FSK

FS Investment Corporation 8-K Summary

Business Context and Reporting Period

This Form 8-K, dated July 17, 2014, reports on events occurring at a reconvened Special Meeting of Stockholders for FS Investment Corporation (the "Company"). The filing details the approval of two key proposals regarding capital raising flexibility and the amendment of the investment advisory agreement with FB Income Advisor, LLC.

Key Financial Metrics and Agreements

The filing does not report specific revenue, profit, cash flow, or debt figures for a reporting period. Instead, it outlines the financial terms of a new contractual agreement:

• Base Management Fee: Reduced from 2.0% to 1.75% of the average value of the Company's gross assets.
• Incentive Fee Hurdle Rate: The quarterly hurdle rate for the subordinated incentive fee on income was lowered from 2.0% (8.0% annualized) to 1.875% (7.5% annualized).
• Incentive Fee Structure:
  • No fee if pre-incentive fee net investment income is below 1.875% per quarter.
  • 100% of income between 1.875% and 2.34375% per quarter is paid to the Adviser as a "catch-up."
  • 20% of income exceeding 2.34375% per quarter is paid to the Adviser.

Material Changes Versus Prior Period

The primary material change is the formalization of fee reductions that were previously voluntary. Pending stockholder approval, the Adviser had voluntarily waived fees effective April 1, 2014, to match the new 1.75% rate. The new agreement makes this reduction permanent and lowers the threshold required for the Adviser to earn incentive fees.

Guidance, Outlook, and Stockholder Votes

Stockholders approved two proposals at the Special Meeting:

1. Proposal 1 (Capital Flexibility): Authorized the Company to sell shares below net asset value (NAV) for 12 months, subject to board approval and limitations.
   • Votes For: 114,972,480
   • Votes Against: 11,750,867
   • Abstentions: 6,219,461
2. Proposal 2 (Advisory Agreement): Approved the Amended and Restated Investment Advisory Agreement to reduce the base fee and adjust the incentive fee hurdle rate.
   • Votes For: 118,828,663
   • Votes Against: 7,466,208
   • Abstentions: 6,647,937

The filing notes that the subordinated incentive fee remains subject to a total return requirement.

Investor Verification Checklist

• Verify the full text of the Amended and Restated Investment Advisory Agreement (Exhibit 10.1) for specific definitions of "gross assets" and "pre-incentive fee net investment income."
• Review the Proxy Statement filed on May 20, 2014, for detailed limitations on the below-NAV share issuance authorized in Proposal 1.
• Confirm the impact of the reduced hurdle rate on future distributions to shareholders versus fees paid to the Adviser.
• Check subsequent filings for the actual utilization of the below-NAV issuance authority.