FS Investment Corporation III 8-K


Exhibit 10.1


 





FIRST AMENDMENT AGREEMENT


 


AMENDMENT AGREEMENT (“Amendment”) dated as of
March 11, 2015 to the Committed Facility Agreement dated as of October 17, 2014 between BNP Paribas Prime Brokerage, Inc., on behalf
of itself and as agent for the BNPP Entities (“BNPP PB, Inc.”) and Burholme Funding LLC (“Customer”).


 


WHEREAS, BNPP PB, Inc. and Customer previously entered into a Committed
Facility Agreement dated as of October 17, 2014 (as amended from time to time, the “Agreement”);


 


WHEREAS, the parties hereto desire to amend the Agreement as provided
herein;


 


NOW THEREFORE, in consideration of the mutual agreements provided
herein, the parties agree to amend the Agreement as follows:


 


 


		1.	Amendment to Section 1 of the Agreement (‘Definitions’)



 


The definition of “Maximum Commitment Financing”
in Section 1 of the Agreement is hereby amended by replacing the number “100,000,000” currently appearing therein with
the number “200,000,000”.


 


		2.	Amendment to Appendix A to the Agreement (‘Collateral Requirements’)



 


Appendix A to the Agreement is hereby deleted and replaced
in its entirety with the attached Appendix A.


 


		3.	Representations



 


Each party represents to the other party that all representations
contained in the Agreement are true and accurate as of the date of this Amendment and that such representations are deemed to be
given or repeated by each party, as the case may be, on the date of this Amendment, in each case, however, except for any representation
that refers to a specific date, as to which each party represents to the other party that such representation is true and accurate
as of such specific date and is deemed to be given or repeated by each party, as the case may be, as of such specific date.


 


		4.	Miscellaneous



 


		(a)	Definitions. Capitalized terms used in this Amendment and not otherwise defined herein
shall have the meanings specified for such terms in the Agreement.



		(b)	Entire Agreement. The Agreement as amended and supplemented by this Amendment constitutes
the entire agreement and understanding of the parties with respect to its subject matter and supersedes all oral communications
and prior writings (except as otherwise provided herein) with respect thereto. Except as expressly set forth herein, the terms
and conditions of the Agreement remain in full force and effect.



		(c)	Counterparts.  This Amendment may be executed and delivered in counterparts (including
by facsimile transmission), each of which will be deemed an original.



		(d)	Headings. The headings used in this Amendment are for convenience of reference only and
are not to affect the construction of or to be taken into consideration in interpreting this Amendment.



		(e)	Governing Law. This Amendment will be governed by and construed in accordance with the
laws of the State of New York (without reference to choice of law doctrine).



 


(Signature page follows)


 












    	 



    	 



    

 


IN WITNESS WHEREOF the parties have executed this Amendment
with effect from the first date specified on the first page of this Amendment.


 





	BNP PARIBAS PRIME
    BROKERAGE, INC. 	 	BURHOLME FUNDING
    LLC 	 
	 	 	 	 
	/s/ Jeffrey Lowe	 	/s/ Gerald F. Stahlecker	 
	 	 	 	 
	Name: Jeffrey Lowe 	 	Name: Gerald F. Stahlecker	 
	Title: Managing Director	 	Title: Executive Vice President	 
	 	 	 	 
	/s/ JP Muir	 	 	 
	Name: JP Muir	 	 	 
	Title: Managing Director	 	 	 



 





 






    	 



    	 



    

 


Appendix
A – Collateral Requirements







THIS
APPENDIX A forms a part of the Committed Facility Agreement entered into between BNP Paribas Prime Brokerage, Inc. ("BNPP
PB, Inc.") and Burholme Funding LLC ("Customer") (the "Committed Facility Agreement").


 





	1.	Collateral Requirements -
	 	 
	 	The
Collateral Requirements in relation to all positions held in the accounts established pursuant to the 40 Act Financing Agreements
(the "Positions") consisting of Eligible Securities shall be the greatest of:



 


		(a)	the
                                         sum of the Position Charges of all Positions consisting of Eligible Securities;



 


		(b)	the
                                         sum of the collateral requirements of such Positions as per Regulation T or Regulation
                                         X, as applicable, of the Board of Governors of the Federal Reserve System, as amended
                                         from time to time;



 


		(c)	the
                                         sum of the collateral requirements of such Positions as per Financial Industry Regulatory
                                         Authority, Inc. Rule 4210, as amended from time to time, to the extent applicable;



 


		(d)	35%
                                         of the Portfolio Gross Market Value; and



 


		(e)	the
                                         Issuer Concentration Floor.



 


	2.	Eligible Securities -









		(a)	Positions
                                         in the following eligible equity and fixed income security types ("Eligible Securities",
                                         which term shall exclude any securities described in Section 2(b)) are covered under
                                         the Committed Facility Agreement:



 


		i.	USD
                                         common stock traded on the New York Stock Exchange, NASDAQ, NYSE Arca and NYSE Amex Equities;



 


		ii.	non-convertible
                                         corporate debt securities or preferred securities, provided that such securities
                                         are (A) issued by an issuer incorporated in one of the following countries: USA, Canada,
                                         United Kingdom, France, Germany, Switzerland, Austria, Spain, Italy, The Netherlands,
                                         Finland, Belgium, Japan, Australia or Portugal and (B) denominated in USD, CAD or EUR;



 


		iii.	Treasury
                                         Securities; or



 


		iv.	non-USD
                                         common stock, provided such stock is (A) listed in the FTSE World Index, (B) traded
                                         on a major exchange in one of the following countries: Canada, United Kingdom, France,
                                         Germany, Switzerland, Austria, Spain, Italy, The Netherlands, Finland, Belgium, Japan,
                                         Australia, Sweden or Portugal and (C) denominated in one of the following currencies:
                                         CAD, GBP, EUR, JPY, CHF, AUD or SEK.



 


		(b)	Notwithstanding
                                         the foregoing, the following will not be part of the collateral commitment and shall
                                         have no collateral value:



 


		i.	any
                                         security type not covered above, as determined by BNPP PB, Inc. in its sole discretion;



 


		ii.	any
                                         short security position;












    	 



    	 



    

 


		iii.	any
                                         security offered through a private placement or any restricted securities; provided
                                         that a non-convertible corporate debt security that is eligible for resale pursuant
                                         to Rule 144A under the Securities Act of 1933, as amended, shall not be deemed restricted
                                         for this purpose;



 


		iv.	any
                                         security that is not maintained as a book-entry security on a major depository, such
                                         as The Depository Trust Company, Euroclear or Clearstream;



 


		v.	any
                                         securities that are municipal securities, asset-backed securities, mortgage securities,
                                         Structured Securities or capital contingent convertible bonds (notwithstanding the fact
                                         that such securities would otherwise be covered);



 


		vi.	any
                                         security where Customer or Customer's Advisor (i) is an Affiliate of the Issuer of the
                                         relevant equity securities or (ii) beneficially owns more than 9% of either (a) the voting
                                         interests of the Issuer or (b) any voting class of equity securities of the Issuer (in
                                         each case, whether such positions are held in accounts established pursuant to the 40
                                         Act Financing Agreements or otherwise);



 


		vii.	to
                                         the extent that the Gross Market Value of non-USD-denominated Positions exceeds 50% of
                                         the Portfolio Gross Market Value, any such securities in excess of such 50% (and BNPP
                                         PB, Inc. shall determine in its sole discretion which specific securities shall be considered
                                         to be in excess of 50%);



 


		viii.	to
                                         the extent that the Gross Market Value of the aggregate of non-convertible corporate
                                         debt securities and/or preferred securities denominated in CAD exceeds 20% or more of
                                         the Portfolio Gross Market Value, any non-convertible corporate debt securities and/or
                                         preferred securities denominated in CAD in excess of such 20% (and BNPP PB, Inc. shall
                                         determine in its sole discretion which specific securities shall be considered to be
                                         in excess of 20%);



		ix.	any
                                         equity security of an Issuer with a market capitalization of less than USD $300,000,000;






		x.	any
                                         Debt Security which (i) trades below 40% of its nominal value or (ii) is greater than
                                         10% of the Issue Size;



		xi.	any
                                         Debt Security whose outstanding issuance, calculated pursuant to its Face Value, is less
                                         than USD $75,000,000;



		xii.	to
                                         the extent that the Gross Market Value of any Debt Securities with an outstanding issuance,
                                         calculated pursuant to its Face Value, between USD
                                         $75,000,000 and USD $150,000,000 exceeds 10% of the Portfolio Gross Market Value, any
                                         Debt Securities in excess of such 10% (and BNPP PB, Inc. shall determine in its sole
                                         discretion which specific securities shall be considered to be in excess of 10%);






		xiii.	any
                                         Positions with a long-term debt rating below CCC- by S&P or below Caa3 by Moody's
                                         or that have defaulted (excluding, for the avoidance of doubt, unrated securities);



		xiv.	any
                                         Positions with Days of Trading Volume equal to or greater than 4;



		xv.	any
                                         Positions with Equity Volatility equal to or greater than 100%; and



		xvi.	to
                                         the extent that the Gross Market Value of Positions in any industry sector (as defined
                                         by Bloomberg) exceeds 20% of the Portfolio Gross Market Value, any Positions in excess
                                         of such 20% (and BNPP PB, Inc. shall determine in its sole discretion which specific
                                         securities shall be considered to be in excess of such 20%).






 






    	 



    	 



    

 


	3.	Equity
                                         Securities Collateral Percentage -



 


The
Collateral Percentage for a Position consisting of applicable equity securities that are Eligible Securities shall be:


 


		i.	subject
                                         to paragraph (ii) below, the sum of (A) the Equity Core Collateral Rate and (B)
the product of (I) the Equity Core Collateral Rate and (II) the sum of the Equity Liquidity Factor and the Equity Volatility Factor,
or






 


		ii.	100%
                                         if the product determined under paragraph (i) above is greater than 100%.



 


(a)  
Equity Liquidity Factor.


 


The
"Equity Liquidity Factor" shall be determined pursuant to the following table.


 


	Days
    of Trading Volume	Equity
    Liquidity Factor
	Less
    than 2	0
	2to
    4	1





 


(b)  
Equity Volatility Factor.


 


The
"Equity Volatility Factor" shall be determined pursuant to the following table.


 


	Equity
    Volatility	Equity
    Volatility Factor
	Less
    than 35%	0
	Equal
    to or greater than 35% and less than 50%	0.5
	Equal
    to or greater than 50% and less than 75%	1
	Equal
    to or greater than 75% and less than 100%	2


 


	4.	Debt
                                         Securities Collateral Percentage -
	 	 
	 	The
                                         Collateral Percentage for a Position consisting of applicable Debt Securities that are
                                         Eligible Securities shall be Debt Core Rate; provided
                                         that (i) the Collateral Percentage
                                         for any Debt Security which trades below 40% of its nominal value shall be 100%, (ii)
                                         if a Debt Security's remaining maturity is greater than 10 years, its Collateral Percentage
                                         shall be the Debt Core Rate plus 10%, and (iii) if a Debt Security is a Payment-in-Kind
                                         Bond, its Collateral Percentage shall be the Debt Core Rate plus 10%.



  








		(a)	Debt
                                         Core Rate.
	 	 	 
	 	 	(i)	The
                                         "Debt Core Rate"
                                         with respect to an applicable Position in an Eligible Security shall be (A) for Treasury
                                         Securities, 6%, and (B) for all other Debt Securities, as determined pursuant to the
                                         following table using the lower of the S&P or Moody's rating as shown below; provided
                                         that (I) if there is only one
                                         such rating, then the Debt Core Rate corresponding to such rating shall be used and (II)
                                         if there is no such rating, then the Debt Core Rate shall be 30%.









 






    	 



    	 



    




 


	S&
    P’s Rating	Moody’s
    Rating	Debt
    Core Rate
	AAA
    to A-	Aaa
    to A3	10%
	BBB+
    to BBB-	Baa1
    to Baa3	12%
	BB+
    to BB-	Ba1
    to Ba3	15%
	B+
    to B- / NR	B1
    to B3	20%
	CCC+
    to CCC-	Caa1
    to Caa3 / NR	30%


 





	5.	Positions
                                         Outside the Scope of this Appendix A -
	 	 
	 	For
                                         the avoidance of doubt, the Collateral Requirements set forth herein are limited to the
                                         types and sizes of securities specified herein. The Collateral Requirement for any Position
                                         or part of a Position not covered by the terms of this Appendix A shall be determined
                                         by BNPP PB, Inc. in its sole discretion.



 


	6.	One-off
                                         Collateral Requirements -
	 	 
	 	From
time to time BNPP PB, Inc., in its sole discretion, may agree to a lower Collateral Requirement than the Collateral Requirement
determined pursuant to this Appendix A for the portfolio or for one or more Positions or Eligible Securities in the portfolio;
provided that, for the avoidance of doubt, the commitment in Section 6(a) of the Committed Facility Agreement shall apply
only with respect to the Collateral Requirement determined in accordance with this Appendix A and BNPP PB, Inc. shall have the
right at any time to increase the Collateral Requirement up to the Collateral Requirement that would be required as determined
in accordance with this Appendix A.



  


		7.	Certain
                                         Definitions -



 


		(a)	"Affiliate"
                                         means an affiliate as defined in Rule 144(a)(1) under the Securities Act of 1933, as
                                         amended.



 


		(b)	"Bloomberg"
                                         means the Bloomberg Professional service.



 


		(c)	"Collateral
                                         Percentage" means the percentage as determined by BNPP PB, Inc. according to
                                         this Appendix A.



 


		(d)	"Current
                                         Market Value" means, with respect to a Position, an amount equal to the product
                                         of (i) the number of units of the relevant security and (ii) the price per unit of the
                                         relevant security (determined by BNPP PB, Inc.).



 


		(e)	"Days
                                         of Trading Volume" means, with respect to an equity security, an amount equal
                                         to the quotient of (i) the number of shares of such security constituting the Position,
                                         as numerator, and (ii) the 90-day average daily trading volume of such security as shown
                                         on Bloomberg (or, if the 90-day average daily trading volume of such security is unavailable,
                                         the 30-day average daily trading volume of such security, as determined by BNPP PB, Inc.
                                         in its sole discretion), as denominator.



 


		(f)	"Debt
                                         Security" means non-convertible preferred securities and corporate debt securities.



 


		(g)	"Equity
                                         Core Collateral Rate" means 15%.



 


		(h)	"Equity
                                         Volatility" means, with respect to an equity security, the 90-day historical
                                         volatility of such security as determined by BNPP PB, Inc. in its sole discretion or,
                                         if the 90-day historical price volatility of such security is unavailable, the 30-day
                                         historical price volatility of such security as determined by BNPP PB, Inc. in its sole
                                         discretion.



 






    	 



    	 



    

 





		(i)	"Face
                                         Value" means the value in USD representing the principal of a Debt Security.



 


		(j)	"Gross
                                         Market Value" of one or more Positions means an amount equal to the sum of all
                                         Current Market Values of all such Positions, where, for the avoidance of doubt, the Current
                                         Market Value of each Position is expressed as a positive number whether or not such Position
                                         is held long.



 


		(k)	"Issuer"
                                         means, with respect to a Debt Security or equity security, the ultimate parent company
                                         or similar term as used by Bloomberg; provided that, if the relevant security
                                         was issued by a company or a subsidiary of a company that has issued common stock, the
                                         Issuer shall be deemed to be the entity that has issued common stock; provided further
                                         that, with respect to any exchange-traded funds, the Issuer of such securities shall
                                         be the index to which the relevant securities relate, if any.



 


		(l)	"Issuer
                                         Concentration Floor" means, as of any date, the product of (i) the largest Issuer
                                         Jump-to-default loss and (ii) 3. Jump-to-default loss is the theoretical loss upon a
                                         bond default with a 20% of par recovery.



 


		(m)	"Issue
                                         Size" means, with respect to a Position in a Debt Security of an Issuer, the
                                         Current Market Value of all such Debt Securities issued by the Issuer and still outstanding.



 


		(n)	"Moody’s"
                                         means Moody's Investor Service, Inc.



 


		(o)	“Payment-in-Kind
                                         Bond” means a Debt Security whose interest or principal payments may be paid
                                         with additional Debt Securities, as opposed to cash.



 


		(p)	"Portfolio
                                         Gross Market Value" means the Gross Market Value of all of the Positions that
                                         are Eligible Securities.



 


		(q)	"Position
                                         Charge" means, with respect to a Position consisting of Eligible Securities,
                                         the product of (x) the Collateral Percentage applicable to such Position and (y) the
                                         Current Market Value of such Position.



 


		(r)	"Structured
                                         Securities" means any security (i) the payment to a holder of which is linked
                                         to a different security, provided that such different security is issued by a
                                         different issuer or (ii) structured in such a manner that the credit risk of acquiring
                                         the security is primarily related to an entity other than the issuer of the security
                                         itself.



 


		(s)	"S&P"
                                         means Standard & Poor's Ratings Services, a division of The McGraw-Hill Companies,
                                         Inc.



 


		(t)	"Treasury
                                         Security" means any security that is a direct obligation of the United States
                                         Treasury. For the avoidance of doubt, neither Treasury Inflation-Protected Securities
                                         nor securities issued under the Separate Trading of Registered Interest and Principal
                                         of Securities program nor securities issued by any other United States government agency
                                         or government sponsored enterprise are herein considered Treasury Securities.