AMENDED AND RESTATED SPECIAL CUSTODY AND PLEDGE AGREEMENT

AMENDED AND RESTATED SPECIAL CUSTODY AND PLEDGE AGREEMENT

AMENDED AND RESTATED SPECIAL CUSTODY AND PLEDGE AGREEMENT (hereinafter "Agreement") dated as of March 20, 2017 among Guggenheim Enhanced Equity Income Fund (“Customer”), BNP Paribas Prime Brokerage, Inc. ("Counterparty") and The Bank of New York Mellon as Custodian hereunder ("Custodian").

WHEREAS, pursuant to an Agreement and Plan of Redomestication, Customer has reorganized from a Massachusetts business trust to a Delaware statutory trust; and

WHEREAS, Customer and Counterparty are party to (i) a Committed Facility Agreement and attachments thereto dated as of June 18, 2010 (as amended from time to time, the “Committed Facility Agreement”), (ii) a U.S. PB Agreement and attachments thereto dated as of June 18, 2010 (as amended from time to time, the “U.S. PB Agreement”, and collectively with the Committed Facility Agreement, the “40 Act Financing Agreements”), and (iii) together with the Custodian, a Special Custody and Pledge Agreement dated as of June 18, 2010 (as amended from time to time prior to the date hereof, the “Existing SCPA”), and Counterparty has agreed to provide secured financing to Customer pursuant to the terms and conditions of the Committed Facility Agreement (to the extent the Committed Facility Agreement has not been terminated or the commitment has not expired) and the U.S. PB Agreement (which, for the avoidance of doubt, is not a committed facility); and

WHEREAS, Customer provides pledged collateral to Counterparty and has opened an account with Counterparty (the “Account”) and for those purposes has entered into an account agreement with Counterparty as part of the U.S. PB Agreement (as amended from time to time, the "Account Agreement"); and

WHEREAS, Counterparty and Customer are required to comply with applicable laws and regulations pertaining to extensions of credit and borrowing securities, including the margin regulations of the Board of Governors of the Federal Reserve System and of any relevant securities exchanges and other self-regulatory associations (the "Margin Rules") and Counterparty's internal policies; and

WHEREAS, to facilitate extensions of credit and borrowing of securities from the Counterparty, Customer and Counterparty desire to establish procedures for compliance with the Margin Rules; and

WHEREAS, in connection with an amendment to the Committed Facility Agreement, the parties hereto wish to amend and restate the Existing SCPA in its entirety and Custodian is prepared to act pursuant to the terms and conditions of this Agreement;

NOW, THEREFORE, in consideration of the mutual covenants contained herein and for other good and valuable consideration, it is agreed as follows:

 

"Adequate Performance Assurance" shall mean such Collateral held in the Special Custody Account as is adequate under the Margin Rules and as set forth in the Committed Facility Agreement, and, to the extent such Committed Facility Agreement has been terminated or the commitment therein has expired, the Account Agreement.

"Advice from Counterparty" means a notice, instruction or entitlement order (as defined in Section 8-102 of the UCC (as defined herein)) delivered by Counterparty to Customer or Custodian, as applicable hereunder, communicated: (i) in writing; (ii) by a facsimile-sending device, or such other means as may be agreed to amongst the parties from time to time (including, for the avoidance of doubt, S.W.I.F.T. connectivity); or (iii) in cases of calls for additional Collateral (as such term is hereinafter defined) or notices referred to in section 8 hereof, by telephone to a person designated by Customer (not to include Custodian) in writing as authorized to receive such advice or, in the event that no such person is available, to any officer of the Customer.

"Business Day" means a day on which Custodian, Customer and Counterparty are open for business.

"Collateral" means all U.S. cash or U.S. dollar-denominated securities which are maintained in the Special Custody Account, provided that any of the foregoing that has been released from the Special Custody Account to the Customer in accordance with Sections 4, 8 and 22 (and has not subsequently been re-deposited into the Special Custody Account after such release) shall cease to be “Collateral” after such release.

“Custody Agreement” means the custody agreement dated as of March 20, 2017, which relates to Customer and Custodian.

“Depository” shall mean the Treasury/Reserve Automated Debt Entry System maintained at The Federal Reserve Bank of New York for receiving and delivering securities, The Depository Trust Company and any other clearing corporation within the meaning of Section 8-102 of the UCC or otherwise authorized to act as a securities depository or clearing agency, and their respective successors and nominees.

"Insolvency" means that:  (i) an order, judgment or decree has been entered under the bankruptcy, reorganization, compromise, arrangement, insolvency, readjustment of debt, dissolution or liquidation or similar law (herein called the "Bankruptcy Law") of any jurisdiction adjudicating the Customer insolvent; or (ii) the Customer has petitioned or applied to any tribunal for, or consented to the appointment of, or taking possession by, a trustee, receiver, liquidator or similar official, of the Customer, or commenced a voluntary case under the Bankruptcy Law of the United States or any proceedings relating to the Customer under the Bankruptcy Law of any other jurisdiction, whether now or hereinafter in effect; or (iii) any such petition or application has been filed, or any such proceedings commenced, against the Customer and the Customer by any act has indicated its approval thereof, consent thereto or acquiescence therein, or an order for relief has been entered in an involuntary case under the Bankruptcy Law of the United States or any other jurisdiction, as now or hereinafter constituted, or an order, judgment or decree has been entered appointing any such trustee, receiver, liquidator or similar official, or approving the petition in any such proceedings.

 

"Instructions from Customer" means a request, instruction, direction or certification in writing signed in the name of the Customer by a person authorized by Customer and delivered to Custodian or transmitted to it by a facsimile-sending device or such other means as may be agreed to amongst the parties from time to time (including, for the avoidance of doubt, S.W.I.F.T. connectivity).

"Short Sales" shall mean the sale by Customer of securities which Customer does not own, and which is consummated by the delivery of securities borrowed from or through the facilities of Counterparty, in accordance with the applicable provisions of the Margin Rules, particularly Sections 220.10 and 220.12 of Regulation T of the Board of Governors of the Federal Reserve.

(b) Customer agrees to provide and at all times maintain Adequate Performance Assurance in the Special Custody Account pursuant to the terms and conditions of this Agreement. Custodian will maintain accounts and records for the Collateral in the Special Custody Account separate from the accounts and records of any other property of the Customer which may be held by Custodian, subject to the interest therein of Counterparty as the pledgee thereof in accordance with the terms of this Agreement. Interest, dividends or proceeds attributable to Collateral shall be credited to the Special Custody Account as additional Collateral and shall be held in the Special Custody Account as Collateral until released therefrom or withdrawn in accordance with this Agreement.

(c) Customer, Counterparty and Custodian agree (i) that Collateral will be held for Counterparty as pledgee in the Special Custody Account by Custodian in accordance with this Agreement, (ii) that the Custodian will make such deliveries and permit such withdrawals of all or any Collateral as Counterparty shall direct in an Advice from Counterparty, (iii) that Custodian shall comply with all entitlement orders originated by Counterparty, (iv) that, in its capacity as a

 

 

bank, the Custodian agrees to comply with instructions originated by Counterparty directing the disposition of cash in the Special Custody Account, (v) that in no event shall any consent of Customer be required for the taking of any such action by Custodian and (vi) that in no event shall Custodian permit any withdrawal or release of Collateral otherwise than pursuant to an Advice from Counterparty.

(d) Customer hereby grants a continuing security interest to Counterparty: (i) in Collateral and any proceeds thereof; (ii) in all other property in the Account and the Special Custody Account; and (iii) in its accounts (including the Account) with Counterparty and the Special Custody Account, to secure Customer's obligations to Counterparty hereunder and under the 40 Act Financing Agreements.  Custodian shall have no responsibility for the validity or enforceability of such security interest.

 

 

Custodian receives any notice of levy, lien, court order or other process purporting to affect the Collateral. If there shall arise for any reason an overdraft in the Special Custody Account, whether in connection with an advance by Custodian to settle a transaction involving the Special Custody Account or reversing any provisional credit to the Special Custody Account, or if an overdraft or indebtedness shall otherwise arise, such overdraft or indebtedness shall be deemed an overdraft or indebtedness within the meaning of the Custody Agreement and Custodian shall have all the rights and remedies available to it thereunder, solely as related to the assets held in the Custody Account, and for the avoidance of doubt not the Collateral in the Special Custody Account.

(a)

There occurs a Default (as defined in the Committed Facility Agreement), an Event of Default (as defined in the Account Agreement) or a failure by Customer to perform any obligation hereunder including, without limitation, its obligation to maintain Adequate Performance Assurance as herein provided; or

(b)

Customer's Insolvency.

Upon Counterparty’s determination that a Customer Default has occurred, if Counterparty wishes to declare such default, Counterparty shall notify the Customer in an Advice from Counterparty of such Customer Default.  After transmittal by Counterparty of such Advice from Counterparty, if the Customer Default continues at the end of such period, Counterparty may thereupon take any action permitted pursuant to the 40 Act Financing Agreements. The Counterparty shall notify Customer of any sale of Collateral and any deficiency remaining thereafter in an Advice from Counterparty, including without limitation, the conversion of any convertible securities or exercise of Customer's rights in warrants (if any) held in the Account and the Special Custody Account, the buy-in of any securities of which the Account may be short, and the sale of any or all property or securities in the Account and the Special Custody Account to the extent necessary to satisfy Customer's obligations to Counterparty (in which event such Collateral shall be delivered to Counterparty as directed in an Advice from Counterparty). Any sale of Collateral made by Counterparty shall be made in accordance with the provisions of the New York Uniform Commercial Code to the extent applicable. Customer

 

 

shall be liable to Counterparty for any deficiency which may exist after the exercise by Counterparty of its rights and remedies as aforesaid. Any surplus resulting from the sale of Collateral shall be transmitted to Custodian.  Counterparty shall notify Customer of any deficiency or surplus remaining after any sale of Collateral in an Advice from Counterparty.  Any such sale of Collateral held in the Special Custody Account shall be made only after such Collateral has been withdrawn from the Special Custody Account by Counterparty.  Custodian shall have no responsibility for or with respect to the provisions of this paragraph.

Customer agrees to indemnify and hold Custodian harmless from and against any and all Losses sustained or incurred by or asserted against Custodian by reason of or as a result of any action or inaction, or arising out of Custodian’s performance hereunder, including reasonable fees and expenses of counsel incurred by Custodian in a successful defense of

 

 

claims by either party; provided, that Custodian shall not be indemnified for those Losses arising out of Custodian’s own negligence or willful misconduct.  This indemnity shall be a continuing obligation of Customer and its respective successors and assigns, notwithstanding the termination of this Agreement.

Counterparty agrees to indemnify Custodian from and against any and all Losses sustained or incurred by or asserted against Custodian arising out of Custodian’s performance hereunder pursuant to an Advice from Counterparty which it believes in good faith to be genuine and authorized; provided, that Custodian shall not be indemnified for those Losses arising out of Custodian’s own negligence or willful misconduct with respect to this Agreement.

Without limiting the generality of the foregoing, Custodian shall be under no obligation to inquire into, and shall not be liable for, any Losses incurred by Customer, Counterparty or any other person as a result of the receipt or acceptance of fraudulent, forged or invalid Collateral, or Collateral which otherwise is not freely transferrable or deliverable without encumbrance in any relevant market.

Neither Counterparty nor Custodian shall be responsible or liable for any failure or delay in the performance of its obligations under this Agreement arising out of or caused, directly or indirectly, by circumstances beyond its reasonable control, including without limitation, acts of God; earthquakes; fires; floods; wars; civil or military disturbances; sabotage; epidemics; riots; interruptions, loss or malfunctions of utilities, computer (hardware or software) or communications service; accidents (any such event, a “Force Majeure Event”); provided, that the Custodian or Counterparty, as applicable, shall use commercially reasonable efforts to resume normal performance as soon as is practicable under the circumstances; provided further, that, should any Force Majeure Event occur with respect to Custodian and such event (a) prevents or would prevent Custodian from releasing the Collateral to Counterparty upon an Advice from Counterparty directing such release or (b) would inhibit Counterparty’s ability to monitor the amount of Collateral in the Special Custody Account (each of (a) and (b), a “Custodian Failure Event”), then during the period from the day on which the Force Majeure Event begins (the “Force Majeure Event Day”) up to the day on which the relevant Custodian Failure Event is no longer occurring, for purposes of determining whether Customer has met its obligation to provide and maintain Adequate Performance Assurance under this Agreement or to meet the Collateral Requirements (as defined in the Committed Facility Agreement), Counterparty shall take account only of the Collateral that was in the Special Custody Account on the Business Day immediately prior to the Force Majeure Event Day.

Customer and Counterparty hereby agree that, notwithstanding references to any agreements in this Agreement, including, without limitation, the 40 Act Financing Agreements, Custodian has no interest in, and no duty, responsibility or obligation with respect to, such agreement or transaction or the Account (including without limitation, no duty, responsibility or obligation to monitor compliance with any of the same or to know the terms thereof).

Custodian shall be under no obligation to take action to collect any amount payable on Collateral in default, or if payment is refused after due demand and presentment.

Custodian shall have no duties or responsibilities whatsoever except such duties and

 

 

 

responsibilities as are specifically set forth in this Agreement, and no covenant or obligation shall be implied against Custodian in connection with this Agreement.

(a)	if to Custodian, to:                         BNY Mellon Asset Servicing - Global FinancialInstitutions

The Bank of New York Mellon

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Attn:  ▇▇▇▇▇▇ ▇▇▇▇▇▇▇

Email:  ▇▇▇▇▇▇▇▇▇▇_▇▇@▇▇▇▇▇▇▇▇▇.▇▇▇

(b)

if to Customer, to:

Guggenheim Enhanced Equity Income Fund

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Attention: GPIM Trade Ops

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With a copy to:

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Attention: GI Legal

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Each of Customer and Counterparty may elect to receive advices and statements electronically through the internet to an email address specified by it for such purpose.  By electing to use the internet for this purpose, each of Customer and Counterparty acknowledges that such transmissions are not encrypted and therefore are insecure.  Each of Customer and Counterparty further acknowledges that there are other risks inherent in communicating through the internet such as the possibility of virus contamination and disruptions in service, and agrees that Custodian shall not be responsible for any loss, damage or expense suffered or incurred by Customer, Counterparty or any person claiming by or through Customer or Counterparty as a result of the use of such methods.

 

 

 

taken together shall be deemed to constitute one and the same instrument.

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GUGGENHEIM ENHANCED EQUITY INCOME FUND

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By: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇

BNP PARIBAS PRIME BROKERAGE, INC.

THE BANK OF NEW YORK MELLON