000128703206-30FALSE00012870322022-10-122022-10-120001287032us-gaap:CommonStockMember2022-10-122022-10-120001287032psec:A535SeriesAFixedRateCumulativePerpetualPreferredStockMember2022-10-122022-10-12
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of Earliest Event Reported): October 12, 2022 (October 7, 2022)
Prospect Capital Corporation
(Exact name of registrant as specified in its charter)
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| Maryland | | 814-00659 | | 43-2048643 |
| (State or other jurisdiction | | (Commission File Number) | | (IRS Employer |
| of incorporation) | | | | Identification No.) |
10 East 40th Street, 42nd Floor, New York, New York 10016
(Address of principal executive offices, including zip code)
(212) 448-0702
(Registrant’s telephone number, including area code)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| | | | | | | | |
| o | | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| | |
| o | | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| | |
| o | | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| | |
| o | | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities registered pursuant to Section 12(b) of the Act:
| | | | | | | | |
| Title of each class | Trading symbol | Name of each exchange on which registered |
| Common Stock, $0.001 par value | PSEC | NASDAQ Global Select Market |
| 5.35% Series A Fixed Rate Cumulative Perpetual Preferred Stock, par value $0.001 | PSEC PRA | New York Stock Exchange |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company o
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
Item 1.01. Entry into a Material Definitive Agreement.
On October 7, 2022, Prospect Capital Corporation (the “Company”) entered into an amendment (the “Amendment”) to the Amended and Restated Dealer Manager Agreement, dated February 18, 2022, with InspereX LLC (the “Dealer Manager”) and the other agents named therein from time to time (the “Dealer Manager Agreement”), pursuant to which the Dealer Manager has agreed to serve as the Company’s agent and dealer manager for the Company’s offering of up to 10,000,000 shares of any combination of its 5.50% Series AA1 Preferred Stock, 5.50% Series MM1 Preferred Stock, 6.50% Series AA2 Preferred Stock (“Series AA2 Shares”) and 6.50% Series MM2 Preferred Stock (“Series MM2 Shares”, and together with the Series AA2 Shares, the “New Preferred Shares”), each par value $0.001 per share, and each with a liquidation preference of $25.00 per share. The Amendment adds the New Preferred Shares to the Dealer Manager Agreement. The Company may offer any future series of Preferred Stock, provided that the aggregate number of shares issued across all series of Preferred Stock offered pursuant to the Dealer Manager Agreement shall not exceed 10,000,000 shares.
The New Preferred Shares are registered with the Securities and Exchange Commission pursuant to an automatic shelf registration statement on Form N-2 (File No. 333-236415) under the Securities Act of 1933, as amended (the “Registration Statement”), and will be offered and sold pursuant to a prospectus supplement dated February 18, 2022, as amended on October 7, 2022, and a base prospectus dated February 13, 2020, relating to the Registration Statement (collectively, the “Prospectus”).
The foregoing description of the Amendment is only a summary and is qualified in its entirety by reference to the full text of the Amendment, a copy of which is filed as Exhibit 1.1 to this Current Report on Form 8-K and incorporated herein by reference.
Venable LLP, special Maryland counsel to the Company, has issued a legal opinion relating to the validity of the New Preferred Shares, a copy of which is attached to this Form 8-K as Exhibit 5.1.
Item 3.03. Material Modification to Rights of Security Holders.
On October 11, 2022, in connection with the Amendment, the Company filed Articles Supplementary (the “Articles Supplementary”) with the State Department of Assessments and Taxation of Maryland (“SDAT”), reclassifying and designating 20,000,000 shares of the Company’s authorized and unissued shares of Common Stock into shares of Preferred Stock designated as “Convertible Preferred Stock, Series AA2,” and reclassifying and designating 20,000,000 shares of the Company’s authorized and unissued shares of Common Stock into shares of Preferred Stock designated as “Convertible Preferred Stock, Series MM2.” The reclassification decreased the number of shares classified as Common Stock from 1,652,100,000 shares immediately prior to the reclassification to 1,612,100,000 shares immediately after the reclassification. The description of the Preferred Stock contained in the section of the Prospectus entitled “Description of the Preferred Stock” is incorporated herein by reference.
The foregoing description of the Preferred Stock is only a summary and is qualified in its entirety by reference to the full text of the Articles Supplementary, a copy of which is filed as Exhibit 3.1 to this Current Report on Form 8-K and incorporated herein by reference.
Item 5.03. Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year.
Item 3.03 above with respect to the Articles Supplementary is incorporated in this Item 5.03 in its entirety.
Item 7.01. Regulation FD Disclosure.
The Company is declaring (with respect to the AA2 and MM2 Shares) distributions to preferred shareholders based on an annual rate equal to 6.50% of the stated value of $25 per share of the AA2 and MM2 Shares, from the
date of issuance or, if later, from the most recent dividend payment date (the first business day of the month),as follows:
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Series AA2 and MM2 Monthly Cash 6.50% Preferred Shareholder Distribution | Record Date | Payment Date | Monthly Amount ($ per share), before pro ration for partial periods |
October and November 2022 | 11/16/2022 | 12/1/2022 | $0.135417 |
The information disclosed under this Item 7.01 is being furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 and shall not be deemed incorporated by reference into any filing made under the Securities Act of 1933, except as expressly set forth by specific reference in such filing.
Item 8.01. Other Events.
Preferred Stock Dividend Reinvestment Plan
In connection with the Offering, effective as of October 7, 2022, the Company amended and restated its Preferred Stock Distribution Reinvestment Plan (the “DRIP”) to include the New Preferred Shares, as well as the Company’s 6.50% Series A3 Preferred Stock and 6.50% Series M3 Preferred Stock (collectively, the “Added Preferred Stock Series”). Under the DRIP, holders of the Added Preferred Stock Series (“preferred stockholders”) will have dividends on their Added Preferred Stock Series automatically reinvested in additional shares of such Added Preferred Stock Series at a price per share of $25.00 if they so elect. Once enrolled in the DRIP, preferred stockholders may elect to reinvest all, but not less than all, of their dividends in additional shares of the Added Preferred Stock Series, until they terminate their participation in the DRIP. The Company will pay all fees or other charges on shares of the Added Preferred Stock Series purchased through the DRIP.
Shares of the Added Preferred Stock Series purchased under the DRIP will come from the Company’s authorized but unissued shares of the Added Preferred Stock Series. Shares of the Added Preferred Stock Series received through the DRIP will be of the same series and have the same original issue date for purposes of calculating the fee associated with a preferred stockholder’s election to convert shares of the Added Preferred Stock Series held by the preferred stockholder prior to the listing of the Added Preferred Stock Series on a national securities exchange and for other terms of the Added Preferred Stock Series based on issuance date as the Added Preferred Stock Series for which the dividend was declared. The Company may terminate the DRIP at any time in its sole discretion. The description of the DRIP contained in the section of the Prospectus entitled “Preferred Stock Dividend Reinvestment Plan” is incorporated herein by reference.
The foregoing description of the DRIP is only a summary and is qualified in its entirety by reference to the full text of the DRIP, a copy of which is filed as Exhibit 99.1 to this Current Report on Form 8-K and incorporated herein by reference.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits
1.1 Amendment No. 1 to Amended and Restated Dealer Manager Agreement, dated October 7, 2022,
by and among the Company, Prospect Capital Management L.P., Prospect Administration LLC, InspereX LLC and the Agents named therein and added from time to time
3.1 Articles Supplementary to the Articles of Amendment and Restatement of Prospect Capital Corporation
5.1 Opinion of Venable LLP
99.1 Amended and Restated Preferred Stock Dividend Reinvestment Plan
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this Current Report on Form 8-K to be signed on its behalf by the undersigned hereunto duly authorized.
Prospect Capital Corporation
By: /s/ M. Grier Eliasek
Name: M. Grier Eliasek
Title: President and Chief Operating Officer
Date: October 12, 2022
Index to Exhibits
FIRST AMENDMENT
TO
AMENDED AND RESTATED
DEALER MANAGER AGREEMENT
THIS FIRST AMENDMENT TO AMENDED AND RESTATED DEALER MANAGER AGREEMENT (this “First Amendment”), effective as of October 7, 2022 (the “Effective Date”), is entered into by and among Prospect Capital Corporation, a corporation organized under the laws of Maryland (the “Company”), Prospect Capital Management L.P., a Delaware limited partnership registered as an investment adviser (the “Adviser”), Prospect Administration LLC, a Delaware limited liability company (the “Administrator”), and InspereX LLC (the “Dealer Manager”). Capitalized terms used herein without definition shall have the meanings ascribed to such terms in the Dealer Manager Agreement (defined below).
WHEREAS, the Company, the Adviser, the Administrator and the Dealer Manager are parties to that certain Amended and Restated Dealer Manager Agreement, dated February 18, 2022 (as may be amended from time to time, the “Dealer Manager Agreement”); and
WHEREAS, the Company, the Adviser, the Administrator and the Dealer Manager desire to amend the Dealer Manager Agreement to reflect the offering of two additional series of Preferred Stock.
NOW, THEREFORE, in consideration of the foregoing and of the mutual covenants and agreements contained herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:
1. Amendment to Article I.
The first paragraph of Article I of the Dealer Manager Agreement is hereby amended and superseded in its entirety with the following:
The Company has authorized and proposes to issue and sell, on the terms and subject to the conditions set forth herein, up to an aggregate of 10,000,000 shares (the “Authorized Amount”), par value $0.001 per share, any combination of its 5.50% Series AA1 Preferred Stock (the “AA1 Shares”) and its 6.50% Series AA2 Preferred Stock (the “AA2 Shares”, and together with the AA1 Shares, the “AA Shares”) and its 5.50% Series MM1 Preferred Stock (the “MM1 Shares”) and its 6.50% MM2 Preferred Stock (the “MM2 Shares”, and together with the MM1 Shares, the “MM Shares”), each with a liquidation preference of $25 per share (the “Liquidation Preference”) (such Authorized Amount of 10,000,000 AA Shares and MM Shares being referred to herein collectively as the “Preferred Stock”). The Company may offer any future series of Preferred Stock, provided that the aggregate number of shares issued across all series of Preferred Stock offered pursuant to this Agreement shall not exceed 10,000,000 shares. For the avoidance of doubt, the defined term “Preferred Stock” in this Agreement shall refer only to the Authorized Amount of 10,000,000 shares of Preferred Stock authorized for sale hereunder and shall not refer to any other class or series of preferred stock that the Company may offer, sell or have outstanding. The terms of the Preferred Stock are described in the prospectus referred to below. The Preferred Stock will be convertible into shares of the Company’s common stock, par value $0.001 per share (the “Underlying Securities”).
2. Amendment to Article II(b)(2).
Article II(b)(2) of the Dealer Manager Agreement is hereby amended and superseded in its entirety with the following:
“Prospectus” means, collectively, (i) the base prospectus relating to various securities of the Company that is included in the Registration Statement and (ii) the prospectus supplement relating to the Preferred Stock, filed by the Company with the Commission pursuant to Rule 424 prior to the offer and acceptance of the Preferred Stock, including, in each case, any supplement or amendment thereto and any document incorporated or deemed to be incorporated therein by reference, and which otherwise satisfies Section 10(a) of the 1933 Act.
3. Amendment to Exhibit D.
Exhibit D to the Dealer Manager Agreement is hereby superseded and replaced with Exhibit D attached hereto.
4. Amendment to Exhibit E.
Exhibit E to the Dealer Manager Agreement is hereby superseded and replaced with Exhibit E attached hereto.
5. Governing Law.
This First Amendment shall be governed by, and construed and interpreted in accordance with, the laws of the state of New York applicable to contracts executed in and to be performed in that state. Each party to this First Amendment irrevocably agrees that any legal action or proceeding against it arising out of or in connection with this First Amendment or for recognition or enforcement of any judgment rendered against it in connection with this First Amendment may be brought in any Federal or New York State court sitting in the Borough of Manhattan, and, by execution and delivery of this First Amendment, such party hereby irrevocably accepts and submits to the jurisdiction of each of the aforesaid courts in person, generally and unconditionally with respect to any such action or proceeding for itself and in respect of its property, assets and revenues. Each party hereby also irrevocably waives, to the fullest extent permitted by law, any objection which it may now or hereafter have to the laying of venue of any such action or proceeding brought in any such court and any claim that any such action or proceeding has been brought in an inconvenient forum. Each party hereto also irrevocably waives, to the fullest extent permitted by applicable law, any and all right to trial by jury in any legal proceeding arising out of or relating to this First Amendment or the transactions contemplated hereby.
6. Counterparts.
This First Amendment may be executed in any number of counterparts, each of which shall be an original, but all of which shall constitute one instrument.
Except as expressly set forth herein, the Dealer Manager Agreement remains unmodified and unchanged and the parties hereto ratify and confirm the Dealer Manager Agreement as amended hereby.
[Signature Page Follows]
IN WITNESS WHEREOF, the parties hereto have executed this First Amendment effective as of the Effective Date.
PROSPECT CAPITAL CORPORATION
By: /s/ Kristin Van Desk__________
Name: Kristin Van Dask
Title: Chief Financial Officer, Chief
Compliance Officer, and Secretary
PROSPECT CAPITAL MANAGEMENT, L.P.
By: Prospect Management Group GP LLC,
its General Partner
By: /s/ John Francis Barry III_____
Name: John Francis Barry III
Title: Authorized Signatory
PROSPECT ADMINISTRATION LLC
By: /s/ John Francis Barry III____
Name: John Francis Barry III
Title: Authorized Signatory
INSPEREX LLC
By: /s/Stephen Giles_____________
Name: Stephen Giles
Title: Head of Strategic Initiatives
[Signature Page to First Amendment to the Dealer Manager Agreement]
EXHIBIT D
Form of Final Term Sheet
PROSPECT CAPITAL CORPORATION (the “Issuer”)
5.50% Series AA1 Preferred Stock and 6.50% Series AA2 Preferred Stock (the “AA Shares”)
5.50% Series MM1 Preferred Stock and 6.50% Series MM2 Preferred Stock (the “MM Shares” and, together with the AA Shares, the “Preferred Stock”)
Prospectus Supplement dated February 18, 2022, and Supplement to Prospectus Supplement dated October 7, 2022
Offering Period:
Trade Date:
Settlement Date (T+3):
Dealer Manager: InspereX LLC
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
CUSIP NUMBER | DIVIDEND RATE | DIVIDEND FREQUENCY | MATURITY | FIRST DIVIDEND PAYMENT DATE | FIRST DIVIDEND PAYMENT AMOUNT | PUBLIC OFFERING PRICE | SELLING COMMISSION | DEALER MANAGER FEE | LISTING |
| [●] | [●]% | Monthly | Perpetual | [●] | [●] | Multiple Fixed ($23.75-$25.00)1 | Up to 4.875% of the Stated Value2 | 0.125% of the Stated Value | Subject to Issuer discretion3 |
Prospectus Supplement: Please review the prospectus supplement, which is available at [link to the prospectus supplement], and the supplement to the prospectus supplement, which is available at [link to the supplement to the prospectus supplement].
1The Preferred Stock will be sold to investors at multiple fixed price public offering prices ranging from $23.75 to $25 per share (the “Price Range”), which prices, if less than $25 per share, will be determined from time to time by the Dealer Manager, Agents and Selected Dealers, subject to the Issuer’s prior consent, prior disclosure in the Prospectus and be consistently applied to all sales to eligible customer accounts of the Dealer Manager, an Agent or a Selected Dealer, as applicable.
2 The Issuer will pay to the Dealer Manager a dealer manager fee equal to 0.125% of the Stated Value and a selling commission of up to 4.875% of the Stated Value which selling commission will be determined from time to time by the Issuer and the Dealer Manager.
3 The Issuer may elect to list the Preferred Stock on a national securities exchange at any time after issuance of the Preferred Stock but is not required to do so.
EXHIBIT E
Terms Agreement
5.50% Series AA1 Preferred Stock and 6.50% Series AA2 Preferred Stock (the “AA Shares”)
5.50% Series MM1 Preferred Stock and 6.50% Series MM2 Preferred Stock (the “MM Shares” and, together with the AA Shares, the “Preferred Stock”)
Prospect Capital Corporation
10 East 40th Street
New York, New York 10016
Attention: Treasurer
The undersigned agrees to purchase the following aggregate principal amount of Preferred Stock:
$__________
Total Number of Shares:
Stated Value: $25.00 per share
Dealer Manager Fee: 0.125% of Stated Value; as set forth in the pricing table attached hereto as Annex A (the “Pricing Table”)
Selling Commission: up to 4.875% of Stated Value; as set forth in the Pricing Table
Price to Dealer Manager: as set forth in the Pricing Table
Net Proceeds to Issuer: as set forth in the Pricing Table
The terms of such Preferred Stock shall be as follows:
CUSIP Number: [●]
Public Offering Price: $25.00 per share, except as otherwise set forth in the Pricing Table
Dividend Rate: [●]%
Dividend Frequency: Monthly
Maturity: Perpetual
Conversion Rights: As described in Prospectus Supplement dated February 18, 2022, and Supplement to Prospectus Supplement dated October [•], 2022
Redemption Rights: As described Prospectus Supplement in dated February 18, 2022, and Supplement to Prospectus Supplement dated October [•], 2022
Settlement Date: [●]
[Any other terms and conditions agreed to by the Dealer Manager and the Company]
INSPEREX LLC
By:
Title:
ACCEPTED
PROSPECT CAPITAL CORPORATION
By:
Title:
PROSPECT CAPITAL CORPORATION
ARTICLES SUPPLEMENTARY
CONVERTIBLE PREFERRED STOCK, SERIES AA2
CONVERTIBLE PREFERRED STOCK, SERIES MM2
Prospect Capital Corporation, a Maryland corporation (the “Corporation”), hereby certifies to the State Department of Assessments and Taxation of Maryland (the “SDAT”) as follows:
FIRST: Pursuant to the authority expressly vested in the Board of Directors of the Corporation (the “Board”) by Section 5.3 of the charter of the Corporation (the “Charter”) and Section 2-208 of the Maryland General Corporation Law, the Board, by resolutions duly adopted, (a) reclassified 20,000,000 authorized but unissued shares of common stock, par value $0.001 per share (the “Common Stock”), of the Corporation, as a new series of Convertible Preferred Stock, par value $0.001 per share (the “Convertible Preferred Stock”), classified and designated as Convertible Preferred Stock, Series AA2, having such preferences, voting powers, restrictions, limitations as to dividends and other distributions, qualifications and terms and conditions of redemption as set forth herein, and (b) reclassified 20,000,000 authorized but unissued shares of Common Stock as an additional series of Convertible Preferred Stock, classified and designated as Convertible Preferred Stock, Series MM2, having such preferences, voting powers, restrictions, limitations as to dividends and other distributions, qualifications and terms and conditions of redemption as set forth herein.
1.Designation; Number of Shares. The Board has duly adopted resolutions designating the following additional series of Convertible Preferred Stock:
20,000,000 shares of a series of preferred stock, designated as “Convertible Preferred Stock, Series AA2”, par value $0.001 per share (the “Series AA2 Shares”).
20,000,000 shares of a series of preferred stock, designated as “Convertible Preferred Stock, Series MM2”, par value $0.001 per share (the “Series MM2 Shares”).
The Series AA2 Shares and the Series MM2 Shares shall have the preferences, conversion or other rights, voting powers, restrictions, limitations as to dividends and other distributions, qualifications and terms and conditions of redemption of a series of Convertible Preferred Stock, as set forth in the Articles Supplementary establishing the Convertible Preferred Stock, filed with, and accepted for record by, the SDAT on August 3, 2020 (the “Original Articles Supplementary”), except as set forth herein. The Series AA2 Shares shall be considered “Shares” and “Series A Shares” for the purposes of the Original Articles Supplementary. The Series MM2 Shares shall be considered “Shares” and “M Shares” for the purposes of the Original Articles Supplementary. Terms used but not defined herein shall have the meaning assigned to such terms in the Original Articles Supplementary.
2.Dividends.
(a) The holders of the Series AA2 Shares shall be entitled to receive, when, as and if authorized by the Board and declared by the Corporation, out of funds legally available therefor, cumulative dividends at the annual rate of 6.50% of the Stated Value payable in cash or in additional Shares pursuant to the terms of any dividend reinvestment plan adopted by the
Corporation, payable monthly in arrears, in preference to dividends on shares of Common Stock and any other stock of the Corporation ranking junior to the Shares in payment of dividends.
(b) The holders of the Series MM2 Shares shall be entitled to receive, when, as and if authorized by the Board and declared by the Corporation, out of funds legally available therefor, cumulative dividends at the annual rate of 6.50% of the Stated Value payable in cash or in additional Shares pursuant to the terms of any dividend reinvestment plan adopted by the Corporation, payable monthly in arrears, in preference to dividends on shares of Common Stock and any other stock of the Corporation ranking junior to the Shares in payment of dividends.
SECOND: The Series AA2 Shares and the Series MM2 Shares have been classified and designated by the Board under the authority contained in the Charter.
THIRD: The undersigned officer of the Corporation acknowledges these Articles Supplementary to be the act of the Corporation and, as to all matters or facts required to be verified under oath, the undersigned officer acknowledges that, to the best of such officer’s knowledge, information and belief, these matters and facts are true in all material respects and that this statement is made under the penalties for perjury.
[SIGNATURE PAGE FOLLOWS]
IN WITNESS WHEREOF, the Corporation has caused these Articles Supplementary to be executed in its name and on its behalf by its President and Chief Operating Officer and attested to by its Chief Financial Officer, Chief Compliance Officer and Secretary on this day of October, 2022.
PROSPECT CAPITAL CORPORATION
By: /s/ M. Grier Eliasek
Name: M. Grier Eliasek
Title: President & Chief Operating
Officer
ATTEST:
/s/Kristin Van Dask
Name: Kristin Van Dask
Title: Chief Financial Officer, Chief
Compliance Officer & Secretary
October 12, 2022
Prospect Capital Corporation
10 East 40th Street, 44th Floor
New York, New York 10016
Re: Registration Statement on Form N-2:
1933 Act File No. 333-236415
Ladies and Gentlemen:
We have served as Maryland counsel to Prospect Capital Corporation, a Maryland corporation (the “Company”) and a business development company under the Investment Company Act of 1940, as amended (the “1940 Act”), in connection with certain matters of Maryland law arising out of the issuance of up to 20,000,000 shares of preferred stock, par value $0.001 per share, of the Company, classified and designated as Convertible Preferred Stock, Series AA2 and Series MM2 (collectively, the “Shares”), covered by the above-referenced Registration Statement, and all amendments thereto (collectively, the “Registration Statement”), filed by the Company with the United States Securities and Exchange Commission (the “Commission”) under the Securities Act of 1933, as amended (the “1933 Act”). The Shares are to be issued in a public offering (the “Offering”) pursuant to the Prospectus Supplement (as defined herein).
In connection with our representation of the Company, and as a basis for the opinion hereinafter set forth, we have examined originals, or copies certified or otherwise identified to our satisfaction, of the following documents (collectively, the “Documents”):
1. The Registration Statement;
2. The Prospectus, dated February 18, 2020, as supplemented by a Prospectus Supplement, dated February 18, 2022 and Supplement No. 1, dated as of October 7, 2022 (as supplemented, the “Prospectus Supplement”), filed with the Commission pursuant to Rule 424(b) under the 1933 Act;
3. The charter of the Company (the “Charter”), certified by the State Department of Assessments and Taxation of Maryland (the “SDAT”);
4. The Bylaws of the Company, certified as of the date hereof by an officer of the Company;
5. A certificate of the SDAT as to the good standing of the Company, dated as of a recent date;
Prospect Capital Corporation
October 12, 2022
Page 2
6. Resolutions adopted by the Board of Directors of the Company (the “Resolutions”), relating to, among other matters, the sale and issuance of the Shares and the Conversion Shares (as defined herein), certified as of the date hereof by an officer of the Company;
7. A certificate executed by an officer of the Company, dated as of the date hereof; and
8. Such other documents and matters as we have deemed necessary or appropriate to express the opinion set forth below, subject to the assumptions, limitations and qualifications stated herein.
In expressing the opinion set forth below, we have assumed the following:
1. Each individual executing any of the Documents, whether on behalf of such individual or another person, is legally competent to do so.
2. Each individual executing any of the Documents on behalf of a party (other than the Company) is duly authorized to do so.
3. Each of the parties (other than the Company) executing any of the Documents has duly and validly executed and delivered each of the Documents to which such party is a signatory, and such party’s obligations set forth therein are legal, valid and binding and are enforceable in accordance with all stated terms.
4. All Documents submitted to us as originals are authentic. The form and content of all Documents submitted to us as unexecuted drafts do not differ in any respect relevant to this opinion from the form and content of such Documents as executed and delivered. All Documents submitted to us as certified or photostatic copies conform to the original documents. All signatures on all Documents are genuine. All public records reviewed or relied upon by us or on our behalf are true and complete. All representations, warranties, statements and information contained in the Documents are true and complete. There has been no oral or written modification of or amendment to any of the Documents, and there has been no waiver of any provision of any of the Documents, by action or omission of the parties or otherwise.
5. Upon the issuance of any shares (the “Conversion Shares”) of common stock, $0.001 par value per share (the “Common Stock”), of the Company issuable upon the conversion of the Shares, the total number of shares of Common Stock issued and outstanding will not exceed the total number of shares of Common Stock that the Company is then authorized to issue under the Charter.
Based upon the foregoing, and subject to the assumptions, limitations and qualifications stated herein, it is our opinion that:
1. The Company is a corporation duly incorporated and existing under and by virtue of the laws of the State of Maryland and is in good standing with the SDAT.
Prospect Capital Corporation
October 12, 2022
Page 3
2. The issuance of the Shares has been duly authorized and, when issued and delivered by the Company pursuant to the Registration Statement, the Prospectus Supplement and the Resolutions against payment of the consideration set forth therein, the Shares will be validly issued, fully paid and nonassessable.
3. The issuance of the Conversion Shares has been duly authorized and, when and to the extent issued and delivered by the Company upon conversion of the Shares in accordance with the Registration Statement, the Prospectus Supplement, the Resolutions and the Charter, the Conversion Shares will be validly issued, fully paid and nonassessable.
The foregoing opinion is limited to the laws of the State of Maryland and we do not express any opinion herein concerning the laws of any other jurisdiction. We express no opinion as to the 1940 Act, or other federal securities laws, or state securities laws, including the securities laws of the State of Maryland, or as to federal or state laws regarding fraudulent transfers. To the extent that any matter as to which our opinion is expressed herein would be governed by the laws of any jurisdiction other than the State of Maryland, we do not express any opinion on such matter. The opinion expressed herein is subject to the effect of any judicial decision which may permit the introduction of parol evidence to modify the terms or the interpretation of agreements.
The opinion expressed herein is limited to the matters specifically set forth herein and no other opinion shall be inferred beyond the matters expressly stated. We assume no obligation to supplement this opinion if any applicable law changes after the date hereof or if we become aware of any fact that might change the opinion expressed herein after the date hereof.
This opinion is being furnished to you for submission to the Commission as an exhibit to the Registration Statement. We hereby consent to the filing of this opinion as an exhibit to the Registration Statement and to the use of the name of our firm therein. In giving this consent, we do not admit that we are within the category of persons whose consent is required by Section 7 of the 1933 Act.
Very truly yours,
/s/ Venable LLP
PREFERRED STOCK DIVIDEND REINVESTMENT PLAN
OF
PROSPECT CAPITAL CORPORATION
October 7, 2022
Prospect Capital Corporation, a Maryland corporation (the “Corporation”), hereby adopts the following plan (the “Preferred Stock Dividend Reinvestment Plan”) with respect to dividends declared by its Board of Directors on shares of its 5.50% Series A1 Preferred Stock, 5.50% Series M1 Preferred Stock, 5.50% Series M2 Preferred Stock, 5.50% Series AA1 Preferred Stock, 5.50% Series A2 Preferred Stock, 5.50% Series MM1 Preferred Stock, 6.50% Series A3 Preferred Stock, 6.50% Series M3 Preferred Stock, 6.50% Series AA2 Preferred Stock and 6.50% Series MM2 Preferred Stock (together with such other series as may be distinguished by the Board of Directors from time to time, the “Preferred Stock”). As used herein, “dividends” means dividends on Preferred Stock.
1.At the election of a stockholder, all dividends hereafter declared by the Board of Directors shall be payable in shares of Preferred Stock. In order to enroll in the Preferred Stock Dividend Reinvestment Plan, a stockholder must submit authorization to Computershare Trust Company, N.A., as agent for the stockholders in administering the Preferred Stock Dividend Reinvestment Plan (the “Plan Administrator”).
2.By enrolling in the Preferred Stock Dividend Reinvestment Plan, a stockholder is directing the Administrator to apply all, but not less than all, dividends to the purchase of additional shares of Preferred Stock in accordance with the Preferred Stock Dividend Reinvestment Plan’s terms and conditions. Unless otherwise instructed, the Plan Administrator will thereafter automatically reinvest all, but not less than all, dividends declared on shares of Preferred Stock held under the Preferred Stock Dividend Reinvestment Plan. If a stockholder who has enrolled in the Preferred Stock Dividend Reinvestment Plan pursuant to the terms and conditions stated herein (each a “Participant”), wants to discontinue the reinvestment of all dividends paid on their shares of Preferred Stock, they must provide written or telephonic notice to the Plan Administrator.
3.Dividends shall be payable on such date or dates as may be fixed from time to time by the Board of Directors to stockholders of record at the close of business on the record date(s) established by the Board of Directors for the dividend involved. The first dividend payable with respect to newly-issued shares of
Preferred Stock pursuant to the Corporation’s primary offering will be paid in cash, with subsequent dividends reinvested pursuant to the Preferred Stock Dividend Reinvestment Plan. If a Participant’s request to participate in the Preferred Stock Dividend Reinvestment Plan is received after the record date for a dividend, such dividend will be paid in cash and the initial dividend reinvestment will commence with the following dividend payment.
4.Shares of Preferred Stock received through the Preferred Stock Dividend Reinvestment Plan will be of the same series or sub-series and have the same original issue date for purposes of the Holder Optional Conversion Fee and for other terms of the Preferred Stock based on issuance date as the Preferred Stock for which the dividend was declared. Shares of Preferred Stock issued under the Preferred Stock Dividend Reinvestment Plan will come from our authorized but unissued shares of Preferred Stock. Fractional shares of Preferred Stock may be issued under the Preferred Stock Dividend Reinvestment Plan, subject to operating procedures of Depository Trust Company. Dividends on fractional shares, as well as on whole shares, will be reinvested in additional shares of Preferred Stock, which will be credited to a Participant’s Preferred Stock Dividend Reinvestment Plan account.
5.With respect to reinvested dividends, the market price for purchases of shares of Preferred Stock directly from the Corporation will be $25.00 per share, and the investment date will be the dividend payment date for the month. Dividend payment dates generally occur on the first business day of each month. Subject to operating procedures of Depository Trust Company, each Participant’s account will be credited with a full and fractional number of shares of Preferred Stock, equal to the total amount to be invested by such Participant, divided by the applicable purchase price per share.
6.The Plan Administrator will set up a dividend reinvestment account for shares acquired pursuant to the Preferred Stock Dividend Reinvestment Plan for each Participant. The Plan Administrator will hold each Participant’s shares, together with the shares of other Participants, in non-certificated form in the Plan Administrator’s name or that of its nominee.
7.The Corporation will pay all fees, the annual cost of administration and, unless provided otherwise in the Preferred Stock Dividend Reinvestment Plan, all other charges incurred in connection with the purchase of shares of Preferred Stock acquired under the Preferred Stock Dividend Reinvestment Plan, if any.
8.Dividends paid on the shares accumulated in the Preferred Stock Dividend Reinvestment Plan are included in the Form 1099-DIV information return sent annually to each stockholder. When applicable, proceeds received from sales transactions are included in the Form 1099-B information return sent annually to each stockholder. The automatic reinvestment of distributions will not relieve stockholders of any U.S. federal, state or local income tax that may be payable (or required to be withheld) on such distributions.
9.Participation in the Preferred Stock Dividend Reinvestment Plan may be terminated by a Participant at any time by notice to that effect to the Plan Administrator. To be effective for any given distribution, the notice to terminate must be received by the Plan Administrator, in writing, via the internet or the Plan Administrator’s toll free number, no later than the record date for the next dividend. If the notice to terminate is received after the record date for a dividend, then that dividend will be reinvested; however, all subsequent dividends will be paid out in cash on all balances.
10.Generally, an eligible holder of shares of Preferred Stock may again become a Participant in the Preferred Stock Dividend Reinvestment Plan. However, the Corporation reserves the right to reject the enrollment of a previous Participant in the Preferred Stock Dividend Reinvestment Plan on grounds of excessive joining and termination. This reservation is intended to minimize administrative expense and to encourage use of the Preferred Stock Dividend Reinvestment Plan as a long-term investment service.
11.The Corporation reserves the right to interpret and regulate the Preferred Stock Dividend Reinvestment Plan. The Corporation also reserves the right to suspend, modify or terminate the Preferred Stock Dividend Reinvestment Plan at any time. Participants will be notified of any suspension, modification or termination of the Preferred Stock Dividend Reinvestment Plan. Upon the termination of the Preferred Stock Dividend Reinvestment Plan any whole book-entry shares owned will continue to be credited to a Participant’s account unless specifically requested otherwise.
12.Any shares of Preferred Stock distributed by the Corporation as a dividend on shares of Preferred Stock credited to a Participant’s account under the Preferred Stock Dividend Reinvestment Plan, or upon any split of such shares of Preferred Stock, will be credited to such Participant’s account. Stock dividends or splits distributed on all other shares of Preferred Stock held by a Participant and registered in their own name will be mailed directly to such Participant.
13.If a Participant disposes of all shares of Preferred Stock registered in their name, but does not give notice of withdrawal to the Plan Administrator, the Plan Administrator will continue to reinvest the dividends on any shares of Preferred Stock held in such Participant’s account under the Preferred Stock Dividend Reinvestment Plan until the Plan Administrator is otherwise notified.
14.Any voting rights attributable to the shares of Preferred Stock credited to a Participant’s account under the Preferred Stock Dividend Reinvestment Plan will be voted in accordance with such Participant’s instructions. If a Participant does not hold shares of Preferred Stock in their own name, such Participant will be furnished with a form of proxy covering the shares of Preferred Stock credited to such Participant’s account under the Preferred Stock Dividend Reinvestment Plan to which any such voting rights are attributable. If a Participant does hold shares of Preferred Stock in their own name, such Participant’s proxy will be deemed to include shares of Preferred Stock, if any, credited to their account under the Preferred Stock Dividend Reinvestment Plan to which any such voting rights are attributable, and the shares of Preferred Stock held under the Preferred Stock Dividend Reinvestment Plan will be voted in the same manner as the shares of Preferred Stock registered in their own name. If a proxy is not returned by a Participant, none of such Participant’s shares of Preferred Stock to which any such voting rights are attributable will be voted unless such Participant votes in person. If a Participant wants to vote in person at a meeting of stockholders, a proxy for shares of Preferred Stock credited to their account under the Preferred Stock Dividend Reinvestment Plan to which any such voting rights are attributable may be obtained upon written request received by the Plan Administrator at least 15 days before the meeting.
15.Participants may not pledge any shares of Preferred Stock held in their Preferred Stock Dividend Reinvestment Plan account. Any pledge of shares of Preferred Stock in a Preferred Stock Dividend Reinvestment Plan account is null and void. If a Participant wishes to pledge shares of Preferred Stock, they must first withdraw those shares of Preferred Stock from the Preferred Stock Dividend Reinvestment Plan.
16.Recordkeeping functions under the Preferred Stock Dividend Reinvestment Plan are provided by the Plan Administrator.
17.Neither the Administrator, nor any independent agent, will be liable in administering the Preferred Stock Dividend Reinvestment Plan for any act done in good faith or any omission to act in good faith in connection with the Preferred
Stock Dividend Reinvestment Plan. This limitation includes, but is not limited to, any claims of liability relating to: (1) the failure to terminate a Participant’s Preferred Stock Dividend Reinvestment Plan account upon such Participant’s death prior to receiving written notice of such death; (2) the purchase prices reflected in a Participant’s Preferred Stock Dividend Reinvestment Plan account or the dates of purchases of Preferred Stock under the Preferred Stock Dividend Reinvestment Plan; or (3) any loss or fluctuation in the market value of shares of Preferred Stock after the purchase of shares of Preferred Stock under the Preferred Stock Dividend Reinvestment Plan. Further, in no event shall the Corporation, the Plan Administrator or their agents have any liability as to any inability to purchase shares of Preferred Stock, or as to the timing of any purchase. The foregoing limitation of liability does not represent a waiver of any rights a Participant may have under applicable securities laws.
18.The Participant agrees to notify the Plan Administrator promptly of any change of address. Notices to the Participant may be given by letter addressed to the Participant at the last address of record with the Plan Administrator.
19.These terms and conditions may be amended or supplemented by the Corporation at any time but, except when necessary or appropriate to comply with applicable law or the rules or policies of the Securities and Exchange Commission or any other regulatory authority, only by mailing an appropriate notice at least thirty (30) days prior to the effective date thereof to the Participant’s last address of record. The amendment or supplement shall conclusively be deemed to be accepted by the Participant unless prior to the effective date thereof the Plan Administrator receives written notice of the termination or participation in the Preferred Stock Dividend Reinvestment Plan. Any such amendment may include the appointment by the Plan Administrator in its stead and place a successor plan administrator under these terms and conditions, with full power and authority to perform all or any of the acts to be performed by the Plan Administrator under these terms and conditions. Upon any such appointment of any agent for the purpose of receiving dividends and distributions, the Corporation will be authorized to pay to such successor agent, for each Participant’s account, all dividends and distributions payable on shares of the Corporation held in the Participant’s name or under the Preferred Stock Dividend Reinvestment Plan for retention or application by such successor agent as provided in these terms and conditions.
20.The Plan Administrator will at all times act in good faith and use its best efforts within reasonable limits to ensure its full and timely performance of all services to
be performed by it under this Plan and to comply with applicable law, but assumes no responsibility and shall not be liable for loss or damage due to errors unless such error is caused by the Plan Administrator’s negligence, bad faith, or willful misconduct or that of its employees or agents.
21.These terms and conditions shall be governed by and construed in accordance with the laws of the State of New York without regard to its conflicts of law principles and applicable rules and regulations of the Securities and Exchange Commission. These terms and conditions cannot be changed orally.
