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with Oaktree and to use commercially reasonable efforts to facilitate the election of five director nominees (the New Director Nominees) to the board of directors of each of
the Issuer and FSFR: John B. Frank, who will be an interested person (within the meaning of Section 2(a)(19) of the Investment Company Act of 1940, as amended) with respect to Oaktree, and Marc H. Gamsin, Craig Jacobson, Richard G.
Ruben and Bruce Zimmerman.
Upon the closing of the transactions contemplated by the Asset Purchase Agreement (the
Closing), all current members of the Issuers board of directors except Richard P. Dutkiewicz have agreed to resign. The Issuers board of directors has nominated Messrs. Gamsin, Jacobson, Ruben and Zimmerman as new
independent directors and Mr. Frank, Vice Chairman of Oaktree, as a new interested director of the board, each of whom would take office upon receipt of the requisite stockholder approvals for the transactions contemplated by the Asset Purchase
Agreement and the Closing. Mr. Frank is expected to serve as Chairman of the Issuers board of directors.
Upon the closing of
the transactions contemplated by the Asset Purchase Agreement, Oaktree would become the investment adviser and an affiliate of Oaktree would become the administrator to the Issuer. At that time, Oaktree and its affiliate will assume management of
the day-to-day operations of the Issuer, with Oaktree managing the Issuers investments and Oaktrees affiliate providing facilities and administrative services necessary for the Issuers day-to-day operations. The executive officers
of the Issuer will resign and will be replaced with individuals affiliated with Oaktree.
Consummation of the transactions contemplated by
the Asset Purchase Agreement is subject to the approval of the respective stockholders of FSAM, the Issuer and FSFR, the termination or expiration of the applicable waiting period (and any extension thereof) under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976 and other customary closing conditions.
The foregoing description of the Asset Purchase Agreement and the
transactions contemplated thereby does not purport to be complete and is subject to and qualified in its entirety by reference to the Asset Purchase Agreement, a copy of which is filed as Exhibit 2 to this Schedule 13D and is incorporated by
reference into this Item 6.
Voting Agreement
Concurrently with the execution of the Asset Purchase Agreement, the Stockholders and Oaktree entered into a voting agreement (the
Voting Agreement), dated as of July 13, 2017, with respect to the shares of Common Stock held by each of the Stockholders. Pursuant to the Voting Agreement, each of the Stockholders agreed to vote their shares of Common Stock
(i) in favor of approving the proposed new investment advisory agreements with Oaktree and facilitating the election of the New Director Nominees and (ii) otherwise at the direction of Oaktree.
The Voting Agreement terminates upon the earliest of Oaktree no longer advising the Issuer, the termination of the Asset Purchase Agreement
and, with respect to any Stockholder, when such Stockholder no longer owns shares of Common Stock. If the Asset Purchase Agreement terminates under certain circumstances in which the stockholders of FSAM have not approved the transactions
contemplated by the Asset Purchase Agreement, then the Voting Agreement will not terminate until six months after the termination of the Asset Purchase Agreement.
Each Stockholder has agreed not to transfer shares of Common Stock prior to the Closing. Following the Closing, subject to a right of first
refusal for the benefit of Oaktree, a Stockholder may transfer shares of Common Stock to third parties, subject to certain volume restrictions under certain circumstances.
The foregoing description of the Voting Agreement and the transactions contemplated thereby does not purport to be complete and is subject to
and qualified in its entirety by reference to the Voting Agreement, a copy of which is filed as Exhibit 3 to this Schedule 13D and is incorporated by reference into this Item 6.
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