Exhibit 10.3

 

AMENDED AND RESTATED

CUSTODY AGREEMENT

 

THIS AGREEMENT is made and entered into as of April 30, 2018 by and between MVC
CAPITAL, INC., a Delaware corporation, (the “Fund”), and U.S. BANK NATIONAL
ASSOCIATION, a national banking association organized and existing under the
laws of the United States of America with its principal place of business at
Minneapolis, Minnesota (the “Custodian”).

 

WHEREAS the parties have entered into a Custody Agreement dated, November 1,
2002.

 

WHEREAS, the Fund is a closed-end management investment company, which has
elected to be regulated as a business development company under the Investment
Company Act of 1940, as amended (the “1940 Act”); and

 

WHEREAS, the Custodian is a bank having the qualifications prescribed in
Section 26(a)(1) of the 1940 Act; and

 

WHEREAS, the Board of Directors (as defined below) has delegated to the
Custodian the responsibilities set forth in Rule 17f-5(c) under the 1940 Act and
the Custodian is willing to undertake such responsibilities and serve as the
foreign custody manager for the Fund.

 

WHEREAS, the Fund desires to retain the Custodian to act as custodian of its
cash and securities; and

 

NOW, THEREFORE, in consideration of the promises and mutual covenants herein
contained, and other good and valuable consideration, the receipt of which is
hereby acknowledged, the parties hereto, intending to be legally bound, do
hereby agree as follows:

 

ARTICLE I

 

CERTAIN DEFINITIONS

 

Whenever used in this Agreement, the following words and phrases shall have the
meanings set forth below unless the context otherwise requires:

 

1.01                                                “Authorized Person” means
any Officer or person (including an investment advisor or other agent) who has
been designated by written notice as such from the Fund or the Fund’s investment
advisor or other agent and is named in Exhibit A attached hereto.  Such officer
or person shall continue to be an Authorized Person until such time as the
Custodian receives Written Instructions from the Fund or the Fund’s investment
advisor or other agent that any such person is no longer an Authorized Person.

 

1.02                                                “Board of Directors” shall
mean the directors from time to time serving under the Fund’s Articles of
Incorporation and Bylaws, as amended from time to time.

 

1.03                                                “Book-Entry System” shall
mean a federal book-entry system as provided in Subpart O of Treasury Circular
No. 300, 31 CFR 306, in Subpart B of 31 CFR Part 350, or in such book-entry
regulations of federal agencies as are substantially in the form of such Subpart
O.

 

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1.04                                                “Business Day” shall mean
any day recognized as a settlement day by The New York Stock Exchange, Inc., and
any other day for which the Fund computes the net asset value of Shares of the
Fund.

 

1.05                                                “Eligible Foreign Custodian”
has the meaning set forth in Rule 17f-5(a)(1), including a majority-owned or
indirect subsidiary of a U.S. Bank (as defined in Rule 17f-5), a bank holding
company meeting the requirements of an Eligible Foreign Custodian (as set forth
in Rule 17f-5 or by other appropriate action of the SEC), or a foreign branch of
a Bank (as defined in Section 2(a)(5) of the 1940 Act) meeting the requirements
of a custodian under Section 17(f) of the 1940 Act; the term does not include
any Eligible Securities Depository.

 

1.06                                                “Eligible Securities
Depository” shall mean a system for the central handling of securities as that
term is defined in Rule 17f-4 and 17f-7 under the 1940 Act.

 

1.07                                                “Foreign Securities” means
any of the Fund’s investments (including foreign currencies) for which the
primary market is outside the United States and such cash and cash equivalents
as are reasonably necessary to effect the Fund’s transactions in such
investments.

 

1.08                                                “Fund Custody Account” shall
mean any of the accounts in the name of the Fund, which is provided for in
Section 3.02 below.

 

1.09                                                “IRS” shall mean the
Internal Revenue Service.

 

1.10                                                “FINRA” shall mean the
Financial Industry Regulatory Authority, Inc. .

 

1.11                                                “Officer” shall mean the
Chairman, President, any Vice President, any Assistant Vice President, the
Secretary, any Assistant Secretary, the Treasurer, or any Assistant Treasurer of
the Fund.

 

1.12                                                “Proper Instructions” shall
mean Written Instructions.

 

1.13                                                “SEC” shall mean the U.S.
Securities and Exchange Commission.

 

1.14                                                “Securities” shall include,
without limitation, common and preferred stocks, bonds, corporate loans,
derivatives, call options, put options, debentures, notes, bank certificates of
deposit, bankers’ acceptances, mortgage-backed securities or other obligations,
and any certificates, receipts, warrants or other instruments or documents
representing rights to receive, purchase or subscribe for the same, or
evidencing or representing any other rights or interests therein, or any similar
property or assets that the Custodian or its agents have the facilities to clear
and service.

 

1.15                                                “Securities Depository”
shall mean The Depository Trust Company and any other clearing agency registered
with the SEC 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.

 

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1.16                                                “Shares” shall mean, with
respect to a Fund, the shares of common stock issued by the Fund on account of
the Fund.

 

1.17                                                “Sub-Custodian” shall mean
and include (i) any branch of a “U.S. bank,” as that term is defined in
Rule 17f-5 under the 1940 Act, and (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 Fund based on the standards specified in Section 3.03 below.  Such
contract shall be in writing and shall include provisions that provide: (i) for
indemnification or insurance arrangements (or any combination of the foregoing)
such that the Fund will be adequately protected against the risk of loss of
assets held in accordance with such contract; (ii) that the Foreign Securities
will not be subject to any right, charge, security interest, lien or claim of
any kind in favor of the Sub-Custodian or its creditors except a claim of
payment for their safe custody or administration, in the case of cash deposits,
liens or rights in favor of creditors of the Sub-Custodian arising under
bankruptcy, insolvency, or similar laws; (iii) that beneficial ownership for the
Foreign Securities will be freely transferable without the payment of money or
value other than for safe custody or administration; (iv) that adequate records
will be maintained identifying the assets as belonging to the Fund or as being
held by a third party for the benefit of the Fund; (v) that the Fund’s
independent public accountants will be given access to those records or
confirmation of the contents of those records; and (vi) that the Fund will
receive periodic reports with respect to the safekeeping of the Fund’s assets,
including, but not limited to, notification of any transfer to or from a Fund’s
account or a third party account containing assets held for the benefit of the
Fund.  Such contract may contain, in lieu of any or all of the provisions
specified in (i)-(vi) above, such other provisions that the Custodian determines
will provide, in their entirety, the same or a greater level of care and
protection for Fund assets as the specified provisions.

 

1.18                                                “Written Instructions” shall
mean (i) written communications received by the Custodian and signed by an
Authorized Person (ii) communications by facsimile or e-mail or any other such
system from one or more persons reasonably believed by the Custodian to be an
Authorized Person, or (iii) communications between electronic devices.

 

ARTICLE II.

 

APPOINTMENT OF CUSTODIAN

 

2.01                                                Appointment.  The Fund
hereby appoints the Custodian as custodian of all Securities and cash owned by
or in the possession of the Fund at any time during the period of this
Agreement, on the terms and conditions set forth in this Agreement, and the
Custodian hereby accepts such appointment and agrees to perform the services and
duties set forth in this Agreement.  The Fund hereby delegates to the Custodian,
subject to Rule 17f-5(b), the responsibilities with respect to the Fund’s
Foreign Securities, and the Custodian hereby accepts such delegation as foreign
custody manager with respect to the Fund.  The services and duties of the
Custodian shall be confined to those matters expressly set forth herein, and no
implied duties are assumed by or may be asserted against the Custodian
hereunder.

 

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2.02                                                Documents to be Furnished. 
The following documents, including any amendments thereto, will be provided
contemporaneously with the execution of the Agreement to the Custodian by the
Fund:

 

(a)              A copy of the Fund’s Articles of Incorporation, certified by
the Secretary;

 

(b)              A copy of the Fund’s Bylaws, certified by the Secretary or
other Authorized Person;

 

(c)               A copy of the resolution of the Board of  Directors of the
Fund appointing the Custodian, certified by the Secretary or other Authorized
Person;

 

(d)              A certification of the Chairman or the President and the
Secretary or other Authorized Person of the Fund setting forth the names and
signatures of the current Officers of the Fund and other Authorized Persons; and

 

(e)               An executed authorization required by the Shareholder
Communications Act of 1985, attached hereto as Exhibit E.

 

2.03                                                Notice of Appointment of
Transfer Agent.  The Fund agrees to notify the Custodian in writing of the
appointment, termination or change in appointment of any transfer agent of the
Fund, except if the Fund appoints an affiliate of the Custodian to serve as
transfer agent of the Fund, the Custodian hereby waives the Fund’s obligation to
provide such written notice.

 

ARTICLE III.

 

CUSTODY OF CASH AND SECURITIES

 

3.01                                                Segregation.  All Securities
and non-cash property held by the Custodian for the account of the Fund (other
than Securities maintained in a Securities Depository, Eligible Securities
Depository or Book-Entry System) shall be physically segregated from other
Securities and non-cash property in the possession of the Custodian (including
the Securities and non-cash property of the other series of the Fund, if
applicable) and shall be identified as subject to this Agreement.

 

3.02                                                Fund Custody Accounts.  The
Custodian shall open and maintain in its trust department a custody account in
the name of the Fund coupled with the name of the Fund, subject only to draft or
order of the Custodian, in which the Custodian shall enter and carry all
Securities, cash and other assets of the Fund which are delivered to it.

 

3.03                                                Appointment of Agents.

 

(a)              In its discretion, the Custodian may appoint one or more
Sub-Custodians to establish and maintain arrangements with (i) Eligible
Securities Depositories or (ii) Eligible Foreign Custodians that are members of
the Sub-Custodian’s network to hold Securities and cash of the Fund and to carry
out such other provisions of this Agreement as it may determine; provided,
however, that the appointment of any such agents and maintenance of any
Securities and cash of the Fund shall be at the Custodian’s expense and shall
not relieve the Custodian of any of its obligations or liabilities under this
Agreement.  The Custodian

 

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shall be liable for the actions of any Sub-Custodians (regardless of whether
assets are maintained in the custody of a Sub-Custodian, a member of its network
or an Eligible Securities Depository) appointed by it as if such actions had
been done by the Custodian.

 

(b)              If, after the initial appointment of Sub-Custodians by the
Custodian in connection with this Agreement, the Custodian wishes to appoint
other Sub-Custodians to hold property of the Fund, it will so notify the Fund
and make the necessary determinations as to any such new Sub-Custodian’s
eligibility under Rule 17f-5 under the 1940 Act.

 

(c)               In performing its delegated responsibilities as foreign
custody manager to place or maintain the Fund’s assets with a Sub-Custodian, the
Custodian will determine that the Fund’s assets will be subject to reasonable
care, based on the standards applicable to custodians in the country in which
the Fund’s assets will be held by that Sub-Custodian, after considering all
factors relevant to safekeeping of such assets, including, without limitation
the factors specified in Rule 17f-5(c)(1).

 

(d)              The agreement between the Custodian and each Sub-Custodian
acting hereunder shall contain the required provisions set forth in
Rule 17f-5(c)(2) under the 1940 Act.

 

(e)               At the end of each calendar quarter, the Custodian shall
provide written reports notifying the Board of Directors of the withdrawal or
placement of the Securities and cash of the Fund with a Sub-Custodian and of any
material changes in the Fund’s arrangements.  Such reports shall include an
analysis of the custody risks associated with maintaining assets with any
Eligible Securities Depositories.  The Custodian shall promptly take such steps
as may be required to withdraw assets of the Fund from any Sub-Custodian
arrangement that has ceased to meet the requirements of Rule 17f-5 or Rule 17f-7
under the 1940 Act, as applicable.

 

(f)                With respect to its responsibilities under this Section 3.03,
the Custodian hereby warrants to the Fund that it agrees to exercise reasonable
care, prudence and diligence such as a person having responsibility for the
safekeeping of property of the Fund.  The Custodian further warrants that the
Fund’s assets will be subject to reasonable care if maintained with a
Sub-Custodian, after considering all factors relevant to the safekeeping of such
assets, including, without limitation:  (i) the Sub-Custodian’s practices,
procedures, and internal controls for certificated securities (if applicable),
its method of keeping custodial records, and its security and data protection
practices;  (ii)  whether the Sub-Custodian has the requisite financial strength
to provide reasonable care for Fund assets; (iii)  the Sub-Custodian’s general
reputation and standing and, in the case of a Securities Depository, the
Securities Depository’s operating history and number of participants; and (iv) 
whether the Fund will have jurisdiction over and be able to enforce judgments
against the Sub-Custodian, such as by virtue of the existence of any offices of
the Sub-Custodian in the United States or the Sub-Custodian’s consent to service
of process in the United States.

 

(g)               The Custodian shall establish a system or ensure that its
Sub-Custodian has established a system to monitor on a continuing basis (i) the
appropriateness of maintaining the Fund’s assets with a Sub-Custodian or
Eligible Foreign Custodians who are members of a Sub-Custodian’s network;
(ii) the performance of the contract governing the Fund’s

 

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arrangements with such Sub-Custodian or Eligible Foreign Custodian’s members of
a Sub-Custodian’s network; and (iii) the custody risks of maintaining assets
with an Eligible Securities Depository.  The Custodian must promptly notify the
Fund or its investment adviser of any material change in these risks.

 

(h)              The Custodian shall use commercially reasonable efforts to
collect all income and other payments with respect to Foreign Securities to
which the Fund shall be entitled and shall credit such income, as collected, to
the Fund.  In the event that extraordinary measures are required to collect such
income, the Fund and Custodian shall consult as to the measurers and as to the
compensation and expenses of the Custodian relating to such measures.

 

3.04                                                Delivery of Assets to
Custodian.  The Fund shall deliver, or cause to be delivered, to the Custodian
all of the Fund’s Securities, cash and other investment assets, including
(i) all payments of income, payments of principal and capital distributions
received by the Fund with respect to such Securities, cash or other assets owned
by the Fund at any time during the period of this Agreement, and (ii) all cash
received by the Fund for the issuance of Shares.  The Custodian shall not be
responsible for such Securities, cash or other assets until actually received by
it.

 

3.05                                                Manner of Holding
Securities. The Custodian shall at all times hold Securities of the Fund either:
(a) by physical possession of the share certificates or other instruments
representing such Securities in registered or bearer form, subject to the
following provisions:

 

(i)                           The Custodian may hold registrable portfolio
Securities which have been delivered to it in physical form, by registering the
same in the name of the Fund or its nominee, or in the name of the Custodian or
its nominee, for whose actions the Fund and Custodian, respectively, shall be
fully responsible. Upon the receipt of Proper Instructions, the Custodian shall
hold such Securities in street certificate form, so called, with or without any
indication of fiduciary capacity. The Custodian will hold such securities in the
Fund’s name, unless, however, the Custodian receives Proper Instructions to
register all such portfolio Securities in the name of the Custodian’s authorized
nominee. All such Securities shall be held in an account of the Custodian
containing only assets of the Fund or only assets held by the Custodian as a
fiduciary, provided that the records of the Custodian shall indicate at all
times the Fund or other customer for which such Securities are held in such
accounts and the respective interests therein.

 

or (b) the Custodian may deposit and/or maintain Securities of the Fund in a
Securities Depository or in a Book-Entry System, subject to the following
provisions:

 

(a)              The Custodian, on an on-going basis, shall deposit in a
Securities Depository or Book-Entry System all Securities eligible for deposit
therein and shall make use of such Securities Depository or Book-Entry System to
the extent possible and practical in connection with its performance hereunder,
including, without limitation, in connection with settlements of purchases and
sales of Securities, loans of Securities, and deliveries and returns of
collateral consisting of Securities.

 

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(b)              Securities of the Fund kept in a Book-Entry System or
Securities Depository shall be kept in an account (“Depository Account”) of the
Custodian in such Book-Entry System or Securities Depository which includes only
assets held by the Custodian as a fiduciary, custodian or otherwise for
customers.

 

(c)               The records of the Custodian with respect to Securities of the
Fund maintained in a Book-Entry System or Securities Depository shall, by
book-entry, identify such Securities as belonging to the Fund.

 

(d)              If Securities purchased by the Fund are to be held in a
Book-Entry System or Securities Depository, the Custodian shall pay for such
Securities upon: (i) receipt of advice from the Book-Entry System or Securities
Depository that such Securities have been transferred to the Depository
Account;  and (ii) the making of an entry on the records of the Custodian to
reflect such payment and transfer for the account of the Fund.  If Securities
sold by the Fund are held in a Book-Entry System or Securities Depository, the
Custodian shall transfer such Securities upon (i) receipt of advice from the
Book-Entry System or Securities Depository that payment for such Securities has
been transferred to the Depository Account;  and (ii) the making of an entry on
the records of the Custodian to reflect such transfer and payment for the
account of the Fund.

 

(e)               The Custodian shall provide the Fund with copies of any report
(obtained by the Custodian from a Book-Entry System or Securities Depository in
which Securities of the Fund are kept) on the internal accounting controls and
procedures for safeguarding Securities deposited in such Book-Entry System or
Securities Depository.

 

(f)                Notwithstanding anything to the contrary in this Agreement,
the Custodian shall be liable to the Fund for any loss or damage to the Fund
resulting from: (i) the use of a Book-Entry System or Securities Depository by
reason of any negligence or willful misconduct on the part of the Custodian or
any Sub-Custodian; or (ii) failure of the Custodian or any Sub-Custodian to
enforce effectively such rights as it may have against a Book-Entry System or
Securities Depository.  At its election, the Fund shall be subrogated to the
rights of the Custodian with respect to any claim against a Book-Entry System or
Securities Depository or any other person from any loss or damage to the Fund
arising from the use of such Book-Entry System or Securities Depository, if and
to the extent that the Fund has not been made whole for any such loss or damage.

 

(g)               With respect to its responsibilities under this Section 3.05
and pursuant to Rule 17f-4 under the 1940 Act, the Custodian hereby warrants to
the Fund that it agrees to (i) exercise due care in accordance with reasonable
commercial standards in discharging its duty as a securities intermediary to
obtain and thereafter maintain such assets, (ii) provide, promptly upon request
by the Fund, such reports as are available concerning the Custodian’s internal
accounting controls and financial strength, and (iii) require any Sub-Custodian
to exercise due care in accordance with reasonable commercial standards in
discharging its duty as a securities intermediary to obtain and thereafter
maintain assets corresponding to the security entitlements of its entitlement
holders.

 

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3.06                                                Disbursement of Moneys from
Fund Custody Account.  Upon receipt of Proper Instructions, the Custodian shall
disburse moneys from the Fund Custody Account but only in the following cases:

 

(a)              For the purchase of Securities for the Fund but only in
accordance with Section 4.01 of this Agreement and only (i) in the case of
Securities (other than options on Securities, futures contracts and options on
futures contracts), against the delivery to the Custodian (or any Sub-Custodian)
of such Securities registered as provided in Section 3.09 below or in proper
form for transfer, or if the purchase of such Securities is effected through a
Book-Entry System or Securities Depository, in accordance with the conditions
set forth in Section 3.05 above; (ii) in the case of options on Securities,
against delivery to the Custodian (or any Sub-Custodian) of such receipts as are
required by the customs prevailing among dealers in such options; (iii) in the
case of futures contracts and options on futures contracts, against delivery to
the Custodian (or any Sub-Custodian) of evidence of title thereto in favor of
the Fund or any nominee referred to in Section 3.09 below; and (iv) in the case
of repurchase or reverse repurchase agreements entered into between the Fund and
a bank that is a member of the Federal Reserve System or between the Fund and a
primary dealer in U.S. Government securities, against delivery of the purchased
Securities either in certificate form or through an entry crediting the
Custodian’s account at a Book-Entry System or Securities Depository with such
Securities; and (v) in the case of Securities as to which payment for the
Security and receipt of the instrument evidencing the Security are, under
generally accepted trade practice or the terms of the instrument representing
the Security, expected to take place in different locations or through separate
parties, such as commercial paper which is indexed to foreign currency exchange
rates, derivatives and similar Securities, the Custodian may make payment for
such Securities prior to delivery thereof in accordance with such generally
accepted trade practice or the terms of the instrument representing such
Security.

 

(b)              In connection with the conversion, exchange or surrender, as
set forth in Section 3.07(f) below, of Securities owned by the Fund;

 

(c)               For the payment of any dividends or capital gain distributions
declared by the Fund;

 

(d)              In payment of the repurchase price of Shares as provided in
Section 5.01 below;

 

(e)               For the payment of any expense or liability incurred by the
Fund, including, but not limited to, the following payments for the account of
the Fund:  interest; taxes; administration, investment advisory, accounting,
auditing, transfer agent, custodian, director and legal fees; and other
operating expenses of the Fund; in all cases, whether or not such expenses are
to be in whole or in part capitalized or treated as deferred expenses;

 

(f)                For transfer in accordance with the provisions of any
agreement among the Fund, the Custodian and a broker-dealer registered under the
1934 Act and a member of FINRA, relating to compliance with rules of the Options
Clearing Corporation and of any registered national securities exchange (or of
any similar organization or organizations) regarding escrow or other
arrangements in connection with transactions by the Fund;

 

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(g)               For transfer in accordance with the provisions of any
agreement among the Fund, the Custodian and a futures commission merchant
registered under the Commodity Exchange Act, relating to compliance with the
rules of the Commodity Futures Trading Commission and/or any contract market (or
any similar organization or organizations) regarding account deposits in
connection with transactions by the Fund;

 

(h)              For the funding of any uncertificated time deposit or other
interest-bearing account with any banking institution (including the Custodian),
which deposit or account has a term of one year or less; and

 

(i)                  For any other proper purpose, but only upon receipt of
Proper Instructions, declaring such purpose to be a proper corporate purpose,
and naming the person or persons to whom such payment is to be made.

 

3.07                                                Delivery of Securities from
Fund Custody Account.  Upon receipt of Proper Instructions, the Custodian shall
release and deliver, or cause the Sub-Custodian to release and deliver,
Securities from the Fund Custody Account but only in the following cases:

 

(a)              Upon the sale of Securities for the account of the Fund but
only against receipt of payment therefor in cash, by certified or cashiers check
or bank credit;

 

(b)              In the case of a sale effected through a Book-Entry System or
Securities Depository, in accordance with the provisions of Section 3.05 above;

 

(c)               To an offeror’s depository agent in connection with tender or
other similar offers for Securities of the Fund; provided that, in any such
case, the cash or other consideration is to be delivered to the Custodian;

 

(d)              To the issuer thereof or its agent (i) for transfer into the
name of the Fund, the Custodian or any Sub-Custodian, or any nominee or nominees
of any of the foregoing, or (ii) for exchange for a different number of
certificates or other evidence representing the same aggregate face amount or
number of units; provided that, in any such case, the new Securities are to be
delivered to the Custodian;

 

(e)               Securities held in physical form may be delivered and paid for
in accordance with “street delivery custom” to a broker or its clearing agent,
against delivery to the Custodian of a receipt for such Securities provided that
the Custodian shall have taken reasonable steps to ensure prompt collection of
the payment for, or return of, such Securities by the broker or its clearing
agent, and provided further that the Custodian shall not be responsible for the
selection of or the failure or inability to perform of such broker or its
clearing agent or for any related loss arising from delivery or custody of such
Securities prior to receiving payment therefor;

 

(f)                To the broker selling the Securities, for examination in
accordance with the “street delivery” custom;

 

(g)               For exchange or conversion pursuant to any plan of merger,
consolidation, recapitalization, reorganization or readjustment of the issuer of
such Securities, or

 

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pursuant to provisions for conversion contained in such Securities, or pursuant
to any deposit agreement, including surrender or receipt of underlying
Securities in connection with the issuance or cancellation of depository
receipts; provided that, in any such case, the new Securities and cash, if any,
are to be delivered to the Custodian;

 

(h)              Upon receipt of payment therefor pursuant to any repurchase or
reverse repurchase agreement entered into by the Fund;

 

(i)                  In the case of warrants, rights or similar Securities, upon
the exercise thereof, provided that, in any such case, the new Securities and
cash, if any, are to be delivered to the Custodian;

 

(j)                 For delivery in connection with any loans of Securities of
the Fund, but only against receipt of such collateral as the Fund shall have
specified to the Custodian in Proper Instructions;

 

(k)              For delivery as security in connection with any borrowings by
the Fund requiring a pledge of assets by the Fund, but only against receipt by
the Custodian of the amounts borrowed;

 

(l)                  Pursuant to any authorized plan of liquidation,
reorganization, merger, consolidation or recapitalization of the Fund;

 

(m)          For delivery in accordance with the provisions of any agreement
among the Fund, the Custodian and a broker-dealer registered under the 1934 Act
and a member of FINRA, relating to compliance with the rules of the Options
Clearing Corporation and of any registered national securities exchange (or of
any similar organization or organizations) regarding escrow or other
arrangements in connection with transactions by the Fund;

 

(n)              For delivery in accordance with the provisions of any agreement
among the Fund, the Custodian and a futures commission merchant registered under
the Commodity Exchange Act, relating to compliance with the rules of the
Commodity Futures Trading Commission and/or any contract market (or any similar
organization or organizations) regarding account deposits in connection with
transactions by the Fund;

 

(o)              For any other proper corporate purpose, but only upon receipt
of Proper Instructions, specifying the Securities to be delivered, declaring
such purpose to be a proper corporate purpose, and naming the person or persons
to whom delivery of such Securities shall be made; or

 

(p)              To brokers, clearing banks or other clearing agents for
examination or trade execution in accordance with market custom; provided that
in any such case the Custodian shall have no responsibility or liability for any
loss arising from the delivery of such securities prior to receiving payment for
such securities except as may arise from the Custodian’s own negligence or
willful misconduct.

 

3.08                                                Actions Not Requiring Proper
Instructions.  Unless otherwise instructed by the Fund, the Custodian shall with
respect to all Securities held for the Fund:

 

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(a)              Subject to Section 9.04 below, collect on a timely basis all
income and other payments to which the Fund is entitled either by law or
pursuant to custom in the securities business;

 

(b)              Present for payment and, subject to Section 9.04 below, collect
on a timely basis the amount payable upon all Securities that may mature or be
called, redeemed, or retired, or otherwise become payable;

 

(c)               Endorse for collection, in the name of the Fund, checks,
drafts and other negotiable instruments;

 

(d)              Surrender interim receipts or Securities in temporary form for
Securities in definitive form;

 

(e)               Execute, as custodian, any necessary declarations or
certificates of ownership under the federal income tax laws or the laws or
regulations of any other taxing authority now or hereafter in effect, and
prepare and submit reports to the IRS and the Fund at such time, in such manner
and containing such information as is prescribed by the IRS;

 

(f)                Hold for the Fund, either directly or, with respect to
Securities held therein, through a Book-Entry System or Securities Depository,
all rights and similar Securities issued with respect to Securities of the Fund;
and

 

(g)               In general, and except as otherwise directed in Proper
Instructions, attend to all non-discretionary details in connection with the
sale, exchange, substitution, purchase, transfer and other dealings with
Securities and other assets of the Fund.

 

3.09                                                Registration and Transfer of
Securities.  All Securities held for the Fund that are issued or issuable only
in bearer form shall be held by the Custodian in that form, provided that any
such Securities shall be held in a Book-Entry System if eligible therefor.  All
other Securities held for the Fund may be registered in the name of the Fund,
the Custodian, a Sub-Custodian or any nominee thereof, or in the name of a
Book-Entry System, Securities Depository or any nominee of either thereof.  The
records of the Custodian with respect to the Fund’s Foreign Securities that are
maintained with a Sub-Custodian in an account that is identified as belonging to
the Custodian for the benefit of its customers shall identify those securities
as belonging to the Fund.  The Fund shall furnish to the Custodian appropriate
instruments to enable the Custodian to hold or deliver in proper form for
transfer, or to register in the name of any of the nominees referred to above or
in the name of a Book-Entry System or Securities Depository, any Securities
registered in the name of the Fund.

 

3.10                                                Records.

 

(a)              The Custodian shall maintain complete and accurate records with
respect to Securities, cash or other property held for the Fund, including
(i) journals or other records of original entry containing an itemized daily
record in detail of all receipts and deliveries of Securities and all receipts
and disbursements of cash; (ii) ledgers (or other records) reflecting
(A) Securities in transfer, (B) Securities in physical possession, (C) monies
and Securities borrowed and monies and Securities loaned (together with a record
of the collateral therefor and substitutions of such collateral), (D) dividends
and interest

 

11

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received, and (E) dividends receivable and interest receivable; (iii) canceled
checks and bank records related thereto; and (iv) all records relating to its
activities and obligations under this Agreement.  The Custodian shall keep such
other books and records of the Fund as the Fund shall reasonably request, or as
may be required by the 1940 Act, including, but not limited to, Section 31 of
the 1940 Act and Rule 31a-2 promulgated thereunder.

 

(b)              All such books and records maintained by the Custodian shall
(i) be maintained in a form acceptable to the Fund and in compliance with the
rules and regulations of the SEC, (ii) be the property of the Fund and at all
times during the regular business hours of the Custodian be made available upon
request for inspection by duly authorized officers, employees or agents of the
Fund and employees or agents of the SEC, and (iii) if required to be maintained
by Rule 31a-1 under the 1940 Act, be preserved for the periods prescribed in
Rules 31a-1 and 31a-2 under the 1940 Act.

 

(c)               The Custodian agrees to provide to the Fund any records and
certifications necessary for the Fund to comply with the Fund’s disclosure
controls and procedures adopted in accordance with the Sarbanes-Oxley Act.
Without limiting the generality of the foregoing, the Custodian shall cooperate
with the Fund and assist the Fund as necessary by providing information to
enable the appropriate officers of the Fund to execute any required
certifications.

 

3.11                                                Fund Reports by Custodian. 
The Custodian shall furnish the Fund with a daily activity statement and a
summary of all transfers to or from each Fund Custody Account on the day
following such transfers.  At least monthly, the Custodian shall furnish the
Fund with a detailed statement of the Securities and moneys held by the
Custodian and the Sub-Custodians for the Fund under this Agreement.

 

3.12                                                Other Reports by Custodian. 
As the Fund may reasonably request from time to time, the Custodian shall
provide the Fund with reports on the internal accounting controls and procedures
for safeguarding Securities which are employed by the Custodian or any
Sub-Custodian.

 

3.13                                                Proxies and Other
Materials.  The Custodian shall cause all proxies relating to Securities that
are not registered in the name of the Fund to be promptly executed by the
registered holder of such Securities, without indication of the manner in which
such proxies are to be voted, and shall promptly deliver to the Fund such
proxies, all proxy soliciting materials and all notices relating to such
Securities.  With respect to the foreign Securities, the Custodian will use
reasonable commercial efforts to facilitate the exercise of voting and other
shareholder rights, subject to the laws, regulations and practical constraints
that may exist in the country where such securities are issued.  The Fund
acknowledges that local conditions, including lack of regulation, onerous
procedural obligations, lack of notice and other factors may have the effect of
severely limiting the ability of the Fund to exercise shareholder rights.

 

3.14                                                Information on Corporate
Actions.  The Custodian shall promptly deliver to the Fund all information
received by the Custodian and pertaining to Securities being held by the Fund
with respect to optional tender or exchange offers, calls for redemption or
purchase or expiration

 

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of rights. If the Fund desires to take action with respect to any tender offer,
exchange offer or other similar transaction, the Fund shall notify the Custodian
at least three Business Days prior to the date on which the Custodian is to take
such action.  The Fund will provide or cause to be provided to the Custodian all
relevant information for any Security which has unique put/option provisions at
least three Business Days prior to the beginning date of the tender period.

 

ARTICLE IV.

 

PURCHASE AND SALE OF INVESTMENTS OF THE FUND

 

4.01                                                Purchase of Securities. 
Promptly upon each purchase of Securities for the Fund, Written Instructions
shall be delivered to the Custodian, specifying (i) the name of the issuer or
writer of such Securities, and the title or other description thereof, (ii) the
number of shares, principal amount (and accrued interest, if any) or other units
purchased, (iii) the date of purchase and settlement, (iv) the purchase price
per unit, (v) the total amount payable upon such purchase, and (vi) the name of
the person to whom such amount is payable.  The Custodian shall upon receipt of
such Securities purchased by the Fund pay out of the moneys held for the account
of the Fund the total amount specified in such Written Instructions to the
person named therein.  The Custodian shall not be under any obligation to pay
out moneys to cover the cost of a purchase of Securities for the Fund, if in the
Fund Custody Account there is insufficient cash available to the Fund for which
such purchase was made.

 

4.02                                                Liability for Payment in
Advance of Receipt of Securities Purchased.  In any and every case where payment
for the purchase of Securities for the Fund is made by the Custodian in advance
of receipt of the Securities purchased and in the absence of specified Written
Instructions to so pay in advance, the Custodian shall be liable to the Fund for
such payment.

 

4.03                                                Sale of Securities. 
Promptly upon each sale of Securities by the Fund, Written Instructions shall be
delivered to the Custodian, specifying: (i) the name of the issuer or writer of
such Securities, and the title or other description thereof; (ii) the number of
shares, principal amount (and accrued interest, if any), or other units sold;
(iii) the date of sale and settlement, (iv) the sale price per unit; (v) the
total amount payable upon such sale; and (vi) the person to whom such Securities
are to be delivered.  Upon receipt of the total amount payable to the Fund as
specified in such Written Instructions, the Custodian shall deliver such
Securities to the person specified in such Written Instructions.  Subject to the
foregoing, the Custodian may accept payment in such form as shall be
satisfactory to it, and may deliver Securities and arrange for payment in
accordance with the customs prevailing among dealers in Securities.

 

4.04                                                Delivery of Securities
Sold.  Notwithstanding Section 4.03 above or any other provision of this
Agreement, the Custodian, when instructed to deliver Securities against payment,
shall be entitled, if in accordance with generally accepted market practice, to
deliver such Securities prior to actual receipt of final payment therefor.  In
any such case, the Fund shall bear the risk that final payment for such
Securities may not be made or that such Securities may be returned or otherwise
held or disposed of by or through the person to whom they were delivered, and
the Custodian shall have no liability for any for the foregoing.

 

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4.05                                                Payment for Securities
Sold.  In its sole discretion and from time to time, the Custodian may credit
the Fund Custody Account, prior to actual receipt of final payment thereof,
with: (i) proceeds from the sale of Securities which it has been instructed to
deliver against payment;  (ii) proceeds from the redemption of Securities or
other assets of the Fund; and (iii) income from cash, Securities or other assets
of the Fund.  Any such credit shall be conditional upon actual receipt by
Custodian of final payment and may be reversed if final payment is not actually
received in full.  The Custodian may, in its sole discretion and from time to
time, permit the Fund to use funds so credited to the Fund Custody Account in
anticipation of actual receipt of final payment.  Any such funds shall be
repayable immediately upon demand made by the Custodian at any time prior to the
actual receipt of all final payments in anticipation of which funds were
credited to the Fund Custody Account.

 

4.06                                                Advances by Custodian for
Settlement.  The Custodian may, in its sole discretion and from time to time,
advance funds to the Fund to facilitate the settlement of a Fund’s transactions
in the Fund Custody Account.  Any such advance shall be repayable immediately
upon demand made by Custodian.

 

ARTICLE V.

 

REPURCHASE OF FUND SHARES

 

5.01                                                Transfer of Funds.  From
such funds as may be available for the purpose in the relevant Fund Custody
Account, and upon receipt of Proper Instructions specifying that the funds are
required to repurchase Shares of the Fund, the Custodian shall wire each amount
specified in such Proper Instructions to or through such bank or broker-dealer
as the Fund may designate.

 

5.02                                                No Duty Regarding Paying
Banks.  Once the Custodian has wired amounts to a bank or broker-dealer pursuant
to Section 5.01 above, the Custodian shall not be under any obligation to effect
any further payment or distribution by such bank or broker-dealer.

 

ARTICLE VI.

 

SEGREGATED ACCOUNTS

 

Upon receipt of Proper Instructions, the Custodian shall establish and maintain
a segregated account or accounts for and on behalf of the Fund, into which
account or accounts may be transferred cash and/or Securities, including
Securities maintained in a Depository Account:

 

(a)              in accordance with the provisions of any agreement among the
Fund, the Custodian and a broker-dealer registered under the 1934 Act and a
member of FINRA (or any futures commission merchant registered under the
Commodity Exchange Act), relating to compliance with the rules of the Options
Clearing Corporation and of any registered national securities exchange (or the
Commodity Futures Trading Commission or any registered contract market), or of
any similar organization or organizations, regarding escrow or other
arrangements in connection with transactions by the Fund;

 

14

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(b)              for purposes of segregating cash or Securities in connection
with securities options purchased or written by the Fund or in connection with
financial futures contracts (or options thereon) purchased or sold by the Fund;

 

(c)               which constitute collateral for loans of Securities made by
the Fund;

 

(d)              for purposes of compliance by the Fund with requirements under
the 1940 Act for the maintenance of segregated accounts by registered investment
companies in connection with reverse repurchase agreements and when-issued,
delayed delivery and firm commitment transactions; and

 

(e)               for other proper corporate purposes, but only upon receipt of
Proper Instructions, setting forth the purpose or purposes of such segregated
account and  declaring such purposes to be proper corporate purposes.

 

Each segregated account established under this Article VI shall be established
and maintained for the Fund only.  All Proper Instructions relating to a
segregated account shall specify the Fund.

 

ARTICLE VII.

 

COMPENSATION OF CUSTODIAN

 

7.01                                                Compensation.  The Custodian
shall be compensated for providing the services set forth in this Agreement in
accordance with the fee schedule set forth on Exhibit B hereto (as amended from
time to time).  The Custodian shall also be reimbursed for such miscellaneous
expenses as set forth on Exhibit B hereto and are reasonably incurred by the
Custodian in performing its duties hereunder.  The Fund shall pay all such fees
and reimbursable expenses within 30 calendar days following receipt of the
billing notice, except for any fee or expense subject to a good faith dispute. 
The Fund shall notify the Custodian in writing within 30 calendar days following
receipt of each invoice if the Fund is disputing any amounts in good faith. The
Fund shall pay such disputed amounts within 10 calendar days of the day on which
the parties agree to the amount to be paid.  With the exception of any fee or
expense the Fund is disputing in good faith as set forth above, unpaid invoices
shall accrue a finance change of 1½ % per month after the due date. 
Notwithstanding anything to the contrary, amounts owed by the Fund to the
Custodian shall only be paid out of the assets and property of the particular
Fund involved.

 

7.02                                                Overdrafts.  The Fund is
responsible for maintaining an appropriate level of short term cash investments
to accommodate cash outflows.  The Fund may obtain a formal line of credit for
potential overdrafts of its custody account.  In the event of an overdraft or in
the event the line of credit is insufficient to cover an overdraft, the
overdraft amount or the overdraft amount that exceeds the line of credit will be
charged in accordance with the fee schedule set forth on Exhibit B hereto (as
amended from time to time).

 

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ARTICLE VIII.

 

REPRESENTATIONS AND WARRANTIES

 

8.01                                                Representations and
Warranties of the Fund.  The Fund hereby represents and warrants to the
Custodian, which representations and warranties shall be deemed to be continuing
throughout the term of this Agreement, that:

 

(a)              It is duly organized and existing under the laws of the
jurisdiction of its organization, with full power to carry on its business as
now conducted, to enter into this Agreement and to perform its obligations
hereunder;

 

(b)              This Agreement has been duly authorized, executed and delivered
by the Fund in accordance with all requisite action and constitutes a valid and
legally binding obligation of the Fund, enforceable in accordance with its
terms, subject to bankruptcy, insolvency, reorganization, moratorium and other
laws of general application affecting the rights and remedies of creditors and
secured parties; and

 

(c)               It is conducting its business in compliance in all material
respects with all applicable laws and regulations, both state and federal, and
has obtained all regulatory approvals necessary to carry on its business as now
conducted; there is no statute, rule, regulation, order or judgment binding on
it and no provision of its charter, bylaws or any contract binding it or
affecting its property which would prohibit its execution or performance of this
Agreement.

 

8.02                                                Representations and
Warranties of the Custodian.  The Custodian hereby represents and warrants to
the Fund, which representations and warranties shall be deemed to be continuing
throughout the term of this Agreement, that:

 

(a)              It is duly organized and existing under the laws of the
jurisdiction of its organization, with full power to carry on its business as
now conducted, to enter into this Agreement and to perform its obligations
hereunder;

 

(b)              It is a “U.S. Bank” as defined in section (a)(7) of Rule 17f-5.

 

(c)               This Agreement has been duly authorized, executed and
delivered by the Custodian in accordance with all requisite action and
constitutes a valid and legally binding obligation of the Custodian, enforceable
in accordance with its terms, subject to bankruptcy, insolvency, reorganization,
moratorium and other laws of general application affecting the rights and
remedies of creditors and secured parties; and

 

(d)              It is conducting its business in compliance in all material
respects with all applicable laws and regulations, both state and federal, and
has obtained all regulatory approvals necessary to carry on its business as now
conducted; there is no statute, rule, regulation, order or judgment binding on
it and no provision of its charter, bylaws or any contract binding it or
affecting its property which would prohibit its execution or performance of this
Agreement.

 

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ARTICLE IX.

 

CONCERNING THE CUSTODIAN

 

9.01                                                Standard of Care.  The
Custodian shall exercise reasonable care in the performance of its duties under
this Agreement.  The Custodian shall not be liable for any error of judgment or
mistake of law or for any loss suffered by the Fund in connection with its
duties under this Agreement, except a loss arising out of or relating to the
Custodian’s (or a Sub-Custodian’s) refusal or failure to comply with the terms
of this Agreement (or any sub-custody agreement) or from its (or a
Sub-Custodian’s) bad faith, negligence or willful misconduct in the performance
of its duties under this Agreement (or any sub-custody agreement).  The
Custodian shall be entitled to rely on and may act upon advice of counsel on all
matters, and shall be without liability for any action reasonably taken or
omitted pursuant to such advice.  The Custodian shall promptly notify the Fund
of any action taken or omitted by the Custodian pursuant to advice of counsel.

 

9.02                                                Actual Collection Required. 
The Custodian shall not be liable for, or considered to be the custodian of, any
cash belonging to the Fund or any money represented by a check, draft or other
instrument for the payment of money, until the Custodian or its agents actually
receive such cash or collect on such instrument.

 

9.03                                                No Responsibility for
Title, etc.  So long as and to the extent that it is in the exercise of
reasonable care, the Custodian shall not be responsible for the title, validity
or genuineness of any property or evidence of title thereto received or
delivered by it pursuant to this Agreement.

 

9.04                                                Limitation on Duty to
Collect.  Custodian shall not be required to enforce collection, by legal means
or otherwise, of any money or property due and payable with respect to
Securities held for the Fund if such Securities are in default or payment is not
made after due demand or presentation.

 

9.05                                                Reliance Upon Documents and
Instructions.  The Custodian shall be entitled to rely upon any certificate,
notice or other instrument in writing received by it and reasonably believed by
it to be genuine.  The Custodian shall be entitled to rely upon any Written
Instructions actually received by it pursuant to this Agreement.

 

9.06                                                Cooperation.  The Custodian
shall cooperate with and supply necessary information to the entity or entities
appointed by the Fund to keep the books of account of the Fund and/or compute
the value of the assets of the Fund.  The Custodian shall take all such
reasonable actions as the Fund may from time to time request to enable the Fund
to obtain, from year to year, favorable opinions from the Fund’s independent
accountants with respect to the Custodian’s activities hereunder in connection
with (i) the preparation of the Fund’s reports on Form 10-K, Form 10-Q and any
other reports or public filings required by the SEC or any future registration
statement on Form N-2, and (ii) the fulfillment by the Fund of any other
requirements of the SEC.

 

17

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ARTICLE X.

 

INDEMNIFICATION

 

10.01                                         Indemnification by Fund.  The Fund
shall indemnify and hold harmless the Custodian, any Sub-Custodian and any
nominee thereof (each, an “Indemnified Party” and collectively, the “Indemnified
Parties”) from and against any and all claims, demands, losses, reasonable
expenses and liabilities of any and every nature (including reasonable
attorneys’ fees) that an Indemnified Party may sustain or incur or that may be
asserted against an Indemnified Party by any person arising directly or
indirectly (i) from the fact that Securities are registered in the name of any
such nominee, (ii) from any action taken or omitted to be taken by the Custodian
or such Sub-Custodian (a) at the request or direction of or in reliance on the
advice of the Fund, or (b) upon Proper Instructions, or (iii) from the
performance of its obligations under this Agreement or any sub-custody
agreement, provided that neither the Custodian nor any such Sub-Custodian shall
be indemnified and held harmless from and against any such claim, demand, loss,
expense or liability arising out of or relating to its refusal or failure to
comply with the terms of this Agreement (or any sub-custody agreement), or from
its bad faith, negligence or willful misconduct in the performance of its duties
under this Agreement (or any sub-custody agreement).  This indemnity shall be a
continuing obligation of the Fund, its successors and assigns, notwithstanding
the termination of this Agreement.  As used in this paragraph, the terms
“Custodian” and “Sub-Custodian” shall include their respective directors,
officers and employees.

 

10.02                                         Indemnification by Custodian.  The
Custodian shall indemnify and hold harmless the Fund from and against any and
all claims, demands, losses, expenses, and liabilities of any and every nature
(including reasonable attorneys’ fees) that the Fund may sustain or incur or
that may be asserted against the Fund by any person arising directly or
indirectly out of any action taken or omitted to be taken by an Indemnified
Party as a result of the Indemnified Party’s refusal or failure to comply with
the terms of this Agreement (or any sub-custody agreement), or from its bad
faith, negligence or willful misconduct in the performance of its duties under
this Agreement (or any sub-custody agreement).  This indemnity shall be a
continuing obligation of the Custodian, its successors and assigns,
notwithstanding the termination of this Agreement.  As used in this paragraph,
the term “Fund” shall include the Fund’s directors, officers and employees.

 

10.03                                         Security.  If the Custodian
advances cash or Securities to the Fund for any purpose, either at the Fund’s
request or as otherwise contemplated in this Agreement, or in the event that the
Custodian or its nominee incurs, in connection with its performance under this
Agreement, any claim, demand, loss, expense or liability (including reasonable
attorneys’ fees) (except such as may arise from its or its nominee’s bad faith,
negligence or willful misconduct), then, in any such event, any property at any
time held for the account of the Fund shall be security therefor, and should the
Fund fail to promptly repay or indemnify the Custodian, the Custodian shall be
entitled to utilize available cash of such Fund and to dispose of other assets
of such Fund to the extent necessary to obtain reimbursement or indemnification.

 

18

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10.04                                         Miscellaneous.

 

(a)              Neither party to this Agreement shall be liable to the other
party for consequential, special or punitive damages under any provision of this
Agreement.

 

(b)              The indemnity provisions of this Article shall indefinitely
survive the termination and/or assignment of this Agreement.

 

(c)               In order that the indemnification provisions contained in this
Article shall apply, it is understood that if in any case the indemnitor may be
asked to indemnify or hold the indemnitee harmless, the indemnitor shall be
fully and promptly advised of all pertinent facts concerning the situation in
question, and it is further understood that the indemnitee will use all
reasonable care to notify the indemnitor promptly concerning any situation that
presents or appears likely to present the probability of a claim for
indemnification. The indemnitor shall have the option to defend the indemnitee
against any claim that may be the subject of this indemnification.  In the event
that the indemnitor so elects, it will so notify the indemnitee and thereupon
the indemnitor shall take over complete defense of the claim, and the indemnitee
shall in such situation initiate no further legal or other expenses for which it
shall seek indemnification under this Article X; provided however, that the
indemnitor shall not settle a claim that results in any admission of wrongdoing
by the indemnitee without the indemnitee’s prior written consent.  The
indemnitee shall in no case confess any claim or make any compromise in any case
in which the indemnitor will be asked to indemnify the indemnitee except with
the indemnitor’s prior written consent.

 

ARTICLE XI.

 

FORCE MAJEURE

 

Neither the Custodian nor the Fund shall be liable for any failure or delay in
performance of its obligations under this Agreement arising out of or caused,
directly or indirectly, by circumstances beyond its reasonable control,
including, without limitation, acts of God; earthquakes; fires; floods; wars;
civil or military disturbances; acts of terrorism; sabotage; strikes; epidemics;
riots; power failures; computer failure and any such circumstances beyond its
reasonable control as may cause interruption, loss or malfunction of utility,
transportation, computer (hardware or software) or telephone communication
service; accidents; labor disputes; acts of civil or military authority;
governmental actions; or inability to obtain labor, material, equipment or
transportation; provided, however, that in the event of a failure or delay, the
Custodian: (i) shall not discriminate against the Fund in favor of any other
customer of the Custodian in making computer time and personnel available to
input or process the transactions contemplated by this Agreement; and (ii) shall
use its best efforts to ameliorate the effects of any such failure or delay.

 

ARTICLE XII.

 

PROPRIETARY AND CONFIDENTIAL INFORMATION

 

12.01                                         The Custodian agrees on behalf of
itself and its directors, officers, and employees to treat confidentially and as
proprietary information of the Fund, all records and other information relative
to the Fund and prior, present, or potential shareholders of the Fund (and
clients of said shareholders), and not to use such records and information for
any purpose other than the

 

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performance of its responsibilities and duties hereunder, except: (i) after
prior notification to and approval in writing by the Fund, which approval shall
not be unreasonably withheld and may not be withheld where the Custodian may be
exposed to civil or criminal contempt proceedings for failure to comply;
(ii) when requested to divulge such information by duly constituted authorities,
although the Custodian will promptly report such disclosure to the Fund if
disclosure is permitted by applicable law and regulation; or (iii) when so
requested by the Fund.  Records and other information which have become known to
the public through no wrongful act of the Custodian or any of its employees,
agents or representatives, and information that was already in the possession of
the Custodian prior to receipt thereof from the Fund or its agent, shall not be
subject to this paragraph.

 

12.02                                         Further, the Custodian will adhere
to the privacy policies adopted by the Fund pursuant to Title V of the
Gramm-Leach-Bliley Act, as may be modified from time to time.  In this regard,
the Custodian shall have in place and maintain physical, electronic and
procedural safeguards reasonably designed to protect the security,
confidentiality and integrity of, and to prevent unauthorized access to or use
of, records and information relating to the Fund and its shareholders.

 

ARTICLE XIII.

 

EFFECTIVE PERIOD; TERMINATION

 

13.01                                         Effective Period.  This Agreement
shall become effective as of the date first written above.

 

13.02                                         Termination.  This Agreement may
be terminated by either party upon giving 90 days prior written notice to the
other party or such shorter period as is mutually agreed upon by the parties. 
Notwithstanding the foregoing, this Agreement may be terminated by either party
upon the breach of the other party of any material term of this Agreement if
such breach is not cured within 15 days of notice of such breach to the
breaching party.  In addition, the Fund may, at any time, immediately terminate
this Agreement in the event of the appointment of a conservator or receiver for
the Custodian by regulatory authorities or upon the happening of a like event at
the direction of an appropriate regulatory agency or court of competent
jurisdiction.

 

13.03                                         Appointment of Successor
Custodian.  If a successor custodian shall have been appointed by the Board of
Directors, the Custodian shall, upon receipt of a notice from the Fund, on such
specified date of termination (i) deliver directly to the successor custodian
all Securities (other than Securities held in a Book-Entry System or Securities
Depository) and cash then owned by the Fund and held by the Custodian as
custodian, and (ii) transfer any Securities held in a Book-Entry System or
Securities Depository to an account of or for the benefit of the Fund at the
successor custodian, provided that the Fund shall have paid to the Custodian all
fees, expenses and other amounts to the payment or reimbursement of which it
shall then be entitled.  In addition, the Custodian shall, in the absence of a
material breach by the Custodian, at the expense of the Fund, transfer to such
successor all relevant books, records, correspondence, and other data
established or maintained by the Custodian under this Agreement in a form
reasonably

 

20

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acceptable to the Fund (if such form differs from the form in which the
Custodian has maintained the same, the Fund shall pay any expenses associated
with transferring the data to such form), and will cooperate in the transfer of
such duties and responsibilities, including provision for assistance from the
Custodian’s personnel in the establishment of books, records, and other data by
such successor.  Upon such delivery and transfer, the Custodian shall be
relieved of all obligations under this Agreement, except with respect to its
obligations under Article 12 and as otherwise specificifically provided for in
this Agreement.

 

13.04                                         Failure to Appoint Successor
Custodian.  If a successor custodian is not designated by the Fund on or before
the date of termination of this Agreement, then the Custodian shall have the
right to deliver to a bank or trust company of its own selection, which bank or
trust company: (i) is a “bank” as defined in the 1940 Act; and (ii) has
aggregate capital, surplus and undivided profits as shown on its most recent
published report of not less than $25 million, all Securities, cash and other
property held by the Custodian under this Agreement and to transfer to an
account of or for the Fund at such bank or trust company all Securities of the
Fund held in a Book-Entry System or Securities Depository.  Upon such delivery
and transfer, such bank or trust company shall be the successor custodian under
this Agreement and the Custodian shall be relieved of all obligations under this
Agreement, except with respect to its obligations under Article 12 and as
otherwise specificifically provided for in this Agreement.  In addition, under
these circumstances, all books, records and other data of the Fund shall be
returned to the Fund.

 

ARTICLE XIV.

 

CLASS ACTIONS

 

Subject to any specific instructions of the Fund, the Custodian shall use its
best efforts to identify and file claims for the Fund involving any class action
litigation that impacts any security the Fund may have held during the class
period.  The Fund agrees that the Custodian may file such claims on its behalf
and understands that it may be waiving and/or releasing certain rights to make
claims or otherwise pursue class action defendants who settle their claims. 
Further, the Fund acknowledges that there is no guarantee these claims will
result in any payment or partial payment of potential class action proceeds and
that the timing of such payment, if any, is uncertain.

 

However, the Fund may instruct the Custodian to distribute class action notices
and other relevant documentation to the Fund or its designee and, if it so
elects, will relieve the Custodian from any and all liability and responsibility
for filing class action claims on behalf of the Fund.

 

ARTICLE XV.

 

MISCELLANEOUS

 

15.01                 Compliance with Laws.  The Fund has and retains primary
responsibility for all compliance matters relating to the Fund, including but
not limited to compliance with the 1940 Act, the Internal Revenue Code of 1986,
the Sarbanes-Oxley Act of 2002, the USA Patriot Act of 2001 and the policies and
limitations of the Fund relating to its portfolio investments as set forth in
its prospectus and statement of additional information on Form N-2.  The
Custodian will

 

21

--------------------------------------------------------------------------------

 

perform the services hereunder in compliance with all applicable laws and
regulations. The Custodian’s services hereunder shall not relieve the Fund of
its responsibilities for assuring such compliance or the Board of Director’s
oversight responsibility with respect thereto.

 

15.02   Amendment.  This Agreement may not be amended or modified in any manner
except by written agreement executed by the Custodian and the Fund, and
authorized or approved by the Board of Directors.

 

15.03                 Assignment.  This Agreement shall extend to and be binding
upon the parties hereto and their respective successors and assigns; provided,
however, that this Agreement shall not be assignable by the Fund without the
written consent of the Custodian, or by the Custodian without the written
consent of the Fund accompanied by the authorization or approval of the Board of
Directors.

 

15.04    Governing Law.  This Agreement shall be governed by and construed in
accordance with the laws of the State of Minnesota, without regard to conflicts
of law principles.  To the extent that the applicable laws of the State of
Minnesota, or any of the provisions herein, conflict with the applicable
provisions of the 1940 Act, the latter shall control, and nothing herein shall
be construed in a manner inconsistent with the 1940 Act or any rule or order of
the SEC thereunder.

 

15.05   No Agency Relationship.  Nothing herein contained shall be deemed to
authorize or empower either party to act as agent for the other party to this
Agreement, or to conduct business in the name, or for the account, of the other
party to this Agreement.

 

15.06   Services Not Exclusive.  Nothing in this Agreement shall limit or
restrict the Custodian from providing services to other parties that are similar
or identical to some or all of the services provided hereunder.

 

15.07                 Invalidity.  Any provision of this Agreement which may be
determined by competent authority to be prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.  In such case, the parties shall in good faith modify or
substitute such provision consistent with the original intent of the parties.

 

15.08   Notices.  Any notice required or permitted to be given by either party
to the other shall be in writing (which can include email) and shall be deemed
to have been given on the date delivered personally or by courier service, or
three days after sent by registered or certified mail, postage prepaid, return
receipt requested, or on the date sent and confirmed received by facsimile
transmission to the other party’s address set forth below:

 

Notice to the Custodian shall be sent to:

U.S Bank, N.A.

1555 N. Rivercenter Dr., MK-WI-S302

Milwaukee, WI 53212

Attn:  Tom Fuller

Phone: 414-905-6118

 

22

--------------------------------------------------------------------------------

 

Fax: 866-350-5066

 

and notice to the Fund shall be sent to:

 

MVC Capital, Inc

287 Bowman Avenue, 2nd Floor

Purchase, NY 10577

Attn:

Phone:

Fax:

 

15.09   Multiple Originals.  This Agreement may be executed on two or more
counterparts, each of which when so executed shall be deemed an original, but
such counterparts shall together constitute but one and the same instrument.

 

15.10  No Waiver.  No failure by either party hereto to exercise, and no delay
by such party in exercising, any right hereunder shall operate as a waiver
thereof.  The exercise by either party hereto of any right hereunder shall not
preclude the exercise of any other right, and the remedies provided herein are
cumulative and not exclusive of any remedies provided at law or in equity.

 

15.11  References to Custodian.  The Fund shall not circulate any written
material that contains any reference to the Custodian without the prior written
approval of the Custodian, excepting written material contained in the
prospectus or statement of additional information for the Fund and such other
written material as merely identifies the Custodian as custodian for the Fund. 
The Fund shall submit written material requiring approval to the Custodian in
draft form, allowing sufficient time for review by the Custodian and its counsel
prior to any deadline for publication.

 

23

--------------------------------------------------------------------------------

 

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
by a duly authorized officer on one or more counterparts as of the date first
above written.

 

 

MVC CAPITAL, INC.

 

 

 

By:

/s/ Scott Schuenke

 

 

 

 

Name:

Scott Schuenke

 

 

 

 

Title:

 

 

 

 

 

 

U.S. BANK NATIONAL ASSOCIATION

 

 

 

 

 

By:

/s/ Anita Zagrodnik

 

 

 

 

Name:

Anita Zagrodnik

 

 

 

 

Title:

 

 

 

24

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EXHIBIT A

 

AUTHORIZED PERSONS — MVC CAPITAL, Inc.

 

Set forth below are the names and specimen signatures of the persons authorized
by the Fund to administer the Fund Custody Accounts.

 

Name

 

Telephone/Fax Number

 

Signature

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

25

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Exhibit B to the Custody Agreement

 

Custody Services Fee Schedule at April 2018

 

Annual Fee Based Upon Net Asset Value per Fund*

 

1.0       basis point on average daily net asset value of all long securities
and cash held in the portfolio for the first $200 Million

0.5       basis point on average daily net asset value of all long securities
and cash held in the portfolio on the balance

 

Minimum annual fee per fund — $6000

Plus portfolio transaction fees

 

Portfolio Transaction Fees

 

·                  $7.00 — Book entry DTC transaction, Federal Reserve
transaction,

·                  $8.00 -  Principal Paydown

·                  $7.00 — Repurchase agreement, reverse repurchase agreement,
time deposit/CD or other non-depository transaction

·                  $ 15.00— Option/SWAPS/future contract written, exercised or
expired

·                  $10.00 — Mutual fund trade, Margin Variation Wire and
outbound Fed wire

·                  $ 25.00 — Physical security transaction

·                  $  5.00 — Check disbursement (waived if U.S. Bancorp is
Administrator)

·                  $50.00 - per Cedel/Euroclear transaction

·                  $15.00 per Fed wire

·                  $6.00 per short sale

·                  $150.00 per segregated account per year

 

A transaction is a purchase/sale of a security, free receipt/free delivery,
maturity, tender or exchange.

 

Securities Lending and Money Market Deposit Account (MMDA)

 

·                  Negotiable

 

In addition to the fees described above, additional fees may be charged, as
mutually agreed to by the parties, to the extent that changes to applicable
laws, rules or regulations require additional work or expenses related to
services provided (e.g., compliance with new liquidity risk management and
reporting requirements).

 

Miscellaneous Expenses

 

All other miscellaneous fees and expenses, including but not limited to the
following, will be separately billed as incurred: expenses incurred in the
safekeeping, delivery and receipt of securities, shipping, transfer fees,
deposit withdrawals at custodian (DWAC) fees, SWIFT charges, negative interest
charges and extraordinary expenses based upon complexity.

 

Additional Services

 

·                  See Additional Services fee schedule for global servicing.

·                  $600 per custody sub — account per year (e.g., per sub
—adviser, segregated account, etc.)

·                  Class Action Services — $25 filing fee per class action per
account, plus 2% of gross proceeds, up to a maximum per recovery not to exceed
$2,000.

·                  No charge for the initial conversion free receipt.

·                  Overdrafts — charged to the account at prime interest rate
plus 2 unless a line of credit is in place.

 

Additional services not included above shall be mutually agreed upon at the time
of the service being added.  In addition to the fees described above, additional
fees may be charged to the extent that changes to applicable laws, rules or
regulations require additional work or expenses related to services provided
(e.g., compliance with new liquidity risk management and reporting
requirements).

 

26

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Exhibit B (continued) to the Custody Agreement

 

Additional Global Sub-Custodial Services Annual Fee Schedule

 

COUNTRY

 

INSTRUMENT

 

SAFEKEEPING
(BPS)

 

TRANSACTION
FEE

 

Argentina

 

All

 

13.0

 

$

35

 

Australia

 

All

 

1.0

 

$

15

 

Austria

 

All

 

2.0

 

$

20

 

Bahrain

 

All

 

44.0

 

$

115

 

Bangladesh

 

All

 

35.0

 

$

120

 

Belgium

 

All

 

1.5

 

$

25

 

Benin

 

All

 

44.0

 

$

125

 

Bermuda

 

All

 

13.0

 

$

50

 

Botswana

 

All

 

22.0

 

$

40

 

Brazil

 

All

 

8.0

 

$

20

 

Bulgaria

 

All

 

35.0

 

$

65

 

Burkina Faso

 

All

 

44.0

 

$

125

 

Canada

 

All

 

1.0

 

$

5

 

Cayman Islands*

 

All

 

1.0

 

$

10

 

Channel Islands*

 

All

 

1.5

 

$

20

 

Chile

 

All

 

18.0

 

$

50

 

China (B share only)

 

All

 

11.0

 

$

45

 

Colombia

 

All

 

35.0

 

$

80

 

Costa Rica

 

All

 

13.0

 

$

50

 

Croatia

 

All

 

31.0

 

$

55

 

Cyprus

 

All

 

13.0

 

$

50

 

Czech Republic

 

All

 

11.0

 

$

25

 

Denmark

 

All

 

2.0

 

$

25

 

Egypt

 

All

 

28.0

 

$

65

 

Estonia

 

All

 

6.0

 

$

20

 

Euromarkets**

 

All

 

1.00

 

$

5

 

Finland

 

All

 

2.5

 

$

25

 

France

 

All

 

1.0

 

$

15

 

Germany

 

All

 

1.0

 

$

15

 

Ghana

 

All

 

22.0

 

$

40

 

Greece

 

All

 

8.0

 

$

35

 

Guinea Bissau

 

All

 

44.0

 

$

125

 

Hong Kong

 

All

 

2.0

 

$

20

 

Hungary

 

All

 

22.0

 

$

60

 

Iceland

 

All

 

13.0

 

$

45

 

India

 

All

 

9.0

 

$

85

 

Indonesia

 

All

 

6.0

 

$

70

 

Ireland

 

All

 

2.0

 

$

15

 

Israel

 

All

 

11.0

 

$

30

 

Italy

 

All

 

2.0

 

$

25

 

Ivory Coast

 

All

 

44.0

 

$

125

 

Japan

 

All

 

1.0

 

$

10

 

Jordan

 

All

 

35.0

 

$

100

 

Kazakhstan

 

All

 

53.0

 

$

120

 

Kenya

 

All

 

26.0

 

$

40

 

Kuwait

 

All

 

35.0

 

$

120

 

Latvia

 

Equities

 

13.0

 

$

60

 

Lithuania

 

All

 

18.0

 

$

40

 

Luxembourg

 

All

 

4.0

 

$

20

 

Malaysia

 

All

 

3.5

 

$

40

 

Mali

 

All

 

44.0

 

$

125

 

Malta

 

All

 

20.0

 

$

60

 

Mauritius

 

All

 

26.0

 

$

80

 

Mexico

 

All

 

2.0

 

$

10

 

Morocco

 

All

 

31.0

 

$

80

 

Namibia

 

All

 

26.0

 

$

40

 

Netherlands

 

All

 

2.0

 

$

15

 

New Zealand

 

All

 

2.5

 

$

25

 

Niger

 

All

 

44.0

 

$

125

 

Nigeria

 

All

 

26.0

 

$

40

 

Norway

 

All

 

2.0

 

$

25

 

Oman

 

All

 

45.0

 

$

115

 

Pakistan

 

All

 

26.0

 

$

80

 

Peru

 

All

 

39.0

 

$

85

 

Philippines

 

All

 

5.0

 

$

40

 

Poland

 

All

 

13.0

 

$

25

 

Portugal

 

All

 

5.5

 

$

40

 

Qatar

 

All

 

40.0

 

$

115

 

Romania

 

All

 

31.0

 

$

80

 

Russia

 

Equities

 

33.0

 

$

165

 

Senegal

 

All

 

44.0

 

$

125

 

Serbia

 

All

 

55.0

 

$

150

 

Singapore

 

All

 

2.0

 

$

20

 

Slovak Republic

 

All

 

22.0

 

$

90

 

Slovenia

 

All

 

22.0

 

$

90

 

South Africa

 

All

 

2.0

 

$

10

 

South Korea

 

All

 

5.5

 

$

10

 

Spain

 

All

 

1.0

 

$

15

 

Sri Lanka

 

All

 

13.0

 

$

50

 

Swaziland

 

All

 

26.0

 

$

40

 

Sweden

 

All

 

1.0

 

$

25

 

Switzerland

 

All

 

1.0

 

$

25

 

Taiwan

 

All

 

13.0

 

$

65

 

Thailand

 

All

 

3.5

 

$

25

 

Togo

 

All

 

44.0

 

$

125

 

Tunisia

 

All

 

35.0

 

$

40

 

Turkey

 

All

 

11.0

 

$

10

 

UAE

 

All

 

40.0

 

$

105

 

United Kingdom

 

All

 

1.0

 

$

5

 

Ukraine

 

All

 

21.0

 

$

30

 

Uruguay

 

All

 

45.0

 

$

55

 

Vietnam

 

All

 

20.0

 

$

85

 

Zambia

 

All

 

26.0

 

$

40

 

Zimbabwe

 

All

 

26.0

 

$

40

 

 

--------------------------------------------------------------------------------

Safekeeping and transaction fees are assessed on security and currency
transactions.

* Additional customer documentation and indemnification will be required prior
to establishing accounts in these markets.

** Tiered  by market value:<$5 billion: 1bp, >$5 billion and <$10 billion: .75
bps; >$10 billion: .50 bps.

** Euromarkets - Non-Eurobonds: Surcharges vary by local market.

 

A monthly base fee per fund will apply based on the number of foreign securities
held. If no global assets are held within a given month, the monthly base charge
will not apply for that month.

 

·                  1 — 25 foreign securities — $500; 26 — 50 foreign securities
— $1,000; Over 50 foreign securities — $1,500

·                  Euroclear — Eurobonds only.  Eurobonds are held in Euroclear
at a standard rate, but other types of securities (including but not limited to
equities, domestic market debt and mutual funds) will be subject to a
surcharge.  In addition, certain transactions that are delivered within
Euroclear or from a Euroclear account to a third party depository or settlement
system, will be subject to a surcharge.

·                  For all other markets specified in above grid, surcharges may
apply if a security is held outside of the local market.

 

Miscellaneous Expenses

 

·                  Tax reclaims that have been outstanding for more than 6 (six)
months with the client will be charged $50 per claim.

·                  Charges incurred by U.S. Bank, N.A. directly or through
sub-custodians for account opening fees, local taxes, stamp duties or other
local duties and assessments, stock exchange fees, foreign exchange
transactions, postage and insurance for shipping, facsimile reporting,
extraordinary telecommunications fees, proxy services and other shareholder
communications, recurring administration fees, negative interest charges,
overdraft charges or other expenses which are unique to a country in which the
client or its clients is investing will be passed along as incurred.

·                  A surcharge may be added to certain miscellaneous expenses
listed herein to cover handling, servicing and other administrative costs
associated with the activities giving rise to such expenses.  Also, certain
expenses are charged at a predetermined flat rate.

·                  SWIFT reporting and message fees.

 

27

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Exhibit B (continued) to the Custody Agreement

 

Margin Management Services

 

Requires U.S. Bank as custodian for all assets

 

$30,000 annual program fee (includes up to 4 Account Control Agreements)

 

$7,500 annual fee per each additional Account Control Agreement.

 

Fees are calculated pro rata and billed monthly

 

Extraordinary Services —

 

Extraordinary services are duties or responsibilities of an unusual nature,
including termination, but not provided for in the governing documents or
otherwise set forth in this schedule. A reasonable charge will be assessed based
on the nature of the service and the responsibility involved. At our option,
these charges will be billed at a flat fee or at our hourly rate then in effect.

 

Account approval is subject to review and qualification. Fees are subject to
change at our discretion and upon written notice. The fees set forth above and
any subsequent modifications thereof are part of your agreement. Finalization of
the transaction constitutes agreement to the above fee schedule, including
agreement to any subsequent changes upon proper written notice. In the event
your transaction is not finalized, any related out-of-pocket expenses will be
billed to the client directly. Absent your written instructions to sweep or
otherwise invest, all sums in your account will remain uninvested and no accrued
interest or other compensation will be credited to the account. Payment of fees
constitutes acceptance of the terms and conditions set forth.

 

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, we ask for documentation to verify its formation and existence as
a legal entity. We may also ask to see financial statements, licenses,
identification and authorization documents from individuals claiming authority
to represent the entity or other relevant documentation.

 

28

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Exhibit C to the Custody Agreement

 

SHAREHOLDER COMMUNICATIONS ACT AUTHORIZATION

 

MVC CAPITAL, Inc.

 

The Shareholder Communications Act of 1985 requires banks and trust companies to
make an effort to permit direct communication between a company which issues
securities and the shareholder who votes those securities.

 

Unless you specifically require us to NOT release your name and address to
requesting companies, we are required by law to disclose your name and address.

 

Your “yes” or “no” to disclosure will apply to all securities U.S. Bank holds
for you now and in the future, unless you change your mind and notify us in
writing.

 

o YES

 

U.S. Bank is authorized to provide the Fund’s name, address and security
position to requesting companies whose stock is owned by the Company.

 

 

 

o NO

 

U.S. Bank is NOT authorized to provide the Fund’s name, address and security
position to requesting companies whose stock is owned by the Company.

 

MVC CAPITAL, Inc.

 

 

By:

 

 

 

 

 

Title:

 

 

 

 

 

Date:

 

 

 

29

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