AMENDED AND RESTATED ADMINISTRATION AGREEMENT
Exhibit 10.6
AMENDED AND RESTATED ADMINISTRATION AGREEMENT
This Agreement (“Agreement”) is made as of May 2, 2011 by and between FIFTH STREET FINANCE
CORP., a Delaware corporation (the “Company”), and FSC, INC., a New York corporation (the
“Administrator”).
W I T N E S S E T H:
WHEREAS, the Company is a closed-end management investment company that has elected to be
regulated as a business development company (“BDC”) under the Investment Company Act of 1940, as
amended (the “Investment Company Act”); and
WHEREAS, the Company and the Administrator entered into an administration agreement, dated as
of December 14, 2007 (the “Original Administration Agreement”); and
WHEREAS, the Company and the Adviser desire to amend and restate in its entirety the Original
Administration Agreement to reflect changes in certain non-substantive factual matters described
therein that occurred subsequent to the date of its execution.
NOW, THEREFORE, in consideration of the premises and the covenants hereinafter contained and
for other good and valuable consideration, the receipt and adequacy of which is hereby
acknowledged, the Company and the Administrator hereby agree as follows:
| 1. | Duties of the Administrator |
(a) Employment of Administrator. The Company hereby employs the Administrator to act
as administrator of the Company, and to furnish, or arrange for others to furnish, the
administrative services, personnel and facilities described below, subject to review by and the
overall control of the Board of Directors of the Company (the “Board”), for the period and on the
terms and conditions set forth in this Agreement. The Administrator hereby accepts such employment
and agrees during such period to render, or arrange for the rendering of, such services and to
assume the obligations herein set forth subject to the reimbursement of costs and expenses provided
for below. The Administrator and such others shall for all purposes herein be deemed to be
independent contractors and shall, unless otherwise expressly provided or authorized herein, have
no authority to act for or represent the Company in any way or otherwise be deemed agents of the
Company.
(b) Services. The Administrator shall perform (or oversee, or arrange for, the
performance of) the administrative services necessary for the operation of the Company. Without
limiting the generality of the foregoing, to the extent the Company so requires, the Administrator
shall provide the Company with office facilities, equipment, clerical, bookkeeping and record
keeping services at such facilities and such other services as the Administrator, subject to review
by the Board, shall from time to time determine to be necessary or useful to perform its
obligations under this Agreement. The Administrator shall also, on behalf of the Company, conduct
relations with custodians, depositories, transfer agents, dividend disbursing agents, other
stockholder servicing agents, accountants, attorneys, underwriters, brokers and dealers, corporate
fiduciaries, insurers, banks and such other persons in any such other capacity deemed to be
necessary or desirable. The Administrator shall make reports to the Board of its
performance of obligations hereunder and furnish advice and recommendations with respect to
such other aspects of the business and affairs of the Company, in each case, as it shall determine
to be desirable or as reasonably requested by the Board; provided that nothing herein shall be
construed to require the Administrator to, and the Administrator shall not, provide any advice or
recommendation relating to the securities and other assets that the Company should purchase, retain
or sell or any other investment advisory services to the Company pursuant to this Agreement. The
Administrator shall provide portfolio collections functions for interest income, fees and warrants
and be responsible for the financial and other records that the Company is required to maintain and
shall prepare, print and disseminate reports to stockholders, and reports and other materials filed
with the Securities and Exchange Commission (the “SEC”). In addition, the Administrator will
assist the Company in determining and publishing the Company’s net asset value, overseeing the
preparation and filing of the Company’s tax returns, and generally overseeing the payment of the
Company’s expenses and the performance of administrative and professional services rendered to the
Company by others.
2. Records
The Administrator agrees to maintain and keep all books, accounts and other records of the
Company that relate to activities performed by the Administrator hereunder and will maintain and
keep such books, accounts and records in accordance with the Investment Company Act. In compliance
with the requirements of Rule 31a-3 under the Investment Company Act, the Administrator agrees that
all records which it maintains for the Company shall at all times remain the property of the
Company, shall be readily accessible during normal business hours, and shall be promptly
surrendered upon the termination of the Agreement or otherwise on written request. The
Administrator further agrees that all records that it maintains for the Company pursuant to Rule
31a-1 under the Investment Company Act will be preserved for the periods prescribed by Rule 31a-2
under the Investment Company Act unless any such records are earlier surrendered as provided above.
Records shall be surrendered in usable machine-readable form. The Administrator shall have the
right to retain copies of such records subject to observance of its confidentiality obligations
under this Agreement.
3. Confidentiality
All confidential information provided by a party hereto, including nonpublic personal
information (regulated pursuant to Regulation S-P of the SEC), shall be used by any other party
hereto solely for the purpose of rendering services pursuant to this Agreement and, except as may
be required in carrying out this Agreement, shall not be disclosed to any third party, without the
prior consent of such providing party. The foregoing shall not be applicable to any information
that is publicly available when provided or thereafter becomes publicly available other than
through a breach of this Agreement, or that is required to be disclosed to any regulatory or legal
authority, or legal counsel of the parties hereto, by judicial or administrative process or
otherwise by applicable law or regulation.
4. Compensation; Allocation of Costs and Expenses
In full consideration of the provision of the services of the Administrator, the Company shall
reimburse the Administrator for the costs and expenses incurred by the Administrator in
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performing its obligations and providing personnel and facilities hereunder. The Company will
bear all costs and expenses that are incurred in its operation, administration and transactions and
not specifically assumed by Fifth Street Management LLC (the “Adviser”) pursuant to that certain
Investment Advisory Agreement, dated as of May 2, 2011 (the “Investment Advisory Agreement”) by and
between the Company and the Adviser. Costs and expenses to be borne by the Company include, but
are not limited to, fees and expenses relating to: organizational and offering expenses; the
investigation and monitoring of the Company’s investments; the cost of calculating the Company’s
net asset value; the cost of effecting sales and repurchases of shares of the Company’s common
stock and other securities; management and incentive fees payable pursuant to the Investment
Advisory Agreement; fees payable to third parties relating to, or associated with, making
investments and valuing investments (including third-party valuation firms); transfer agent and
custodial fees; fees and expenses associated with marketing efforts (including attendance at
investment conferences and similar events); federal and state registration fees; any exchange
listing fees; federal, state and local taxes; independent directors’ fees and expenses; brokerage
commissions; costs of proxy statements, stockholders’ reports and notices; costs of preparing
government filings, including periodic and current reports with the SEC; fidelity bond, liability
insurance and other insurance premiums; and printing, mailing, independent accountants and outside
legal costs and all other direct expenses incurred by either the Administrator or the Company in
connection with administering the Company’s business, including payments under this Agreement.
5. Limitation of Liability of the Administrator; Indemnification
The Administrator (and its officers, managers, partners, agents, employees, controlling
persons, members, and any other person or entity affiliated with the Administrator, including
without limitation its members, and any person affiliated with its members to the extent they are
providing services for or otherwise acting on behalf of the Administrator, Adviser or the Company)
shall not be liable to the Company for any action taken or omitted to be taken by the Administrator
in connection with the performance of any of its duties or obligations under this Agreement or
otherwise as administrator for the Company, and the Company shall indemnify, defend and protect the
Administrator (and its officers, managers, partners, agents, employees, controlling persons,
members, and any other person or entity affiliated with the Administrator, including without
limitation the Adviser, each of whom shall be deemed a third party beneficiary hereof)
(collectively, the “Indemnified Parties”) and hold them harmless from and against all damages,
liabilities, costs and expenses (including reasonable attorneys’ fees and amounts reasonably paid
in settlement) incurred by the Indemnified Parties in or by reason of any pending, threatened or
completed action, suit, investigation or other proceeding (including an action or suit by or in the
right of the Company or its security holders) arising out of or otherwise based upon the
performance of any of the Administrator’s duties or obligations under this Agreement or otherwise
as administrator for the Company. Notwithstanding the preceding sentence of this Section 5 to the
contrary, nothing contained herein shall protect or be deemed to protect the Indemnified Parties
against or entitle or be deemed to entitle the Indemnified Parties to indemnification in respect
of, any liability to the Company or its security holders to which the Indemnified Parties would
otherwise be subject by reason of willful misfeasance, bad faith or gross negligence in the
performance of the Administrator’s duties or by reason of the reckless disregard of the
Administrator’s duties and obligations under this Agreement (to the extent
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applicable, as the same shall be determined in accordance with the Investment Company Act and
any interpretations or guidance by the SEC or its staff thereunder).
6. Activities of the Administrator
The services of the Administrator to the Company are not to be deemed to be exclusive, and the
Administrator and each of its affiliates is free to render services to others. It is understood
that directors, officers, employees and stockholders of the Company are or may become interested in
the Administrator and its affiliates, as directors, officers, members, managers, employees,
partners, stockholders or otherwise, and that the Administrator and directors, officers, members,
managers, employees, partners and stockholders of the Administrator and its affiliates are or may
become similarly interested in the Company as stockholders or otherwise.
7. Duration and Termination of this Agreement
(a) This Agreement shall become effective as of the first date above written. This Agreement
may be terminated at any time, without the payment of any penalty, upon 60 days’ written notice, by
the vote of a majority of the outstanding voting securities of the Company, or by the vote of the
Company’s directors or by the Administrator.
(b) This Agreement shall remain in effect until March 1, 2012, and thereafter shall continue
automatically for successive annual periods, provided that such continuance is specifically
approved at least annually by (a) the vote of the Board, or by the vote of a majority of the
outstanding voting securities of the Company and (b) the vote of a majority of the Company’s
directors who are not parties to this Agreement or “interested persons” (as such term is defined in
Section 2(a)(19) of the Investment Company Act) of any such party, in accordance with the
requirements of the Investment Company Act and each of whom is an “independent director” under
applicable New York Stock Exchange listing standards.
(c) This Agreement may not be assigned by a party without the consent of the other party;
provided, however, that the rights and obligations of the Company under this
Agreement shall not be deemed to be assigned to a newly-formed entity in the event of the merger of
the Company into, or conveyance of all of the assets of the Company to, such newly-formed entity;
provided, further, however, that the sole purpose of that merger or
conveyance is to effect a mere change in the Company’s legal form into another limited liability
entity. The provisions of Section 5 of this Agreement shall remain in full force and effect, and
the Administrator shall remain entitled to the benefits thereof, notwithstanding any termination of
this Agreement.
8. Amendments of this Agreement
This Agreement may be amended pursuant to a written instrument by mutual consent of the
parties.
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9. Governing Law
This Agreement shall be construed in accordance with the laws of the State of New York and
shall be construed in accordance with the applicable provisions of the Investment Company Act. To
the extent the applicable laws of the State of New York, or any of the provisions herein, conflict
with the provisions of the Investment Company Act, the latter shall control.
10. Entire Agreement
This Agreement contains the entire agreement of the parties and supercedes all prior
agreements, understandings and arrangements with respect to the subject matter hereof.
11. Notices
Any notice under this Agreement shall be given in writing, addressed and delivered or mailed,
postage prepaid, to the other party at its principal office.
Remainder of Page Intentionally Left Blank
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IN WITNESS WHEREOF, the parties hereto have executed and delivered this Agreement as of the
date first above written.
| FIFTH STREET FINANCE CORP. |
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| By: | ||||
| Name: | Xxxxxxx X. Xxxxxxxxxx | |||
| Title: | Chief Executive Officer | |||
| FSC, INC. |
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| By: | ||||
| Name: | Xxxxxxx X. Xxxxxx | |||
| Title: | President | |||
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