but all of which together shall constitute one and the same instrument. This Agreement may be executed by
facsimile signature.

 

20. 
Employee's Acknowledgment of Voluntary Agreement. Employee acknowledges that he has carefully read
this Agreement, that he has had the opportunity to receive advice with respect to this Agreement by counsel of his choice, that
he understands its terms and its legal effect, and that Employee has entered into this Agreement voluntarily and not in reliance
upon any promises or representations made by the Company other than those made in this Agreement itself.

 

21. 
No Change in Status. Nothing contained in the Agreement shall affect or in any way change Employee's
at-will employment status.

 

    	 	9	 

     

    

22. 
 Section 409A.

 

		(a)	Potential Six-Month Delay. Notwithstanding
any other provisions of the Agreement, any payment that may be provided under this Agreement that the Company reasonably determines
is subject to Section 409A(a)(2)(B)(i) of the Code shall not be paid or payment commenced until six (6) months after the date
of Employee’s termination of employment (or, if earlier, Employee’s death). On the earliest date on which such payments
can be commenced without violating the requirements of Section 409A(a)(2)(B)(i) of the Code, Employee shall be paid, in a single
cash lump sum, an amount equal to the aggregate amount of all payments delayed pursuant to the preceding sentence.

 

(b)  Savings
Clause. It is intended that any amounts payable under this Agreement shall either be exempt from or comply with Section
409A of the Code (including Treasury regulations and other published guidance related thereto) so as not to subject Employee to
payment of any additional tax, penalty or interest imposed under Section 409A of the Code. The provisions of this Agreement shall
be construed and interpreted to avoid the imputation of any such additional tax, penalty or interest under Section 409A of the
Code yet preserve (to the nearest extent reasonably possible) the intended benefit payable to Employee. Notwithstanding the foregoing,
the Company makes no representation or warranty and shall have no liability to Employee or to any other person if any of the provisions
of this Agreement are determined to constitute deferred compensation subject to Section 409A, but that do not satisfy an exemption
from, or the conditions of, that section.

 

 

[Signature page follows]

    	 	10	 

     

    

 

By signing below, the Company (on behalf
of itself and its affiliates) and Employee, intending to be legally bound, agree to the terms of this Agreement as listed and stated
above.

 

 

 

	 	FSC CT LLC
	 	 
	 	 
	 	 
	Dated:  11/29/2016	By:       /s/ Bernard D. Berman
	 	Name:  Bernard D. Berman
	 	Title:    President
	 	 
	 	 
	 	Employee:
	 	 
	Dated:  11/29/2016	/s/ Patrick Dalton
	 	Patrick Dalton

 

    	 	11	 

     

    

 

EXHIBIT A

 

As used in this Agreement, “Cause”
and “Good Reason” shall have the meanings ascribed to them in the Offer Letter.

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