CUSTODY AGREEMENT dated as of May 9, 2014 by and between PROSPECT CAPITAL CORPORATION
_____________________
_____________________
dated as of May 9, 2014
by and between
PROSPECT CAPITAL CORPORATION
(“Company”)
and
TABLE OF CONTENTS
Page
1.DEFINITIONS 1
2.APPOINTMENT OF CUSTODIAN 6
3.DUTIES OF CUSTODIAN 7
4.REPORTING 15
5.DEPOSIT IN U.S. SECURITIES SYSTEMS 15
6.FOREIGN SUB-CUSTODIANS 16
7.CERTAIN GENERAL TERMS 16
8.RESPONSIBILITY OF CUSTODIAN 17
0.XXXXXXXX CODES 21
00.XXX LAW 21
11.EFFECTIVE PERIOD, TERMINATION 21
12.REPRESENTATIONS AND WARRANTIES 22
13.PARTIES IN INTEREST; NO THIRD PARTY BENEFIT 23
14.NOTICES 23
15.CHOICE OF LAW AND JURISDICTION 24
16.ENTIRE AGREEMENT; COUNTERPARTS 24
17.AMENDMENT; WAIVER 24
18.SUCCESSOR AND ASSIGNS 25
19.SEVERABILITY 25
20.REQUEST FOR INSTRUCTIONS 25
21.OTHER BUSINESS 25
22.REPRODUCTION OF DOCUMENTS 26
23.MISCELLANEOUS 26
SCHEDULES
SCHEDULE A – CERTIFICATE OF AUTHORIZED PERSONS
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This CUSTODY AGREEMENT (this “Agreement”) is dated as of May 9, 2014, and is by and between Prospect Capital Corporation (and 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 00 Xxxx 00xx Xxxxxx, 00xx Xxxxx, Xxx Xxxx, XX 00000, and Customers Bank (and any successor or permitted assign acting as custodian hereunder, the “Custodian”), a Pennsylvania state-chartered bank having a place of business at 00 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000.
RECITALS
1. | DEFINITIONS |
1.1 Defined Terms. In addition to terms expressly defined elsewhere herein, the following words shall have the following meanings as used in this Agreement:
“Account” means the Cash Account and the Securities Account, collectively.
“Agreement” means this Custody Agreement (as the same may be amended from time to time in accordance with the terms hereof).
“Asset File” means, with respect to each Security for which documents are delivered to the Document Custodian, each of the Required Documents identified on the related Document Checklist.
“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 is open for business in the market or country in which a transaction is to take place.
“Cash Account” means the segregated custodial 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 the
Securities of the Company, as applicable, which account shall be designated the “Prospect Capital Corporation Cash Proceeds Account.”
“Certificated Security” shall have the meaning ascribed to such term in Section 8-102(4) of the UCC.
“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 Custodian” means the Custodian when acting in the role of a document custodian hereunder.
“Document Checklist” means a list delivered to the Document Custodian by the Company in connection with delivery of each Asset File to the Custodian that identifies (i) whether a Security is a Certificated Security or an Uncertificated Security, and (ii) the documents, instruments and certificates contained in the related Asset File.
“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 banks 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.
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“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 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, or (ii) any “Eligible Foreign Custodian,” as that term is defined in Rule 17f-5 under the 1940 Act.
“Participation” means an interest in a Security 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 the initial public offering by the Company and any subsequent offering 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 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 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 any of the foregoing).
“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, by any of the following means:
(a) in writing signed by any two (2) Authorized Persons (and delivered by hand, by mail, by overnight courier or by telecopier);
(b) by electronic mail from an Authorized Person;
(c) in tested communication;
(d) in a communication utilizing access codes effected between electro mechanical or electronic devices; or
(e) such other means as may be agreed upon from time to time by the Custodian and the party giving such instructions, including oral instructions.
“Reinvestment Earnings” has the meaning set forth in Section 3.6(b).
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“Required Documents” means, for each Security as to which an Asset File is delivered to the Document Custodian:
(a) the related Document Checklist; and
(b) such documents identified in the Document Checklist that may include any Underlying Documents (but excluding any physical certificates evidencing ownership of a Certificated Security).
“Securities” means, collectively, (i) the equity investments, including investments in partnership and limited liability companies, 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 Uncertificated Securities) received by it pursuant to this Agreement, which account shall be designated the “Prospect Capital Corporation Securities Account.”
“Securities Custodian” means the Custodian when acting in the role of a securities custodian hereunder.
“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 (including an Eligible Securities Depository).
“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.
“Trade Confirmation” means a confirmation to the Custodian from the Company of the Company’s acquisition of a Security setting forth applicable information with respect to
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such Security in any form as may be agreed to by, the Custodian and the Company from time to time.
“UCC” shall have the meaning set forth in Section 3.3(a).
“Underlying Agreement” means, with respect to any Security, the limited liability company agreement, subscription agreement or other document or documents evidencing the Company’s investment in the related issuer.
“Underlying Documents” means, with respect to any Security for which the Company delivers an Asset File to the Custodian, the documents listed on the Document Checklist that may include the related Underlying Agreement together with any other offering memorandums, purchase agreements, security documents, other agreements, other ancillary documents, and instruments (including any Certificated Security) executed or delivered in connection with the Company’s investment in the issuer thereof, including a copy of the register evidencing registration of the membership or equity interest of the Company on the books and records of the applicable issuer.
“Uncertificated Security” means a Security that is not represented by a physical certificate.
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) | a reference to a Person includes a reference to the Person’s executors, 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 |
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(h) |
1.3 Headings. Headings are inserted for convenience and do not affect the interpretation of this Agreement.
2. |
2.3 Company Responsible For Directions. The Company is solely responsible for directing the Custodian with respect to deposits to, withdrawals from and transfers to or from the Account. Without limiting the generality of the foregoing, the Custodian has no responsibility for the Company’s compliance with the 1940 Act, any restrictions, covenants, limitations or obligations to which the Company may be subject or for which it may have obligations to third-parties in respect of the Account, and the Custodian shall have no liability for the application of any funds made at the direction of the Company. The Company shall be solely responsible for properly instructing all applicable payors to make all appropriate payments to the Custodian for deposit to the Account, and for properly instructing the Custodian with respect to the allocation or application of all such deposits.
DUTIES OF CUSTODIAN |
3.2 Securities Custody Account. The Custodian shall open and maintain in its trust department a segregated trust account in the name of the Company, subject only to order of the Custodian, in which the Custodian shall enter and carry, subject to Section 3.3(b), all Securities (other than Uncertificated Securities) and other investment Uncertificated Securities of the Company which are delivered to it in accordance with this Agreement. For avoidance of doubt, the Custodian shall not be required to credit or deposit Uncertificated Securities in the Securities Account but shall instead maintain a register (in book-entry form or in such other form as it shall deem necessary or desirable) of such Uncertificated Securities, containing such information as the Company and the Custodian may reasonably agree; provided that, with respect to such Uncertificated Securities, all Required 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 Company in a manner consistent with Rule 17f-1 under the 1940 Act and as set forth in this Agreement.
(a) | The Company shall deliver, or cause to be delivered, to the Custodian certain of the Company’s Securities, cash and other investment assets. Required Documents shall be delivered to the Custodian in its role as, and at the address identified for, the Document Custodian; provided that physical certificates representing a Security shall be delivered to the Securities Custodian. Except to the extent otherwise expressly provided herein, delivery of Securities constituting Certificated Securities to the Custodian shall be in Street Name or the name of the Company or its nominee (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. With respect to Securities (other than Uncertificated Securities and assets in the nature of “general intangibles” (as hereinafter defined)) held by the Custodian in its capacity as a “securities intermediary” (as defined in Section 8-102 of the Uniform Commercial Code as in effect in the State of New York (the “UCC”)), the Custodian shall be obligated to exercise due care in accordance with reasonable commercial standards in discharging its duties as a securities intermediary to obtain and maintain such |
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Securities. A Security will be deemed to be “delivered” to the Custodian when the Company delivers such Security in the following manner: (i) if such Security is a Certificated Security or an instrument (other than a Security held in a Securities System), then in physical certificated form in the name of the Company or its nominee, (ii) if such Security is an Uncertificated Security or in the form of uncertificated share(s) or other interest (other than a Security held in a Securities System), then delivery of confirmation statements which identify such shares or interests as being recorded in the name of the Company or its nominee, (iii) if such Security is held in a Securities System or maintained in one or more omnibus accounts at the Custodian, its agents or sub‑custodians, then delivery of confirmation that such Security is held in the Securities System or maintained through one or more omnibus accounts in the name of the Custodian (or its nominee) who shall identify the same on its books and records as held for the account of the Company, or (iv) in such other good delivery form that may be agreed to by the Custodian from time to time.
(b) | (i) In connection with its acquisition of a Security constituting an Uncertificated Security, the Company shall deliver or cause to be delivered to the Custodian (in its roles as, and at the address identified for, the Custodian and Document Custodian) a properly completed Trade Confirmation containing such information in respect of such Security as the Custodian may reasonably require in order to enable the Custodian to perform its duties hereunder in respect of such Security and on which the Custodian may conclusively rely without further inquiry or investigation, in such form and format as the Custodian reasonably may require, and shall deliver to the Document Custodian (in its role as, and at the address identified for, the Document Custodian) the Required Documents, including the Document Checklist. |
(ii) | Notwithstanding anything herein to the contrary, delivery of Securities acquired by the Company in the form of Uncertificated Securities 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 Document Custodian of (i) in the case of an Uncertificated Security, a copy of the register of the underlying issuer of such interest evidencing registration of such equity interest on the books and records of the applicable issuer to the name of the Company (or its nominee) or a copy (which may be a facsimile copy) of an assignment agreement in favor of the Company as assignee, as identified on the Document Checklist and (ii) in the case of a Participation, a copy of the related participation agreement or limited liability agreement identifying the Company as participant or owner of such interest. Any duty on the part of the Custodian with respect to the custody of such Securities shall be limited to the exercise of reasonable care by the Custodian in the physical custody of any such Required |
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Documents delivered to it, and any related instrument, security, participation 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 Security that is not represented by a physical share certificate or an asset in the nature of a general intangible (as defined in Section 9-102(a)(42) of the UCC) or uncertificated security (within the meaning of Section 8-102(18) 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 become available with respect to any Security 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, 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 Security or to compel or cause delivery thereof to the Custodian. |
(iv) |
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3.4 Release of Securities.
(a) | The Custodian shall release and deliver, or direct its agents or sub-custodian to release and deliver, as the case may be, Securities or Required Documents of the Company held by the Custodian, its agents or its sub-custodian from time to time upon receipt of Proper Instructions (which shall, among other things, specify the Securities or Required Documents to be released, with such delivery and other information as may be necessary to enable the Custodian to perform), 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 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 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 such Securities; |
(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-custodian); |
(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-custodian 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; |
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(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-custodian); |
(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-custodian); and/or |
(ix) |
(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. |
(b) | Amounts held in the Cash Account from time to time may be invested in Eligible Investments generally offered by the Custodian at such time to its commercial customers, pursuant to specific written Proper Instructions (which may be standing instructions) received by the Custodian from any two (2) Authorized Persons acting on behalf of the Company. Such investments shall be subject to |
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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. |
(d) |
3.7 Foreign Exchange.
(a) | Upon the receipt of Proper Instructions, the Custodian, its agents or its sub-custodian 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-custodian or any affiliates of the Custodian or the sub-custodian. 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 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) |
3.8 Collection of Income. The Custodian, its agents or its sub-custodian shall use reasonable efforts to collect on a timely basis all income and other payments with respect to the Securities held hereunder to which the Company shall be entitled, to the extent consistent with usual custom in the securities custodian business in the United States. Such efforts shall include collection of interest income, dividends and other payments
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3.9 Payment of Moneys. 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-custodian, and direct them to pay out) moneys of the Company on deposit therein in the following cases:
(a) | 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: |
(i) 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
(ii) in the case of a purchase effected through a Securities System, in accordance with the rules governing the operation of such Securities System;
(b) | 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-custodian, as contemplated by Section 3.7 above; |
(i) | in payment of the price of securities of the Company repurchased in open market purchases, tender offers or any other Company repurchase program; and |
(ii) |
3.10 Proxies. The Custodian will, with respect to the Securities held hereunder, use reasonable efforts to cause to be promptly executed by the registered holder of such Securities proxies received by the Custodian from its agents or its sub-custodian or from issuers of the Securities being held for the Company, without indication of the manner in which such proxies are to be voted, and upon receipt of Proper Instructions shall promptly deliver to the applicable issuer such proxies relating to such Securities. In the absence of such Proper Instructions, or in the event that such Proper Instructions are not
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3.11 Communications Relating to Securities. The Custodian shall transmit promptly to the Company all written information (including proxies, proxy soliciting materials, notices, pendency of calls and maturities of Securities and expirations of rights in connection therewith) received by the Custodian, from its agents or its sub-custodian or from issuers of the Securities being held for the Company. The Custodian shall have no obligation or duty to exercise any right or power, or otherwise to preserve rights, in or under any Securities unless and except to the extent it has received timely Proper Instruction from the Company in accordance with the next sentence. The Custodian will not be liable for any untimely exercise of any right or power in connection with Securities at any time held by the Custodian, its agents or sub-custodian unless:
(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-custodian are in actual possession of such Securities, |
3.12 Records. The Custodian shall create and maintain complete and accurate records relating to its activities under this Agreement with respect to the Securities, cash or other property held for the Company under this Agreement, with particular attention to Section 31 of the 1940 Act, and Rules 31a-1 and 31a-2 thereunder. To the extent that the Custodian, in its sole opinion, is able to do so, the Custodian shall provide assistance to the Company (at the Company’s reasonable request made from time to time) by providing sub-certifications regarding certain of its services performed hereunder to the Company in connection with the Company’s certification requirements pursuant to the Xxxxxxxx-Xxxxx Act of 2002, as amended. All such records shall be the property of the Company and shall at all times during the regular business hours of the Custodian be open for inspection by duly authorized officers, employees or agents of the Company (including its independent public accountants) and employees and agents of the Securities and Exchange Commission, upon reasonable request and prior notice and at the Company’s expense. The Custodian shall, at the Company’s request, supply the Company with a tabulation of Securities owned by the Company and held by the Custodian and shall, when requested to do so by the Company and for such compensation as shall be agreed upon between the Company and the Custodian, include, to the extent
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4. | REPORTING |
(a) | 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, all transactions in the Securities during the 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) |
5. | DEPOSIT IN U.S. SECURITIES SYSTEMS |
The Custodian may deposit and/or maintain Securities in a Securities System within the United States 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:
(c) | 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; |
(d) | 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; |
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(e) | The Custodian shall provide to the Company copies of all notices received from a U.S. Securities System of transfers of Securities for the account of the Company; and |
(f) |
6. |
6.1 Foreign Sub-custodians. The Custodian may not appoint or employ any Foreign Sub-custodians.
7. | CERTAIN GENERAL TERMS |
7.1 No Duty to Examine Underlying Instruments. Nothing herein shall obligate the Custodian to review or examine the terms of any underlying limited liability company agreement, stock or share certificate, share registrar, instrument, subscription agreement, limited partnership agreement or other similar agreement or document evidencing or governing any Security to determine the validity, sufficiency, marketability or enforceability of any Security (and shall have no responsibility for the genuineness or completeness thereof), or otherwise.
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 any two (2) Authorized Persons previously certified to the Custodian. The Custodian shall be entitled to rely upon the identity and authority of such persons until it receives written |
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notice from any two (2) Authorized Persons of the Company to the contrary. The initial Authorized Persons are set forth on Schedule A attached hereto and made a part hereof (as such Schedule A 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 A.
(b) |
7.5 Actions Permitted Without Express Authority. The Custodian may, at its discretion, without express authority from the Company:
(c) | surrender Securities in temporary form for Securities in definitive form; |
(d) | endorse for collection cheques, drafts and other negotiable instruments; and |
(e) |
(a) | the authority of any person to act in accordance with such certificate; or |
(b) | any determination or action by the Company as described in such certificate, |
7.7 Receipt of Communications. Any communication received by the Custodian on a day which is not a Business Day or after 3:30 p.m., Eastern time (or such other time as is agreed by the Company and the Custodian from time to time), on a Business Day will be deemed to have been received on the next Business Day (but in the case of
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8.2 Instructions.
(c) | 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. |
(d) |
8.3 General Standards of Care. Notwithstanding any terms herein contained to the contrary, the acceptance by the Custodian of its appointment hereunder is expressly subject to the following terms, which shall govern and apply to each of the terms and provisions of this Agreement (whether or not so stated therein):
(c) | 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 any two (2) Authorized Persons); and the Custodian shall be entitled to presume the genuineness and due authority of any signature appearing thereon. The |
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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.
(d) | 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. |
(e) | In no event shall the Custodian be liable for any indirect, special or consequential damages (including lost profits) whether or not it has been advised of the likelihood of such damages. |
(f) | 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. |
(g) | 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 received (and then only to the extent received) in writing by the Custodian at the applicable address(es) as set forth in Section 14 and specifically referencing this Agreement. |
(h) | 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 |
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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.
(i) | The permissive right of the Custodian to take any action hereunder shall not be construed as duty. |
(j) | The Custodian may act or exercise its duties or powers hereunder through agents, subcustodians, or attorneys, and the Custodian shall not be liable or responsible for the actions or omissions of any such agent, subcustodian or attorney (i) appointed with the Company’s prior written consent specifically acknowledging such limitation of liability and (ii) maintained with reasonable due care. |
(k) |
8.4 Indemnification; Custodian’s Lien.
(f) | The Company shall and does hereby indemnify and hold harmless each of the Custodian 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 (including, for the avoidance of doubt, any subsidiary) 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. |
(g) | If the Company requests that the Custodian, its affiliates, subsidiaries or agents, advance cash or securities for any purpose (including but not limited to securities settlements, foreign exchange contracts and assumed settlement) (it being understood and agreed that the Custodian may approve or reject any such request in its sole discretion) or in the event that the Custodian or its nominee shall incur or be assessed any taxes, charges, expenses, assessments, claims or liabilities in connection with the performance of this Agreement, except such as may arise from the Custodian’s or its nominee’s own gross negligent action, gross negligent failure to act, fraud or willful misconduct, or if the Company fails to compensate the Custodian pursuant to Section 8.4 hereof, any cash at any time held for the account of the Company shall be security therefor and should the Company fail to repay the Custodian promptly (or, if specified, within the time |
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9. | SECURITY CODES |
10. | TAX LAW |
10.2 Foreign Tax Law. It shall be the responsibility of the Company to notify the Custodian of the obligations imposed on the Company by the tax law of foreign (i.e., non-U.S.) jurisdictions, including responsibility for withholding and other taxes, assessments or other government charges, certifications and government reporting. The sole responsibility of the Custodian with regard to such tax law shall be to use reasonable efforts to cooperate with the Company with respect to any claims for exemption or refund under the tax law of the jurisdictions for which the Company has provided such information.
11. |
12. |
12.1 Representations of the Company. The Company represents and warrants to the Custodian that:
(c) | it has the power and authority to enter into and perform its obligations under this Agreement, and it has duly authorized, executed and delivered this Agreement so as to constitute its valid and binding obligation; and |
(d) |
12.2 Representations of the Custodian. The Custodian hereby represents and warrants to the Company that:
(b) | it is qualified to act as a custodian pursuant to Section 26(a)(1) of the 1940 Act; |
(c) | it has the power and authority to enter into and perform its obligations under this Agreement; |
(d) | it has duly authorized, executed and delivered this Agreement so as to constitute its valid and binding obligations; and |
(e) |
13. |
14. | NOTICES |
Any Proper Instructions (to the extent given by hand, mail, courier or telecopier) 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 or telex, with a duplicate sent on the same day by first class mail, postage prepaid:
(a) | if to the Company, to |
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Prospect Capital Corporation
00 Xxxx 00xx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Prospect Accounting
Fax No.: (000) 000-0000
Attention: Prospect Accounting
Fax No.: (000) 000-0000
Email: xxx@xxxxxxxxxxxxxx.xxx
xxxxx@xxxxxxxxxxxxxx.xxx
xx@xxxxxxxxxxxxxx.xxx
(b) | if to the Custodian, to |
Customers Bank
00 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ref: Prospect Capital Corporation
Fax:
15. | CHOICE OF LAW AND JURISDICTION |
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.
16. |
16.2 Counterparts. This Agreement may be executed in any number of counterparts and all counterparts taken together shall constitute one and the same instrument.
17. | AMENDMENT; WAIVER |
18. |
19. | SEVERABILITY |
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20. | REQUEST FOR INSTRUCTIONS |
21. | OTHER BUSINESS |
22. | REPRODUCTION OF DOCUMENTS |
23. | MISCELLANEOUS |
The Company acknowledges receipt of the following notice:
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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 written above.
Witness: | PROSPECT CAPITAL CORPORATION |
_/s/ Xxxx X. Colandrea___________ By: /s/ X. Xxxxx Eliasek
Name: Xxxx X. Xxxxxxxxx Name: X. Xxxxx Eliasek
Title: Deputy General Counsel Title: President and COO
Witness: CUSTOMERS BANK
_/s/ Jake Danielski_______________ By: /s/ Xxxxxx Xxxxxxx
Name: Xxxx Xxxxxxxxx Name: Xxxxxx Xxxxxxx
Title: Vice President Title: Managing Director
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SCHEDULE A
CERTIFICATE OF AUTHORIZED PERSONS
The undersigned hereby certifies that he/she is the duly elected and acting Secretary of Prospect Capital Corporation (the “Client”), and further certifies that the following officers or employees of the Client have been duly authorized to deliver Instructions to the Custodian pursuant to the Agreement between the Client and Custodian, dated May 9, 2014, and that the signatures appearing opposite their names are true and correct:
Xxxx X. Xxxxx III Name | Chairman and CEO Title | Signature |
X. Xxxxx Xxxxxxx Name | President and COO Title | Signature |
Xxxxx X. Xxxxxx Name | CFO, Secretary and Treasurer Title | Signature |
This certificate supersedes any certificate of Authorized Persons you may currently have on file.
By:_______________________________
Name: Xxxxx X. Xxxxxx
Title: CFO, Secretary and Treasurer
Date: May 9, 2014