Exhibit 10.3

 

Execution Version

Custodian Agreement

This Agreement is made as of October 27, 2016 (this “Agreement”),by and between
Great Elm Capital Corp., a corporation organized and existing under the laws of
Maryland (the “Fund”) and State Street Bank and Trust Company, a Massachusetts
trust company (the “Custodian”).

Witnesseth:

Whereas, the Fund desires for the Custodian to provide certain custodial
services relating to securities and other assets of the Fund; and

Whereas, the Custodian is willing to provide the services upon the terms
contained in this Agreement;

Section 1.Definitions.  In addition to terms defined in Section 4.1 (Rule 17f-5
and Rule 17f-7 related definitions) or elsewhere in this Agreement, (a) terms
defined in the UCC have the same meanings herein as therein and (b) the
following other terms have the following meanings for purposes of this
Agreement:

“1940 Act” means the Investment Company Act of 1940, as amended from time to
time.

“Board” means, in relation to the Fund, the board of directors, trustees or
other governing body of the Fund.

“Client Publications” means the general client publications of State Street Bank
and Trust Company available from time to time to clients and their investment
managers.

“Deposit Account Agreement” means the Deposit Account Agreement and Disclosure,
as may be amended from time to time, issued by the Custodian and available on
the Custodian’s internet customer portal, “my.statestreet.com”.

“Domestic securities” means securities held within the United States.

“Foreign securities” means securities held primarily outside of the United
States.

“Fund Interests” means beneficial interests in the Fund.

“Held outside of the United States” means not held within the United States.

“Held within the United States” means (a) in relation to a security or other
financial asset, the security or other financial asset (i) is a certificated
security registered in the name of the Custodian or its sub-custodian, agent or
nominee or is endorsed to the Custodian or its sub-custodian, agent or nominee
or in blank and the security certificate is located within the United States,
(ii) is an uncertificated security or other financial asset registered in the
name of the Custodian or its sub-custodian, agent or nominee at an office
located in the United States, or (iii) has given rise to a security entitlement
of which the Custodian or its sub-custodian, agent or nominee is the entitlement
holder against a U.S. Securities System or another securities intermediary for
which the securities intermediary’s jurisdiction is within the United States,
and (b) in relation to cash, the cash is maintained in a deposit account
denominated in U.S. dollars with the banking department of the Custodian or with
another bank or trust company’s office located in the United States.

“Investment Advisor” means the investment manager or investment advisor of the
Fund.

“On book currency” means (a) U.S. dollars or (b) a foreign currency that, when
credited to a deposit account of a customer maintained in the banking department
of the Custodian or an Eligible Foreign Custodian, the Custodian maintains on
its books as an amount owing as a liability by the Custodian to the customer.

 

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“Proper Instructions” means instructions in accordance with Section 10 received
by the Custodian from the Fund, the Fund’s Investment Advisor, or an individual
or organization duly authorized by the Fund or the Investment Advisor.  The term
includes standing instructions.

“SEC” means the U.S. Securities and Exchange Commission.

“UCC” means the Uniform Commercial Code of the Commonwealth of Massachusetts as
in effect from time to time.

“Underlying Portfolios” means a group of investment companies as defined in
Section 12(d)(1)(F) of the 1940 Act.

“Underlying Shares” means shares or other securities, issued by a U.S. issuer,
of Underlying Portfolios and other registered “investment companies” (as defined
in Section 3(a)(1) of the 1940 Act), whether or not in the same “group of
investment companies” (as defined in Section 12(d)(1)(G)(ii) of the 1940 Act).

“Underlying Transfer Agent” means State Street Bank and Trust Company or such
other organization which may from time to time be appointed by the Fund to act
as a transfer agent for the Underlying Portfolios and with respect to which the
Custodian is provided with Proper Instructions.

“U.S. Securities System” means a securities depository or book-entry system
authorized by the U.S. Department of the Treasury or a “clearing corporation” as
defined in Section 8-102 of the UCC.

Section 2.Employment of Custodian.

Section 2.1General.  The Fund hereby employs the Custodian as a custodian of (a)
securities and cash of each of the Fund and (b) other assets of the Fund that
the Custodian agrees to treat as financial assets.  The Fund agrees to deliver
to the Custodian (i) all securities and cash of the Fund, (ii) all other assets
of the Fund that it desires the Custodian, and the Custodian is willing, to
treat as a financial asset and (iii) all cash and other proceeds of the
securities and financial assets held in custody under this Agreement.  The
holding of confirmation statements that identify Underlying Shares as being
recorded in the Custodian’s name on behalf of the Fund will be custody for
purposes of this Section 2.1.  This Agreement does not require the Custodian to
accept an asset for custody hereunder or to treat any asset that is not a
security as a financial asset.

Section 2.2Sub-custodians.  Upon receipt of Proper Instructions, the Custodian
shall on behalf of the Fund appoint one or more banks, trust companies or other
entities located in the United States and designated in the Proper Instructions
to act as a sub-custodian for the purposes of effecting such transactions as may
be designated by the Fund in the Proper Instructions.  The Custodian may place
and maintain the Fund’s foreign securities with foreign banking institution
sub-custodians employed by the Custodian or foreign securities depositories, all
in accordance with the applicable provisions of Sections 4 and 5.  An entity
acting in the capacity of Underlying Transfer Agent is not an agent or
sub-custodian of the Custodian for purposes of this Agreement.

Section 2.3Relationship.  With respect to securities and other financial assets,
the Custodian is a securities intermediary and the Fund is the entitlement
holder.  With respect to cash maintained in a deposit account and denominated in
an “on book” currency, the Custodian is a bank and the Fund is the bank’s
customer.  If cash is maintained in a deposit account with a bank other than the
Custodian and the cash is denominated in an “on book” currency, the Custodian is
that bank’s customer.  The Custodian agrees to treat the claim to the cash as a
financial asset for the benefit of the Fund.  The Custodian does not otherwise
agree to treat cash as financial asset.  The duties of the Custodian as
securities intermediary and bank set forth in the UCC are varied by the terms of
this Agreement to the extent that the duties may be varied by agreement under
the UCC.

Section 3.

Activities of the Custodian with Respect to Property Held in the United States.

Section 3.1Holding Securities.  The Custodian may deposit and maintain
securities or other financial assets of the Fund in a U.S. Securities System in
compliance with the conditions of Rule 17f-4 under the 1940 Act.  Upon receipt
of Proper Instructions on behalf of the Fund, the Custodian shall establish and
maintain a segregated

 

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account or accounts for and on behalf of the Fund and into which account or
accounts may be transferred cash or securities and other financial assets,
including securities and financial assets maintained in a U.S. Securities
System.  The Custodian shall hold and physically segregate for the account of
the Fund all securities and other financial assets held by the Custodian in the
United States, including all domestic securities of the Fund, other than (a)
securities or other financial assets maintained in a U.S. Securities System and
(b) Underlying Shares maintained pursuant to Section 3.6 in an account of an
Underlying Transfer Agent.  The Custodian may at any time or times in its
discretion appoint any other bank or trust company, qualified under the 1940 Act
to act as a custodian, as the Custodian’s agent to carry out such of the
provisions of this Section as the Custodian may from time to time direct.  The
appointment of any agent shall not relieve the Custodian of any of its duties
hereunder.  The Custodian may at any time or times in its discretion remove the
bank or trust company as the Custodian’s agent.

Section 3.2Registration of Securities.  Domestic securities or other financial
assets held by the Custodian and that are not bearer securities shall be
registered in the name of the Fund or in the name of any nominee of the Fund or
of any nominee of the Custodian, or in the name or nominee name of any agent or
any sub-custodian permitted hereby.  All securities accepted by the Custodian on
behalf of the Fund under the terms of this Agreement shall be in “street name”
or other good delivery form.  However, if the Fund directs the Custodian to
maintain securities or other financial assets in “street name,” the Custodian
shall utilize reasonable efforts only to timely collect income due the Fund on
the securities and other financial assets and to notify the Fund of relevant
issuer actions including, without limitation, pendency of calls, maturities,
tender or exchange offers.

Section 3.3Bank Accounts.  The Custodian shall open and maintain upon the terms
of the Deposit Account Agreement a separate deposit account or accounts in the
United States in the name of the Fund, subject only to draft or order by the
Custodian acting pursuant to the terms of this Agreement.  The Custodian shall
credit to the deposit account or accounts, subject to the provisions hereof, all
cash received by the Custodian from or for the account of the Fund, other than
cash maintained by the Fund in a deposit account established and used in
accordance with Rule 17f-3 under the 1940 Act.  Funds held by the Custodian for
the Fund may be deposited by the Custodian to its credit as Custodian in the
banking department of the Custodian or in such other banks or trust companies as
it may in its discretion deem necessary or desirable; provided, however, that
(a) every such bank or trust company shall be qualified to act as a custodian
under the 1940 Act and (b) each such bank or trust company and the funds to be
deposited with each such bank or trust company shall on behalf of the Fund be
approved by vote of a majority of the Fund’s Board.  The funds shall be
deposited by the Custodian in its capacity as Custodian and shall be
withdrawable by the Custodian only in that capacity.

Section 3.4Collection of Income.  Subject to the domestic securities or other
financial assets held in the United States being registered as provided in
Section 3.2, the Custodian shall collect on a timely basis all income and other
payments with respect to the securities and other financial assets and to which
the Fund shall be entitled either by law or pursuant to custom in the securities
business. The Custodian shall collect on a timely basis all income and other
payments with respect to bearer domestic securities if, on the date of payment
by the issuer, the securities are held by the Custodian or its agent.  The
Custodian shall present for payment all income items requiring presentation as
and when they become due and shall collect interest when due on securities and
other financial assets held hereunder.  The Custodian shall credit income to the
Fund as such income is received or in accordance with the Custodian’s then
current payable date income schedule.  Any credit to the Fund in advance of
receipt may be reversed when the Custodian determines that payment will not
occur in due course, and the Fund may be charged at the Custodian’s applicable
rate for time credited.

Section 3.5Delivery Out.  The Custodian shall release and deliver out domestic
securities and other financial assets of the Fund held in a U.S. Securities
System, or in an account at the Underlying Transfer Agent, only upon receipt of
Proper Instructions on behalf of the Fund, specifying the domestic securities or
financial assets held in the United States  to be delivered out and the person
or persons to whom delivery is to be made.  The Custodian shall pay out cash of
the Fund upon receipt of Proper Instructions on behalf of the Fund, specifying
the amount of the payment and the person or persons to whom the payment is to be
made.

 

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Section 3.6Deposit of Fund Assets with the Underlying Transfer
Agent.  Underlying Shares of the Fund shall be deposited and held in an account
or accounts maintained with an Underlying Transfer Agent.  The Custodian’s only
responsibilities with respect to the Underlying Shares shall be limited to the
following:

 

1)

Upon receipt of a confirmation or statement from an Underlying Transfer Agent
that the Underlying Transfer Agent is holding or maintaining Underlying Shares
in the name of the Custodian (or a nominee of the Custodian) for the benefit of
the Fund, the Custodian shall identify by book-entry that the Underlying Shares
are being held by it as custodian for the benefit of the Fund.

 

2)

Upon receipt of Proper Instructions to purchase Underlying Shares for the
account of the Fund, the Custodian shall pay out cash of the Fund as so directed
to purchase the Underlying Shares and record the payment from the account of the
Fund on the Custodian’s books and records.

 

3)

Upon receipt of Proper Instructions for the sale or redemption of Underlying
Shares for the account of the Fund, the Custodian shall transfer the Underlying
Shares as so directed to sell or redeem the Underlying Shares, record the
transfer from the account of the Fund on the Custodian’s books and records and,
upon the Custodian’s receipt of the proceeds of the sale or redemption, record
the receipt of the proceeds for the account of the Fund on the Custodian’s books
and records.

Section 3.7Proxies.  The Custodian shall cause to be promptly executed by the
registered holder of domestic securities or other financial assets held in the
United States of the Fund, if the securities or other financial assets are
registered otherwise than in the name of the Fund or a nominee of the Fund, all
proxies, without indication of the manner in which the proxies are to be voted,
and shall promptly deliver to the Fund such proxies, all proxy soliciting
materials and all notices relating to the securities or other financial assets.

Section 3.8Communications.  Subject to the domestic securities or other
financial assets held in the United States being registered as provided in
Section 3.2, the Custodian shall transmit promptly to the Fund all written
information received by the Custodian from issuers of the securities and other
financial assets being held for the Fund.  The Custodian shall transmit promptly
to the Fund all written information received by the Custodian from issuers of
the securities and other financial assets whose tender or exchange is sought and
from the party or its agent making the tender or exchange offer.  The Custodian
shall also transmit promptly to the Fund all written information received by the
Custodian regarding any class action or other collective litigation relating to
Fund securities or other financial assets issued in the United States and then
held, or previously held, during the relevant class-action period during the
term of this Agreement by the Custodian for the account of the Fund, including,
but not limited to, opt-out notices and proof-of-claim forms. The Custodian does
not support class-action participation by the Fund beyond such forwarding of
written information received by the Custodian.

Section 4.Provisions Relating to Rules 17f-5 and 17f-7.

Section 4.1.Definitions.  As used in this Agreement, the following terms have
the following meanings:

“Country Risk” means all factors reasonably related to the systemic risk of
holding Foreign Assets in a particular country.  The factors include but are not
limited to risks arising from the country’s political environment, economic and
financial infrastructure (including any Eligible Securities Depository operating
in the country); prevailing or developing custody, tax and settlement practices;
nationalization, expropriation or other  government actions; currency
restrictions, devaluations or fluctuations; market conditions affecting the
orderly execution of securities transactions or the value of assets;
the  regulation of the banking and securities industries, including changes in
market rules; and laws and regulations applicable to the safekeeping and
recovery of Foreign Assets held in custody in that country.

“Covered Foreign Country” means a country listed on Schedule A, which list of
countries may be amended from time to time at the request of the Fund and with
the agreement of the Foreign Custody Manager.

“Eligible Foreign Custodian” has the meaning set forth in Section (a)(1) of Rule
17f-5.

“Eligible Securities Depository” has the meaning set forth in section (b)(1) of
Rule 17f-7.

 

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“Foreign Assets” means any of the Fund’s securities or other investments
(including foreign currencies) for which the primary market is outside the
United States, and any cash and cash equivalents that are reasonably necessary
to effect transactions of the Fund in those investments.

“Foreign Custody Manager” has the meaning set forth in section (a)(3) of Rule
17f-5.

“Foreign Securities System” means an Eligible Securities Depository listed on
Schedule B.

“Rule 17f-5” means Rule 17f-5 promulgated under the 1940 Act.

“Rule 17f-7” means Rule 17f-7 promulgated under the 1940 Act.

Section 4.2.The Custodian as Foreign Custody Manager.

4.2.1Delegation.  The Fund, by resolution adopted by its Board, hereby delegates
to the Custodian, subject to Section (b) of Rule 17f-5, the responsibilities set
forth in this Section 4.2 with respect to Foreign Assets of the Fund held
outside the United States.  The Custodian hereby accepts such delegation.  By
giving at least 30 days’ prior written notice to the Fund, the Foreign Custody
Manager may withdraw its acceptance of the delegated responsibilities generally
or with respect to a Covered Foreign Country designated in the
notice.  Following the withdrawal, the Custodian shall have no further
responsibility in its capacity as Foreign Custody Manager to the Fund generally
or, as the case may be, with respect to the Covered Foreign Country so
designated.

4.2.2Exercise of Care as Foreign Custody Manager.  The Foreign Custody Manager
shall exercise reasonable care, prudence and diligence such as a person having
responsibility for the safekeeping of the Foreign Assets would exercise in
performing the delegated responsibilities.

4.2.3Foreign Custody Arrangements.  The Foreign Custody Manager shall be
responsible for performing the delegated responsibilities only with respect to
Covered Foreign Countries.  The Foreign Custody Manager shall list on Schedule A
for a Covered Foreign Country each Eligible Foreign Custodian selected by the
Foreign Custody Manager to maintain the Foreign Assets of the Fund with respect
to the Covered Foreign Country. The list of Eligible Foreign Custodians may be
amended from time to time upon notice in the sole discretion of the Foreign
Custody Manager.  This Agreement constitutes a Proper Instruction by the Fund to
open an account, and to place and maintain Foreign Assets, for the Fund in each
applicable Covered Foreign Country.  The Fund shall satisfy the account opening
requirements for the Covered Foreign Country, and the delegation for the Covered
Foreign Country will not be considered to have been accepted by the Custodian
until that satisfaction.  If the Foreign Custody Manager receives from the Fund
Proper Instructions directing the Foreign Custody Manager to close the account,
the delegation shall be considered withdrawn, and the Custodian shall
immediately cease to be the Foreign Custody Manager with respect to the Fund for
the Covered Foreign Country.

4.2.4  Scope of Delegated Responsibilities:  Subject to the provisions of this
Section 4.2, the Foreign Custody Manager may place and maintain Foreign Assets
in the care of an Eligible Foreign Custodian selected by the Foreign Custody
Manager in each applicable Covered Foreign Country.  The Foreign Custody Manager
shall determine that (a) the Foreign Assets will be subject to reasonable care,
based on the standards applicable to custodians in the country in which the
Foreign Assets will be held by the Eligible Foreign Custodian, after considering
all factors relevant to the safekeeping of such assets, including, without
limitation the factors specified in Rule 17f-5(c)(1) and (b) the contract
between the Foreign Custody Manager and the Eligible Foreign Custodian governing
the foreign custody arrangements will satisfy the requirements of Rule
17f-5(c)(2).  The Foreign Custody Manager shall establish a system to monitor
(i) the appropriateness of maintaining the Foreign Assets with the Eligible
Foreign Custodian and (ii) the performance of the contract governing the custody
arrangements.  If the Foreign Custody Manager determines that the custody
arrangements with an Eligible Foreign Custodian are no longer appropriate, the
Foreign Custody Manager shall so notify the Fund.

4.2.5Reporting Requirements.  The Foreign Custody Manager shall (a) report the
withdrawal of Foreign Assets from an Eligible Foreign Custodian and the
placement of Foreign Assets with another Eligible Foreign Custodian by providing
to the Fund’s Board an amended Schedule A at the end of the calendar quarter in
which

 

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the action has occurred, and (b) after the occurrence of any other material
change in the foreign custody arrangements of the Fund described in this Section
4.2, make a written report to the Board containing a notification of the change.

4.2.6Representations.  The Foreign Custody Manager represents to the Fund that
it is a U.S. Bank as defined in Section (a)(7) of Rule 17f-5.  The Fund
represents to the Custodian that its Board has (a) determined that it is
reasonable for the Board to rely on the Custodian to perform the
responsibilities delegated pursuant to this Agreement to the Custodian as the
Foreign Custody Manager of the Fund, and (b) considered and determined to accept
such Country Risk as is incurred by placing and maintaining the Foreign Assets
of the Fund in each Covered Foreign Country.

4.2.7Termination By the Fund of the Custodian as Foreign Custody Manager.  By
giving at least 30 days’ prior written notice to the Custodian, the Fund may
terminate the delegation to the Custodian as the Foreign Custody Manager for the
Fund.  Following the termination, the Custodian shall have no further
responsibility in its capacity as Foreign Custody Manager to the Fund.

Section 4.3Monitoring of Eligible Securities Depositories.  The Custodian shall
(a) provide the Fund or its Investment Advisor with an analysis of the custody
risks associated with maintaining assets with the Eligible Securities
Depositories set forth on Schedule B in accordance with Section (a)(1)(i)(A) of
Rule 17f-7 and (b) monitor such risks on a continuing basis and  promptly notify
the Fund or its Investment Advisor of any material change in such risks, in
accordance with Section (a)(1)(i)(B) of Rule 17f-7.

Section 5.

Activities of the Custodian with Respect to Property Held Outside the United
States.

Section 5.1.Holding Securities.  Foreign securities and other financial assets
held outside of the United States shall be maintained in a Foreign Securities
System in a Covered Foreign Country through arrangements implemented by the
Custodian or an Eligible Foreign Custodian, as applicable, in the Covered
Foreign Country.  The Custodian shall identify on its books as belonging to the
Fund the foreign securities and other financial assets held by each Eligible
Foreign Custodian or Foreign Securities System.  The Custodian may hold foreign
securities and other financial assets for all of its customers, including the
Fund, with any Eligible Foreign Custodian in an account that is identified as
the Custodian’s account for the benefit of its customers; provided however, that
(a) the records of the Custodian with respect to foreign securities or other
financial assets of the Fund maintained in the account shall identify those
securities and  other financial assets as belonging to the Fund and (b) to the
extent permitted and customary in the market in which the account is maintained,
the Custodian shall require that securities and other financial assets so held
by the Eligible Foreign Custodian be held separately from any assets of the
Eligible Foreign Custodian or of other customers of the Eligible Foreign
Custodian.

Section 5.2.Registration of Foreign Securities.  Foreign securities and other
financial assets held outside of the United States maintained in the custody of
an Eligible Foreign Custodian and that are not bearer securities shall be
registered in the name of the Fund or in the name of the Custodian or in the
name of any Eligible Foreign Custodian or in the name of any nominee of any
of  the foregoing.  The Fund agrees to hold any such nominee harmless from any
liability as a holder of record of the foreign securities or other financial
assets.  The Custodian or an Eligible Foreign Custodian reserves the right not
to accept securities or other financial assets on behalf of the Fund under the
terms of this Agreement unless the form of the securities or other financial
assets and the manner in which they are delivered are in accordance with local
market practice.

Section 5.3.Indemnification by Eligible Foreign Custodians.  Each contract
pursuant to which the Custodian employs an Eligible Foreign Custodian shall, to
the extent possible, require the Eligible Foreign Custodian to indemnify and
hold harmless the Custodian from and against any loss, cost or expense arising
out of or in connection with the Eligible Foreign Custodian’s performance of its
obligations.  At the Fund’s election, the Fund shall be entitled to be
subrogated to the rights of the Custodian with respect to any claims against an
Eligible Foreign Custodian as a consequence of any such loss, cost or expense if
and to the extent that the Fund has not been made whole for the loss, cost or
expense.  In no event shall the Custodian be obligated to bring suit in its own
name or to allow suit to be brought in its name.

 

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Section 5.4 Bank Accounts.

5.4.1General.  The Custodian shall identify on its books as for the account of
the Fund the amount of cash (including cash denominated in foreign currencies)
deposited with the Custodian.  The Custodian shall maintain cash deposits in on
book currencies on its balance sheet. The Custodian shall be liable for such
balances.  If the Custodian is unable to maintain, or market practice does not
facilitate the maintenance for the Fund of a cash balance in a currency as an on
book currency, a deposit account shall be opened and maintained by the Custodian
outside the United States on behalf of the Fund with an Eligible Foreign
Custodian.  The Custodian shall not maintain the cash deposit on its balance
sheet.  The Eligible Foreign Custodian will be liable for such balance directly
to the Fund.  All deposit accounts referred to in this Section shall be subject
only to draft or order by the Custodian or, if applicable, the Eligible Foreign
Custodian acting pursuant to the terms of this Agreement.  Cash maintained in a
deposit account and denominated in an “on book” currency will be maintained
under and subject to the laws of the Commonwealth of Massachusetts.  The
Custodian will not have any deposit liability for deposits in any currency that
is not an “on book” currency.

5.4.2Non-U.S. Branch and Non-U.S. Dollar Deposits.  In accordance with the laws
of the Commonwealth of Massachusetts, the Custodian shall not be required to
repay any deposit made at a non-U.S. branch of the Custodian or any deposit made
with the Custodian and denominated in a non-U.S. dollar currency, if repayment
of the deposit or the use of assets denominated in the non-U.S. dollar currency
is prevented, prohibited or otherwise blocked due to (a) an act of war,
insurrection or civil strife; (b) any action by a non-U.S. government or
instrumentality or authority asserting governmental, military or police power of
any kind, whether such authority be recognized as a de facto or a de jure
government, or by any entity, political or revolutionary movement or otherwise
that usurps, supervenes or otherwise materially impairs the normal operation of
civil authority; or  (c) the closure of a non-U.S. branch in order to prevent,
in the reasonable judgment of the Custodian, harm to the employees or property
of the Custodian.

Section 5.5.Collection of Income.  The Custodian shall use reasonable commercial
efforts to collect all income and other payments with respect to the Foreign
Assets held hereunder to which the Fund shall be entitled.  If extraordinary
measures are required to collect the income or payment, the Fund and the
Custodian shall consult as to such measures and as to the compensation and
expenses of the Custodian relating to such measures.  The Custodian shall credit
income to the Fund as such income is received or in accordance with the
Custodian’s then current payable date income schedule.  Any credit to the Fund
in advance of receipt may be reversed when the Custodian determines that payment
will not occur in due course, and the Fund may be charged at the Custodian’s
applicable rate for time credited.  Income on securities or other financial
assets loaned other than from the Custodian’s securities lending program shall
be credited as received.

Section 5.6.Transactions in Foreign Custody Account.

5.6.1Delivery Out.  The Custodian or an Eligible Foreign Custodian shall release
and deliver foreign securities or other financial assets held outside of the
United States owned by the Fund and held by the Custodian or such Eligible
Foreign Custodian, or in a Foreign Securities System account, only upon receipt
of Proper Instructions, specifying the foreign securities to be delivered and
the person or persons to whom delivery is to be made. The Custodian shall pay
out, or direct the respective Eligible Foreign Custodian or the respective
Foreign Securities System to pay out, cash of the Fund only upon receipt of
Proper Instructions specifying the amount of the payment and the person or
persons to payment is to be made.

5.6.2Market Conditions.  Notwithstanding any provision of this Agreement to the
contrary, settlement and payment for Foreign Assets received for the account of
the Fund and delivery of Foreign Assets maintained for the account of the Fund
may be effected in accordance with the customary established securities trading
or processing practices and procedures in the country or market in which the
transaction occurs, including, without limitation, delivering Foreign Assets to
the purchaser thereof or to a dealer therefor (or an agent for such purchaser or
dealer) with the expectation of receiving later payment for the Foreign Assets
from such purchaser or dealer.

5.6.3Settlement Practices.  The Custodian shall provide to the Board the
information with respect to custody and settlement practices in countries in
which the Custodian employs an Eligible Foreign Custodian described on Schedule
C at the time or times set forth on the Schedule.  The Custodian may revise
Schedule C from time to time, but no revision shall result in the Board being
provided with substantively less information than had been previously provided
on Schedule C.

 

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Section 5.7Shareholder or Bondholder Rights.  The Custodian shall use reasonable
commercial efforts to facilitate the exercise of voting and other shareholder
and bondholder rights with respect to foreign securities and other financial
assets held outside the United States, subject always to the laws, regulations
and practical constraints that may exist in the country where the securities or
other financial assets are issued.  The Custodian may utilize Broadridge
Financial Solutions, Inc. or another proxy service firm of recognized standing
as its delegate to provide proxy services for the exercise of shareholder and
bondholder rights.  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 and bondholder
rights.

Section 5.8.Communications.  The Custodian shall transmit promptly to the Fund
written information with respect to materials received by the Custodian through
Eligible Foreign Custodians from issuers of the foreign securities and other
financial asset assets being held outside the United States for the account of
the Fund.  The Custodian shall transmit promptly to the Fund written information
with respect to materials so received by the Custodian from issuers of foreign
securities whose tender or exchange is sought or from the party or its agent
making the tender or exchange offer.  The Custodian shall also transmit promptly
to the Fund all written information received by the Custodian through  Eligible
Foreign Custodians from issuers of the foreign securities or other financial
assets issued outside of the United States and being held for the account of the
Fund regarding any class action or other collective litigation relating to the
Fund’s foreign securities or other financial assets issued outside the United
States and then held, or previously held, during the relevant class-action
period during the term of this Agreement by the Custodian via an Eligible
Foreign Custodian for the account of the Fund, including, but not limited to,
opt-out notices and proof-of-claim forms. The Custodian does not support
class-action participation by the Fund beyond such forwarding of written
information received by the Custodian.

Section 6.Foreign Exchange.

Section 6.1.Generally.  Upon receipt of Proper Instructions, which for purposes
of this section may also include security trade advices, the Custodian shall
facilitate the processing and settlement of foreign exchange transactions.  Such
foreign exchange transactions do not constitute part of the services provided by
the Custodian under this Agreement.

Section 6.2.Fund Elections.  The Fund (or its Investment Advisor acting on its
behalf) may elect to enter into and execute foreign exchange transactions with
third parties that are not affiliated with the Custodian, with State Street
Global Markets, which is the foreign exchange division of State Street Bank and
Trust Company and its affiliated companies (“SSGM”), or with a
sub-custodian.  Where the Fund or its Investment Advisor gives Proper
Instructions for the execution of a foreign exchange transaction using an
indirect foreign exchange service described in the Client Publications, the Fund
(or its Investment Advisor) instructs the Custodian, on behalf of the Fund, to
direct the execution of such foreign exchange transaction to SSGM or, when the
relevant currency is not traded by SSGM, to the applicable sub-custodian.  The
Custodian shall not have any agency (except as contemplated in preceding
sentence), trust or fiduciary obligation to the Fund, its Investment Advisor or
any other person in connection with the execution of any foreign exchange
transaction.  The Custodian shall have no responsibility under this Agreement
for the selection of the counterparty to, or the method of execution of, any
foreign exchange transaction entered into by the Fund (or its Investment Advisor
acting on its behalf) or the reasonableness of the execution rate on any such
transaction.

Section 6.3.Fund Acknowledgement.  The Fund acknowledges that in connection with
all foreign exchange transactions entered into by the Fund (or its Investment
Advisor acting on its behalf) with SSGM or any sub-custodian, SSGM and each such
sub-custodian:

(i)

shall be acting in a principal capacity and not as broker, agent or fiduciary to
the Fund or its Investment Advisor;

(ii)

shall seek to profit from such foreign exchange transactions, and are entitled
to retain and not disclose any such profit to the Fund or its Investment
Advisor; and

(iii)

shall enter into such foreign exchange transactions pursuant to the terms and
conditions, including pricing or pricing methodology, (a) agreed with the Fund
or its Investment Advisor from time to time or (b) in the case of an indirect
foreign exchange service, (i) as established by SSGM and set forth in the Client
Publications with respect to the particular foreign exchange execution services
selected by the Fund or the Investment Advisor or (ii) as established by the
sub-custodian from time to time.

 

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Section 6.4.Transactions by State Street.  The Custodian or its affiliates,
including SSGM, may trade based upon information that is not available to the
Fund (or its Investment Advisor acting on its behalf), and may enter into
transactions for its own account or the account of clients in the same or
opposite direction to the transactions entered into with the Fund (or its
Investment Manager), and shall have no obligation, under this Agreement, to
share such information with or consider the interests of their respective
counterparties, including, where applicable, the Fund or the Investment Advisor.

Section 7.Contractual Settlement Services (Purchase/Sales).

Section 7.1General.  The Custodian shall, in accordance with the terms set out
in this Section 7, debit or credit the appropriate deposit account of the Fund
on a contractual settlement basis in connection with the purchase of securities
or other financial assets for the Fund or the receipt of the proceeds of the
sale or redemption of securities or other financial assets.

Section 7.2Provision of Services.  The services described in Section 7.1 (the
“Contractual Settlement Services”) shall be provided for the securities and
other financial assets and in such markets as the Custodian may advise from time
to time. The Custodian may terminate or suspend any part of the provision of the
Contractual Settlement Services at its sole discretion immediately upon notice
to the Fund, including, without limitation, in the event of force majeure events
affecting settlement, any disorder in markets, or other changed external
business circumstances affecting the markets or the Fund.

Section 7.3Purchase Consideration.  The consideration payable in connection with
a purchase transaction shall be debited from the appropriate deposit account of
the Fund as of the time and date that funds would ordinarily be required to
settle the transaction in the applicable market.  The Custodian shall promptly
recredit the amount at the time that the Fund notifies the Custodian by Proper
Instruction that the transaction has been canceled.

Section 7.4Sales and Redemptions.  A provisional credit of an amount equal to
the net sale price for a sale or redemption of securities or other financial
assets shall be made to the account of the Fund as if the amount had been
received as of the close of business on the date on which good funds would
ordinarily be immediately available in the applicable market.  The provisional
credit will be made conditional upon the Custodian having received Proper
Instructions with respect to, or reasonable notice of, the transaction, as
applicable; and the Custodian or its agent having possession of the securities
of other financial assets (excluding financial assets subject to any third party
lending arrangement entered into by the Fund) associated with the transaction in
good deliverable form and not being aware of any facts which would lead the
Custodian or its agent to believe that the transaction will not settle in the
time period ordinarily applicable to such transactions in the applicable market.

Section 7.5.Reversals of Provisional Credits or Debits.  The Custodian shall
have the right to reverse any provisional credit or debit given in connection
with the Contractual Settlement Services at any time when the Custodian
believes, in its reasonable judgment, that such transaction will not settle in
accordance with its terms or amounts due pursuant thereto, will not be
collectable or where the Custodian has not been provided Proper Instructions
with respect thereto, as applicable.  The Fund shall be responsible for any
costs or liabilities resulting from such reversal.  Upon such reversal, a sum
equal to the credited or debited amount shall become immediately payable by the
Fund to the Custodian and may be debited from any deposit or other account held
for benefit of the Fund.

Section 8.Tax Services.

Section 8.1General.  Subject to and to the extent of receipt by the Custodian of
relevant and necessary documentation and information with respect to the Fund
that the Custodian has requested, the Custodian shall perform the following
services: (a) file claims for exemptions, reductions in withholding taxes, or
refunds of any tax with respect to withheld foreign (non-U.S.) taxes in
instances in which such claims are appropriate; (b) withhold appropriate amounts
as required by U.S. tax laws with respect to amounts received on behalf of
nonresident aliens; and (c) provide to the Fund such information actually
received by the Custodian that could, in the Custodian’s reasonable belief and
sole discretion, assist any of the Fund in their submission of any reports or
returns with respect to taxes.  It shall be the responsibility of the Fund to
notify the Custodian of the obligations imposed on the Fund or the Custodian as
custodian by the tax law of countries, states and political subdivisions
thereof, including responsibility for withholding and other taxes, assessments
or other governmental charges, certifications and governmental reporting.  The
sole responsibility of the Custodian with regard to such tax law shall be to use
reasonable efforts to assist the Fund with

 

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respect to any claim for exemption or refund under the tax law of countries for
which the Fund has provided sufficient information and documentation.

Section 8.2Ownership Certificates for Tax Purposes.  The Custodian shall execute
ownership and other certificates and affidavits for all federal and state tax
purposes in connection with receipt of income or other payments with respect to
domestic securities or other financial assets held within the United States of
the Fund held by the Custodian and in connection with transfers of securities
and other financial assets.

Section 8.3Authorizations.  The Custodian is authorized to deduct from any cash
received or credited to the account of the Fund any taxes or levies required by
any tax or other governmental authority having jurisdiction in respect of the
Fund’s transactions and to disclose any information required by any such tax or
other governmental authority in relation to processing any claim for exemption
from or reduction or refund of any taxes relating to the Fund transactions and
holdings.

Section 8.4Services Further Limited.  Other than the servicing responsibilities
provided herein, the Custodian shall have no responsibility or liability for any
obligations now or hereafter imposed on the Fund or the Custodian as custodian
of the assets of the Fund by the tax law of any country or of any state or
political subdivision thereof.  The Custodian shall not be considered the Fund’s
tax advisor or tax counsel.

Section 9.Payments for Sales or Redemptions of Fund Interests.

Section 9.1Payment for Fund Interests Issued.  The Custodian shall receive from
the distributor of Fund Interests of the Fund or from the Fund’s transfer agent
(the “Transfer Agent”) and deposit into the account of the Fund such payments as
are received for Fund Interests issued or sold from time to time by the
Fund.  The Custodian will provide timely notification to the Fund and the
Transfer Agent of any receipt of the payments by the Custodian.

Section 9.2Payment for Fund Interests Redeemed.  Upon receipt of instructions
from the Transfer Agent, the Custodian shall set aside funds of the Fund to the
extent available for payment to holders of Fund Interests who have delivered to
the Transfer Agent a request for redemption of their Fund Interests. The
Custodian is authorized upon receipt of instructions from the Transfer Agent to
wire funds to or through a commercial bank designated by the redeeming interest
holders.  If the Custodian furnishes a check to a holder in payment for the
redemption of the holder’s Fund Interests and the check is drawn on the
Custodian, the Custodian shall honor the check so long as the check is presented
to the Custodian in accordance with the Deposit Account Agreement and such
procedures and controls as are mutually agreed upon from time to time between
the Fund and the Custodian.

Section 10.Proper Instructions.

Section 10. 1Form and Security Procedures.  Proper Instructions may be in
writing signed by the authorized individual or individuals or may be in a tested
communication or in a communication utilizing access codes effected between
electro-mechanical or electronic devices or may be by such other means and
utilizing such intermediary systems and utilities as may be agreed to from time
to time by the Custodian and the individual or organization giving the
instruction, provided that the Fund has followed any security procedures agreed
to from time to time by the Fund and the Custodian including, but not limited
to, the security procedures selected by the Fund by reference to the form of
Funds Transfer Addendum hereto, the terms of which are part of this
Agreement.  The Custodian may agree to accept oral instructions, and in such
case oral instructions will be considered Proper Instructions.  The Fund shall
cause all oral instructions to be confirmed in writing, but the Fund’s failure
to do so shall not affect the Custodian’s authority to rely on the oral
instructions.

Section 10.2Reliance on Officer’s Certificate.  Concurrently with the execution
of this Agreement, and from time to time thereafter, as appropriate, the Fund
shall deliver to the Custodian an officer’s certificate setting forth the names,
titles, signatures and scope of authority of all individuals authorized to give
Proper Instructions or any other notice, request, direction, instruction,
certificate or instrument on behalf of the Fund.  The certificate may be
accepted and conclusively relied upon by the Custodian and shall be considered
to be in full force and effect until receipt by the Custodian of a similar
certificate to the contrary and the Custodian has had a reasonable time to act
thereon.

 

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Section 10.3Untimely Proper Instructions.  If the Custodian is not provided with
reasonable time to execute a Proper Instruction (including any Proper
Instruction not to execute, or any other modification to, a prior Proper
Instruction),  the Custodian will use good faith efforts to execute the Proper
Instruction but will not be responsible or liable if the Custodian’s efforts are
not successful (including any inability to change any actions that the Custodian
had taken pursuant to the prior Proper Instruction).  The inclusion of a
statement of purpose or intent (or any similar notation) in a Proper Instruction
shall not impose any additional obligations on the Custodian or condition or
qualify its authority to effect the Proper Instruction.  The Custodian will not
assume a duty to ensure that the stated purpose or intent is fulfilled and will
have no responsibility or liability when it follows the Proper Instruction
without regard to such purpose or intent.

Section 11.Actions Permitted without Express Authority.

The Custodian may in its discretion, without express authority from the Fund on
behalf of the Fund:

 

1)

Make payments to itself or others for minor expenses of handling securities or
other financial assets relating to its duties under this Agreement; provided
that all such payments shall be accounted for to the Fund;

 

2)

Surrender securities or other financial assets in temporary form for securities
or other financial assets in definitive form;

 

3)

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

 

4)

In general, attend to all non-discretionary details in connection with the sale,
exchange, substitution, purchase, transfer and other dealings with the
securities and other financial assets of the Fund except as otherwise directed
by the applicable Board.

Section 12.Records.

The Custodian shall with respect to the Fund create and maintain all records
relating to its activities and obligations under this Agreement in such manner
as will meet the obligations of the Fund under the 1940 Act, with particular
attention to Section 31 thereof and Rules 31a-1 and 31a-2 thereunder.  All such
records shall be the property of the Fund 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 Fund and employees and agents of
the SEC.  The Custodian shall, at the Fund’s request, supply the Fund with a
tabulation of securities owned by the Fund and held by the Custodian and shall,
when requested to do so by the Fund and for such compensation as shall be agreed
upon between the Fund and the Custodian, include certificate numbers in such
tabulations.  In the event that the Custodian is requested or authorized by the
Fund, or required by subpoena, administrative order, court order or other legal
process, applicable law or regulation, or required in connection with any
investigation, examination or inspection of the Fund by state or federal
regulatory agencies, to produce the records of the Fund or the Custodian’s
personnel as witnesses, the Fund agrees to pay the Custodian for the Custodian’s
time and expenses, as well as the fees and expenses of the Custodian’s counsel,
incurred in responding to such request, order or requirement.

Section 13.Fund’s Independent Accountants.

Section 13.1Opinions.  The Custodian shall take all reasonable action, as the
Fund may from time to time request, to obtain from year to year favorable
opinions from the Fund’s independent accountants with respect to its activities
hereunder in connection with the preparation of the Fund’s Form N-1A or Form
N-2, as applicable, and Form N-SAR or other annual reports to the SEC and with
respect to any other requirements thereof.

Section 13.2Reports.  Upon reasonable request of a Fund, the Custodian shall
provide the Fund with a copy of the Custodian’s Service Organizational Control
(SOC) 1 reports prepared in accordance with the requirements of AT section 801,
Reporting on Controls at a Service Organization (formerly Statement on Standards
for Attestation Engagements (SSAE) No. 16).  The Custodian shall use
commercially reasonable efforts to provide the Fund with such reports as the
Fund may reasonably request or otherwise reasonably require to fulfill its
duties under Rule 38a-1 of the 1940 Act or similar legal and regulatory
requirements.

 

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Section 14.Custodian’s Standard of Care; Exculpation.

14.1Standard of Care.  In carrying out the provisions of this Agreement, the
Custodian shall act in good faith and without negligence and shall be held to
the exercise of reasonable care.

14.2Reliance on Proper Instructions.  The Custodian shall be entitled
conclusively to rely and act upon Proper Instructions until the Custodian has
received notice of any change from the Fund and has had a reasonable time to act
thereon.  The Custodian may act on a Proper Instruction if it reasonably
believes that it contains sufficient information and may refrain from acting on
any Proper Instructions until such time that it has determined, in its sole
discretion, that is has received any required clarification or authentication of
Proper Instructions.  The Custodian may rely upon and shall be protected in
acting upon any Proper Instruction or any other instruction, notice, request,
consent, certificate or other instrument or paper believed by it in good faith
to be genuine and to have been properly executed by or on behalf of the Fund.

14.3Other Reliance.  The Custodian is authorized and instructed to rely upon the
information that the Custodian receives from the Fund or any third party on
behalf of the Fund.  The Custodian shall have no responsibility to review,
confirm or otherwise assume any duty with respect to the accuracy or
completeness of any information supplied to it by or on behalf of the Fund.  The
Custodian shall have no liability in respect of any loss, cost or expense
incurred or sustained by the Fund arising from the performance of the
Custodian’s duties hereunder in reliance upon records that were maintained for
the Fund by any individual or organization, other than the Custodian, prior to
the Custodian’s appointment as custodian hereunder.  The Custodian shall be
entitled to rely on and may act upon advice of counsel (who may be counsel for
the Fund) on all matters and shall be without liability for any action
reasonably taken or omitted pursuant to the advice.

14.4Liability for Foreign Custodians.  The Custodian shall be liable for the
acts or omissions of an Eligible Foreign Custodian to the same extent as if the
action or omission were performed by the Custodian itself, taking into account
the facts and circumstances and the established local market practices and laws
prevailing in the particular jurisdiction in which the Fund elects to invest.

14.5Insolvency and Country Risk.  The Custodian shall in no event be liable for
(a) the insolvency of any Eligible Foreign Custodian, (b) the insolvency of any
depositary bank maintaining in a deposit account cash denominated in any
currency other than an “on book” currency, or (c) any loss, cost or expense
incurred or sustained by the Fund resulting from or caused by Country Risk.

14.6Force Majeure and Third Party Actions.  The Custodian shall be without
responsibility or liability to the Fund for: (a) events or circumstances beyond
the reasonable control of the Custodian, including, without limitation, the
interruption, suspension or restriction of trading on or the closure of any
currency or securities market or system, power or other mechanical or
technological failures or interruptions, computer viruses or communications
disruptions, work stoppages, natural disasters, acts of war, revolution, riots
or terrorism or other similar force majeure events or acts; (b) errors by the
Fund, its Investment Advisor or any other duly authorized person in their
instructions to the Custodian; (c) the insolvency of or acts or omissions by a
U.S. Securities System, Foreign Securities System, Underlying Transfer Agent or
domestic sub-custodian designated pursuant to Section 2.2; (d) the failure of
the Fund, its Investment Advisor, or any duly authorized individual or
organization to adhere to the Custodian’s operational policies and procedures;
(e) any delay or failure of any broker, agent, securities intermediary or other
intermediary, central bank or other commercially prevalent payment or clearing
system to deliver to the Custodian’s sub-custodian or agent securities or other
financial assets purchased or in the remittance or payment made in connection
with securities or other financial assets sold; (f) any delay or failure of any
organization in charge of registering or transferring securities or other
financial assets in the name of the Custodian, the Fund, the Custodian’s
sub-custodians, nominees or agents including non-receipt of bonus, dividends and
rights and other accretions or benefits; (g) delays or inability to perform its
duties due to any disorder in market infrastructure with respect to any
particular security, other financial asset, U.S. Securities System or Foreign
Securities System; and (h) the effect of any provision of any law or regulation
or order of the United States of America, or any state thereof, or any other
country, or political subdivision thereof or of any court of competent
jurisdiction.

14.7Indirect/Special/Consequential Damages.  Notwithstanding any other provision
set forth herein, in no event shall the Custodian be liable for any special,
indirect, incidental, punitive or consequential damages of

 

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any kind whatsoever (including, without limitation, lost profits) with respect
to the services provided pursuant to this Agreement, regardless of whether
either party has been advised of the possibility of such damages.

14.8Delivery of Property. The Custodian shall not be responsible for any
securities or other assets of the Fund which are not received by the Custodian
or which are delivered out in accordance with Proper Instructions.  The
Custodian shall not be responsible for the title, validity or genuineness of any
securities or other assets or evidence of title thereto received by it or
delivered by it pursuant to this Agreement.

14.9No Investment Advice.  The Custodian has no responsibility to monitor or
oversee the investment activity undertaken by the Fund or its Investment
Advisor.  The Custodian has no duty to ensure or to inquire whether an
Investment Advisor complies with any investment objectives or restrictions
agreed upon between the Fund and the Investment Advisor or whether the
Investment Advisor complies with its legal obligations under applicable
securities laws or other laws, including laws intended to protect the interests
of investors.  The Custodian shall neither assess nor take any responsibility or
liability for the suitability or appropriateness of the investments made by the
Fund.

14.10Communications.  The Custodian shall not be liable for any untimely
exercise of any tender, exchange or other right or power in connection with
securities or other financial assets of the Fund at any time held by the
Custodian unless (a) the Custodian or the Eligible Foreign Custodian is in
actual possession of such foreign securities or other financial assets, (b) the
Custodian receives Proper Instructions with regard to the exercise of the right
or power, and (c) both of the conditions referred to in the foregoing clauses
(a) and (b) have been satisfied at least three business days prior to the date
on which the Custodian is to take action to exercise the right or power.

14.11Loaned Securities.  Income due to the Fund on securities or other financial
assets loaned shall be the responsibility of the Fund.  The Custodian will have
no duty or responsibility in connection with loaned securities or other
financial assets, other than to provide the Fund with such information or data
as may be necessary to assist the Fund in arranging for the timely delivery to
the Custodian of the income to which the Fund is entitled.

14.12Trade Counterparties.  The Fund’s receipt of securities or other financial
assets from a counterparty in connection with any of its purchase transactions
and its receipt of cash from a counterparty in connection with any sale
or  redemption of securities or other financial assets will be at the Fund’s
sole risk, and the Custodian shall not be obligated to make demands on the
Fund’s behalf if the Fund’s counterparty defaults.  If the Fund’s counterparty
fails to deliver securities, other financial assets or cash, the Custodian will,
as its sole responsibility, notify the Fund’s Investment Advisor of the failure
within a reasonable time after the Custodian became aware of the failure.

Section 15.Compensation and Indemnification of Custodian; Security Interest.

Section. 15.1Compensation.  The Custodian shall be entitled to reasonable
compensation for its services and expenses as agreed upon from time to time
between the Fund and the Custodian.

Section 15.2Indemnification.  The Fund agrees to indemnify the Custodian and to
hold the Custodian harmless from and against any loss, cost or expense sustained
or incurred by the Custodian in acting or omitting to act under or in respect of
this Agreement in good faith and without negligence, including, without
limitation, (a) the Custodian’s compliance with Proper Instructions and (b) in
connection with the provision of services to the Fund pursuant to Section 8, any
obligations, including taxes, withholding and reporting requirements, claims for
exemption and refund, additions for late payment, interest, penalties and other
expenses, that may be assessed against the Fund or the Custodian as custodian of
the assets of the Fund.  If the Fund instructs the Custodian to take any action
with respect to securities or other financial assets, and the action involves
the payment of money or may, in the opinion of the Custodian, result in the
Custodian or its nominee assigned to the Fund being liable therefor, the Fund,
as a prerequisite to the Custodian taking the action, shall provide to the
Custodian at the Custodian’s request such further indemnification in an amount
and form satisfactory to the Custodian.

Section 15.3Security Interest.  The Fund hereby grants to the Custodian, to
secure the payment and performance of the Fund’s obligations under this
Agreement, whether contingent or otherwise, a security interest in and right of
recoupment and setoff against all cash and all securities and other financial
assets at any time held for the account of the Fund by or through the
Custodian.  The obligations include, without limitation, the Fund’s obligations
to reimburse the Custodian if the Custodian or any of its affiliates,
subsidiaries or agents advances cash or securities or

 

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other financial assets to the Fund for any purpose (including but not limited to
settlements of securities or other financial assets, foreign exchange contracts
and assumed settlement), 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 its or its nominee’s own negligence, as well as the Fund’s
obligation to compensate the Custodian pursuant to Section 15.1 or indemnify the
Custodian pursuant to Section 15.2.  Should the Fund fail to reimburse or
otherwise pay the Custodian any obligation under this Agreement promptly, the
Custodian shall have the rights and remedies of a secured party under this
Agreement, the UCC and other applicable law, including the right to utilize
available cash and to sell or otherwise dispose of the Fund’s assets to the
extent necessary to obtain payment or reimbursement.  The Custodian may at any
time decline to follow Proper Instructions to deliver out cash, securities or
other financial assets if the Custodian determines in its reasonable discretion
that, after giving effect to the Proper Instructions, the cash, securities or
other financial assets remaining will not have sufficient value fully to secure
the Fund's payment or reimbursement obligations, whether contingent or
otherwise.

Section 16.Effective Period and Termination.

Section 16.1Term.  This Agreement shall remain in full force and effect for an
initial term ending October 25, 2019 (the “Initial Term”).  After the expiration
of the Initial Term, this Agreement shall automatically renew for successive
one-year terms (each, a “Renewal Term”) unless a written notice of non-renewal
is delivered by the non-renewing party no later than ninety (90) days prior to
the expiration of the Initial Term or any Renewal Term, as the case may be.

Section 16.2Termination.  During the Initial Term and thereafter, either party
may terminate this Agreement: (i) in the event of the other party’s material
breach of a material provision of this Agreement that the other party has either
(a) failed to cure or (b) failed to establish a remedial plan to cure that is
reasonably acceptable, in each case, within 60 days’ written notice of such
breach, or (ii) upon 180 days’ written notice to the other party, or (iii) in
the event of the appointment of a conservator or receiver for the other party or
upon the happening of a like event to the other party at the direction of an
appropriate agency or court of competent jurisdiction.

Section 16.3Payments Owing to the Custodian.  Upon termination of this Agreement
pursuant to Section 16.1 or 16.2  the Fund shall pay to the Custodian any
compensation then due and shall reimburse the Custodian for its other fees,
expenses and charges.  In the event of: (a) the Fund's termination of this
Agreement for any reason other than as set forth in Section 16.1 or 16.2, or (b)
a transaction not in the ordinary course of business pursuant to which the
Custodian is not retained to continue providing services hereunder to the Fund
(or its respective successor), the Fund shall pay to the Custodian any
compensation due through the effective date of termination and shall reimburse
the Custodian for its other fees, expenses and charges incurred prior to such
date.  Upon receipt of such payment and reimbursement, the Custodian will
deliver the Fund’s cash and its securities and other financial assets as set
forth in Section 17.

Section 16.4Exclusions.  No payment will be required pursuant to clause (b) of
Section 16.3 in the event of any transaction consisting of (a) the liquidation
or dissolution of the Fund and distribution of the Fund’s assets as a result of
the Board’s determination in its reasonable business judgment that the Fund is
no longer viable, (b) a merger of the Fund into, or the consolidation of the
Fund with, another organization or series, or (c) the sale by the Fund of all or
substantially all of its assets to another organization or series and, in the
case of a transaction referred to in the foregoing clause (b) or (c)  the
Custodian is retained to continue providing services to the Fund (or its
respective successor) on substantially the same terms as this Agreement.

Section 16.5Effect of Termination.  Following termination, the Custodian shall
have no further responsibility to forward information under Section 3.8 or
5.8.  The provisions of Sections 8, 14, 15 and 17 of this Agreement shall
survive termination of this Agreement.

Section 17.Successor Custodian.

Section 17.1Successor Appointed.  If a successor custodian shall be appointed
for the Fund by its Board, the Custodian shall, upon termination of this
Agreement and receipt of Proper Instructions, deliver to the successor custodian
at the office of the Custodian, duly endorsed and in the form for transfer, all
cash and all securities and other financial assets of the Fund then held by the
Custodian hereunder and shall transfer to an account of the

 

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successor custodian all of the securities and other financial assets of the Fund
held in a U.S. Securities System or Foreign Securities System or at the
Underlying Transfer Agent.

Section 17.2No Successor Appointed.  If no such successor custodian shall be
appointed, the Custodian shall, in like manner, upon receipt of Proper
Instructions, deliver at the office of the Custodian and transfer the cash and
the securities and other financial assets of the Fund in accordance with the
Proper Instructions.

Section 17.3No Successor Appointed and No Property Instructions.  If no
successor custodian has been appointed and no Proper Instructions have been
delivered to the Custodian on or before the termination of this Agreement, then
the Custodian shall have the right to deliver to a bank or trust company, which
is a “bank” as defined in the 1940 Act, doing business in Boston, Massachusetts,
or New York, New York, of its own selection, all cash and all securities and
other financial assets of the Fund then held by the Custodian hereunder, and to
transfer to an account of the bank or trust company all of the securities and
other financial assets of the Fund held in any U.S. Securities System or Foreign
Securities System or at the Underlying Transfer Agent.  The transfer will be on
such terms as are contained in this Agreement or as the Custodian may otherwise
reasonably negotiate with the bank or trust company.  Any compensation payable
to the bank or trust company, and any cost or expense incurred by the Custodian,
in connection with the transfer shall be for the account of the Fund.

Section 17.4Remaining Property.  If any cash or any securities or other
financial assets of the Fund held by the Custodian hereunder remain held by the
Custodian after the termination of this Agreement owing to the failure of the
Fund to provide Proper Instructions, the Custodian shall be entitled to fair
compensation for its services during such period as the Custodian holds the cash
or the securities or other financial assets (the existing agreed-to compensation
at the time of termination shall be one indicator of what is considered fair
compensation).  The provisions of this Agreement relating to the duties,
exculpation and indemnification of the Custodian shall apply in favor of the
Custodian during such period.

Section 17.5Reserves.  Notwithstanding the foregoing provisions of this Section
17, the Custodian may retain cash or securities or other financial assets of the
Fund as a reserve reasonably established by the Custodian to secure the payment
or performance of any obligations of the Fund secured by a security interest or
right of recoupment or setoff in favor of the Custodian.

Section 18. Remote Access Services Addendum.  The Custodian and the Fund agree
to be bound by the terms of the Remote Access Services Addendum hereto.

Section 19.Loan Services Addendum.  If the Fund directs the Custodian in writing
to perform loan services, the Custodian and the Fund will be bound by the terms
of the Loan Services Addendum attached hereto.  The Fund shall reimburse
Custodian for its fees and expenses related thereto as agreed upon from time to
time in writing by the Fund and the Custodian.

Section 20. General.

Section 20.1  Governing Law.  Any and all matters in dispute between the parties
hereto, whether arising from or relating to this Agreement, shall be governed by
and construed in accordance with laws of the Commonwealth of Massachusetts,
without giving effect to any conflict of laws rules.  Likewise, the law
applicable to all issues in Article 2(1) of the Hague Convention on the Law
Applicable to Certain Rights in respect of Securities Held with an Intermediary
is the law in force in the Commonwealth of Massachusetts.

Section 20.2  Prior Agreements; Amendments.  This Agreement supersedes all prior
agreements between the Fund and the Custodian relating to the custody of the
Fund’s assets.  This Agreement may be amended at any time in writing by mutual
agreement of the parties hereto.

Section 20.3  Assignment.  This Agreement may not be assigned by (a) the Fund
without the written consent of the Custodian or (b) the Custodian without the
written consent of the Fund.  However, without the consent the Fund, the
Custodian may assign this Agreement to a successor of all or a substantial
portion of its business, or to a party controlling, controlled by or under
common control with the Custodian.  Notwithstanding the foregoing, the Custodian
may employ, engage, associate or contract with such person or persons,
including, without limitation, affiliates

 

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and subsidiaries of the Custodian, as the Custodian may deem desirable to assist
it in performing certain of its non-custodial obligations under this Agreement
without the consent of the Fund; provided, however, that the compensation of
such person or persons shall be paid by the Custodian and that the Custodian
shall be as fully responsible to the Fund for the acts and omissions of any such
person or persons as it is for its own acts and omissions under this Agreement.

Section 20.4  Interpretive and Additional Provisions.  In connection with the
operation of this Agreement, the Custodian and the Fund may from time to time
agree on such provisions interpretive of or in addition to the provisions of
this Agreement as may in their joint opinion be consistent with the general
tenor of this Agreement.  Any such interpretive or additional provisions shall
be in a writing signed by all parties, provided that no such interpretive or
additional provisions shall contravene any applicable laws or regulations or any
provision of the Fund’s organic record and Prospectus.  No interpretive or
additional provisions made as provided in the preceding sentence shall be an
amendment of this Agreement.

Section 20.5  The Parties; Representations and Warranties.

20.5.1Fund Representations and Warranties.  The Fund hereby represents and
warrants that (a) it is duly organized and validly existing in good standing in
its jurisdiction of organization; (b) it has the requisite power and authority
under applicable law and its organic record to enter into and perform this
Agreement; (c) all requisite proceedings have been taken to authorize it to
enter into and perform this Agreement; (d) no legal or administrative
proceedings have been instituted or threatened which would materially impair the
Fund’s ability to perform its duties and obligations under this Agreement; and
(e) its entering into this Agreement shall not cause a material breach or be in
material conflict with any other agreement or obligation of the Fund or any law
or regulation applicable to it.

20.5.2Custodian Representations and Warranties.  The Custodian hereby represents
and warrants that (a) it is a trust company, duly organized and validly existing
under the laws of the Commonwealth of Massachusetts; (b) it has the requisite
power and authority to carry on its business in the Commonwealth of
Massachusetts; (c) all requisite proceedings have been taken to authorize it to
enter into and perform this Agreement; (d) no legal or administrative
proceedings have been instituted or threatened which would materially impair the
Custodian’s ability to perform its duties and obligations under this Agreement;
and (e) its entering into this Agreement shall not cause a material breach or be
in material conflict with any other agreement or obligation of the Custodian or
any law or regulation applicable to it.

Section 20.6  Notices.  Any notice, instruction or other communication required
to be given hereunder will, unless otherwise provided in this Agreement, be in
writing and may be sent by hand, or by facsimile transmission, or overnight
delivery by any recognized delivery service, to the parties at the following
addresses or such other addresses as may be notified by any party from time to
time.

 

To the Fund:

 

Great Elm Capital Corp.

 

 

c/o Great Elm Capital Management, Inc.

 

 

200 Clarendon St, 51st Floor

 

 

Boston, MA 02116

 

 

Attention:  General Counsel

 

 

Telephone: 617-375-3000

 

 

Telecopy: 617-247-7985

 

 

 

To the Custodian:

 

STATE STREET BANK AND TRUST COMPANY

 

 

100 Summer Street, Floor 5

 

 

Box 5501

 

 

Boston, MA 02206

 

 

Attention: James Meagher, Managing Director

 

 

State Street Alternative Investment Solutions

 

 

Telephone: 617-662-7310

 

 

Telecopy: 212-651-2393

 

 

 

with a copy to:

 

State Street Bank and Trust Company

 

 

Legal Division – Global Services Americas

 

 

P.O. Box 5049

 

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Boston, MA  02206-5049

 

 

Attention:  Senior Vice President and Senior Managing Counsel

Section 20.7  Counterparts.  This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original, and all such
counterparts taken together shall constitute one and the same
Agreement.  Counterparts may be executed in either original or electronically
transmitted form (e.g., faxes or emailed portable document format (PDF) form),
and the parties hereby adopt as original any signatures received in
electronically transmitted form.

Section 20.8  Severability; No Waiver.  If any provision of this Agreement shall
be held to be invalid, unlawful or unenforceable, the validity, legality and
enforceability of the remaining provisions shall not in any way be affected or
impaired.  The failure of a party hereto to insist upon strict adherence to any
term of this Agreement on any occasion or the failure of a party hereto to
exercise or any delay in exercising any right or remedy under this Agreement
shall not constitute a waiver of any the  term, right or remedy or a waiver of
any other rights or remedies, and no single or partial exercise of any right or
remedy under this Agreement shall prevent any further exercise of the right or
remedy or the exercise of any other right or remedy.

Section 20.9 Confidentiality.  All information provided under this Agreement by
a party (the “Disclosing Party”) to the other party (the “Receiving Party”)
regarding the Disclosing Party’s business and operations shall be treated as
confidential.  Subject to Section 20.10 below, all confidential information
provided under this Agreement by Disclosing Party shall be used, including
disclosure to third parties, by the Receiving Party, or its agents or service
providers, solely for the purpose of performing or receiving the services and
discharging the Receiving Party’s other obligations under the Agreement or
managing the business of the Receiving Party and its affiliates, including
financial and operational management and reporting, risk management, legal and
regulatory compliance and client service management.  The foregoing shall not be
applicable to any information (a) that is publicly available when provided or
thereafter becomes publicly available, other than through a breach of this
Agreement, (b) that is independently derived by the Receiving Party without the
use of any information provided by the Disclosing Party in connection with this
Agreement, (c) that is disclosed to comply with any legal or regulatory
proceeding, investigation, audit, examination, subpoena, civil investigative
demand or other similar process, (d) that is disclosed as required by operation
of law or regulation or as required to comply with the requirements of any
market infrastructure that the Disclosing Party or its agents direct the
Custodian or its affiliates to employ (or which is required in connection with
the holding or settlement of instruments included in the assets subject to this
Agreement), or (e) where the party seeking to disclose has received the prior
written consent of the party providing the information, which consent shall not
be unreasonably withheld.

Section 20.10  Use of Data.

(a)In connection with the provision of the services and the discharge of its
other obligations under this Agreement, the Custodian (which term for purposes
of this Section 20.10 includes each of its parent company, branches and
affiliates (“Affiliates”)) may collect and store information regarding the Fund
and share such information with its Affiliates, agents and service providers in
order and to the extent reasonably necessary (i) to carry out the provision of
services contemplated under this Agreement and other agreements between the Fund
and the Custodian or any of its Affiliates and (ii) to carry out management of
its businesses, including, but not limited to, financial and operational
management and reporting, risk management, legal and regulatory compliance and
client service management.

(b)Subject to paragraph (c) below, the Custodian and/or its Affiliates (except
those Affiliates or business divisions principally engaged in the business of
asset management) may use any data or other information (“Data”) obtained by
such entities in the performance of their services under this Agreement or any
other agreement between the Fund and the Custodian or one of its Affiliates,
including Data regarding transactions and portfolio holdings relating to the
Fund, and publish, sell, distribute or otherwise commercialize the Data;
provided that, unless the Fund otherwise consents, Data is combined or
aggregated with information relating to (i) other customers of the Custodian
and/or its Affiliates or (ii) information derived from other sources, in each
case such that any published information will be displayed in a manner designed
to prevent attribution to or identification of such Data with the Fund.  The
Fund agrees that Custodian and/or its Affiliates may seek to profit and realize
economic benefit from the commercialization and use of the Data, that such
benefit will constitute part of the Custodian’s compensation for services under
this Agreement or such other agreement, and the Custodian and/or its Affiliates
shall be entitled to retain and not be required to disclose the amount of such
economic benefit and profit to the Fund.

 

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(c)Except as expressly contemplated by this Agreement, nothing in this Section
20.10 shall limit the confidentiality and data-protection obligations of the
Custodian and its Affiliates under this Agreement and applicable law.  The
Custodian shall cause any Affiliate, agent or service provider to which it has
disclosed Data pursuant to this Section 20.10 to comply at all times with
confidentiality and data-protection obligations as if it were a party to this
Agreement.

Section 20.11  Reproduction of Documents.  This Agreement and all schedules,
addenda, exhibits, appendices, attachments and amendments hereto may be
reproduced by any photographic, photostatic, microfilm, micro-card, miniature
photographic or other similar process.  Any such reproduction shall be
admissible in evidence as the original itself in any judicial or administrative
proceeding, whether or not the original is in existence and whether or not such
reproduction was made by a party in the regular course of business, and any
enlargement, facsimile or further reproduction of such reproduction shall
likewise be admissible in evidence.

Section 20.12  Regulation GG.  The Fund  represents and warrants that it does
not engage in an “Internet gambling business,” as such term is defined in
Section 233.2(r) of Federal Reserve Regulation GG (12 CFR 233) and covenants
that it shall not engage in an Internet gambling business.  In accordance with
Regulation GG, the Fund is hereby notified that “restricted transactions,” as
such term is defined in Section 233.2(y) of Regulation GG, are prohibited in any
dealings with the Custodian pursuant to this Agreement or otherwise between or
among any party hereto.

Section 20.13  Shareholder Communications Election.  SEC Rule 14b-2 requires
banks that hold securities, as that term is used in federal securities laws, for
the account of customers to respond to requests by issuers of securities for the
names, addresses and holdings of beneficial owners of securities of that issuer
held by the bank unless the beneficial owner has expressly objected to
disclosure of this information.  In order to comply with the rule, as may be
applicable, the Custodian needs the Fund to indicate whether it authorizes the
Custodian to provide the Fund’s name, address, and share position to requesting
companies whose securities the Fund owns.  If the Fund tells the Custodian “no,”
the Custodian will not provide this information to requesting companies.  If the
Fund tells the Custodian “yes” or does not check either “yes” or “no” below, the
Custodian is required by the rule, as applicable, to treat the Fund as
consenting to disclosure of this information for all securities owned by the
Fund or any funds or accounts established by the Fund.  For the Fund’s
protection, the Rule, as applicable, prohibits the requesting company from using
the Fund’s name and address for any purpose other than corporate
communications.  Please indicate below whether the Fund consents or objects by
checking one of the alternatives below.

YES [  ]

The Custodian is authorized to release the Fund’s name, address, and share
positions.

NO  [X]

The Custodian is not authorized to release the Fund’s name, address, and share
positions.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

 

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Signature Page

In Witness Whereof, each of the parties has caused this Agreement to be executed
in its name and behalf by its duly authorized representative under seal as of
the date first above-written.

Great Elm Capital Corp.

 

By:

/s/ Peter Reed

 

Name: Peter Reed

 

Title: Chief Executive Officer

 

State Street Bank and Trust Company

 

By:

/s/ Joseph W Scott

Name:

Joseph W Scott

Title:

Insert

 

 

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