FILE NO. 812-
Before the
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
In the Matter of the Application of:
PROSPECT CAPITAL CORPORATION
PRIORITY INCOME FUND, INC.
PROSPECT FLEXIBLE INCOME FUND, INC.
PROSPECT CAPITAL MANAGEMENT L.P.
PRIORITY SENIOR SECURED INCOME MANAGEMENT,
LLC
APPLICATION FOR AN ORDER
PURSUANT TO SECTION 6(c) OF THE INVESTMENT COMPANY ACT OF 1940
GRANTING AN EXEMPTION FROM SECTION 12(d)(3) OF THE ACT AND
RULE 12d3-1 UNDER THE ACT
All Communications, Notices and Orders to:
Prospect Capital Corporation
10 East 40th Street, 42nd Floor
New York, NY 10016
Attention: Russell Wininger
(646) 536-3992
Copies to:
Steven B. Boehm, Esq.
Eversheds Sutherland (US) LLP
700 6th Street NW
Washington, DC 20001
(202) 383-0176
August 5, 2021
UNITED STATES OF AMERICA
Before the
SECURITIES AND EXCHANGE COMMISSION
In
the Matter of
PROSPECT CAPITAL CORPORATION
PRIORITY INCOME FUND, INC.
PROSPECT FLEXIBLE INCOME FUND, INC.
PROSPECT CAPITAL MANAGEMENT
L.P.
PRIORITY
SENIOR SECURED INCOME MANAGEMENT, LLC
10
East 40th Street, 42nd Floor
New York, NY 10016
File No. 812-
Investment Company Act of 1940
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APPLICATION
FOR AN ORDER PURSUANT TO SECTION 6(c) OF THE INVESTMENT COMPANY ACT OF 1940 GRANTING AN EXEMPTION FROM
SECTION 12(d)(3) OF THE ACT AND RULE 12d3-1 UNDER THE ACT
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INTRODUCTION
In this application
(the “Application”), (i) Prospect Capital Corporation (“PSEC”), a Maryland corporation organized as a
closed-end management investment company that has elected to be regulated as a business development company under the Investment
Company Act of 1940, as amended, and the rules and regulations promulgated thereunder (the “1940 Act”), (ii) Priority
Income Fund, Inc. (“PRIS”), a Maryland corporation organized as a closed-end management investment company that has
registered as an investment company under the 1940 Act, (iii) Prospect Flexible Income Fund, Inc. (f/k/a TP Flexible Income Fund,
Inc.) (“FLEX” and, together with PSEC, PRIS and any Future Regulated Fund,1 each, a “Company”
and collectively, the “Companies”), a Maryland corporation organized as a closed-end management investment company
that has elected to be regulated as a business development company under the 1940 Act, (iv) Prospect Capital Management L.P. (“PCM”),
a Delaware limited partnership that is registered as an investment adviser under the Investment Advisers Act of 1940, as amended
(the “Advisers Act”), that serves as the investment adviser of PSEC and FLEX, and (v) Priority Senior Secured Income
Management, LLC (“PRISM” and, together with PCM and any future investment adviser that controls, is controlled by
or is under common control with PCM and is registered as an investment adviser under the Advisers Act, each, an “Adviser”),
a Delaware limited liability company that is registered as an investment adviser under the Advisers Act, that serves as the investment
adviser of PRIS (each Adviser, together with each Company, the “Applicants”), apply for and request an order of the
Securities and Exchange Commission (the “Commission”) pursuant to Section 6(c) of the 1940 Act, exempting the Applicants
(1) from the provisions of Section 12(d)(3) of the 1940 Act and Rule 12d3-1 thereunder in order to permit the Companies to acquire
the securities of various investment managers, each of which the Applicants believe will be an issuer that derives more than 15%
of its gross revenues from “securities related activities,” as such term is defined in Rule 12d3-1(d)(1) under the
1940 Act, in excess of the quantitative limitations set forth in Rule 12d3-1(b).
1 For purposes of this Application,
“Future Regulated Fund” means any closed-end management investment company (a) that is registered under the 1940 Act
or has elected to be regulated as a business development company and (b) whose investment adviser is an Adviser. For purposes
of this Application, “Applicants” means each Adviser and each Company or any successor to an Adviser or a Company,
respectively. For the purposes of the requested order, “successor” is limited to an entity or entities that result
from a reorganization into another jurisdiction or a change in the type of business organization.
We believe that
the conditions hereto (the “Conditions”), when applied to such Future Regulated Funds, would provide the same level
of shareholder protection as those Conditions provide when applied to the Applicants here. Future Regulated Funds would operate
in fundamentally the same way as the existing Companies here. That is, they will invest primarily in private debt and, if the
relief sought here is granted, to invest in Investment Managers (as defined herein). Moreover, because the Future Regulated Funds
would operate substantially the same as the existing Companies, the Conditions set forth herein should provide the same level
of protection to their shareholders as they would to the shareholders of the Companies. We note that the Staff, in the context
of orders for co-investment relief, regularly approves applications that cover future entities.2 As with those orders,
the relief requested here will be subject to Conditions that apply equally to existing and future entities. Accordingly, we see
no reason to distinguish the applicability of relief for Future Regulated Funds in the context of co-investment on the one hand,
and in the context of Section 12(d)(3) relief on the other.
This application for
exemption is made on the grounds that such exemption is appropriate in the public interest and consistent with the protection of
investors and the purposes fairly intended by the policy and provisions of the 1940 Act. The relief requested by the Applicants
will be referred to herein as “Relief.” No form having been specifically prescribed for this application, the Applicants
proceed under Rule 0-2 of the General Rules and Regulations of the Commission under the 1940 Act.
BACKGROUND
A. General
PSEC is a Maryland
corporation organized as a closed-end management investment company that has elected to be regulated as a business development
company under Section 54 of the 1940 Act.3 PSEC’s investment objective is to generate both current income and
long-term capital appreciation through debt and equity investments. PSEC invests primarily in senior and subordinated debt and
equity of private companies in need of capital for acquisitions, divestitures, growth, development, recapitalizations and other
purposes. PSEC had $5.2 billion in total assets under management as of March 31, 2020.
PRIS is a Maryland
corporation organized as a closed-end management investment company that has registered as an investment company under the 1940
Act. PRIS’s investment objective is to generate current income and, as a secondary objective, long-term capital appreciation.
PRIS had $571 million in total assets under management as of December 31, 2019.
FLEX is a Maryland
corporation organized as a closed-end management investment company that has elected to be regulated as a business development
company under the 1940 Act. FLEX’s investment objective is to generate current income and, as a secondary objective, long-term
capital appreciation. FLEX had $41.3 million in total assets under management as of March 31, 2020.
The companies in
which the Companies would invest will be private companies engaged exclusively in the investment management business (each, an
“Investment Manager”), with the exception that certain Investment Managers may, through affiliates or subsidiaries,
also provide limited broker-dealer services in connection with distribution of their investment products or as part of a wealth
management business. None of the Investment Managers will be part of a larger financial institution.
2 See, e.g., Prospect
Capital Corporation, et al., Investment Company Act Release Nos. 33745 (January 13, 2020) (order) and 33716 (December 12, 2019)
(notice).
3 Section 2(a)(48) of the
1940 Act defines a business development company to be any closed-end investment company that operates for the purpose of making
investments in securities described in Sections 55(a)(1) through 55(a)(3) of the 1940 Act, makes available significant managerial
assistance with respect to the issuers of such securities and has elected to be subject to the provisions of Sections 55 through
65 of the 1940 Act.
Each Company intends
to provide debt capital to Investment Managers, including Investment Managers that are expected to be registered under the Advisers
Act. The debt capital to be provided by a Company and/or its Affiliates (as defined below) will involve a transaction whereby
in exchange for a non-voting, non-controlling loan, each Investment Manager will issue a debt security, including a participating
convertible debt security, to such Company (each, a “Note” and such loan, a “Loan”). Each Note will have
a coupon and may provide for repayment of principal at the Note’s maturity in the event that it is not converted into equity
of the underlying Investment Manager at such time. Such participation-based payment structure of each of the Notes is expected
to be based on the revenues of the underlying Investment Manager, or on its assets under management. If converted into equity,
in general it is expected that in most cases the equity received from the conversion of the Notes would consist of non-voting
securities and in any case would not represent more than 25% of the outstanding voting securities, or otherwise constitute control,
of the underlying Investment Manager. The Applicants believe that each Note will be an “investment security” as defined
in Section 3(a)(2) of the 1940 Act. The Notes will not be actively or publicly traded; rather, they will be purchased by a Company
in highly negotiated “one-off” private transactions and, generally, held to maturity.
Each Company has
elected to be treated as a registered investment company under Subchapter M of the Internal Revenue Code of 1987, as amended (the
“Code”).
B. The Advisers
PSEC is externally
managed by PCM. PCM is a Delaware limited partnership and an investment adviser registered with the Commission pursuant to Section
203 of the Advisers Act. PCM is led by John F. Barry III. Mr. Barry is the Chairman and Chief Executive Officer of PSEC and controls
PCM.
PRIS is externally
managed by PRISM. PRISM is a Delaware limited liability company and an investment adviser registered with the Commission pursuant
to Section 203 of the Advisers Act.
FLEX is externally
managed by PCM. PCM is a Delaware limited partnership and an investment adviser registered with the Commission pursuant to Section
203 of the Advisers Act. PCM is led by John F. Barry III. Mr. Barry is the Chairman and Chief Executive Officer of PSEC and controls
PCM.
C. The Companies’ Investments
in Investment Managers
Set forth below
are the respective investment strategies for each Company as described in its respective registration statement on Form N-2, other
filings such Company has made with the Commission under the Securities Act of 1933, as amended, the Securities Exchange Act of
1934, as amended, and such Company’s reports to shareholders (collectively, the “Investment Strategies”).
PSEC’s investment
objective is to generate both current income and long-term capital appreciation through debt and equity investments. PSEC focuses
on making investments in private companies. PSEC invests primarily in first and second lien secured loans and unsecured debt,
which in some cases includes an equity component. First and second lien secured loans generally are senior debt instruments that
rank ahead of unsecured debt of a given portfolio company. These loans also have the benefit of security interests on the assets
of the portfolio company, which may rank ahead of or be junior to other security interests. PSEC’s investments in collateralized
loan obligations (“CLOs”) are subordinated to senior loans and are generally unsecured. PSEC’s investments have
generally ranged between $5 million and $250 million each, although the investment size may be more or less than this range. PSEC
invests in debt and equity positions of CLOs which are a form of securitization in which the cash flows of a portfolio of loans
are pooled and passed on to different classes of owners in various tranches. PSEC’s CLO investments are derived from portfolios
of corporate debt securities which are generally risk rated from BB to B.
PRIS’ investment
objective is to generate current income and, as a secondary objective, long-term capital appreciation. PRIS seeks to achieve its
investment objective by investing, under normal circumstances, at least 80% of its total assets, or net assets plus borrowings,
in senior secured loans made to companies whose debt is rated below investment grade or, in limited circumstances, unrated, which
we collectively refer to as “Senior Secured Loans,” with an emphasis on current income. These investments, which are
often referred to as “junk” or “high yield,” have predominantly speculative characteristics with respect
to the issuer’s capacity to pay interest and repay principal. They may also be difficult to value and illiquid. PRIS’
investments may take the form of the purchase of Senior Secured Loans (either in the primary or secondary markets) or through
investments in entities that in turn own a pool of Senior Secured Loans. PRIS may invest in Senior Secured Loans directly or in
any security issued by a CLO to implement its investment objective but have invested primarily in the equity and junior debt tranches
of CLOs. The Senior Secured Loans within a CLO are limited to Senior Secured Loans which meet specified credit and diversity criteria
and are subject to concentration limitations in order to create an investment portfolio that is diverse by Senior Secured Loan,
borrower, and industry, with limitations on non-U.S. borrowers.
FLEX’s investment
objective is to generate current income and, as a secondary objective, long-term capital appreciation. FLEX intends to primarily
lend to and invest in the debt of privately-owned U.S. middle market companies. FLEX expects to focus primarily on making investments
in syndicated senior secured first lien loans, syndicated senior secured second lien loans, and to a lesser extent, subordinated
debt, of middle market companies in a broad range of industries. Syndicated secured loans refer to commercial loans provided by
a group of lenders that are structured, arranged, and administered by one or several commercial or investment banks, known as
arrangers. These loans are then sold (or syndicated) to other banks or institutional investors. Syndicated secured loans may have
a first priority lien on a borrower’s assets (i.e., senior secured first lien loans), a second priority lien on a borrower’s
assets (i.e., senior secured second lien loans), or a lower lien or unsecured position on the borrower’s assets (i.e., subordinated
debt).
The Companies would
apply their Investment Strategies, as set forth above, to the same extent to Investment Managers as they do to other types of
portfolio companies. Thus, in particular, the Companies’ principal focus would be on the debt of Investment Managers. Aside
from the 25% limitation discussed above, at this point, the Applicants do not expect to have additional specific quantitative
limitations on the debt securities of the Investment Managers in which the Companies will invest, although the Applicants anticipate
that the types of investments the Companies will make will align with the rest of the investments in the Companies’ respective
portfolio.
Due to the fact
that most of the issuers of the Notes are expected to be registered investment advisers and it is expected that most investments
in the Notes will exceed the quantitative limitations set forth in Rule 12d3-1(b), absent exemptive relief, the Applicants would
not be in compliance with Section 12(d)(3) or Rule 12d3-1 of the 1940 Act. In certain instances, and for separate business reasons,
the actual issuer of the Note may not be the registered investment adviser itself, but instead a company that holds an ownership
interest in the registered investment adviser (i.e., a holding company). The prospect that Notes may be issued by an entity
other than the registered investment adviser will be disclosed in the applicable Company’s prospectus.
The Applicants
expect that more than 15% of the revenues of each Investment Manager will be from “securities related activities”
as such term is defined in Rule 12d3-1(d)(1) of the 1940 Act. The Applicants believe the majority of each Investment Manager’s
revenue will be earned by charging fees based upon assets under management, investment performance or from securities-related
transactions. The amount of the Company’s investments in each of the Notes, which the Applicants believe will be treated
as equity securities for purposes of Rule 12d3-1, will likely constitute more than 5% of the outstanding equity securities of
an Investment Manager at the time of the investment. However, in certain instances an investment by a Company may constitute less
than 5% of the outstanding equity securities of an Investment Manager at the time of the investment. In the event a Company invests
in Notes of an Investment Manager that are treated as debt securities for purposes of Rule 12d3-1, the principal amount of that
debt will likely exceed 10% of the outstanding principal amount of the Investment Manager’s debt securities. However, in
certain instances an investment by a Company may constitute less than 10% of the outstanding principal amount of an Investment
Manager’s debt securities at the time of the investment in a Note.
In addition, the
Applicants believe that there may be instances in which more than 5% of the value of a Company’s total assets will be invested
in each of several Investment Managers. In order to comply with the Code’s diversification requirements for regulated investment
companies,4 it is contemplated that, with respect to at least 50% of a Company’s total assets, each of the investments
in an Investment Manager will not constitute more than 5% of a Company’s total assets at the time of investment. However,
with respect to the remaining 50% of a Company’s total assets, such Company may make investments that each constitute more
than 5% but less than 25% of the value of such Company’s total assets, as measured at the time of investment. In any
event, the Companies will not invest all or most of their assets in Investment Managers.
4 Code Section 851(b)(3)
requires that at least 50% of the value of a regulated investment company’s total assets is represented by (i) cash and
cash items (including receivables), government securities and securities of other regulated investment companies, and (ii) other
securities for purposes of this calculation limited, except and to the extent provided in subsection (e), which relates to the
furnishing of capital to development corporations, in respect of any one issuer to an amount not greater in value than 5% of the
value of the total assets of the taxpayer and to not more than 10% of the outstanding voting securities of such issuer. For purposes
of the Code’s diversification requirements, Notes are treated the same as equity securities.
PSEC and FLEX,
from time-to-time, provide managerial assistance to Investment Managers in which they have invested. These efforts could include
advice regarding financing, operations, or other elements of their businesses. To the extent that PSEC and FLEX engage in such
activities, the policy concerns about reciprocal practices—the prevention of which underlies a policy of Section 12(d)(3)—could
be implicated. However, all of the Applicants will comply with Conditions 1 and 5 of this Application, which enforce the policy
considerations relating to reciprocal practices, and thus will not engage in such reciprocal practices.
We note that the
Applicants are unlikely to have a relationship with investee Investment Managers such that the Applicants would be able to influence
the operations of the investee Investment Managers, including the direction of business to other portfolio Investment Managers.
APPLICABLE LAW AND EXEMPTIVE RELIEF
REQUESTED
Section 6(c) of the
1940 Act provides that the Commission may conditionally or unconditionally exempt any person, security or transaction from any
provision of the 1940 Act or any rule thereunder, if and to the extent that such exemption is necessary or appropriate in the public
interest and consistent with the protection of investors and the purposes fairly intended by the policy and provisions of the 1940
Act.
Section 12(d)(3) of
the 1940 Act prohibits a registered investment company from acquiring any security issued by any person who is a broker, dealer,
engaged in the business of underwriting, or a registered investment adviser. Section 60 of the 1940 Act extends the prohibitions
of Section 12(d)(3) to issuers that have elected to be treated as business development companies under the 1940 Act. Rule 12d3-1
provides two exemptions from Section 12(d)(3)’s prohibitions. First, paragraph (a) of Rule 12d3-1 provides an exemption from
Section 12(d)(3) to permit an investment company to purchase the securities of an issuer (except the securities of its own investment
adviser, promoter or principal underwriter or their affiliates), provided that the issuer’s revenues from “securities
related activities” in its most recent fiscal year do not exceed 15% of the issuer’s gross revenues. In addition, paragraph
(b) of Rule 12d3-1 establishes a separate exemption to permit an investment company to acquire any security of an issuer that derives
more than 15% of its gross revenues from securities related activities, provided that, among other things, immediately after the
acquisition of an equity or debt security of the issuer: (i) the investment company has not invested more than 5% of the value
of its total assets in securities of that issuer; and (ii) the investment company owns not more than 5% of the outstanding securities
of that class of the issuer’s securities or 10% of the outstanding principal amount of the issuer’s debt securities,
as applicable. Subparagraph (d)(1) of Rule 12d3-1 defines “securities related activities” to mean a person’s
activities as a broker, dealer, underwriter or registered investment adviser or investment adviser to a registered investment company.
The Applicants
hereby apply for an order pursuant to Section 6(c) of the 1940 Act exempting the Companies from the provisions of Section 12(d)(3)
of the 1940 Act to the extent necessary to permit each Company to invest in the equity and debt securities of various Investment
Managers, each of which the Applicants believe will be an issuer that derives more than 15% of its gross revenues from “securities
related activities,” in excess of the quantitative limitations set forth in Rule 12d3-1(b). The Companies will comply with
all other requirements of Rule 12d3-1. Prior to any Loan to an Investment Manager, a Company will require such Investment Manager
to contractually agree to be bound by the terms of the Conditions of this Application.
DISCUSSION
A. Purposes of Section 12(d)(3)
The Commission
has stated that “[w]hile the reasons for Congress prohibiting investment company investments in securities related businesses
are not addressed in much detail in the 1940 Act’s legislative history, it appears that Congress had two purposes.”5
First, Congress wished to limit, at least to some extent, the exposure of registered investment companies to entrepreneurial
risks peculiar to securities related businesses.” The Commission further stated that “[a] second purpose of the provision
appears to have been to prevent potential conflicts of interest and reciprocal practices.”6 Section 12(d)(3)
is one of several provisions of the 1940 Act designed to limit, and in some instances eliminate, interrelationships between investment
companies and brokers, dealers, underwriters and investment advisers.7 However, as the Commission acknowledged in the
proposing release to Rule 12d3-1, the “evidence indicates that today [Section 12(d)(3)] often prevents investment companies
from making investments that may be in the best interests of their shareholders.”8
1. Avoiding the Entrepreneurial
Risks of Securities Related Businesses.
The Applicants
do not believe that the Companies’ respective investments in various Investment Managers raise the same type of entrepreneurial
risks that may have concerned Congress in enacting Section 12(d)(3). The Commission has stated in regards to the entrepreneurial
risks that, “aside from general partnership interests, investments in securities related businesses need not be subject
to any special standards not applicable to investments in other businesses, except to address the potential for conflicts of interest
and reciprocal practices.”9 The Commission has noted that, since 1940, the ownership structure of most securities
related issuers has changed from a partnership to a corporate form, resulting in the limited liability status of these entities.10
The Commission has further stated that “[a]side from general partnership interests, investments in securities issued
by securities related businesses need not be subject to any special standards not applicable to investments in other businesses,
except to address the potential for conflicts of interests and reciprocal practices.”11
The Applicants
do not believe there is a large number of Investment Managers in existence in the United States that are not organized as corporations
or other limited liability entities; however, the Companies will invest only in Investment Managers that are organized as corporations
or other limited liability entities.
Congress’
concerns regarding entrepreneurial risk will also be mitigated by disclosure to investors in each Company’s ongoing public
filings with the Commission, as such disclosure will describe the fact that such Company’s business includes purchasing
Notes in Investment Managers. As a result, investors in a Company will be informed of the risks, including entrepreneurial risk,
of investing in such types of entities. Therefore, only persons or entities that explicitly intend and desire to have exposure
to Investment Managers will purchase shares in a Company, and, as such, the Applicants believe that a Company’s investments
in Investment Managers will be in the best interests of such Company’s shareholders.
2. Elimination of Reciprocal Practices
Between Investment Companies and Securities Related Businesses.
In addition to
limiting the entrepreneurial risks of investing in securities related businesses, the practical effect of Section 12(d)(3) is
to eliminate the possibility of certain conflicts of interest and reciprocal practices between investment companies and securities
related businesses.12
5 Investment Company Act
Release No. 13725 (January 17, 1984). See also Stadulis and Levin, SEC Regulation of Investment Company Investments in
Securities Related Business under the Investment Company Act of 1940, 2 Villanova J. Law & Investment Management 9 (Spring
2000) for the statement that “[t]he legislative history of the Investment Company Act is virtually silent concerning the
intended scope and purpose of section 12(d)(3).”)
6 Continuing, “[t]he
provisions of the section generally are intended to prevent … cross-control situations which might result in investment
companies being organized, operated, managed, or their portfolio securities selected in the interests of brokers, dealers, underwriters,
and investment advisers, whether or not these entities are affiliated persons of the companies.” Id.
7 See Investment Company Act Release No.
13725 (January 17, 1984).
8 Id.
9 Continuing, “[i]n
1940, securities related businesses, for the most part, were organized as privately held general partnerships. By investing in
such businesses, investment companies exposed themselves to potential losses which were not present in other types of investments;
if the business failed, the investment company as a general partner was held accountable for the partnership’s liabilities.”
Investment Company Act Release No. 19716 (September 16, 1993).
10 Id.
11 Id.
12 See Investment
Company Act Release No. 13725.
In general, the
Applicants believe that there are very few possible situations where a Company and the entities in which it purchases Notes would
have even the possibility of having commercial or other relationships other than actually making a Loan itself. The Investment
Managers will be private companies that are expected to be primarily engaged in the business of providing investment or securities
advice or services to clients. Accordingly, it is unlikely that the activities of an Investment Manager and its Affiliates would
intersect with the activities of the Applicants, other than in connection with the making of a Loan by a Company. Therefore, it
will be easy administratively and practically to prohibit the Applicants from having other commercial relationships with Investment
Managers and their respective Affiliates. By condition, Applicants and their Affiliates13 will be prohibited from having
any other commercial relationships with the Investment Managers and their Affiliates.
One potential risk
that has been noted by the Commission is that an investment company might purchase “securities or other interests in a broker-dealer
to reward that broker-dealer for selling fund shares, rather than solely on investment merit.”14 The Relief will
not create potential conflicts of interest for the Applicants or the Companies’ shareholders because as a condition to the
Relief, no Investment Manager or their Affiliates (defined below) or client of an Investment Manager will be permitted to buy,
sell or otherwise trade securities issued by the Applicants or any of their respective affiliated persons, as such term is defined
in Section 2(a)(3) of the 1940 Act.15
Another potential
conflict of interest is that investment advisers could be influenced to recommend to their clients certain investment companies
which invest in such investment adviser or its affiliates, and thereby use the investment companies’ assets to boost the
price of the investment adviser’s securities.16 As noted above, as a condition to the Relief, the Investment
Managers and their affiliated persons within the meaning of Section 2(a)(3) of the 1940 Act and affiliated persons of such affiliated
persons will not be permitted to sell any securities issued by the Applicants as an underwriter, will not make a market in any
securities issued by the Applicants and will not act as agent or as a broker in connection with the sale of any shares of the
Applicants and will not recommend investing in securities of the Applicants. Further, no Investment Manager or any of its Affiliates
or client of an Investment Manager will (a) buy, sell or otherwise trade securities issued by the Applicants or any of their respective
Affiliates, or (b) buy, sell or otherwise trade securities owned by the Applicants or any of their respective Affiliates in transactions
involving the Applicants or any of their respective Affiliates.
The Commission
has also stated that another purpose of Section 12(d)(3) is to prevent investment companies from directing “brokerage to
a broker-dealer in which the company has invested to enhance the broker-dealer’s profitability or to assist it during financial
difficulty, even though the broker-dealer may not offer the best price and execution.”17
3. Liquidity of Investment Company Portfolio.
In adopting Section
12(d)(3), Congress was also concerned with the liquidity of an investment company’s portfolio.18 The shareholders
that invest in a Company receive disclosure (i) in such Company’s prospectus and (ii) pursuant to its ongoing reporting
requirements, as a public company, that describe the fact that such Company’s business is investing in illiquid investments
pursuant to the Investment Strategies. Such disclosures will describe the fact that such Company’s business (like that of
business development companies and closed-end management investment companies generally) is investing in illiquid investments
of small, developing companies, and more specifically, purchasing Notes in Investment Managers. In addition, because each of the
Companies is either a closed-end management investment company or business development company that does not offer redeemable
securities, they are not required by the 1940 Act or applicable guidance from the Commission or its staff to hold a minimum amount
of liquid assets. As a result, liquidity concerns do not affect the Companies.
13 For the purposes of this
application, an “Affiliate” means an Applicant, any person to which an Applicant provides debt or equity capital,
an Investment Manager, affiliated persons of such Investment Manager within the meaning of Section 2(a)(3) of the 1940 Act, and
affiliated persons of such affiliated persons.
14 See Investment
Company Act Release No. 13725.
15 Section 2(a)(3) of the
1940 Act defines an “affiliated person” of another person to include (i) any person directly or indirectly owning,
controlling or holding with power to vote 5% or more of the outstanding voting securities of the other person, (ii) any person
5% or more of whose voting securities are directly or indirectly owned, controlled, or held with the power to vote by the other
person, and (iii) any person directly or indirectly controlling, controlled by, or under common control with, the other person.
16 See, e.g., American
Medical Association, SEC No-Action Letter (pub. avail. April 23, 1978).
17 See Investment
Company Act Release No. 13725.
18 See id.
The Applicants
believe the Companies’ proposed acquisitions of the securities of various Investment Managers does not present the potential
for the risks and abuses Section 12(d)(3) is intended to eliminate. The Applicants believe that the standards set forth in Section
6(c) have been met.
B. Precedent
The Commission
has previously been willing to grant relief to permit investments by investment companies in issuers that derive more than 15%
of their gross revenues from securities related activities. The applicants have argued that, absent the requested relief, registered
investment companies may be precluded from purchasing, or may be compelled to sell, the issuers’ securities notwithstanding
the fact that the acquisition of such securities did not present the dangers which Section 12(d)(3) purports to address. The applicants
further argued that, as the relief requested related only to investments in securities by the issuer, the question whether such
an investment might expose an investment company to the entrepreneurial risks of the investment banking business must be viewed
in the context of the financial position of the issuer and all of its subsidiaries on a consolidated basis.
Furthermore, the
Commission has granted relief to a closed-end management investment company to purchase securities issued by affiliated persons
of the funds’ principal underwriter that were directly or indirectly engaged in a securities related business.19
In that case, the applicants argued that the fixed nature of the investment company’s portfolio eliminated the concerns
about conflicts of interest that rule 12d3-1(c) was designed to address. The applicants also argued that investors were protected
because the terms of the securities to be purchased would be fully disclosed to investors before they made the decision to purchase
the investment company shares. While in the present case, the portfolios of the Companies will not be fixed, the Applicants do
not believe that this distinction undermines the request for relief being sought here. First, procedures will be in place, as
noted above, preventing any arrangements (other than the portfolio investment itself) between a Company and an Investment Manager.
Moreover, those procedures are designed to prevent the use of additional investment by the Companies in Investment Managers already
in the portfolio as an incentive for those entities to engage in transactions or other activity not in the best interest of the
Companies. Thus, an Investment Manager can dispose of underperforming assets in favor of assets the Investment Manager believes
would be more accretive to investors, a practice that a fixed portfolio could not follow.
The Commission
also permitted a closed-end management investment company to purchase 100% of the stock of an investment adviser and broker-dealer
because the acquisition had been negotiated at arm’s length, was unanimously approved by the investment company’s
board of directors, including non-interested directors, and was subject to approval of a majority of the investment company’s
common stockholders.20 The Commission granted further relief to a closed-end management investment company allowing
for the investment of approximately 80% of its total assets in two issuers, each of which derive more than 15% of their gross
revenues from securities related activities.21 The applicant argued that investors in the applicant were protected
because they had the opportunity to either approve or reject the proposed investment after full disclosure and because the concerns
underlying section 12(d)(3) were not raised given the factual circumstances and the conditions to the relief.
19 HSBC Securities (USA)
Inc., et al., Investment Company Act Release Nos. 24011 (Sept. 14, 1999) (order) and 23963 (Aug. 23, 1999) (notice). Applicants
note that in this case, the conditions of Rule 12d-3(1)(b) were still applicable to the investment companies. Nonetheless, the
precedent is still relevant because it illustrates a scenario in which the Commission granted relief from Section 12 on the condition
that the proposed transactions would be publicly disclosed, mitigating Congress’ concerns regarding entrepreneurial risk.
As discussed further below, each Company similarly intends to include disclosure in its ongoing public filings with the Commission
describing the fact that such Company’s business includes making Investments.
20 Baker, Fentress &
Company, et al., Investment Company Act Release Nos. 21949 (May 10, 1996) (order) and 21890 (April 15, 1996) (notice).
21 In the Matter of Millennium
India Acquisition Company, Inc.; (File No. 812-13464) Investment Company Act Release No. 28121; (January 6, 2008).
The Commission
has provided exemptive relief under Section 6(c) of the 1940 Act to permit unit investment trusts to invest more than 10% of their
assets in securities of issuers that derive more than 15% of their gross revenues from securities related activities.22
While unit investment trusts, unlike the Companies, have fixed portfolios of securities, for the reasons stated above with respect
to the discussion following footnote 18, the Applicants do not believe that this distinction makes these precedents inapposite.
The risks of economic instability and reciprocal practices, at which Section 12(d)(3) is aimed, could arise to the same extent
from Investment Managers in a fixed portfolio, as they could in a managed portfolio. Indeed, these risks may, in fact, be greater
in a fixed portfolio to the extent that divestment of a portfolio company would be deemed to be in the best of interest of the
shareholders.
The Commission
has also provided exemptive relief under Section 6(c) of the 1940 Act to permit a closed-end management investment company, which
intended to elect to be treated as a business development company under the 1940 Act (“Cantilever”), to acquire the
securities of various investment advisers that each derives more than 15% of its gross revenues from securities related activities
as defined in rule 12d3-1(d)(1) under the 1940 Act, in excess of the limitations in rule 12d3-1(b).23 Whereas Cantilever’s
investments in investment advisers were expected to comprise all or nearly all of Cantilever’s investment activity, a Company’s
investment in Investment Managers is not expected to represent all or nearly all of such Company’s Investment Strategies
at any given time. The Applicants believe that this distinction makes the Companies’ approach more consistent with
the policies underlying Section 12(d)(3), as opposed to the approach in Cantilever. Because the Companies will not invest all
or most of their assets in Investment Managers, any entrepreneurial risks associated with such investments would be less than
those to which Cantilever would be subject from exposure to financial services activity.
In granting each
of these applications, the Commission has found that the proposed investments do not raise the concerns that underlie Section
12(d)(3). Similarly, for the reasons set forth above, together with the proposed Conditions for the granting of exemptive relief,
the Applicants believe that the Companies’ proposed acquisitions of the securities of various Investment Managers does not
raise the concerns underlying Section 12(d)(3).
CONDITIONS
The Applicants
agree that any order granting the requested relief will be subject to the following Conditions:
1. None of the
Applicants and none of their respective Affiliates will engage in any transaction with an Investment Manager other than (i) the
Companies’ investments in the Investment Manager (and any follow-on investment) and (ii) a Company’s providing managerial
assistance to an Investment Manager. The managerial assistance provided by the Companies or any of their Affiliates will not include
any activity involving any Investment Manager’s investment process or investment decisions.
2. No Investment
Manager,, or its Affiliates or client of an Investment Manager will (a) buy, sell or otherwise trade securities issued by the
Applicants or any of their respective Affiliates, or (b) buy, sell or otherwise trade securities owned by the Applicants or any
of their respective Affiliates in transactions involving the Applicants or any of their respective Affiliates. Nor will any Investment
Manager or its Affiliates sell any securities issued or owned by the Applicants or any of their respective Affiliates as an underwriter,
make a market in any securities issued or owned by the Applicants or act as agent or as a broker in connection with the sale of
any securities issued or owned by the Applicants or any of their respective Affiliates or recommend to its clients the purchase
of any such securities.
3. None of the
Applicants and none of their respective Affiliates will use any Investment Manager or any Affiliate thereof as a broker-dealer
for the purchase or sale of any portfolio securities.
22 See, e.g.,
Corporate Income Fund, et al., Investment Company Act Release Nos. 23373 (Aug. 4, 1998) (order) and 23308 (July 9, 1998) (notice);
Defined Asset Funds, Investment Company Act Release Nos. 19456 (May 5, 1993) (order) and 19388 (April 7, 1993) (notice). Applicants
note that while certain conditions of rule 12d3-1(b) remained applicable, both precedent applications are still relevant in that
they illustrate scenarios in which the Staff granted relief for entities to make investments in multiple securities-related businesses
in excess of the limitations imposed by Section 12.
23 In the Matter of Cantilever
Capital, LLC and Cantilever Group, LLC; (File No. 812-13781) Investment Company Act Release No. 29925 (January 24, 2012).
4. No Investment Manager
or its Affiliates will provide any services to the Applicants or any of their respective Affiliates.
5. No officer of
an Applicant or member of an Applicant’s board of directors (“Board”) will be affiliated with an Investment
Manager or its Affiliate insofar as an Applicant is deemed to be an Affiliate by virtue of its investment. Their respective Affiliates
and their respective officers or managing members will not (1) serve on the board of directors of such Investment Manager, (2)
participate in the management of such Investment Manager (except for providing managerial assistance) or (3) have other indicia
of control as defined in the 1940 Act (other than typical rights of debt holders, including, but not limited to, access to certain
information). The only affiliation the Applicants (or any of their respective officers or members) will have will be as a provider
of debt capital.
6. The Applicants’
respective Chief Compliance Officers will monitor and report to the applicable Applicant’s Board no less than annually on
compliance with these conditions.
7. The Applicants
will comply with the provisions of Rule 12d3-1, except for paragraph (b) solely to the extent necessary to permit a Company to
invest (x) more than 5% of the value of its total assets in equity securities issued by a registered investment adviser, (y) in
more than 5% of the outstanding equity securities of a registered investment adviser, and (z) in more than 10% of the outstanding
principal amount of a registered investment adviser’s’s debt securities, provided that, (i) immediately after a Company
makes an investment permitted by (x) and/or (y), not more than 50% of the value of such Company’s total assets will consist
of investments permitted by (x) and/or (y), (ii) in no event will such Company acquire more than 25% of the outstanding voting
securities of a registered investment adviser or otherwise control a registered investment adviser, and (iii) immediately after
such Company makes an investment permitted by (z), not more than 10% of the value of such Company’s total assets will consist
of investments permitted by (z).24
24 For the purposes of this paragraph, the terms
“equity security” and “debt securities” have the meanings given them in Rule 12d3-1.
AUTHORITY
Pursuant to Rule
0-2(c)(1) under the 1940 Act, each of the Applicants declare that their respective officers and authorized persons have authorized
the execution and filing of this Application and any further amendments thereto and all requirements of their respective charters,
by-laws and partnership agreement or operating agreement have been complied with regarding the execution and filing of this Application.
The verification
required by Rule 0-2(d) and the authorizations required by Rule 0-2(c) are attached hereto as Appendix A and Appendix
B.
UPON THE BASIS
OF THE FOREGOING, it is respectfully requested that the Commission enter an order, based on the facts as set forth above, under
Section 6(c) of the 1940 Act exempting the Applicants from the provisions of Section 12(d)(3) and Rule 12d3-1 thereunder to the
extent necessary to permit a Company to provide debt capital to various Investment Managers, each an issuer that derives more
than 15% of its gross revenues from securities related activities, in excess of the quantitative limitations set forth in Rule
12d3-1(b).
Pursuant to Rule 0-2(c) of the General
Rules and Regulations under the 1940 Act, the Applicants declare that this Application is signed by M. Grier Eliasek.
August 5, 2021
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PROSPECT CAPITAL CORPORATION
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By:
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/s/ M. Grier Eliasek
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Name:
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M. Grier Eliasek
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Title:
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President & Chief Operating Officer
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PRIORITY INCOME FUND, INC.
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By:
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/s/ M. Grier Eliasek
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Name:
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M. Grier Eliasek
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Title:
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President & Chief Executive Officer
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PROSPECT FLEXIBLE INCOME FUND, INC.
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By:
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/s/ M. Grier Eliasek
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Name:
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M. Grier Eliasek
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Title:
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President & Chief Executive Officer
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PROSPECT CAPITAL MANAGEMENT L.P.
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By:
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/s/ M. Grier Eliasek
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Name:
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M. Grier Eliasek
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Title:
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Authorized Person
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PRIORITY SENIOR SECURED INCOME MANAGEMENT, LLC
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By:
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/s/ M. Grier
Eliasek
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Name:
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M. Grier Eliasek
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Title:
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President & Chief Operating Officer
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Appendix A
Verification of Application and Statement
of Facts
The undersigned
being duly sworn, deposes and says that he has duly executed the attached Application dated August 5, 2021 for and on behalf of
Prospect Capital Corporation, Priority Income Fund, Inc., Prospect Flexible Income Fund, Inc., Prospect Capital Management L.P.,
and Priority Senior Secured Income Management, LLC; that he is the President and Chief Operating Officer of Prospect Capital Corporation,
President and Chief Executive Officer of Priority Income Fund, Inc., President and Chief Executive Officer of Prospect Flexible
Income Fund, Inc., an authorized person of Prospect Capital Management L.P., and President and Chief Operating Officer of Priority
Senior Secured Income Management, LLC; and that all action by the respective officers and authorized persons and other persons
necessary to authorize deponent to execute and file such instrument has been taken. Deponent further says that he is familiar
with such instrument and the contents thereof, and that the facts therein set forth are true to the best of his knowledge, information
and belief.
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/s/ M. Grier Eliasek
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M. Grier Eliasek
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Appendix B
Resolutions of the Board of Directors
of Prospect Capital Corporation
WHEREAS,
the Board of Directors (the “Board”) of Prospect Capital Corporation (the “Corporation”) believes it to
be in the best interests of the Corporation to make an exemptive application to the Securities and Exchange Commission (the “SEC”)
for an order pursuant to Section 6(c) of the Investment Company Act of 1940, as amended (the “Act”), for an exemption
from Section 12(d)(3) of the Act and Rule 12d3-1 under the Act to permit the Corporation to acquire the securities of various
investment managers, each of which may derive more than 15% of its gross revenues from “securities related activities,”
as such term is defined in Rule 12d3-1(d)(1) under the Act, in excess of the quantitative limitations set forth in Rule 12d3-1(b)
under the Act.
NOW THEREFORE,
BE IT RESOLVED, that the respective officers of the Corporation be, and each hereby is, authorized to prepare, execute and
submit, on behalf of the Corporation, an exemptive application to the SEC for an order pursuant to Section 6(c) of the Act, for
an exemption from Section 12(d)(3) of the Act and Rule 12d3-1 under the Act to permit the Corporation to acquire the securities
of various investment managers, each of which may derive more than 15% of its gross revenues from “securities related activities,”
as such term is defined in Rule 12d3-1(d)(1) under the Act, in excess of the quantitative limitations set forth in Rule 12d3-1(b)
under the Act; and
FURTHER RESOLVED,
that any officer of the Corporation be, and each of them hereby is, authorized, empowered and directed on behalf of the Corporation
to do and perform or cause to be done and performed, in the name of the Corporation, such acts, including filing any necessary
documents with the SEC and preparing, executing and filing on behalf of the Corporation any such other documents or instruments,
as they deem appropriate or advisable in furtherance of the above resolution, and to pay or cause to be paid by the Corporation
such costs and expenses, and to prepare or cause to be prepared, negotiate or cause to be negotiated and execute and deliver or
cause to be executed and delivered by or on behalf of the Corporation such notices, requests, demands, directions, consents, approvals,
orders, applications, certificates, agreements, amendments, further assurances or other instruments or communications, under the
corporate seal of the Corporation, as they may deem necessary or advisable in order to carry into effect the intent of the foregoing
resolutions, or to consummate the transactions contemplated thereby, or to comply with the requirements, to implement the terms
or satisfy the conditions of any filings and documents approved and authorized by the foregoing (including, without limitation,
the obtaining of any necessary or appropriate consents and/or approvals of other persons or agencies or authorities); and
FURTHER RESOLVED,
that all actions, transactions, events and practices regarding the Corporation (or the operation thereof), implemented or to be
implemented by the Corporation, or taken or to be taken by the Corporation, that are described in the foregoing resolutions be,
and hereby are, authorized, confirmed, ratified and approved in all respects; and
FURTHER RESOLVED,
that any and all prior lawful actions taken by any officer of the Corporation or any person or persons designated and authorized
to act by a director or officer of the Corporation in connection with the execution, delivery and performance of any documents
or certificates related thereto or contemplated by the foregoing resolutions which would have been authorized by the foregoing
resolutions except that such actions were taken prior to the adoption of the foregoing resolutions are severally authorized, ratified,
confirmed, approved and adopted as being actions of the Corporation; and
FURTHER RESOLVED,
that the officers of the Corporation be, and each of them hereby is, authorized, empowered and directed to certify and deliver
copies of these resolutions to such government bodies, agencies, persons, firms or corporations as the officers of the Corporation
may deem necessary and to identify by his or her signature or certificate, or in such form as may be required, the documents and
instruments presented to and approved herein and to furnish evidence of the approval, by an officer authorized to give such approval,
of any document, instrument or provision or any addition, deletion or change in any document or instrument; and
FURTHER RESOLVED,
that in every instance in the foregoing resolutions where an officer is authorized to take such actions or make such changes to
a document as he or she determines to be necessary, desirable or appropriate, then the taking of the action or the execution of
such document with such changes shall evidence conclusively his or her determination that such actions or changes to such documents
are necessary, desirable or appropriate (as applicable); and
FURTHER RESOLVED,
that the foregoing resolutions shall be inserted in the minute books of the Corporation.
(Approved by unanimous written consent of the Board of Directors
on April 16, 2018).
Resolutions of the Board of Directors
of Priority Income Fund, Inc.
WHEREAS,
the Board of Directors (the “Board”) of Priority Income Fund, Inc. (the “Corporation”) believes it to
be in the best interests of the Corporation to make an exemptive application to the Securities and Exchange Commission (the “SEC”)
for an order pursuant to Section 6(c) of the Investment Company Act of 1940, as amended (the “Act”), for an exemption
from Section 12(d)(3) of the Act and Rule 12d3-1 under the Act to permit the Corporation to acquire the securities of various
investment managers, each of which may derive more than 15% of its gross revenues from “securities related activities,”
as such term is defined in Rule 12d3-1(d)(1) under the Act, in excess of the quantitative limitations set forth in Rule 12d3-1(b)
under the Act.
NOW THEREFORE,
BE IT RESOLVED, that the respective officers of the Corporation be, and each hereby is, authorized to prepare, execute and
submit, on behalf of the Corporation, an exemptive application to the SEC for an order pursuant to Section 6(c) of the Act, for
an exemption from Section 12(d)(3) of the Act and Rule 12d3-1 under the Act to permit the Corporation to acquire the securities
of various investment managers, each of which may derive more than 15% of its gross revenues from “securities related activities,”
as such term is defined in Rule 12d3-1(d)(1) under the Act, in excess of the quantitative limitations set forth in Rule 12d3-1(b)
under the Act; and
FURTHER RESOLVED,
that any officer of the Corporation be, and each of them hereby is, authorized, empowered and directed on behalf of the Corporation
to do and perform or cause to be done and performed, in the name of the Corporation, such acts, including filing any necessary
documents with the SEC and preparing, executing and filing on behalf of the Corporation any such other documents or instruments,
as they deem appropriate or advisable in furtherance of the above resolution, and to pay or cause to be paid by the Corporation
such costs and expenses, and to prepare or cause to be prepared, negotiate or cause to be negotiated and execute and deliver or
cause to be executed and delivered by or on behalf of the Corporation such notices, requests, demands, directions, consents, approvals,
orders, applications, certificates, agreements, amendments, further assurances or other instruments or communications, under the
corporate seal of the Corporation, as they may deem necessary or advisable in order to carry into effect the intent of the foregoing
resolutions, or to consummate the transactions contemplated thereby, or to comply with the requirements, to implement the terms
or satisfy the conditions of any filings and documents approved and authorized by the foregoing (including, without limitation,
the obtaining of any necessary or appropriate consents and/or approvals of other persons or agencies or authorities); and
FURTHER RESOLVED,
that all actions, transactions, events and practices regarding the Corporation (or the operation thereof), implemented or to be
implemented by the Corporation, or taken or to be taken by the Corporation, that are described in the foregoing resolutions be,
and hereby are, authorized, confirmed, ratified and approved in all respects; and
FURTHER RESOLVED,
that any and all prior lawful actions taken by any officer of the Corporation or any person or persons designated and authorized
to act by a director or officer of the Corporation in connection with the execution, delivery and performance of any documents
or certificates related thereto or contemplated by the foregoing resolutions which would have been authorized by the foregoing
resolutions except that such actions were taken prior to the adoption of the foregoing resolutions are severally authorized, ratified,
confirmed, approved and adopted as being actions of the Corporation; and
FURTHER RESOLVED,
that the officers of the Corporation be, and each of them hereby is, authorized, empowered and directed to certify and deliver
copies of these resolutions to such government bodies, agencies, persons, firms or corporations as the officers of the Corporation
may deem necessary and to identify by his or her signature or certificate, or in such form as may be required, the documents and
instruments presented to and approved herein and to furnish evidence of the approval, by an officer authorized to give such approval,
of any document, instrument or provision or any addition, deletion or change in any document or instrument; and
FURTHER RESOLVED,
that in every instance in the foregoing resolutions where an officer is authorized to take such actions or make such changes to
a document as he or she determines to be necessary, desirable or appropriate, then the taking of the action or the execution of
such document with such changes shall evidence conclusively his or her determination that such actions or changes to such documents
are necessary, desirable or appropriate (as applicable); and
FURTHER RESOLVED,
that the foregoing resolutions shall be inserted in the minute books of the Corporation.
(Approved by unanimous written consent of the Board of Directors
on April 16, 2018).
Resolutions of the Board of Directors
of Prospect Flexible Income Fund, Inc. (f/k/a TP Flexible Income Fund, Inc.)
WHEREAS,
the Board of the Directors (the “Board”) of TP Flexible Income Fund, Inc., (the “Corporation”) believes
it to be in the best interests of the Corporation to make an exemptive application to the Securities and Exchange Commission (the
“SEC”) for an order pursuant to Section 6(c) of the Investment Company Act of 1940, as amended (the “Act”),
for an exemption from Section 12(d)(3) of the Act and Rule 12d3-1 under the Act to permit the Corporation to acquire the securities
of various investment managers, each of which may derive more than 15% of its gross revenues from “securities related activities,”
as such term is defined in Rule 12d3-1(d)(1) under the Act, in excess of the quantitative limitations set forth in Rule 12d3-1(b)
under the Act.
NOW THEREFORE,
BE IT RESOLVED, that the respective officers of the Corporation be, and each hereby is, authorized to prepare, execute and
submit, on behalf of the Corporation, an exemptive application to the SEC for an order pursuant to Section 6(c) of the Act, for
an exemption from Section 12(d)(3) of the Act and Rule 12d3-1 under the Act to permit the Corporation to acquire the securities
of various investment managers, each of which may derive more than 15% of its gross revenues from “securities related activities,”
as such term is defined in Rule 12d3-1(d)(1) under the Act, in excess of the quantitative limitations set forth in Rule 12d3-1(b)
under the Act; and
FURTHER RESOLVED,
that any officer of the Corporation be, and each of them hereby is, authorized, empowered and directed on behalf of the Corporation
to do and perform or cause to be done and performed, in the name of the Corporation, such acts, including filing any necessary
documents with the SEC and preparing, executing and filing on behalf of the Corporation any such other documents or instruments,
as they deem appropriate or advisable in furtherance of the above resolution, and to pay or cause to be paid by the Corporation
such costs and expenses, and to prepare or cause to be prepared, negotiate or cause to be negotiated and execute and deliver or
cause to be executed and delivered by or on behalf of the Corporation such notices, requests, demands, directions, consents, approvals,
orders, applications, certificates, agreements, amendments, further assurances or other instruments or communications, under the
corporate seal of the Corporation, as they may deem necessary or advisable in order to carry into effect the intent of the foregoing
resolutions, or to consummate the transactions contemplated thereby, or to comply with the requirements, to implement the terms
or satisfy the conditions of any filings and documents approved and authorized by the foregoing (including, without limitation,
the obtaining of any necessary or appropriate consents and/or approvals of other persons or agencies or authorities); and
FURTHER RESOLVED,
that all actions, transactions, events and practices regarding the Corporation (or the operation thereof), implemented or to be
implemented by the Corporation, or taken or to be taken by the Corporation, that are described in the foregoing resolutions be,
and hereby are, authorized, confirmed, ratified and approved in all respects; and
FURTHER RESOLVED,
that any and all prior lawful actions taken by any officer of the Corporation or any person or persons designated and authorized
to act by a director or officer of the Corporation in connection with the execution, delivery and performance of any documents
or certificates related thereto or contemplated by the foregoing resolutions which would have been authorized by the foregoing
resolutions except that such actions were taken prior to the adoption of the foregoing resolutions are severally authorized, ratified,
confirmed, approved and adopted as being actions of the Corporation; and
FURTHER RESOLVED,
that the officers of the Corporation be, and each of them hereby is, authorized, empowered and directed to certify and deliver
copies of these resolutions to such government bodies, agencies, persons, firms or corporations as the officers of the Corporation
may deem necessary and to identify by his or her signature or certificate, or in such form as may be required, the documents and
instruments presented to and approved herein and to furnish evidence of the approval, by an officer authorized to give such approval,
of any document, instrument or provision or any addition, deletion or change in any document or instrument; and
FURTHER RESOLVED,
that in every instance in the foregoing resolutions where an officer is authorized to take such actions or make such changes to
a document as he or she determines to be necessary, desirable or appropriate, then the taking of the action or the execution of
such document with such changes shall evidence conclusively his or her determination that such actions or changes to such documents
are necessary, desirable or appropriate (as applicable); and
FURTHER RESOLVED,
that the foregoing resolutions shall be inserted in the minute books of the Corporation.
(Approved by unanimous written consent of the Board of Directors
on June 6, 2019)
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