Execution copy
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 April 7, 2014.
Whereas PBL and Customer have entered into an 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 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 date of this Agreement.
(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) "DRAWN AMOUNT" means, on any day, an amount equal to the average of
the Outstanding Debit Financing held by Customer over the
immediately preceding 20 Business Days.
(h) "EXCESS FINANCING AMOUNT" means an amount equal to the Outstanding
Debit Financing minus the Drawn Amount.
(i) "FIXED RATE FINANCING AMOUNT" means an amount of cash financing
provided by PBL to Customer equal to $[0] 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.
(j) "FIXED RATE FINANCING PREPAYMENT DATE" means the date on which a
Fixed Rate Financing Prepayment Event occurs.
(k) "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.
(l) "FIXED RATE PERIOD" means the period commencing on the Fixing Date
and expiring on the tenth anniversary of the Fixing Date, as
adjusted, if necessary, in accordance with the Modified Following
Business Day Convention, unless the parties agree in writing to
amend or extend the term of the relevant Fixed Rate Period (the
"FIXED RATE PERIOD END DATE").
(m) "FIXING DATE" means the date agreed upon by PBL and Customer.
(n) "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.
(o) "FUNDING EVENT" means on any day, (the "RATING DECLINE DATE OF
DETERMINATION") BNP Paribas' long-term credit rating declines by
three or more notches by any of Standard & Poor's Ratings Services,
Xxxxx'x Investor Service, Inc. or Fitch Ratings, Ltd. during the
period beginning on and including the date of this Agreement and
ending on and including the Rating Decline Date of Determination.
(p) "INITIAL FLOATING RATE FINANCING AMOUNT" means $155,000,000.
(q) "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.
(r) "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.
(s) "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 Closing Date, 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.
(t) "NOTICE DATE" means the day on which PBL delivers the Facility
Modification Notice. (u) "OUTSTANDING DEBIT FINANCING" means the sum
of the Fixed Rate Financing Amount and the Outstanding Debit
Floating Rate Financing.
(v) "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
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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.
(w) "TOTAL FACILITY SIZE" means $155,000,000.
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 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 relevant 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).
Notwithstanding the foregoing or anything to the contrary herein, if
there occurs on any day a Funding Event, an amount equal to the
Excess Financing Amount as of the Notice Date, if any, which, for
the avoidance of doubt, would otherwise have been subject to the
commitment described in the Agreement shall be due and payable
immediately upon demand by PBL on any day on or after the 29th
calendar day following the Notice Date; provided that, if such 29th
calendar day is not a Business Day, then such Excess Financing
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Amount shall be due and payable immediately upon demand by PBL on
any day on or after the Business Day immediately preceding such 29th
calendar day.
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.
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;
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(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 (b) 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 pursuant
to Section 13(e) hereto, Customer shall pay a Facility Breakage Fee
as set forth in Appendix B; provided that such Facility Breakage Fee
shall not apply if Customer has terminated the Agreement following
PBL's assignment to an unaffiliated entity pursuant to Section 16(c)
of the U.S. PB Agreement.
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.
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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;
(c) a monthly statement of the leverage and asset coverage ratios of
Customer as soon as available and in any event within 15 calendar
days after the end of each calendar month; and
(d) the estimated net asset value statement of Customer as of any
Business Day, upon request thereof by PBL.
Information with respect to the Customer required to be delivered pursuant
to Section 12 shall be deemed to have been delivered or furnished if such
information, or one or more annual or semi-annual annual reports
containing such information, shall be available on the web page for the
Customer appearing on the website of the SEC at xxxx://xxx.xxx.xxx or on
xxxxxxxxxxxx.xxx.
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 (5) Business Days after the time periods set out in
Sections 12(a), (b) and (c), and (2) within one (1) Business
Day after the time period set out in Section 12(d), 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 13(d)iii, in which case such
Section 13(d)iii shall apply); any 40 Act Financing Agreements
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(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), or 13(c)(ii), 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 (5) 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
Xxxx-Xxxxx Xxxx 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. 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 this
Section, 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 advisor
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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 five (5) Business Days' written notice to PBL designating a
date, not earlier than five Business 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 as
set forth in Appendix B.
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 16(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.
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(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.)
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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 NEW OPPORTUNITIES MLP
& ENERGY FUND
By: /s/ Xxxx X. Xxxxxxx
----------------------------------
Name: Xxxx X. Xxxxxxx
Title: President and CEO
BNP PARIBAS PRIME BROKERAGE
INTERNATIONAL,LTD.,ON BEHALF OF ITSELF
AND AS AGENT FOR THE BNPP ENTITIES
By: /s/ Xxxxxx X. Xxxxx
----------------------------------
Name: XXXXXX X. XXXXX
Title: Director
Execution copy
APPENDIX A - COLLATERAL REQUIREMENTS
THIS APPENDIX forms a part of the Committed Facility Agreement entered into
between BNP Paribas Prime Brokerage International, Ltd. ("PBL") and First Trust
New Opportunities MLP & Energy 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;
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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.
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POSITION CONCENTRATION EQUITY CONCENTRATION FACTOR
--------------------------------------------------------------------
Less than 5% 0
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5%+ to 10% 0.5
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(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
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EQUITY
DAYS OF TRADING VOLUME 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
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Equal to or greater than 7 and less than 10 3
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(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
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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
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Equal to or greater than 75% and less than 100% 2
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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 Xxxxx'x
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.
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DEBT CORE
S& P'S RATING XXXXX'X RATING COLLATERAL RATE
--------------------------------------------------------------------
AAA to A- Aaa to A3 50%
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BBB+ to BBB- Baa1 to Baa3 50%
--------------------------------------------------------------------
BB+ to BB- Ba1 to Ba3 75%
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B+ to B- / NR B1 to B3 / NR 75%
--------------------------------------------------------------------
CCC+ to CCC- Caa1 to Caa3 100%
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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
APPENDIX B
PRICING
FIRST TRUST NEW OPPORTUNITIES MLP & ENERGY 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 Outstanding Debit Floating
Rate Financing
ISO CODE
USD
10-YEAR FIXED RATE
Fixed Base Rate + Liquidity Premium, where
Fixed Base Rate = [TBD on the Fixing Date]
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 Fixing
Date.
COMMITMENT FEE
Customer shall pay a commitment fee equal to 55 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;
provided, however, that the Commitment Fee shall be waived on any day on
which the Drawn Amount is 80% or more of the Total Facility Size.
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 Fixing 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 at least
five (5) Business 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 Total Facility Size
and (ii) (A) if Customer provided less than 30 calendar days' advance
notice of termination, 10 bps; (B) if Customer provided less than 90 days'
advance notice of termination but greater than 30 days' advance notice of
termination, 7.5 bps; and (C) if Customer provided 90 or more calendar
days' advance notice of termination, 0 bps.
2
