CUSTODY AGREEMENT dated as of September 29, 2017 by and between GOLUB CAPITAL BDC 3, INC. (“Company”) and
Exhibit 10.4
EXECUTION VERSION
dated as of September 29, 2017
by and between
XXXXX CAPITAL BDC 3, INC.
(“Company”)
and
U.S. BANK NATIONAL ASSOCIATION
(“Custodian”)
TABLE OF CONTENTS
Page | ||
1. | DEFINITIONS | 1 |
2. | APPOINTMENT OF CUSTODIAN | 5 |
3. | DUTIES OF CUSTODIAN | 5 |
4. | REPORTING | 13 |
5. | DEPOSIT IN U.S. SECURITIES SYSTEMS | 14 |
6. | SECURITIES HELD OUTSIDE OF THE UNITED STATES | 14 |
7. | CERTAIN GENERAL TERMS | 16 |
8. | COMPENSATION OF CUSTODIAN | 18 |
9. | RESPONSIBILITY OF CUSTODIAN | 18 |
10. | SECURITY CODES | 20 |
11. | TAX LAW | 20 |
12. | EFFECTIVE PERIOD, TERMINATION AND AMENDMENT | 21 |
13. | REPRESENTATIONS AND WARRANTIES | 21 |
14. | PARTIES IN INTEREST; NO THIRD PARTY BENEFIT | 22 |
15. | NOTICES | 22 |
16. | CHOICE OF LAW AND JURISDICTION | 23 |
17. | ENTIRE AGREEMENT; COUNTERPARTS | 23 |
18. | AMENDMENT; WAIVER | 23 |
19. | SUCCESSOR AND ASSIGNS | 23 |
20. | SEVERABILITY | 24 |
21. | REQUEST FOR INSTRUCTIONS | 24 |
22. | OTHER BUSINESS | 24 |
23. | REPRODUCTION OF DOCUMENTS | 24 |
24. | MISCELLANEOUS | 24 |
SCHEDULES
SCHEDULE A – Trade Confirmation
SCHEDULE B – Initial Authorized Persons
-i- |
THIS CUSTODY AGREEMENT (this “Agreement”) is dated as of September 29, 2017 and is by and between XXXXX CAPITAL BDC 3, INC. (or any successor or permitted assign, the “Company”), a corporation organized under the laws of the State of Maryland, having its principal place of business at 000 Xxxxx Xxxxxx, 00xx Xxxxx, Xxx Xxxx, XX 00000, and U.S. BANK NATIONAL ASSOCIATION (or any successor or permitted assign acting as custodian hereunder, the “Custodian”), a national banking association having a place of business at 0 Xxxxxxxx Xxxxx, Xxxxx 0000, Xxxxxxx XX 00000.
1. | DEFINITIONS |
“Account” or “Accounts” means the Cash Account, the Securities Account, any Subsidiary Securities Account and any Subsidiary Cash Account.
“Agreement” means this Custody Agreement (as the same may be amended from time to time in accordance with the terms hereof).
“Authorized Person” has the meaning set forth in Section 7.4.
“Business Day” means a day on which the Custodian or the relevant sub-custodian, including a Foreign Sub-custodian, is open for business in the market or country in which a transaction is to take place.
“Cash Account” means the segregated trust account to be established at the Custodian to which the Custodian shall deposit or credit and hold any cash or Proceeds received by it from time to time from or with respect to the Securities or the sale of any securities of the Company, as applicable, which account shall be designated the “Xxxxx Capital BDC 3, Inc. Cash Proceeds Account”.
“Company” has the meaning set forth in the first paragraph of this Agreement.
“Confidential Information” means any databases, computer programs, screen formats, screen designs, report formats, interactive design techniques, and other similar or related information that may be furnished to the Company by the Custodian from time to time pursuant to this Agreement.
“Custodian” has the meaning set forth in the first paragraph of this Agreement.
“Document Custody Agreement” means the Document Custody Agreement dated as of even date between the Document Custodian and the Company.
“Document Custodian” means U.S. Bank National Association in its capacity as document custodian under that certain Document Custody Agreement.
“Eligible Investment” means any investment that at the time of its acquisition is one or more of the following:
(a) United States government and agency obligations;
(b) commercial paper having a rating assigned to such commercial paper by Standard & Poor’s Rating Services or Xxxxx’x Investor Service, Inc. (or, if neither such organization shall rate such commercial paper at such time, by any nationally recognized rating organization in the United States of America) equal to one of the two highest ratings assigned by such organization, it being understood that as of the date hereof such ratings by Standard & Poor’s Rating Services are “A1+” and “A1” and such ratings by Xxxxx’x Investor Service, Inc. are “P1” and “P2”;
(c) interest bearing deposits in United States dollars in United States or Canadian banks with an unrestricted surplus of at least U.S. $250,000,000, maturing within one year; and
(d) money market funds (including funds of the bank serving as Custodian or its affiliates) or United States government securities funds designed to maintain a fixed share price and high liquidity.
“Eligible Securities Depository” has the meaning set forth in Section (b)(1) of Rule 17f-7 under the 1940 Act.
“Federal Reserve Bank Book-Entry System” means a depository and securities transfer system operated by the Federal Reserve Bank of the United States on which are eligible to be held all United States government direct obligation bills, notes and bonds.
“Financing Documents” has the meaning set forth in Section 3.3(b)(ii).
“Foreign Intermediary” means a Foreign Sub-custodian and Eligible Securities Depository.
“Foreign Sub-custodian” means and includes (i) any branch of a “U.S. Bank,” as that term is defined in Rule 17f-5 under the 1940 Act, (ii) any “Eligible Foreign Custodian,” as that term is defined in Rule 17f-5 under the 1940 Act, having a contract with the Custodian which the Custodian has determined will provide reasonable care of assets of the Company based on the standards specified in Section 6.7 below and (iii) any sub-custodian appointed to administer any of the Company’s Foreign Securities, pursuant to Section 6.6 below.
“Foreign Securities” means Securities for which the primary market is outside the United States.
“Loan” means any U.S. dollar denominated commercial loan, or Participation therein, made by a bank or other financial institution that by its terms provides for payments of principal and/or interest, including discount obligations and payment- in-kind obligations, acquired by the Company from time to time.
“Noteless Loan” means a Loan with respect to which (i) the related loan agreement does not require the obligor to execute and deliver an Underlying Note to evidence the indebtedness created under such Loan and (ii) no Underlying Notes are outstanding with respect to the portion of the Loan transferred by the issuer or the prior holder of record.
-2- |
“Participation” means an interest in a Loan that is acquired indirectly by way of a participation from a selling institution.
“Person” means any individual, corporation, partnership, limited liability company, joint venture, association, joint stock company, trust (including any beneficiary thereof) unincorporated organization, or any government or agency or political subdivision thereof.
“Proceeds” means, collectively, (i) the net cash proceeds to the Company of offerings by the Company of any class of securities issued by the Company, (ii) all cash distributions, earnings, dividends, fees and other cash payments paid on the Securities (or, as applicable, Subsidiary Securities) by or on behalf of the issuer or obligor thereof, or applicable paying agent, (iii) the net cash proceeds of the sale or other disposition of the Securities (or, as applicable, Subsidiary Securities) pursuant to the terms of this Agreement and (iv) the net cash proceeds to the Company of any borrowing or other financing by the Company (and any Reinvestment Earnings from investment of the foregoing, as defined in Section 3.6(b) hereof), as delivered to the Custodian from time to time.
“Proper Instructions” means instructions (including Trade Confirmations) received by the Custodian, in form acceptable to it, from the Company, or any Person duly authorized by the Company in any of the following forms acceptable to the Custodian:
(a) in writing signed by an Authorized Person (and delivered by hand, by mail, by overnight courier or by telecopier);
(b) by electronic mail from an Authorized Person;
(c) in a communication utilizing access codes effected between electro mechanical or electronic devices; or
(d) such other means as may be agreed upon from time to time by the Custodian and the party giving such instructions, including oral instructions.
“Securities” means, collectively, the (i) investments, including Loans, acquired by the Company and delivered to the Custodian by the Company from time to time during the term of, and pursuant to the terms of, this Agreement and (ii) all dividends in kind (e.g., non-cash dividends) from the investments described in clause (i).
“Securities Account” means the segregated trust account to be established at the Custodian to which the Custodian shall deposit or credit and hold the Securities (other than Loans) received by it pursuant to this Agreement, which account shall be designated the “Xxxxx Capital BDC 3, Inc. Securities Custody Account”.
“Securities Depository” means The Depository Trust Company and any other clearing agency registered with the Securities and Exchange Commission under Section 17A of the Securities Exchange Act of 1934, as amended (the “1934 Act”), which acts as a system for the central handling of securities where all securities of any particular class or series of an issuer deposited within the system are treated as fungible and may be transferred or pledged by bookkeeping entry without physical delivery of the securities.
“Securities System” means the Federal Reserve Book-Entry System, a clearing agency which acts as a Securities Depository, or another book entry system for the central handling of securities.
“Shares” means the shares of common stock, par value $0.001 per share, of the Company.
-3- |
“Street Delivery Custom” means a custom of the United States securities market to deliver securities which are being sold to the buying broker for examination to determine that the securities are in proper form.
“Street Name” means the form of registration in which the securities are held by a broker who is delivering the securities to another broker for the purposes of sale, it being an accepted custom in the United States securities industry that a security in Street Name is in proper form for delivery to a buyer and that a security may be re-registered by a buyer in the ordinary course.
“Subsidiary” means, collectively, any wholly-owned subsidiary of the Company.
“Subsidiary Cash Account” shall have the meaning set forth in Section 3.14(b).
“Subsidiary Securities” means, collectively, the (i) investments, including Loans, acquired by a Subsidiary and delivered to the Custodian by such Subsidiary from time to time during the term of, and pursuant to the terms of, this Agreement, and (ii) all dividends in kind (e.g., non-cash dividends) from the investments described in clause (i).
“Subsidiary Securities Account” shall have the meaning set forth in Section 3.14(a).
“Trade Confirmation” means a confirmation to the Custodian from the Company of the Company’s acquisition of a Loan, and setting forth applicable information with respect to such Loan, which confirmation may be in the form of Schedule A attached hereto and made a part hereof, subject to such changes or additions as may be agreed to by, or in such other form as may be agreed to by, the Custodian and the Company from time to time.
“Underlying Note” means the one or more promissory notes executed by an obligor evidencing a Loan.
1.2. | Construction. In this Agreement unless the contrary intention appears: |
(a) | any reference to this Agreement or another agreement or instrument refers to such agreement or instrument as the same may be amended, modified or otherwise rewritten from time to time; |
(b) | a reference to a statute, ordinance, code or other law includes regulations and other instruments under it and consolidations, amendments, re-enactments or replacements of any of them; |
(c) | any term defined in the singular form may be used in, and shall include, the plural with the same meaning, and vice versa; |
(d) | reference to a Person includes a reference to the Person’s executors, custodians, successors and permitted assigns; |
(e) | an agreement, representation or warranty in favor of two or more Persons is for the benefit of them jointly and severally; |
(f) | an agreement, representation or warranty on the part of two or more Persons binds them jointly and severally; |
(g) | a reference to the term “including” means “including, without limitation,” and |
-4- |
(h) | a reference to any accounting term is to be interpreted in accordance with generally accepted principles and practices in the United States, consistently applied, unless otherwise instructed by the Company. |
1.3. | Headings. Headings are inserted for convenience and do not affect the interpretation of this Agreement. |
2. | APPOINTMENT OF CUSTODIAN |
3. | DUTIES OF CUSTODIAN |
-5- |
3.3. | Delivery of Securities to Custodian. |
(a) | The Company shall deliver, or cause to be delivered, to the Custodian certain of the Company’s Securities, cash and other investment assets, including (a) payments of income, payments of principal and capital distributions received by the Company with respect to such Securities, cash or other assets owned by the Company at any time during the period of this Agreement, and (b) all cash received by the Company for the issuance, at any time during such period, of Shares or other securities or in connection with a borrowing by the Company. With respect to assets other than Loans, such assets shall be delivered to the Custodian at the address identified below. Except to the extent otherwise expressly provided herein, delivery of Securities to the Custodian shall be in Street Name or other good delivery form. The Custodian shall not be responsible for such Securities, cash or other assets until actually delivered to, and received by it. |
-6- |
(b) | (i) | In connection with its acquisition of a Loan or other delivery of a Security constituting a Loan, the Company shall deliver or cause to be delivered to the Custodian a properly completed Trade Confirmation containing such information in respect of such Loan as the Custodian may reasonably require in order to enable the Custodian to perform its duties hereunder in respect of such Loan on which the Custodian may conclusively rely without further inquiry or investigation, in such form and format as the Custodian reasonably may require. |
(ii) | Notwithstanding anything herein to the contrary, delivery of Securities acquired by the Company which constitute Noteless Loans or Participations or which are otherwise not evidenced by a “security” or “instrument” as defined in Section 8-102 and Section 9-102(a)(47) of the UCC, respectively, shall be made by delivery to the Custodian of (i) in the case of a Noteless Loan, a copy of the loan register with respect to such Noteless Loan evidencing registration of such Loan on the books and records of the applicable obligor or bank agent to the name of the Company (or its nominee) and or a copy (which may be a facsimile copy) of an assignment agreement in favor of the Company as assignee, and (ii) in the case of a Participation, a copy of the related participation agreement. Any duty on the part of the Custodian with respect to the custody of such Loans shall be limited to the exercise of reasonable care by the Custodian in the physical custody of any such documents delivered to it, and any related instrument, security, credit agreement, assignment agreement and/or other agreements or documents, if any (collectively, “Financing Documents”), that may be delivered to it. Nothing herein shall require the Custodian to credit to the Securities Account or to treat as a financial asset (within the meaning of Section 8-102(a)(9) of the UCC) any such Loan or other asset in the nature of a general intangible (as defined in Section 9-102(a)(42) of the UCC) or to “maintain” a sufficient quantity thereof. |
(iii) | The Custodian may assume the genuineness of any such Financing Document it may receive and the genuineness and due authority of any signatures appearing thereon, and shall be entitled to assume that each such Financing Document it may receive is what it purports to be. If an original “security” or “instrument” as defined in Section 8-102 and Section 9-102(a)(47) of the UCC, respectively, is or shall be or becomes available with respect to any Loan to be held by the Custodian under this Agreement, it shall be the sole responsibility of the Company to make or cause delivery thereof to the Document Custodian under the Document Custody Agreement, and the Custodian shall not be under any obligation at any time to determine whether any such original security or instrument has been or is required to be issued or made available in respect of any Loan or to compel or cause delivery thereof to the Custodian. |
-7- |
(iv) | Contemporaneously with the acquisition of any Loan, the Company shall (i) cause the required loan documents evidencing such Loan to be delivered to the Document Custodian; (ii) if requested by the Custodian, provide to the Custodian an amortization schedule of principal payments and a schedule of the interest payable date(s), identifying the amount and due dates of all scheduled principal and interest payments for such Loan and (iii) a properly completed Trade Confirmation containing such information in respect of such Loan as the Custodian may reasonably require in order to enable the Custodian to perform its duties hereunder in respect of such Loan on which the Custodian may conclusively rely without further inquiry or investigation, in such form and format as the Custodian reasonably may require; (iv) take all actions necessary for the Company to acquire good title to such Loan; and (v) take all actions as may be necessary (including appropriate payment notices and instructions to bank agents or other applicable paying agents) to cause (A) all payments in respect of the Loan to be made to the Custodian and (B) all notices, solicitations and other communications in respect of such Loan to be directed to the Company. The Custodian shall have no liability for any delay or failure on the part of the Company to provide necessary information to the Custodian, or for any inaccuracy therein or incompleteness thereof, or for any delay or failure on the part of the Company to give such effective payment instruction to bank agents and other paying agents, in respect of the Loans. With respect to each such Loan, the Custodian shall be entitled to rely on any information and notices it may receive from time to time from the related bank agent, obligor or similar party with respect to the related Loan, or from the Company, and shall be entitled to update its records (as it may deem necessary or appropriate), on the basis of such information or notices received, without any obligation on its part independently to verify, investigate or recalculate such information. |
3.4. | Release of Securities. |
(a) | The Custodian shall release and deliver, or direct its agents or sub-custodians to release and deliver, as the case may be, Securities of the Company held by the Custodian, its agents or its sub-custodians from time to time upon receipt of Proper Instructions (which shall, among other things, specify the Securities to be released, with such delivery and other information as may be necessary to enable the Custodian to perform (including the delivery method)), which may be standing instructions (in form acceptable to the Custodian) in the following cases: |
(i) | upon sale of such Securities by or on behalf of the Company and such sale may, unless otherwise directed by Proper Instructions, be carried out by the Custodian: |
(A) | in accordance with the customary or established practices and procedures in the jurisdiction or market where the transactions occur, including delivery to the purchaser thereof or to a dealer therefor (or an agent of such purchaser or dealer) against expectation of receiving later payment; or |
(B) | in the case of a sale effected through a Securities System, in accordance with the rules governing the operations of the Securities System; |
(ii) | upon the receipt of payment in connection with any repurchase agreement related to such Securities; |
(iii) | to a depositary agent in connection with tender or other similar offers for Securities; |
-8- |
(iv) | to the issuer thereof or its agent when such Securities are called, redeemed, retired or otherwise become payable (unless otherwise directed by Proper Instructions, the cash or other consideration is to be delivered to the Custodian, its agents or its sub-custodians); |
(v) | to an issuer thereof, or its agent, for transfer into the name of the Custodian or of any nominee of the Custodian or into the name of any of its agents or sub-custodians or their nominees or for exchange for a different number of bonds, certificates or other evidence representing the same aggregate face amount or number of units; |
(vi) | to brokers, clearing banks or other clearing agents for examination in accordance with the Street Delivery Custom; |
(vii) | for exchange or conversion pursuant to any plan of merger, consolidation, recapitalization, reorganization or readjustment of the securities of the issuer of such securities, or pursuant to any deposit agreement (unless otherwise directed by Proper Instructions, the new securities and cash, if any, are to be delivered to the Custodian, its agents or its sub-custodians); |
(viii) | in the case of warrants, rights or similar securities, the surrender thereof in the exercise of such warrants, rights or similar securities or the surrender of interim receipts or temporary securities for definitive securities (unless otherwise directed by Proper Instructions, the new securities and cash, if any, are to be delivered to the Custodian, its agents or its sub-custodians); and/or |
(ix) | for any other purpose, but only upon receipt of Proper Instructions and an officer’s certificate signed by an officer of the Company (which officer shall not have been the Authorized Person providing the Proper Instructions) stating (i) the specified securities to be delivered, (ii) the purpose for such delivery, (iii) that such purpose is a proper corporate purpose and (iv) naming the person or persons to whom delivery of such securities shall be made and attaching a certified copy of a resolution of the board of directors of the Company or an authorized committee thereof approving the delivery of such Proper Instructions. |
3.6. Bank Accounts, and Management of Cash.
(a) | Proceeds and other cash received by the Custodian from time to time shall be deposited or credited to the Cash Account. All amounts deposited or credited to the Cash Account shall be subject to clearance and receipt of final payment by the Custodian. |
-9- |
(b) | Amounts held in the Cash Account from time to time may be invested in Eligible Investments pursuant to specific written Proper Instructions (which may be standing instructions) received by the Custodian from an Authorized Person acting on behalf of the Company. Such investments shall be subject to availability and the Custodian’s then applicable transaction charges (which shall be at the Company’s expense). The Custodian shall have no liability for any loss incurred on any such investment. Absent receipt of such written instruction from the Company, the Custodian shall have no obligation to invest (or otherwise pay interest on) amounts on deposit in the Cash Account. In no instance will the Custodian have any obligation to provide investment advice to the Company. Any earnings from such investment of amounts held in the Cash Account from time to time (collectively, “Reinvestment Earnings”) shall be redeposited in the Cash Account (and may be reinvested at the written direction of the Company). |
(c) | In the event that the Company shall at any time request a withdrawal of amounts from the Cash Account, the Custodian shall be entitled to liquidate, and shall have no liability for any loss incurred as a result of the liquidation of, any investment of the funds credited to such account as needed to provide necessary liquidity. Investment instructions may be in the form of standing instructions (in the form of Proper Instructions acceptable to the Custodian). |
(d) | The Company acknowledges that cash deposited or invested with any bank (including the bank acting as Custodian) may make a margin or generate banking income for which such bank shall not be required to account to the Company. |
(e) | The Custodian shall be authorized to open such additional accounts as may be necessary or convenient for administration of its duties hereunder. |
3.7. | Foreign Exchange. |
(a) | Upon the receipt of Proper Instructions, the Custodian, its agents or its sub-custodians may (but shall not be obligated to) enter into all types of contracts for foreign exchange on behalf of the Company, upon terms acceptable to the Custodian and the Company (in each case at the Company’s expense), including transactions entered into with the Custodian, its sub-custodians or any affiliates of the Custodian or the sub-custodians. The Custodian shall have no liability for any losses incurred in or resulting from the rates obtained in such foreign exchange transactions; and absent specific and acceptable Proper Instructions, the Custodian shall not be deemed to have any duty to carry out any foreign exchange on behalf of the Company. The Custodian shall be entitled at all times to comply with any legal or regulatory requirements applicable to currency or foreign exchange transactions. |
(b) | The Company acknowledges that the Custodian, any sub-custodian or any affiliates of the Custodian or any sub-custodian, involved in any such foreign exchange transactions may make a margin or generate banking income from foreign exchange transactions entered into pursuant to this section for which they shall not be required to account to the Company. |
-10- |
3.9. | Payment of Moneys. |
(a) | Upon receipt of Proper Instructions, which may be standing instructions, the Custodian shall pay out from the Cash Account (or remit to its agents or its sub-custodians, and direct them to pay out) moneys of the Company on deposit therein in the following cases: |
(i) | upon the purchase of Securities for the Company pursuant to such Proper Instruction; and such purchase may, unless and except to the extent otherwise directed by Proper Instructions, be carried out by the Custodian: |
(A) | in accordance with the customary or established practices and procedures in the jurisdiction or market where the transactions occur, including delivering money to the seller thereof or to a dealer therefor (or any agent for such seller or dealer) against expectation of receiving later delivery of such securities; or |
(B) | in the case of a purchase effected through a Securities System, in accordance with the rules governing the operation of such Securities System; |
(ii) | for the purchase or sale of foreign exchange or foreign exchange agreements for the account of the Company, including transactions executed with or through the Custodian, its agents or its sub-custodians, as contemplated by Section 3.7 above; and |
(iii) | for any other purpose directed by the Company, but only upon receipt of Proper Instructions specifying the amount of such payment, and naming the Person or Persons to whom such payment is to be made. |
(b) | At any time or times, the Custodian shall be entitled to pay (i) itself from the Cash Account, whether or not in receipt of express direction or instruction from the Company, any amounts due and payable to it pursuant to Section 8 hereof, and (ii) as otherwise permitted by Section 7.5, 9.4 or 12.5 below, provided, however, that in each case all such payments shall be accounted for to the Company. |
-11- |
(i) | the Custodian has received Proper Instructions with regard to the exercise of any such right or power; and |
(ii) | the Custodian, or its agents or sub-custodians are in actual possession of such Securities, |
in each case, at least three (3) Business Days prior to the date on which such right or power is to be exercised. It will be the responsibility of the Company to notify the Custodian of the Person to whom such communications must be forwarded under this Section.
3.14. | Custody of Subsidiary Securities. |
(a) | With respect to each Subsidiary identified to the Custodian by the Company, there shall be established at the Custodian a segregated trust account to which the Custodian shall deposit and hold any Subsidiary Securities (other than Loans) received by it (and any Proceeds received by it in the form of dividends in kind) pursuant to this Agreement, which account shall be designated the “[INSERT NAME OF SUBSIDIARY] Securities Account” (the “Subsidiary Securities Account”); provided that, with respect to such Loans, all required loan documents shall be held in safekeeping by the Document Custodian, individually segregated from the securities and investments of any other Person and marked so as to clearly identify them as the property of the Subsidiary as set forth in this Agreement. |
-12- |
(b) | With respect to each Subsidiary identified to the Custodian by the Company, there shall be established at the Custodian a segregated trust account to which the Custodian shall deposit and hold any cash Proceeds received by it from time to time from or with respect to Subsidiary Securities, which account shall be designated the “[INSERT NAME OF SUBSIDIARY] Cash Proceeds Account” (the “Subsidiary Cash Account”). |
(c) | To the maximum extent possible, the provisions of this Agreement regarding Securities of the Company, the Securities Account and the Cash Account shall be applicable to Subsidiary Securities, any Subsidiary Securities Account and Subsidiary Cash Account, respectively; furthermore, the parties hereto agree that (i) any Subsidiary shall have the same rights and obligations as the Company under this Agreement and (ii) the Company shall notify the Custodian in writing as to the establishment of any Subsidiary as to which the Custodian is to serve as custodian pursuant to the terms of this Agreement; and identify in writing any accounts the Custodian is required to establish for such Subsidiary. |
4. | REPORTING |
(a) | If requested by the Company, the Custodian shall render to the Company a monthly report of (i) all deposits to and withdrawals from the Cash Account during the month and the outstanding balance (as of the last day of the preceding monthly report and as of the last day of the subject month), (ii) an itemized statement of the Securities held pursuant to this Agreement as of the end of each month, as well as a list of all Securities transactions that remain unsettled at that time, and (iii) such other matters as the parties may agree from time to time. |
(b) | For each Business Day, the Custodian shall render to the Company a daily report of (i) all deposits to and withdrawals from the Cash Account for such Business Day and the outstanding balance as of the end of such Business Day, and (ii) a report of settled trades of Securities for such Business Day. |
(c) | The Custodian shall have no duty or obligation to undertake any market valuation of the Securities under any circumstance. |
(d) | The Custodian shall provide the Company with such reports as are reasonably available to it and as the Company may reasonably request from time to time on the internal accounting controls and procedures for safeguarding securities which are employed by the Custodian or Foreign Sub-custodian appointed pursuant to Section 6.1. |
(e) | In accordance with Section 3.12, at the reasonable request of, and at the expense of, the Company, the Custodian agrees to cooperate with the Company’s independent public accountants and shall provide requested information to the extent such information is reasonably available to the Custodian. |
-13- |
5. | DEPOSIT IN U.S. SECURITIES SYSTEMS |
The Custodian may deposit and/or maintain Securities in a Securities System within the United States (a “U.S. Securities System”) in accordance with applicable Federal Reserve Board and Securities and Exchange Commission rules and regulations, including Rule 17f-4 under the 1940 Act, and subject to the following provisions:
(a) | The Custodian may keep domestic Securities in a U.S. Securities System provided that such Securities are represented in an account of the Custodian in the U.S. Securities System which shall not include any assets of the Custodian other than assets held by it as a fiduciary, custodian or otherwise for customers; |
(b) | The records of the Custodian with respect to Securities which are maintained in a U.S. Securities System shall identify by book-entry those Securities belonging to the Company; |
(c) | If requested by the Company, the Custodian shall provide to the Company copies of all notices received from the U.S. Securities System of transfers of Securities for the account of the Company; and |
(d) | Anything to the contrary in this Agreement notwithstanding, the Custodian shall not be liable to the Company for any direct loss, damage, cost, expense, liability or claim to the Company resulting from use of any U.S. Securities System (other than to the extent resulting from the gross negligence, willful misconduct or bad faith of the Custodian itself or from failure of the Custodian to enforce effectively such rights as it may have against the U.S. Securities System). |
6. | SECURITIES HELD OUTSIDE OF THE UNITED STATES |
-14- |
6.7 | Custodian’s Responsibility for Foreign Sub-custodians. |
(a) | With respect to its responsibilities under this Section 6, the Custodian agrees to exercise reasonable care, prudence and diligence such as a person having responsibility for the safekeeping of property of the Company would exercise. The Custodian further agrees that the Foreign Securities will be subject to reasonable care, based on the standards applicable to custodians in the relevant market, if maintained with each Foreign Sub-custodian, after considering all factors relevant to the safekeeping of such assets, including: (i) the Foreign Sub-custodian’s practices, procedures, and internal controls for certificated securities (if applicable), method of keeping custodial records, and security and data protection practices; (ii) whether the Foreign Sub-custodian has the requisite financial strength to provide reasonable care for the Company’s assets; (iii) the Foreign Sub-custodian’s general reputation and standing and, in the case of Eligible Securities Depository, the Eligible Securities Depository’s operating history and number of participants; and (iv) whether the Company will have jurisdiction over and be able to enforce judgments against the Foreign Sub-custodian, such as by virtue of the existence of any offices of the Foreign Sub-custodian in the United States or the Sub-custodian’s consent to service of process in the United States. |
-15- |
(b) | At the end of each calendar quarter, the Custodian shall provide written reports notifying the board of directors of the Company as to the placement of the Foreign Securities and cash of the Company with a particular Foreign Sub-custodian and of any material changes in the Company’s foreign custody arrangements. The Custodian shall promptly take such steps as may be required to withdraw assets of the Company from any Foreign Sub-custodian that has ceased to meet the requirements of Rule 17f-5 under the 1940 Act. |
(c) | The Custodian shall establish a system to monitor the appropriateness of maintaining the Company’s assets with a particular Foreign Sub-custodian and the performance of the contract governing the Company’s arrangements with such Foreign Sub-custodian. |
(d) | The Custodian’s responsibility with respect to the selection or appointment of Foreign Sub-custodians shall be limited to a duty to exercise reasonable care in the selection or retention of such Foreign Intermediaries in light of prevailing settlement and securities handling practices, procedures and controls in the relevant market. With respect to any costs, expenses, damages, liabilities, or claims (including attorneys’ and accountants’ fees) incurred as a result of the acts or the failure to act by any Foreign Sub-custodian, the Custodian shall take reasonable action to recover such costs, expenses, damages, liabilities, or claims from such Foreign Sub-custodian; provided that the Custodian’s sole liability in that regard shall be limited to amounts actually received by it from such Foreign Intermediaries (exclusive of related costs and expenses incurred by the Custodian). The Custodian shall have no responsibility for any act or omission (or the insolvency of) any Securities System (including an Eligible Securities Depository). In the event the Company incurs a loss due to the negligence, willful misconduct, or insolvency of a Securities System (including an Eligible Securities Depository), the Custodian shall make reasonable endeavors, in its discretion, to seek recovery from the Eligible Securities Depository. |
7. | CERTAIN GENERAL TERMS |
-16- |
7.4. | Proper Instructions. |
(a) | The Company will give a notice to the Custodian, in form acceptable to the Custodian, specifying the names and specimen signatures of persons authorized to give Proper Instructions (collectively, “Authorized Persons” and each is an “Authorized Person”) which notice shall be signed by an Authorized Person previously certified to the Custodian. The Custodian shall be entitled to rely upon the identity and authority of such persons until it receives written notice from an Authorized Person of the Company to the contrary. The initial Authorized Persons are set forth on Schedule B attached hereto and made a part hereof (as such Schedule B may be modified from time to time by written notice from the Company to the Custodian); and the Company hereby represents and warrants that the true and accurate specimen signatures of such initial Authorized Persons are set forth on Schedule B. |
(b) | The Custodian shall have no responsibility or liability to the Company (or any other person or entity), and shall be indemnified and held harmless by the Company, in the event that a subsequent written confirmation of an oral instruction fails to conform to the oral instructions received by the Custodian. The Custodian shall not have an obligation to act in accordance with purported instructions to the extent that they conflict with applicable law or regulations, local market practice or the Custodian’s operating policies and practices. The Custodian shall not be liable for any loss resulting from a delay while it obtains clarification of any Proper Instructions. |
(a) | make payments to itself as described in or pursuant to Section 3.9(b), or to make payments to itself or others for minor expenses of handling Securities or other similar items relating to its duties under this Agreement, provided that all such payments shall be accounted for to the Company; |
(b) | surrender Securities in temporary form for Securities in definitive form; |
(c) | endorse for collection cheques, drafts and other negotiable instruments; and |
(d) | in general attend to all nondiscretionary details in connection with the sale, exchange, substitution, purchase, transfer and other dealings with the Securities and property of the Company. |
(a) | the authority of any person to act in accordance with such certificate; or |
(b) | any determination of or any action by the Company as described in such certificate, |
and such certificate may be considered as in full force and effect until receipt by the Custodian of written notice to the contrary from an Authorized Person of the Company.
-17- |
8. | COMPENSATION OF CUSTODIAN |
9. | RESPONSIBILITY OF CUSTODIAN |
9.2. | Instructions. |
(a) | The Custodian shall be entitled to refrain from taking any action unless it has such instruction (in the form of Proper Instructions) from the Company as it reasonably deems necessary, and shall be entitled to require, upon notice to the Company, that Proper Instructions to it be in writing. The Custodian shall have no liability for any action (or forbearance from action) taken pursuant to the Proper Instruction of the Company. |
(b) | Whenever the Custodian is entitled or required to receive or obtain any communications or information pursuant to or as contemplated by this Agreement, it shall be entitled to receive the same in writing, in form, content and medium reasonably acceptable to it and otherwise in accordance with any applicable terms of this Agreement; and whenever any report or other information is required to be produced or distributed by the Custodian it shall be in form, content and medium reasonably acceptable to it and the Company, and otherwise in accordance with any applicable terms of this Agreement. |
-18- |
(a) | The Custodian may rely on and shall be protected in acting or refraining from acting in reliance upon any written notice, instruction, statement, certificate, request, waiver, consent, opinion, report, receipt or other paper or document furnished to it (including any of the foregoing provided to it by telecopier or electronic means), not only as to its due execution and validity, but also as to the truth and accuracy of any information therein contained, which it in good faith believes to be genuine and signed or presented by the proper person (which in the case of any instruction from or on behalf of the Company shall be an Authorized Person); and the Custodian shall be entitled to presume the genuineness and due authority of any signature appearing thereon. The Custodian shall not be bound to make any independent investigation into the facts or matters stated in any such notice, instruction, statement, certificate, request, waiver, consent, opinion, report, receipt or other paper or document, provided, however, that if the form thereof is specifically prescribed by the terms of this Agreement, the Custodian shall examine the same to determine whether it substantially conforms on its face to such requirements hereof. |
(b) | Neither the Custodian nor any of its directors, officers or employees shall be liable to anyone for any error of judgment, or for any act done or step taken or omitted to be taken by it (or any of its directors, officers of employees), or for any mistake of fact or law, or for anything which it may do or refrain from doing in connection herewith, unless such action or inaction constitutes gross negligence, willful misconduct or bad faith on its part and in breach of the terms of this Agreement. The Custodian shall not be liable for any action taken by it in good faith and reasonably believed by it to be within powers conferred upon it, or taken by it pursuant to any direction or instruction by which it is governed hereunder, or omitted to be taken by it by reason of the lack of direction or instruction required hereby for such action. Except as otherwise expressly provided herein, the Custodian shall not be under any obligation at any time to ascertain whether the Company is in compliance with the 1940 Act, the regulations thereunder, or the Company’s investment objectives and policies then in effect. |
(c) | In no event shall the Custodian be liable for any indirect, special, consequential or punitive damages (including lost profits) whether or not it has been advised of the likelihood of such damages. |
(d) | The Custodian may consult with, and obtain advice from, legal counsel selected in good faith with respect to any question as to any of the provisions hereof or its duties hereunder, or any matter relating hereto, and the written opinion or advice of such counsel shall be full and complete authorization and protection in respect of any action taken, suffered or omitted by the Custodian in good faith in accordance with the opinion and directions of such counsel; the reasonable cost of such services shall be reimbursed pursuant to Section 8.2 above. |
(e) | The Custodian shall not be deemed to have notice of any fact, claim or demand with respect hereto unless actually known by an employee working in its Corporate Trust Services group and charged with responsibility for administering this Agreement or unless (and then only to the extent) received in writing by the Custodian at the applicable address(es) as set forth in Section 15 and specifically referencing this Agreement. |
(f) | No provision of this Agreement shall require the Custodian to expend or risk its own funds, or to take any action (or forbear from action) hereunder which might in its judgment involve any expense or any financial or other liability unless it shall be furnished with acceptable indemnification. Nothing herein shall obligate the Custodian to commence, prosecute or defend legal proceedings in any instance, whether on behalf of the Company or on its own behalf or otherwise, with respect to any matter arising hereunder, or relating to this Agreement or the services contemplated hereby. |
(g) | The permissive right of the Custodian to take any action hereunder shall not be construed as a duty. |
-19- |
(h) | The Custodian may act or exercise its duties or powers hereunder through agents (including, for the avoidance of doubt, sub-custodians) or attorneys, and the Custodian shall not be liable or responsible for the actions or omissions of any such agent or attorney appointed and maintained with reasonable due care. |
(i) | All indemnifications contained in this Agreement in favor of the Custodian shall survive the termination of this Agreement. |
9.4. | Indemnification; Custodian’s Lien. |
(a) | The Company shall and does hereby indemnify and hold harmless the Custodian, and any Foreign Sub-custodian appointed pursuant to Section 6.1 above, for and from any and all costs and expenses (including reasonable attorney’s fees and expenses), and any and all losses, damages, claims and liabilities, that may arise, be brought against or incurred by the Custodian, and any advances or disbursements made by the Custodian (including in respect of any Account overdraft, returned deposit item, chargeback, provisional credit, settlement or assumed settlement, reclaimed payment, claw-back or the like), as a result of, relating to, or arising out of this Agreement, or the administration or performance of the Custodian’s duties hereunder, or the relationship between the Company and the Custodian created hereby, other than such liabilities, losses, damages, claims, costs and expenses as are directly caused by the Custodian’s action or inaction constituting gross negligence, fraud or willful misconduct. |
(b) | The Custodian shall have and is hereby granted a continuing lien upon and security interest in, and right of set-off against, the Account, and any funds (and investments in which such funds may be invested) held therein or credited thereto from time to time, whether now held or hereafter required, and all proceeds thereof, to secure the payment of any amounts that may be owing to the Custodian under or pursuant to the terms of this Agreement, whether now existing or hereafter arising. |
10. | SECURITY CODES |
If the Custodian issues to the Company security codes, passwords or test keys in order that it may verify that certain transmissions of information, including Proper Instructions, have been originated by the Company, the Company shall take all commercially reasonable steps to safeguard any security codes, passwords, test keys or other security devices which the Custodian shall make available.
11. | TAX LAW |
-20- |
12. | EFFECTIVE PERIOD, TERMINATION AND AMENDMENT |
13. | REPRESENTATIONS AND WARRANTIES |
13.1. Representations of the Company. The Company represents and warrants to the Custodian that:
(a) | it has the power and authority to enter into and perform its obligations under this Agreement; |
(b) | it has duly authorized and executed this Agreement so as to constitute its valid and binding obligation; and |
-21- |
(c) | in giving any instructions which purport to be “Proper Instructions” under this Agreement, the Company will act in accordance with the provisions of its articles of incorporation and bylaws and any applicable laws and regulations. |
(a) | it is qualified to act as a custodian pursuant to Section 26(a)(1) of the 1940 Act; |
(b) | it has the power and authority to enter into and perform its obligations under this Agreement; |
(c) | it has duly authorized and executed this Agreement so as to constitute its valid and binding obligations; and |
(d) | that it maintains business continuity policies and standards that include data file backup and recovery procedures that comply with all applicable regulatory requirements. |
14. | PARTIES IN INTEREST; NO THIRD PARTY BENEFIT |
This Agreement is not intended for, and shall not be construed to be intended for, the benefit of any third parties and may not be relied upon or enforced by any third parties (other than successors and permitted assigns pursuant to Section 19).
15. | NOTICES |
Any Proper Instructions shall be given to the following address (or such other address as either party may designate by written notice to the other party), and otherwise any notices, approvals and other communications hereunder shall be sufficient if made in writing and given to the parties at the following address (or such other address as either of them may subsequently designate by notice to the other), given by (i) hand, (ii) certified or registered mail, postage prepaid, (iii) recognized courier or delivery service, or (iv) confirmed telecopier, telex, or by electronic mail,with a duplicate sent on the same day by first class mail, postage prepaid:
(a) | if to the Company, to |
Xxxxx Capital BDC 3, Inc. | ||
000 Xxxxx Xxxxxx, 00xx Xxxxx | ||
Xxx Xxxx, Xxx Xxxx 00000 | ||
Attention: Xxxxx X. Xxxxx | ||
Fax: (000) 000-0000 |
(b) | if to the Custodian, to |
U.S. Bank National Association | ||
Global Corporate Trust Services | ||
0 Xxxxxxxx Xxxxx, Xxxxx 0000 | ||
Xxxxxxx, Xxxxx 00000 | ||
Attention: Xxxxxx Xxxxxxx | ||
Fax: (000) 000-0000 |
-22- |
16. | CHOICE OF LAW AND JURISDICTION; WAIVER |
This Agreement shall be construed, and the provisions thereof interpreted under and in accordance with and governed by the laws of the State of New York for all purposes (without regard to its choice of law provisions); except to the extent such laws are inconsistent with federal securities laws, including the 1940 Act, in which case such federal securities laws, shall govern. Each party hereby WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
17. | ENTIRE AGREEMENT; COUNTERPARTS |
18. | AMENDMENT; WAIVER |
19. | SUCCESSOR AND ASSIGNS |
-23- |
20. | SEVERABILITY |
The terms of this Agreement are hereby declared to be severable, such that if any term hereof is determined to be invalid or unenforceable, such determination shall not affect the remaining terms.
21. | REQUEST FOR INSTRUCTIONS |
If, in performing its duties under this Agreement, the Custodian is required to decide between alternative courses of action, the Custodian may (but shall not be obliged to) request written instructions from the Company as to the course of action desired by it. If the Custodian does not receive such instructions within two (2) Business Days after it has requested them, the Custodian may, but shall be under no duty to, take or refrain from taking any such courses of action. The Custodian shall act in accordance with instructions received from the Company in response to such request after such two-Business Day period except to the extent it has already taken, or committed itself to take, action inconsistent with such instructions.
22. | OTHER BUSINESS |
Nothing herein shall prevent the Custodian or any of its affiliates from engaging in other business, or from entering into any other transaction or financial or other relationship with, or receiving fees from or from rendering services of any kind to the Company or any other Person. Nothing contained in this Agreement shall constitute the Company and/or the Custodian (and/or any other Person) as members of any partnership, joint venture, association, syndicate, unincorporated business or similar assignment as a result of or by virtue of the engagement or relationship established by this Agreement.
23. | REPRODUCTION OF DOCUMENTS |
This Agreement and all schedules, exhibits, attachments and amendment hereto may be reproduced by any photographic, photostatic, microfilm, micro-card, miniature photographic or other similar process. The parties hereto each agree that any such reproduction shall be admissible in evidence as the original itself in any judicial or administrative proceeding, whether or not the original is in existence and whether or not such reproduction was made by a party in the regular course of business, and that any enlargement, facsimile or further production shall likewise be admissible in evidence.
24. | MISCELLANEOUS |
The Company acknowledges receipt of the following notice:
“IMPORTANT INFORMATION ABOUT PROCEDURES FOR
To help the government fight the funding of terrorism and money laundering activities, Federal law requires all financial institutions to obtain, verify and record information that identifies each person who opens an account. For a non-individual person such as a business entity, a charity, a trust or other legal entity the Custodian will ask for documentation to verify its formation and existence as a legal entity. The Custodian may also ask to see financial statements, licenses, identification and authorization documents from individuals claiming authority to represent the entity or other relevant documentation.”
[PAGE INTENTIONALLY ENDS HERE. SIGNATURES APPEAR ON NEXT PAGE.]
IN WITNESS WHEREOF, each of the parties has caused this Agreement to be executed and delivered by a duly authorized officer, intending the same to take effect as of the date first above written.
Witness: | XXXXX CAPITAL BDC 3, INC. | ||||
/s/ Xxxx X. Xxxxx | By: | /s/ Xxxxx X. Xxxxx | |||
Name: | Xxxx X. Xxxxx | Name: | Xxxxx X. Xxxxx | ||
Title: | Chief Financial Officer | Title: | President and Chief Executive Officer | ||
Witness: | U.S. BANK NATIONAL ASSOCIATION | ||||
/s/ Xxxxxx X. Xxx | By: | /s/ Xxxxxx X. Xxxxxxx | |||
Name: | Xxxxxx X. Xxx | Name: | Xxxxxx X. Xxxxxxx | ||
Title: | Senior Vice President | Title: | Vice President |
[Signature Page to Custody Agreement]
SCHEDULE A
(Trade Confirmation)
SCHEDULE B
CERTIFICATE OF AUTHORIZED PERSONS
Each of the undersigned hereby certifies that he/she is the duly elected and acting chairman, president and chief executive officer, chief financial officer, and chief compliance officer, respectively, of Xxxxx Capital BDC 3, Inc. (the “Client”) and chief financial officer of Xxxxx Capital LLC and further certifies that the following officers or authorized persons of the Client have been duly authorized to deliver Proper Instructions to the Custodian pursuant to the Agreement between the Client and Custodian dated September 29, 2017, and that the signatures appearing opposite their names are true and correct:
Xxxxxxxx X. Xxxxx | Chairman | /s/ Xxxxxxxx X. Xxxxx | ||
Name | Title | Signature | ||
Xxxxx X. Xxxxx | President and CEO | /s/ Xxxxx X. Xxxxx | ||
Name | Title | Signature | ||
Xxxx X. Xxxxx | Chief Financial Officer | /s/ Xxxx X. Xxxxx | ||
Name | Title | Signature | ||
Xxxxxx X. Xxxxxxxx | Chief Compliance Officer | /s/ Xxxxxx X. Xxxxxxxx | ||
Name | Title | Signature | ||
Xxxxxxx X. Xxxxxx III | CFO of Xxxxx Capital LLC | /s/ Xxxxxxx X. Xxxxxx III | ||
Name | Title | Signature | ||
Xxxxxxx X. Xxxxxxx | Authorized Person | /s/ Xxxxxxx X. Xxxxxxx | ||
Name | Title | Signature | ||
Xxxxxxx X. Xxxxx | Authorized Person | /s/ Xxxxxxx X. Xxxxx | ||
Name | Title | Signature | ||
Xxxxxxxxx X. Xxxxxxxx | Authorized Person | /s/ Xxxxxxxxx X. Xxxxxxxx | ||
Name | Title | Signature | ||
Xxxx X. Xxxxxxxx | Authorized Person | /s/ Xxxx X. Xxxxxxxx | ||
Name | Title | Signature | ||
Xxxxxx X. Xxxxxxxxx | Authorized Person | /s/ Xxxxxx X. Xxxxxxxxx | ||
Name | Title | Signature | ||
Xxxxxx X. Xxxxxxxxxxx | Authorized Person | /s/ Xxxxxx X. Xxxxxxxxxxx | ||
Name | Title | Signature |
This certificate supersedes any certificate of Authorized Persons you may currently have on file.
Xxxxx Capital BDC 3, Inc. | ||
By: | /s/ Xxxxx X. Xxxxx | |
Name: | Xxxxx X. Xxxxx | |
Title: | President and Chief Executive Officer |