Execution copy 7/24/13
AMENDED AND RESTATED COMMITTED FACILITY AGREEMENT
BNP PARIBAS PRIME BROKERAGE INTERNATIONAL, LTD. ("PBL") and the counterparty
specified on the signature page ("CUSTOMER"), hereby enter into this Committed
Facility Agreement (this "AGREEMENT"), dated as of July 24, 2013.
Whereas PBL and Customer have entered into an Amended and Restated U.S. PB
Agreement, dated as of the date hereof (the "U.S. PB Agreement") (the U.S. PB
Agreement and this Agreement, collectively, the "40 ACT FINANCING AGREEMENTS").
Whereas BNP Paribas Prime Brokerage, Inc. ("PBI") and Customer have previously
entered into a Committed Facility Agreement dated as of January 23, 2009 (the
"ORIGINAL AGREEMENT").
Whereas PBI has assigned all its rights and obligations under the Original
Agreement to PBL.
Whereas PBL and Customer hereby desire to amend and restate the Original
Agreement as set forth herein.
Whereas this Agreement supplements and forms part of the other 40 Act Financing
Agreements and sets out the terms of the commitment of PBL to provide financing
to Customer under the 40 Act Financing Agreements.
Now, therefore, in consideration of the foregoing promises and for other good
and valuable consideration, the receipt and adequacy of which is hereby
acknowledged, the parties agree as follows:
1. DEFINITIONS -
(a) Capitalized terms not defined in this Agreement have the
respective meanings assigned to them in the U.S. PB Agreement.
The 40 Act Financing Agreements are included in the term
"Contract," as defined in the U.S. PB Agreement.
(b) "ACCOUNT AGREEMENT" means the Account Agreement attached as
Exhibit A to the U.S. PB Agreement.
(c) "BORROWING" means a draw of cash financing by Customer from PBL
pursuant to Section 2 of this Agreement.
(d) "CLOSING DATE" means the execution date hereof.
(e) "COLLATERAL REQUIREMENTS" means the collateral requirements set
forth in Section 1 of Appendix A attached hereto.
(f) "DEFAULT ACTION" means exercising any rights of set-off,
liquidating positions or Contracts, terminating or accelerating
any loan or Contract, canceling orders, closing out transactions,
deducting charges from an account (other than normal charges for
interest, clearing fees and ticket charges), selling any or all
of the securities and commodities or other property that may be
in possession or control of the BNPP Entities (either
individually or jointly with others), buying-in any securities,
commodities or other property that Customer's account or accounts
may be short, or acting as attorney-in-fact with respect to
Customer, any Customer account or any property in a Customer
account.
(g) "FIXED RATE FINANCING AMOUNT" means an amount of cash financing
provided by PBL to Customer equal to $52,500,000 with a Fixed
Rate Period duration of ten (10) years and an interest rate equal
to the 10-Year Fixed Rate as set forth in Appendix B attached
hereto.
(h) "FIXED RATE FINANCING PREPAYMENT DATE" means the date on which a
Fixed Rate Financing Prepayment Event occurs.
(i) "FIXED RATE FINANCING PREPAYMENT EVENT" means, on any day during
the Fixed Rate Period, (A) the date of termination of any 40 Act
Financing Agreement in connection with (i) a Default, (ii)
Facility Termination Event, or (iii) a request from Customer to
terminate this Agreement in accordance with Section 13(e) herein
is effective, and (B) the date of any prepayment of all or any
portion of the Fixed Rate Financing Amount (including, as a
result of a request from PBL to terminate all or any portion of
the Fixed Rate Financing Amount) pursuant to Section 4 below.
(j) "FIXED RATE PERIOD" means the period commencing on the Closing
Date (the "FIXED RATE PERIOD EFFECTIVE DATE"), and expiring on
the tenth anniversary of the Fixed Rate Period Effective Date, as
adjusted, if necessary, in accordance with the Modified Following
Business Day Convention, and unless the parties agree in writing
to amend or extend the term of the relevant Fixed Rate Period
(the "FIXED RATE PERIOD END DATE").
(k) "FLOATING RATE FINANCING AMOUNT" means the Initial Floating Rate
Financing Amount as adjusted on the Fixed Rate Period End Date or
Fixed Rate Financing Prepayment Date, as applicable, in
accordance with Section 2(d) below; provided, however, that
Customer may, upon one (1) Business Day's prior written notice to
PBL, reduce the Floating Rate Financing Amount one time each
calendar month by an amount not to exceed 20% of the Initial
Floating Rate Financing Amount.
(l) "INITIAL FLOATING RATE FINANCING AMOUNT" means $177,500,000.
(m) "MODIFIED FOLLOWING BUSINESS DAY CONVENTION" means, with respect
to any date, if such date would otherwise fall on a day that is
not a Business Day, an adjustment will be made so that the
relevant date will be the first following day that is a Business
Day unless that day falls in the next calendar month, in which
case the relevant date will be the first preceding day that is a
Business Day.
(n) "NET ASSET VALUE" means, with respect to Customer, the aggregate
net asset value of the common stock issued by Customer calculated
in accordance with U.S. generally accepted accounting principles.
(o) "NET ASSET VALUE FLOOR" means, with respect to Customer, an
amount equal to the greater of (i) 50% of the Net Asset Value of
Customer, calculated as of the date of execution, and (ii) 50% of
the Net Asset Value of Customer, calculated based on the
Customer's Net Asset Value as of its most recent fiscal year end.
(p) "OUTSTANDING DEBIT FLOATING RATE FINANCING" means the aggregate
net cash balance (excluding current short sale proceeds) held
under the 40 Act Financing Agreements minus the sum of all Fixed
Rate Financing Amounts in effect, if such net cash balance is a
debit, or zero if such aggregate net cash balance is a credit.
For the purposes of calculating such aggregate net cash balance,
if Customer holds credit or debit cash balances in non-USD
currencies, PBL will convert each of these balances into USD at
prevailing market rates to determine Customer's aggregate net
cash balance.
2. BORROWINGS -
Subject to Section 7:
(a) On the Closing Date, PBL shall (i) lend funds to Customer equal
to the Fixed Rate Financing Amount and (ii) make funds available
up to the Initial Floating Rate Financing Amount. Such cash
financing shall be made available in immediately available funds.
(b) Subsequent Borrowings on Floating Rate Financing Amount. In
respect of cash financing available to the Customer in connection
with the Floating Rate Financing Amount, any Borrowing (not to
exceed the Floating Rate Financing Amount) following the Closing
Date shall be made on written notice (the "BORROW REQUEST"),
given by Customer to PBL not later than 10:00 A.M. (New York City
time) on the Business Day immediately preceding the date of the
proposed Borrowing (which must be a Business Day) by Customer.
Subject to Section 7, PBL shall, before 10:00 A.M. (New York City
time) on the date of such Borrowing, make available to Customer
the amount of such Borrowing (provided that the Outstanding Debit
Floating Rate Financing, taking into account the amount specified
in the Borrow Request, does not exceed the Floating Rate
Financing Amount) payable to the account designated by the
Customer in such Borrow Request.
(c) No Subsequent Borrowings on Fixed Rate Financing. On any day
following the Closing Date, PBL shall not provide fixed rate
financing to Customer on any amounts in excess of the Fixed Rate
Financing Amount unless otherwise agreed by PBL in writing.
(d) Conversion of Fixed Rate Financing Amounts to Floating Rate
Financing Amounts.
i. On the Fixed Rate Period End Date, the Fixed Rate Financing
Amount shall be reduced to zero and the Floating Rate Financing
Amount shall be correspondingly increased by the same amount.
Such increase to the Floating Rate Financing Amount on such
Fixed Rate Period End Date shall be deemed to be a separate
Borrowing for the purposes of determining interest payments
pursuant to Section 5 below.
ii. At any time following the Closing Date, the Customer may elect
to reduce all or any portion of the Fixed Rate Financing Amount
and correspondingly increase the Floating Rate Financing Amount
by the same amount. To the extent that such an action
constitutes a Fixed Rate Financing Prepayment Event pursuant to
Section 4 below, a Breakage Fee shall be payable by one party to
the other in accordance with Section 8(c).
3. REPAYMENT -
(a) Upon the occurrence of a Facility Termination Event, an event
described in Section 15(a) hereof, or the date specified in the
Facility Modification Notice as described in Section 6, all
Borrowings (including all accrued and unpaid interest thereon and
all other amounts owing or payable hereunder) may be recalled by
PBL in accordance with Section 1 of the U.S. PB Agreement.
(b) Upon the occurrence of a Default, the BNPP Entities shall have the
right to take any action described in Section 13(b) hereof.
4. PREPAYMENTS -
Customer may upon prior written notice to PBL stating the proposed date
and aggregate principal amount of the prepayment, prepay all or any
portion of the outstanding principal amount of the Outstanding Debit
Floating Rate Financing and/or Fixed Rate Financing Amount, together
with any unpaid accrued interest to the date of such prepayment on the
principal amount prepaid as follows: if such notice is sent to PBL (a)
on or before 10:00 a.m. New York time on any Business Day, then
Customer may prepay the relevant amount on such Business Day, and (b)
after 10:00 a.m. New York time on any Business Day, then Customer may
prepay such amount on the next Business Day; provided that Customer
shall continue to be obligated to pay the commitment fee as set forth
in Appendix B in respect of any undrawn Floating Rate Financing Amount.
PBL may, upon 180 days' prior written notice to Customer, early
terminate all or any portion of the Fixed Rated Financing Amount, in
which case Customer shall be required to prepay the Fixed Rate
Financing Amount (or portion thereof) in accordance with the preceding
sentence on the effective termination date. For the avoidance of doubt,
the prepayment or early termination of all or any portion of the Fixed
Rate Financing Amount shall be a Fixed Rate Financing Prepayment Event,
and a fee may apply to Customer or PBL pursuant to Section 8(c) below,
but such prepayment shall not result in a termination of this Agreement
or any commitment set forth herein in relation to any of Customer's
remaining Borrowings.
In the event of a Fixed Rate Financing Prepayment Event and at the
request of Customer, PBL will use its commercially reasonable efforts
to assign and novate the Interest Rate Hedging Transaction (as defined
in Appendix B) to a third party designated by Customer, together with
the principal amount. Any costs (including the principal amount of the
associated loans) will be settled between PBL and the third party
assignee.
5. INTEREST -
Customer shall pay interest on the outstanding principal amount of each
Borrowing from the date of such Borrowing until such principal amount
has been paid in full, at the relevant rate specified in Appendix B
attached hereto. Such interest shall be payable monthly, and if not
paid when due, any unpaid interest shall be capitalized on the
principal balance; provided that, notwithstanding such capitalization,
the failure by Customer to pay such interest when due, shall be a
failure of Customer to comply with an obligation under this Agreement.
6. SCOPE OF COMMITTED FACILITY -
PBL may not take any of the following actions except upon at least 180
calendar days' prior notice (the "FACILITY MODIFICATION NOTICE"):
(a) modify the Collateral Requirements other than in accordance with
the terms of Appendix A;
(b) recall or cause repayment of any cash loan under the 40 Act
Financing Agreements;
(c) modify the Customer Debit Rate, the Liquidity Premium, or the
Commitment Fee, in each case as set forth in Appendix B attached
hereto;
(d) modify the fees, charges or expenses other than those described
in clause (c) above, as set forth in Appendix B attached hereto
(the "FEES"), provided that PBL may modify any Fees immediately
if (i) the amount of such Fees charged to PBL, as the case may
be, have been increased by the provider of the relevant services
or (ii) consistent with increases generally to customers; or
(e) terminate any of the 40 Act Financing Agreements.
7. CONDITIONS FOR COMMITTED FACILITY -
The commitment as set forth in Section 6 only applies so long as -
(a) Customer satisfies the Collateral Requirements; and
(b) no Default or Facility Termination Event has occurred.
8. ARRANGEMENT, BREAKAGE AND COMMITMENT FEES -
(a) Customer shall pay when due an arrangement fee as set forth in
Appendix B;
(b) Customer shall pay when due a commitment fee as set forth in
Appendix B;
(c) Upon the occurrence of a Fixed Rate Financing Prepayment Event,
one party shall pay to the other when due a Breakage Fee as set
forth in Appendix B, provided, however, that such Breakage Fee
shall not apply to the extent the relevant Fixed Rate Financing
Amount and Interest Rate Hedging Transaction (as defined in
Appendix B) has been assigned and novated in accordance with
Section 4 above; and
(d) In the event that this Agreement is terminated by Customer upon
thirty (30) days' prior written notice pursuant to Section 13(e)
hereto, Customer shall pay a Facility Breakage Fee as set forth
in Appendix B.
9. SUBSTITUTION -
(a) After PBL sends a Facility Modification Notice, Customer may not
substitute any collateral, provided that PBL may permit
substitutions (the terms of which shall be determined by PBL in
its sole discretion) upon request, which permission shall not be
unreasonably withheld.
(b) Prior to PBL sending a Facility Modification Notice, Customer may
substitute collateral.
10. COLLATERAL DELIVERY -
If notice of a Collateral Requirement is sent to Customer orally or via
facsimile or electronic mail or such other delivery method as the
parties agree (in each case, with delivery deemed when sent): (i) on or
before 10:00 a.m. New York time on any Business Day, then Customer
shall deliver all required Collateral no later than the close of
business on such Business Day, and (ii) after 10:00 a.m. New York time
on any Business Day, then Customer shall deliver all required
Collateral no later than the close of business on the immediately
succeeding Business Day.
11. REPRESENTATIONS AND WARRANTIES -
Customer hereby makes all the representations and warranties set forth
in Section 4 of the Account Agreement, which are deemed to refer to
this Agreement, and such representations and warranties shall survive
each transaction and the termination of the 40 Act Financing
Agreements.
12. FINANCIAL INFORMATION -
Customer shall provide PBL with copies of -
(a) the most recent annual report of Customer containing financial
statements certified by independent certified public accountants
and prepared in accordance with generally accepted accounting
principles in the United States, as soon as available and in any
event within 120 calendar days after the end of each fiscal year
of Customer;
(b) the most recent quarterly portfolio report of Customer, including
net asset value of Customer, as soon as available and in any
event within 90 calendar days after the end of each calendar
quarter; and
(c) the estimated net asset value statement of Customer as of any
Business Day, upon request thereof by PBL.
13. TERMINATION -
(a) Upon the occurrence of a Facility Termination Event (as defined
in clause (d) below), this Agreement automatically terminates;
provided, however, that if there occurs a Facility Termination
Event under Section 13(d)iii, this Agreement shall not
automatically terminate, but instead the commitment referred to
in Section 6 shall be reduced from 180 calendar days to 30
calendar days, notwithstanding any other provision herein.
(b) Upon the occurrence of a Default, the BNPP Entities may terminate
any of the 40 Act Financing Agreements and take Default Action.
(c) Each of the following events constitutes a "DEFAULT":
i. Customer fails to meet the Collateral Requirements within one
Business Day after the time periods set forth in Section 10;
ii. Customer fails to deliver the financial information (1) within
five Business Days after the time periods set out in Sections
12(a) and (b), and (2) within one Business Day after the time
period set out in Section 12(c), provided that such cure
periods shall apply only in respect of Section 12;
iii. the Net Asset Value of Customer declines below the Net Asset
Value Floor (unless such decline is also a Facility Termination
Event under Section 9(d)iii, in which case such Section 9(d)iii
shall apply);
iv. any representation or warranty made or deemed made by Customer
to PBL under any 40 Act Financing Agreements (including under
Section 11 herein) proves false or misleading when made or
deemed made;
v. Customer fails to comply with or perform any agreement or
obligation under this Agreement or the other 40 Act Financing
Agreements (other than those covered by Section 13(c)i or ii),
provided, however, that other than a failure by Customer to
make a payment due to a BNPP Entity or a Default as set forth
in Sections 13(c)i, 13(c)ii, or 13(c)iv, such event or
occurrence shall not be deemed a Default and Default Action may
not be taken unless Customer has failed to remedy such event or
occurrence within five Business Days; or
vi. the filing by or against Customer of a petition or other
proceeding in bankruptcy, insolvency or for the appointment of
a receiver or upon the levy or attachment against any property
or accounts of Customer.
(d) Each of the following events constitutes a "FACILITY TERMINATION
EVENT":
i. there occurs any change in PBL's interpretation of any
Applicable Law or the adoption of or any changes in the same
(including, for the avoidance of doubt, any new or amended
rules, requests, guidelines, and directives promulgated in
connection with current Applicable Law, including the
Dodd-Frank Wall Street Reform and Consumer Protection Act)
that, in the reasonable opinion of counsel to PBL, has the
effect with regard to PBL of impeding or prohibiting the
arrangements under the 40 Act Financing Agreements (including,
but not limited to, imposing or adversely modifying or
affecting the amount of regulatory capital to be maintained by
PBL); provided, however, that it shall not be a Facility
Termination Event if there occurs a change in, or change in
PBL's interpretation of, any Applicable Law that results in a
cost increase to PBL (as determined in its sole discretion),
rather than a prohibition (as determined in PBL's sole
discretion), and such cost increase is accepted by Customer
(for the avoidance of doubt, such cost increase may be
implemented by adjusting the fees and rates in Appendix B or in
any other manner, as determined by PBL in its sole reasonable
discretion);
ii. the occurrence of a repudiation, misrepresentation, material
breach or the occurrence of a default, termination event or
similar condition (howsoever characterized, which, for the
avoidance of doubt, includes the occurrence of an Additional
Termination Event under an ISDA Master Agreement between
Customer and a BNPP Entity, if applicable) by Customer under
any contract with (A) a BNPP Entity or affiliate of a BNPP
Entity or (B) a third party entity, where the aggregate
principal amount of any such contract (which, for the avoidance
of doubt, includes any obligations with respect to borrowed
money or other assets in connection with such contract) is not
less than $10,000,000;
iii. (A) the Net Asset Value of Customer as of the close of business
on the last Business Day of any calendar month declines by
thirty percent (30%) or more from the Net Asset Value of
Customer as of the close of business on the last Business Day
of the immediately preceding calendar month, (B) the Net Asset
Value of Customer as of the close of business on the last
Business Day of any calendar month declines by forty percent
(40%) or more from the Net Asset Value of Customer as of the
close of business on the last Business Day of the calendar
month three months prior, or (C) the Net Asset Value of
Customer as of the close of business on the last Business Day
of any calendar month declines by fifty percent (50%) or more
from the Net Asset Value of Customer as of the close of
business on the last Business Day of the calendar month twelve
months prior (for purposes of (A), (B) and (C) above, any
decline in Net Asset Value shall not take into account any
positive or negative change caused by capital transfers, such
as redemptions, withdrawals, subscriptions, contributions,
dividends or investments, howsoever characterized, and all
amounts set forth in redemption notices received by or on
behalf of Customer (notwithstanding the date the actual
redemption shall occur));
iv. the investment management agreement between Customer and its
investment advisor ("ADVISOR") is terminated or the Advisor
otherwise ceases to act as investment advisor of Customer;
provided, however, such termination or cessation shall not
constitute a Facility Termination Event if there is a
replacement investment advisor appointed immediately who is
acceptable to PBL in its sole discretion;
v. the asset coverage for all borrowings constituting 'senior
securities' (as defined for purposes of Section 18 of the
Investment Company Act of 1940 ("1940 ACT")) of Customer falls
below the 300% minimum required by Section 18(f)(1) of the 1940
Act or such other minimum percentage as may be approved by U.S.
governmental authorities from time to time under applicable
U.S. securities law (provided that, for purposes of this
provision, such minimum percentage cannot be lower than 200%);
or
vi. Customer fails to make any filing necessary to comply with the
rules of any exchange in which its shares are listed.
(e) Customer or PBL may terminate this Agreement upon 180 days' prior
written notice; provided that Customer may terminate this
Agreement upon thirty (30) calendar days' written notice to PBL
designating a date, not earlier than thirty days following the
giving of such written notice (the "FACILITY BREAKAGE PAYMENT
DATE"), on which such termination shall occur, subject to a
Facility Breakage Fee.
14. NOTICES -
Notices under this Agreement shall be provided pursuant to Section
11(a) of the Account Agreement.
15. COMPLIANCE WITH APPLICABLE LAW -
(a) Notwithstanding any of the foregoing, to the extent required by
Applicable Law -
i. the BNPP Entities may terminate any 40 Act Financing Agreement
and any Contract;
ii. PBL may recall any outstanding loan under the 40 Act Financing
Agreements;
iii. PBL may modify the Collateral Requirements; and
iv. The BNPP Entities may take Default Action.
(b) This Agreement will not limit the ability of PBL to change the
product provided under this Agreement and the 40 Act Financing
Agreements as necessary to comply with Applicable Law.
(c) The BNPP Entities may exercise any remedies permitted under the
Contracts if Customer fails to comply with Applicable Law.
16. MISCELLANEOUS -
(a) In the event of a conflict between any provision of this
Agreement and the other 40 Act Financing Agreements, this
Agreement prevails.
(b) This Agreement is governed by and construed in accordance with
the laws of the State of New York, without giving effect to the
conflict of laws doctrine.
(c) Section 15(c) of the Account Agreement is hereby incorporated by
reference in its entirety and shall be deemed to be a part of
this Agreement to the same extent as if such provision had been
set forth in full herein.
(d) This Agreement may be executed in counterparts, each of which
will be deemed an original instrument and all of which together
will constitute one and the same agreement.
(e) This Agreement and the other 40 Act Financing Agreements shall
not be publicly distributed via syndication (for the avoidance of
doubt, nothing in this Subsection shall affect the
rephypothecation rights in the 40 Act Financing Agreements).
(f) The Customer's Declaration of Trust is on file with the Secretary
to the Commonwealth of Massachusetts. This Agreement is executed
on behalf of the Customer by the Customer's officers as officers
and not individually, and the obligations imposed upon the
Customer by this Agreement are not binding upon any of the
Customer's trustees, officers or shareholders individually, but
are binding only upon the assets and property of the Customer.
(g) Notwithstanding anything in the U.S. PB Agreement to the
contrary, all Collateral will be held by the Customer's custodian
pursuant to a Special Custody and Pledge Agreement among the
Customer, PBL and The Bank of New York Mellon (or any successor
custodian).
(The remainder of this page is blank.)
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed
and delivered as of the date specified on the first page of this Agreement.
FIRST TRUST ENERGY INCOME AND
GROWTH FUND (FKA ENERGY INCOME
AND GROWTH FUND)
By:
--------------------------------------
Name:
Title:
BNP PARIBAS PRIME BROKERAGE
INTERNATIONAL, LTD.
By:
--------------------------------------
Name:
Title:
Execution copy 7/24/13
APPENDIX A - COLLATERAL REQUIREMENTS
THIS APPENDIX forms a part of the Amended and Restated Committed Facility
Agreement entered into between BNP Paribas Prime Brokerage International, Ltd.
("PBL") and First Trust Energy Income and Growth Fund ("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") shall be the greatest of:
(a) the sum of (i) the aggregate product of (x) the Collateral Percentage
applicable to such Positions and (y) the Current Market Value of such
respective Positions and (ii) 10% of the Fixed Rate Financing Amount;
(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 FINRA
Rule 4210, as amended from time to time; or
(d) 50% of the Portfolio Gross Market Value.
2. ELIGIBLE SECURITIES -
(a) Positions in the following eligible equity and fixed income security
types ("ELIGIBLE SECURITIES") are covered under the Committed Facility
Agreement:
i. common stock traded on the following U.S. exchanges: the New
York Stock Exchange, NASDAQ, NYSE Arca, and NYSE MKT;
ii. non-USD common stock, provided such stock is (A) listed in the
FTSE All-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, or Portugal and (C)
denominated in one of the following currencies: CAD, GBP, EUR,
JPY, CHF, AUD or SEK; or
iii. non-convertible and convertible preferred securities and
corporate bonds denominated in USD, provided such securities are
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.
(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 PBL in its
sole discretion;
ii. any short security position;
iii. any security offered through a private placement or any
restricted securities;
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;
1
v. any securities that are municipal securities, asset-backed
securities, mortgage securities or Structured Securities
(notwithstanding the fact that such securities would otherwise
be covered);
vi. to the extent 20% of the Eligible Collateral's Current Market
Value consists of non-investment grade corporate bonds and/or
preferred securities (for the avoidance of doubt, unrated
securities are considered to be non-investment grade), any
non-investment grade corporate bonds and preferred securities in
excess of such 20%; and
vii. to the extent 30% of the Eligible Collateral's Current Market
Value consists of non-USD securities (whether common stock,
preferred securities, or corporate bonds), any non-USD
securities in excess of such 30%.
3. EQUITY SECURITIES COLLATERAL PERCENTAGE -
The Collateral Percentage for a Position consisting of applicable Eligible
Securities shall be:
i. subject to paragraphs ii and iii below, the sum of (A) the
Equity Core Collateral Rate and (B) the product of (1) the
Equity Core Collateral Rate and (2) the sum of the Equity
Concentration Factor, the Equity Liquidity Factor, and the
Equity Volatility Factor;
ii. 100% if (A) the product determined under paragraph i above is
greater than 100%, (B) the Current Market Value per share of the
relevant equity securities is lower than USD $3, or (C) if
Section 3(a), (b) or (c) so provides; and
iii. determined by PBL on a case-by-case basis, if 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).
(a) EQUITY CONCENTRATION FACTOR.
The "EQUITY CONCENTRATION FACTOR" shall be determined pursuant to the
following table, provided that notwithstanding any other provision of
this Appendix, the Collateral Percentage shall be 100% with respect to
the relevant Position if the Position Concentration is equal to or
greater than 10% of the Portfolio Gross Market Value.
-------------------------- ---------------------------------------
POSITION CONCENTRATION EQUITY CONCENTRATION FACTOR
-------------------------- ---------------------------------------
Less than 5% 0
-------------------------- ---------------------------------------
5%+ to 10% 0.5
-------------------------- ---------------------------------------
(b) EQUITY LIQUIDITY FACTOR.
The "EQUITY LIQUIDITY FACTOR" shall be determined pursuant to the
following table, provided that notwithstanding any other provision of
this Appendix, the Collateral Percentage shall be 100% with respect to
the relevant Position if the Days of Trading Volume is equal to or
greater than 10.
2
------------------------------------------- -------------------------
DAYS OF TRADING VOLUME EQUITY LIQUIDITY FACTOR
------------------------------------------- -------------------------
Less than 2 0
------------------------------------------- -------------------------
Equal to or greater than 2 and less than 5 1
------------------------------------------- -------------------------
Equal to or greater than 5 and less than 7 2
------------------------------------------- -------------------------
Equal to or greater than 7 and less than 10 3
------------------------------------------- -------------------------
(c) EQUITY VOLATILITY FACTOR.
The "EQUITY VOLATILITY FACTOR" shall be determined pursuant to the
following table, provided that notwithstanding any other provision of
this Appendix, the Collateral Percentage shall be 100% with respect to
the relevant Position if the Equity Volatility is equal to or greater
than 100%.
----------------------------------------------- ---------------------
EQUITY EQUITY
VOLATILITY VOLATILITY FACTOR
----------------------------------------------- ---------------------
Less than 20% -0.15
----------------------------------------------- ---------------------
Equal to or greater than 20% and 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 shall be the sum of (A) the Debt Core Collateral Rate and (B)
the product of (1) the Debt Core Collateral Rate and (2) the sum of the
Debt Concentration Factor and the Debt Liquidity Adjustment; provided that
the Collateral Percentage for any debt security which trades below 40% of
its nominal value shall be 100%.
(a) DEBT CORE COLLATERAL RATE.
The "DEBT CORE COLLATERAL RATE" shall be based on the credit quality
of the Issuer as set forth below. The lower of the S&P or Moody's
rating as shown below will be used to determine the credit quality of
the Issuer; provided, that if there is only one such rating, then the
Debt Core Collateral Rate corresponding to such rating shall be used.
----------------------- ------------------------- --------------------
DEBT CORE
S&P'S RATING MOODY'S RATING COLLATERAL RATE
----------------------- ------------------------- --------------------
AAA to A- Aaa to A3 50%
----------------------- ------------------------- --------------------
BBB+ to BBB- Baa1 to Baa3 50%
----------------------- ------------------------- --------------------
BB+ to BB- Ba1 to Ba3 75%
----------------------- ------------------------- --------------------
B+ to B- / NR B1 to B3 / NR 75%
----------------------- ------------------------- --------------------
CCC+ to CCC- Caa1 to Caa3 100%
----------------------- ------------------------- --------------------
Below CCC- or defaulted Below Caa3 or defaulted 100%
----------------------- ------------------------- --------------------
(b) DEBT CONCENTRATION FACTOR
The "DEBT CONCENTRATION FACTOR" shall be determined pursuant to the
following table, provided that notwithstanding any other provision of
this Appendix, the Collateral Percentage shall be 100% with respect to
the relevant Position if the Position Concentration is equal to or
greater than 10% of the Portfolio Gross Market Value.
3
---------------------------- ----------------------------------------
POSITION CONCENTRATION DEBT CONCENTRATION FACTOR
---------------------------- ----------------------------------------
Less than 5% 0
---------------------------- ----------------------------------------
5%+ to 10% 0.5
---------------------------- ----------------------------------------
(c) DEBT LIQUIDITY ADJUSTMENT
The "DEBT LIQUIDITY ADJUSTMENT" shall be determined pursuant to the
following table; provided that, notwithstanding any other provision of
this Appendix, the Collateral Percentage shall be 100% with respect to
the relevant Position if its percentage of Issue Size is equal to or
greater than 10%.
-------------------------- ------------------------------------------
PERCENTAGE OF ISSUE SIZE DEBT LIQUIDITY ADJUSTMENT
-------------------------- ------------------------------------------
Less than 10% 0
-------------------------- ------------------------------------------
5. POSITIONS OUTSIDE THE SCOPE OF THIS APPENDIX -
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 shall be determined by PBL in its sole
discretion.
6. ONE-OFF COLLATERAL REQUIREMENTS -
From time to time PBL may, at its sole discretion, agree to a different
Collateral Requirement than the Collateral Requirement determined by this
Appendix for a particular Position; 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 Requirements based upon
the Collateral Percentage determined pursuant to Sections 3 and 4 hereof
and PBL shall have the right at any time to increase the Collateral
Requirement for such Position up to the Collateral Requirement that would
be required as determined in accordance to Sections 3 and 4 hereof.
7. CERTAIN DEFINITIONS -
(a) "AFFILIATE" means an affiliate as defined in Rule 144(a)(1) under the
Securities Act of 1933.
(b) "BLOOMBERG" means the Bloomberg Professional service.
(c) "COLLATERAL PERCENTAGE" means the percentage as determined by PBL
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 the relevant security and
(ii) the price per share of the relevant security (determined by PBL).
(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 PBL in its sole discretion), as denominator.
(f) "DEBT SECURITY" means convertible and non-convertible preferred
securities and corporate debt securities.
4
(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 PBL 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 PBL in its sole discretion.
(i) "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.
(j) "ISSUER" means, with respect to an applicable security, the issuer of
such security.
(k) "ISSUE SIZE" means with respect to a Position in an applicable
security of an Issuer, the aggregate market value of all such
securities issued by the Issuer and still outstanding.
(l) "PORTFOLIO GROSS MARKET VALUE" means the Gross Market Value of all of
Customer's Positions that are Eligible Securities.
(m) "POSITION CONCENTRATION" means with respect to a Position, an amount
equal to the quotient of (i) the absolute value of the Current Market
Value of such Position and (ii) the Gross Market Value of all of
Customer's Positions, expressed as a percentage; provided that in the
event that two Positions hedge one another as determined by PBL, only
the absolute value of the Current Market Value of the unhedged portion
of such Positions shall be considered for the purposes of Section
3(a).
(n) "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.
5
Execution copy 7/24/13
APPENDIX B
PRICING
--------------------------------------------------------------------------------
FIRST TRUST ENERGY INCOME AND GROWTH FUND
--------------------------------------------------------------------------------
BNP PARIBAS PRIME BROKERAGE INTERNATIONAL, LTD.
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
FINANCING RATES
--------------------------------------------------------------------------------
CUSTOMER DEBIT RATE (applicable to the Outstanding Debit Floating
Rate Financing)
1 Month LIBOR + 70 bps per annum on the drawn amount
ISO CODE
USD
10-YEAR FIXED RATE
Fixed Base Rate + Liquidity Premium, where
Fixed Base Rate = 267.97 bps
Liquidity Premium = 70 bps
--------------------------------------------------------------------------------
ARRANGEMENT FEE
--------------------------------------------------------------------------------
Customer shall pay an arrangement fee equal to the product of the Fixed Rate
Financing Amount and 10 bps upon execution, to be paid on the Closing Date.
--------------------------------------------------------------------------------
COMMITMENT FEE
--------------------------------------------------------------------------------
Customer shall pay a commitment fee equal to 80 bps per annum on the amount of
undrawn Floating Rate Financing Amount, to be paid when the amounts calculated
under the Financing Rates section above are due.
--------------------------------------------------------------------------------
BREAKAGE FEE
--------------------------------------------------------------------------------
Upon the occurrence of a Fixed Rate Financing Prepayment Event, Customer and PBL
shall, in good faith and a commercially reasonable manner, jointly determine a
Breakage Fee equal to the cost (or benefit) of entering into a replacement swap
rate transaction to offset the Interest Rate Hedging Transaction as follows:
(a) Both parties shall each seek to obtain two market quotations from
Reference Market-makers by 12:00 p.m. New York time on the Business Day
following the Fixed Rate Financing Prepayment Date (the "DETERMINATION
DATE"). The parties shall determine the Breakage Fee at such time by
taking the average of the market quotations obtained as of such time,
and taking into account any associated commission fees and transaction
costs to terminate the existing swap rate transaction (if any) and enter
into the replacement swap rate transaction. If, as of 12:00 p.m. New
York time, (i) only one market quotation is obtained, such market
quotation shall be used for the Breakage Fee determination or (ii) no
market quotations have been obtained, PBL shall determine the rate of
such replacement swap transaction, subject to approval by Customer and
such approval will not be unreasonably withheld.
(b) If entering into the replacement swap rate transaction results in (a) an
economic benefit to PBL, then PBL shall pay the Breakage Fee to
Customer, and (b) an economic cost to PBL, then Customer shall pay the
Breakage Fee to PBL, in either event, by the close of business on the
Determination Date.
(c) "INTEREST RATE HEDGING TRANSACTION" means an assumed transaction that
could be entered into to hedge the interest rate risk in connection
with providing the Fixed Rate Financing Rate on the Fixed Rate
Financing Amount for the term of the Fixed Rate Period. For purposes
of any calculations to be used herein, the terms of the Interest Rate
Hedging Transaction shall be as follows:
i. The Notional Amount will be equal to the Fixed Rate Financing
Amount.
ii. The Trade Date will be the Closing Date.
iii. The Effective Date will be two (2) Business Days following the
Trade Date.
iv. The Termination Date will be ten (10) years from the Effective
Date, as adjusted, if necessary, in accordance with the Modified
Following Business Day Convention.
v. PBL Pays Fixed/ Receives Floating; Monthly.
vi. Fixed Rate will be the Fixed Base Rate.
vii. Floating Rate Option will be USD-LIBOR-BBA. The Designated
Maturity will be 1 Month.
viii. Fixed / Floating Rate Day Count Fraction will be: Actual/360.
ix. Business Days will be London and New York Business Days.
(d) "REFERENCE MARKET-MAKER" means a leading dealer in the relevant market
selected by the relevant party in good faith (a) from among dealers of
the highest credit standing which satisfy all the criteria that such
party applies generally at the time in deciding whether to offer or to
make an extension of credit and (b) to the extent practicable, from
among such dealers having an office in the same city.
--------------------------------------------------------------------------------
FACILITY BREAKAGE FEE
--------------------------------------------------------------------------------
In the event that this Agreement is terminated by Customer upon thirty
(30) days' prior written notice to PBL, Customer shall pay to PBL a Facility
Breakage Fee due on the Facility Breakage Payment Date. The "FACILITY BREAKAGE
FEE" shall be equal to the sum of the Facility Breakage Rate and any unpaid
accrued interest. For the purposes of the foregoing, "FACILITY BREAKAGE RATE"
means the product of (i) the Final Commitment Amount and (ii) 7.5 bps. The
"FINAL COMMITMENT AMOUNT" shall be the sum of the Fixed Rate Financing Amount
and the Floating Rate Financing Amount as of the Facility Breakage Payment Date.
2