AMENDMENT No. 1 TO

AMENDMENT No. 1
TO

AMENDMENT AGREEMENT (the “Amendment”), dated as of August 17, 2016 to the U.S. PB Agreement, dated as of March 3, 2014, as may be amended from time to time (the “Agreement”) between BNP Paribas Prime Brokerage, Inc. (“BNPP PB, Inc.”) and Guggenheim Credit Allocation Fund (the “Customer”).

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

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

1. Amendment to Exhibit A to the Agreement (‘Account Agreement’).

Section 4 (‘Rehypothecation’) of Exhibit A to the Agreement is hereby deleted in its entirety and placed with the following words “Rehypothecation – See Exhibit B.”.

2. Amendment to Exhibit B to the Agreement.
 
The Agreement is hereby amended by adding a new Exhibit B (‘Rehypothecation Agreement’) in the form attached hereto as Exhibit I.

3. Representations.

Each party represents to the other party that all representations contained in the Agreement are true and accurate as of the date of this Amendment and that such representations are deemed to be given or repeated by each party, as the case may be, on the date of this Amendment, except to the extent that such representations specifically refer to an earlier date, in which case they were true and correct as of such earlier date.

4. Miscellaneous.

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

b. Entire Agreement. This Amendment constitutes the entire agreement and understanding of the parties with respect to its subject matter and supersedes all oral communications and prior writings (except as otherwise provided herein) with respect thereto.

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

d. Headings. The headings used in this Amendment are for convenience of reference only and are not to affect the construction of or to be taken into consideration in interpreting this Amendment.
e. Governing Law. This Amendment will be governed by and construed in accordance with the laws of the State of New York (without reference to choice of law doctrine).

[Signature Page Follows]
IN WITNESS WHEREOF, the parties have executed this Amendment with effect from the first date specified on the first page of this Amendment.

BNP PARIBAS PRIME BROKERAGE, INC.
 
 
 
 
 
 
 
 
By: /s/  XX Xxxx                                                                                By: /s/  Xxxx X. Xxxxxxxx                                                                          
 
Name:  XX Xxxx
 
Name:  Xxxx X. Xxxxxxxx
 
Title:  Managing Director
 
Title:  CFO
 
 
 
 
 
 
 
 
By:
/s/  Xxxxxx Xxxxx                                                                    
 
 
 
Name:  Xxxxxx Xxxxx
 
 
 
Title:  Managing Director
 
 
Exhibit I

See attached.



Exhibit B to U.S. PB Agreement – Rehypothecation Agreement
This Exhibit B (the “Rehypothecation Agreement”) is entered into between Customer and BNP PARIBAS PRIME BROKERAGE, INC. (“BNPP PB, Inc.”), on behalf of itself and as agent for the BNPP Entities. This Rehypothecation Agreement is incorporated as an exhibit to the U.S. PB Agreement (the “Agreement”). Certain capitalized terms used in this Rehypothecation Agreement are defined in the Account Agreement.
                 
1. 
Rehypothecation - 
 
 
 
 
(B) thirty-three and one-third percent (331/3%) of the 
 
 
 
 
 
 
 
 
total assets of the Customer based on the most recent 
(a) 
Customer expressly grants each BNPP Entity the 
 
 
financial information provided by the Customer, (iii) the 
 
right, to the fullest extent that it may effectively do 
 
 
securities which are subject to the Hypothecation 
 
so under Applicable Law, to re-register the 
 
 
Request shall not represent the entire position of such 
 
Collateral in its own name or in another name 
 
 
security held by Customer, and (iv) the securities which 
 
other than Customer’s, to use or invest the 
 
 
are subject to the Hypothecation Request are not 
 
proceeds of any securities lending transaction at 
 
 
Ineligible Securities (as defined below) and have not 
 
its own risk, and to pledge, repledge, hypothecate, 
 
 
been recalled by the Customer or if the securities which 
 
rehypothecate, sell, lend, or otherwise transfer or 
 
 
are subject to the Hypothecation Request were recalled 
 
use the Collateral (the “Hypothecated 
 
 
by the Customer other than for the purpose of selling 
 
Securities”), as principal and not as agent of 
 
 
the securities or removing the securities from the 
 
Customer, with all attendant rights of ownership 
 
 
Special Custody Account (as defined herein), the 
 
except as provided below. For the purposes of the 
 
 
record date that was the reason for the recall or event 
 
return of any Hypothecated Securities to 
 
 
has passed. 
 
Customer, BNPP PB, Inc.’s return obligations shall 
 
 
 
 
be satisfied by delivering the Hypothecated 
2. 
Eligibility; Recall Rights - 
 
Securities or securities identical to such 
 
 
 
 
Hypothecated Securities (such securities having 
 
(a) 
Customer shall have the right, in its sole discretion and 
 
the same cusip number as the subject 
 
 
without condition, to designate any Margin Collateral as 
 
Hypothecated Securities, or in the case of a 
 
 
ineligible for rehypothecation for any valid business 
 
reorganization or recapitalization of the issuer, the 
 
 
reason including, but not limited to, an imminent sale or 
 
equivalent of the subject Hypothecated Securities) 
 
 
removal from the Special Custody Account, dividend 
 
(“Equivalent Securities”). For the avoidance of 
 
 
declaration, record date for voting or other corporate 
 
doubt, Customer hereby grants BNPP PB, Inc. its 
 
 
action (“Ineligible Securities”), provided that the 
 
consent to hypothecate its securities for the 
 
 
market value of the Margin Collateral that has not been 
 
purposes of Rule 15c2-1(a)(1) of the Exchange 
 
 
designated as Ineligible Securities would, following 
 
Act, subject to the limits of this Agreement. 
 
 
 
such designation, be at least equal to the Outstanding 
 
 
 
 
 
 
 
 
Debit Financing (as defined in the Committed Facility 
(b) 
Collateral held by Custodian (including any 
 
 
Agreement) or the value of the loan outstanding if the 
 
successor thereto, the “Custodian”) pursuant to 
 
 
Committed Facility Agreement has been terminated. 
 
the Special Custody and Pledge Agreement 
 
 
Except as limited herein, Customer shall have the right, 
 
between BNPP PB, Inc., Customer, and Custodian 
 
 
upon demand and without condition, to recall any 
 
(the “Special Custody Agreement”) (such 
 
 
Hypothecated Securities and BNPP PB, Inc. shall 
 
Collateral, the “Margin Collateral”) shall be 
 
 
return such security or an Equivalent Security to the 
 
transferred to BNPP PB, Inc. for purposes of 
 
 
Special Custody Account (as defined in the Special 
 
rehypothecation only against a request to 
 
 
Custody Agreement, the “Special Custody Account”) 
 
Custodian for release of Margin Collateral 
 
 
within a commercially reasonable period (in any event, 
 
(“Hypothecation Request”) that meets the 
 
 
no later than the standard settlement cycle for such 
 
following requirements: (i) the Hypothecation 
 
 
securities after such request). 
 
Request is issued by a duly authorized 
 
 
 
 
representative of BNPP PB, Inc. in accordance 
 
(b) 
Customer shall provide, or cause the Custodian to 
 
with the requirements for instructions set forth for 
 
 
provide, a daily report to BNPP PB, Inc. of portfolio 
 
in the Special Custody Agreement, (ii) subject to 
 
 
transactions relating to securities in the Special 
 
Section 2(c)(B), the fair market value of the 
 
 
Custody Account. With respect to any Hypothecated 
 
securities which are subject to the Hypothecation 
 
 
Security that is the subject of a sell order, on the date 
 
Request, together with the value of any 
 
 
such report is delivered to BNPP PB, Inc., BNPP PB, 
 
outstanding Hypothecated Securities, shall not 
 
 
Inc. shall, without any further action by Customer, 
 
exceed the value of the loan against which the 
 
 
return such security or an Equivalent Security to the 
 
Margin Collateral was pledged (“Hypothecation 
 
 
Special Custody Account within a commercially 
 
Limit”), provided that if the Maximum Commitment 
 
 
reasonable period (in any event, no later than the 
 
Financing (as defined in the Committed Facility 
 
 
standard settlement cycle for such securities after such 
 
Agreement) is increased pursuant to the mutual 
 
 
request). 
 
agreement of the parties, then the fair market 
 
 
 
 
value of the securities which are subject to the 
 
(c) 
If as of the close of business on any Business Day the 
 
Hypothecation Request, together with the value of 
 
 
value of all outstanding Hypothecated Securities 
 
any outstanding Hypothecated Securities, shall not 
 
 
exceeds the Hypothecation Limit (such excess amount, 
 
exceed the lesser of (A) the Hypothecation Limit or 
 
 
the “Rehypothecation Excess”), BNPP PB, Inc. shall, 
 
 
 
 
 
 
 
 
at its option, either (A) reduce the amount of 
 
 
             
 
 
outstanding Hypothecated Securities so that the 
 
transfer hereunder shall be transferred to the Special 
 
 
total value of such securities does not exceed the 
 
Custody Account and shall not be held by BNPP PB, Inc. 
 
 
Hypothecation Limit or (B) deliver to, and maintain 
 
 
 
 
 
within, the Special Custody Account an amount of 
5. 
Re-hypothecation Failure - Hypothecated Securities shall 
 
 
cash at least equal to any Rehypothecation 
 
be marked-to-market daily and valued at their fair market 
 
 
Excess (for the avoidance of doubt, if there is no 
 
value (as determined by BNPP PB, Inc. in good faith and in 
 
 
Rehypothecation Excess, BNPP PB, Inc. can 
 
a commercially reasonable manner). Upon the failure of 
 
 
recall any cash delivered hereunder). 
 
BNPP PB, Inc. to return Hypothecated Securities or the 
 
 
 
 
 
Equivalent Securities (such Hypothecated Securities, “Failed 
3. 
Corporate Actions - 
 
 
Securities”) pursuant to this Agreement or Applicable Law, 
 
 
 
 
 
Customer shall be entitled to reduce the value of the loan 
 
(a) 
Income Payments. Customer shall be entitled to 
 
against which the Margin Collateral was pledged by an 
 
 
receive with respect to any Hypothecated Security, 
 
amount equal to one hundred percent (100%) of the then- 
 
 
an amount equal to any principal thereof and all 
 
current fair market value of such Failed Securities as 
 
 
interest, dividends or other distributions paid or 
 
reasonably agreed to between the parties without any fee or 
 
 
distributed on or in respect of the Hypothecated 
 
penalty; provided, however that the terms of the Committed 
 
 
Securities (“Income”) that is not otherwise 
 
Facility Agreement shall not be altered or amended by such 
 
 
received by Customer. BNPP PB, Inc. shall, on 
 
reduction. 
 
 
 
the date such Income is paid or distributed either 
 
 
 
 
 
transfer to or credit to the Special Custody 
6. 
Failure to Process Instructions - If (i) Customer provides 
 
 
Account such Income with respect to any 
 
BNPP PB, Inc. with instructions in respect of corporate 
 
 
Hypothecated Securities, provided that BNPP PB, 
 
actions on the Hypothecated Securities (excluding any 
 
 
Inc. shall make commercially reasonable efforts to 
 
exercise of voting rights) which do not require Customer to 
 
 
return Hypothecated Securities receiving Income 
 
be a record holder at the time of exercise, (ii) Customer 
 
 
prior to the record date for a distribution. 
 
provides at least five Business Days notice prior to the 
 
 
 
 
 
relevant exercise deadline, and (iii) BNPP PB, Inc. fails to 
 
(b) 
Income in the Form of Securities. Where Income, 
 
process Customer’s instructions in a commercially 
 
 
in the form of securities, is paid in relation to any 
 
reasonable manner, BNPP PB, Inc. shall provide Customer 
 
 
Hypothecated Securities, such securities shall be 
 
the cash equivalent of payments or distributions actually 
 
 
delivered to the Special Custody Account. 
 
made but which Customer did not receive due to BNPP PB, 
 
 
 
 
 
Inc.’s failure. 
 
 
(c) 
Other Corporate Actions. Where, in respect of any 
 
 
 
 
 
Hypothecated Securities, any rights relating to 
7. 
Fees - BNPP PB, Inc. agrees to pay Customer a 
 
 
conversion, sub-division, consolidation, pre- 
 
rehypothecation fee (the “Rehypothecation Fee”), 
 
 
emption, rights arising under a takeover offer, 
 
computed daily at a rate as set forth herein, as modified from 
 
 
rights to receive securities or a certificate which 
 
time to time by mutual agreement of the parties. Except as 
 
 
may at a future date be exchanged for securities 
 
BNPP PB, Inc. and Customer may otherwise agree, the 
 
 
or other rights, including those requiring election 
 
Rehypothecation Fee shall accrue from and including the 
 
 
by the record holder of such securities at the time 
 
date on which the Margin Collateral is rehypothecated to, but 
 
 
of the relevant election, become exercisable prior 
 
excluding, the date on which securities or other financial 
 
 
to the redelivery of Equivalent Securities, then 
 
assets of the same issuer and class as the Margin Collateral 
 
 
Customer may, within a reasonable time before 
 
initially rehypothecated are returned to Customer’s Special 
 
 
the latest time for the exercise of the right or 
 
Custody Account. Unless otherwise agreed, any 
 
 
option give written notice to BNPP PB, Inc. that on 
 
Rehypothecation Fee payable hereunder shall be payable 
 
 
redelivery of Equivalent Securities, it wishes to 
 
upon the earlier of (i) the day that is two (2) Business Days 
 
 
receive Equivalent Securities in such form as will 
 
prior to the calendar month end in the month in which such 
 
 
arise if the right is exercised or, in the case of a 
 
fee was incurred (the “Scheduled Payment Date”) or (ii) the 
 
 
right which may be exercised in more than one 
 
termination of the U.S. PB Agreement (the “Termination 
 
 
manner, is exercised as is specified in such written 
 
Payment Date”) (or, if such Scheduled Payment Date or 
 
 
notice, and BNPP PB, Inc. shall return such 
 
Termination Payment Date, as the case may be, is not a 
 
 
Hypothecated Security or an Equivalent Security 
 
Business Day, the next Business Day. 
 
 
to the Special Custody Account within a 
 
 
 
 
 
commercially reasonable period (in any event, no 
 
For the avoidance of doubt, each payment of the 
 
 
later than the standard settlement cycle for such 
 
Rehypothecation Fee on a Scheduled Payment Date shall 
 
 
securities after such request). 
 
be payment for the monthly period from three (3) Business 
 
 
 
 
 
Days prior to a calendar month end to three (3) Business 
4. 
Segregation of Hypothecated Securities - Unless 
 
Days prior to the next succeeding calendar month end. 
 
otherwise agreed by the parties, any transfer of 
 
 
 
 
Hypothecated Securities to the Customer or any 
8. 
Fee Amount – 70% of the difference between the fair 
 
transfer of cash pursuant to Sections 2 or 3 shall be 
 
market rate (as determined by BNPP PB, Inc. in good faith 
 
effected by delivery or other transfer to or for credit to 
 
and in a commercially reasonable manner) and Fed Funds 
 
the Special Custody Account. BNPP PB, Inc. expressly 
 
Open. 
 
 
acknowledges that all securities that it is obligated to 
 
 
 
AutoNDA by SimpleDocs

Document Metadata

Filed: September 15th, 2016
Draft better contracts in just 5 minutes Get the weekly Law Insider newsletter packed with expert videos, webinars, ebooks, and more!