STOCK PURCHASE AGREEMENT

Exhibit 10.1

PROSPECT CAPITAL CORPORATION

STOCK PURCHASE AGREEMENT

Dated as of September 21, 2009

To Each of the Purchasers Listed in the signature page:

Ladies and Gentlemen:

           The undersigned, Prospect Capital Corporation, a Maryland corporation (the " Corporation "), hereby agrees with you as follows:

           1.           AUTHORIZATION; SALE AND PURCHASE OF SHARES

           1.1            Authorization of Shares . The Corporation has duly authorized the issuance and sale of up to an aggregate of 5,000,000 shares (the " Shares ") of common stock, $0.001 par value of the Corporation (the " Common Stock ").

           1.2            Sale and Purchase of the Shares . Subject to the terms and conditions herein provided, the Corporation hereby agrees to sell to the purchasers listed in the signature page attached hereto (each, a " Purchaser " and collectively, the " Purchasers "), and each Purchaser, severally and not jointly, agrees to purchase from the Corporation, at the Closing provided for in Section 2 hereof, up to that number of Shares specified directly opposite its name in the signature page. The per share purchase price for the Shares shall be the same for each Purchaser and shall be equal to the price per share as reflected on the signature page hereof. Each Purchaser's obligations hereunder are several and not joint obligations, and no Purchaser shall have any liability to any person or entity for the performance or nonperformance by any other Purchaser hereunder. Each Purchaser understands and acknowledges that it has made its own review of the investment merits and risks of the Shares.

           2.           THE CLOSING.

           2.1            Time and Place of the Closing . Subject to Section 3 hereof, payment of the purchase price as reflected on the signature page hereof (the " Purchase Price ") for and delivery of the Shares shall be made at the offices of Skadden, Arps, Slate, Meagher & Flom LLP, Four Times Square, New York, New York 10036-6522, or at such other place or in such other manner as may be agreed upon by the Corporation and the Purchasers, at 10:30 a.m., New York time, on September 23, 2009, or at such other time or date as the Purchasers and the Corporation may mutually determine (such date and time of payment and delivery being herein called the " Closing Date ").

           2.2            Delivery of and Payment for the Shares . Subject to Section 3 hereof, at the closing of the Transactions contemplated by this Agreement (the " Closing "), the Corporation shall instruct the Corporation's transfer agent to deliver to each Purchaser, at such address(es) as designated on its Signature Page, certificates evidencing the Shares to be purchased by it (as indicated opposite such Purchaser's name on the Signature Page hereto), dated the Closing Date and bearing appropriate legends as hereinafter provided for, or, in the alternative and at the election of the Purchaser, if permitted and bearing appropriate legends as hereinafter provided for, Shares (as indicated opposite such Purchaser's name on the Signature Page hereto) through delivery in electronic book-entry form through a direct registration system maintained for the Company by its transfer agent to the credit of an account in which the Purchaser is a beneficial owner, which account shall be designated in writing by the Purchaser to the Corporation not later than the trading day before such Closing Date, and, in either case, registered on the books and records of the Corporation in such Purchaser's name or its nominee, against payment in full on the Closing Date of the Purchase Price therefor by wire transfer of immediately available funds for credit to such account as the Corporation shall direct in writing prior to the Closing Date.

           3.           CONDITIONS TO CLOSING

           3.1            Conditions to the Purchasers' Obligations . The obligations of each Purchaser hereunder are subject to the accuracy, as of the date hereof and on the Closing Date, of the representations and warranties of the Corporation contained herein, except to the extent any such representation or warranty expressly specifies an earlier date, and to the performance by the Corporation of its obligations hereunder and to each of the following additional terms and conditions:

                      (a)           The representations and warranties of the Corporation herein shall be true and correct in all respects as of the date when made and as of the Closing Date as though made at that time (except for representations and warranties that speak as of a specific date, which shall be true and correct as of such specified date) and the Corporation shall have performed, satisfied and complied in all respects with the covenants, agreements and conditions required hereby to be performed, satisfied or complied with by the Corporation at or prior to the Closing Date.  Each Purchaser shall have received a certificate, executed by the Chief Executive Officer of the Corporation, dated as of the Closing Date, to the foregoing effect.

                      (b)           Any authorizations, consents, commitments, agreements, orders or approvals of, or declarations or filings with, or expirations of waiting periods imposed by any federal, state or local court or governmental or regulatory agency or authority or applicable stock exchange or trading market (any such court, agency, authority, exchange or market, a " Governmental Authority ") required for the consummation of the Transactions, as defined herein, shall have been obtained or filed or shall have occurred and any such orders shall have become final, non-appealable orders.

                      (c)           The Corporation shall have executed and delivered to such Purchaser each of the Transaction Documents.

                      (d)           Venable LLP, counsel to the Corporation, shall have furnished to the Purchasers its written opinion addressed to the Purchasers and dated the Closing Date that the Shares have been duly authorized and, when issued and delivered in accordance with this Agreement, will be validly issued, fully paid and non-assessable.

           3.2            Conditions to the Corporation's Obligations .  The obligations of the Corporation hereunder are subject to the accuracy, as of the date hereof and as of the Closing Date, of the representations and warranties of each Purchaser contained herein and to the performance by each Purchaser of its obligations hereunder and to each of the following additional terms and conditions:

                      (a)           The Purchasers shall have received any and all necessary approvals from all Governmental Authorities necessary for the purchase by the Purchasers of the Shares as the case may be, pursuant to this Agreement, and any and all applicable waiting periods upon which such approvals are conditioned shall have expired.

                      (b)           Such Purchaser shall have executed each of the Transaction Documents of which it is a party and delivered the same to the Corporation.

           4.           REPRESENTATIONS AND WARRANTIES

           4.1            Representations and Warranties of the Corporation . The Corporation represents and warrants to, and agrees with each Purchaser that as of the date hereof and as of the Closing Date:

                      (a)           The authorized capital stock of the Corporation consists of 100,000,000 shares of Common Stock of which 51,865,044 shares of Common Stock are outstanding as of the date of this Agreement.

                      (b)           Since December 31, 2008, the Corporation has filed all material reports, registrations and statements, together with any required amendments thereto, that it was required to file with the Securities and Exchange Commission (the " SEC ") and any other applicable federal or state securities authorities. All such reports and statements filed with any such regulatory body or authority are collectively referred to herein as the " Corporation Reports ." As of their respective dates, the Corporation Reports complied as to form in all material respects with all the rules and regulations promulgated by the SEC and any other applicable foreign, federal or state securities authorities, as the case may be.

                      (c)           Except as previously disclosed in writing to the Purchasers, since December 31, 2008, no change has occurred and no circumstances exist (including any changes, occurrences, circumstances or facts existing prior to December 31, 2008 but which become known on or after December 31, 2008) that is not disclosed in the Disclosure Materials (as defined below) which, individually or in the aggregate, has had, or would reasonably be expected to have, a Material Adverse Effect.

                      (d)           The Corporation has all permits, licenses, authorizations, orders and approvals of, and has made all filings, applications and registrations with, any governmental entities that are required in order to carry on its business as presently conducted and that are material to the business of the Corporation, except where the failure to have such permits, licenses, authorizations, orders and approvals or the failure to make such filings, applications and registrations would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect; and all such permits, licenses, certificates of authority, orders and approvals are in full force and effect and, to the knowledge of the Corporation, no suspension or cancellation of any of them is threatened, and all such filings, applications and registrations are current.

                      (e)           Each of the following publicly filed documents is available via the EDGAR system to the Purchaser: (i) the Corporation's Annual Report on Form 10-K for the year ended June 30, 2009; (ii) the Corporation's Quarterly Reports on Form 10-Q for each of the quarters ended March 31, 2009, December 31, 2008 and September 30, 2008; (iii) the Corporation's proxy statement for its Annual Meeting of Stockholders held on February 12, 2009; and (iv) the Corporation's Current Reports on Form 8-K filed with the SEC since December 31, 2008, pursuant to the reporting requirements of the Securities and Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder (the " Exchange Act ") (items (i) through (iv) collectively, the " Disclosure Materials "), which Disclosure Materials include, among other things, the Agreement and Plan of Merger by and between Patriot Capital Funding, Inc. and the Corporation, dated as of August 3, 2009, audited consolidated balance sheets of the Corporation as of June 30, 2009 and 2008 and the related consolidated statements of operations, changes in net assets and cash flow for each of the three years in the period ended June 30, 2009.  As of the date hereof, each of the documents comprising a part of the Disclosure Materials, when such documents are considered together as a whole, did not contain or will not contain any untrue statement of material fact or omitted to state or will not omit to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading.

                      (f)           Based in part upon the representations and warranties of each Purchaser contained herein, the Corporation is not required by applicable law or regulation in connection with the offer, sale and delivery of the Shares to the Purchasers in the manner contemplated by this Agreement to register the Shares under the Securities Act of 1933, as amended (the " Securities Act "), or any state securities laws.

                      (g)           The Corporation, (i) has been duly incorporated and is validly existing in good standing under the laws of its jurisdiction of incorporation, (ii) is duly qualified to do business and is in good standing as a foreign corporation in each jurisdiction in which its ownership or lease of property or the conduct of its businesses requires such qualification, except where the failure to be so qualified would not result in any material adverse change in the condition, financial or otherwise, or in the earnings or business affairs of the Corporation, or which would not materially and adversely affect the assets or properties of the Corporation, or which would not materially and adversely affect the ability of the Corporation to perform its obligations under the Transaction Documents (individually or in the aggregate, a " Material Adverse Effect ," except that the mere filing of any action, claim, suit or order relating to any actual or threatened litigation involving the Corporation or any of its employees after the date of this Agreement (rather than the actual facts and circumstances underlying such action, claim, suit or order) shall not be deemed a Material Adverse Effect); and (iii) has all corporate power and authority necessary to own or hold its respective properties and to conduct the businesses in which it is currently engaged.

                      (h)           All of the issued shares of capital stock of the Corporation have been duly and validly authorized and issued, are fully paid and non-assessable and no such shares were issued in violation of the preemptive or similar rights of any security holder of the Corporation. Except as disclosed in the Disclosure Materials, no person has any preemptive or similar statutory or contractual right to purchase any shares of capital stock of the Corporation.  Except as disclosed in the Disclosure Materials, there are no outstanding warrants, options or other rights to subscribe for or purchase any of the Corporation's capital stock and no restrictions upon the voting or transfer of any capital stock of the Corporation pursuant to the Corporation's charter or bylaws or any agreement or other instrument to which the Corporation is a party or by which the Corporation is bound.

                      (i)           The Shares have been duly authorized by the Corporation and, when issued and delivered by the Corporation against payment therefor in the manner contemplated by this Agreement, will be validly issued, fully paid and non-assessable, free from all taxes, liens and charges with respect to the issue thereof, and the issuance of the Shares will not obligate the Corporation to issue shares of capital stock to any person.

                      (j)           This Agreement and the Registration Rights Agreement have been duly authorized, executed and delivered by the Corporation and constitute a valid and legally binding agreement of the Corporation enforceable against the Corporation in accordance with their terms, subject to the effects of bankruptcy, insolvency, reorganization, moratorium and other similar laws relating to or affecting creditors' rights generally, and general equitable principles (whether considered in a proceeding in equity or at law).

                      (k)           The execution, delivery and performance of this Agreement and the Registration Rights Agreement, the issuance and sale of the Shares in the manner contemplated hereby, and the consummation of the Transactions, will not (i) conflict with or constitute a violation of, or default (with the passage of time or the delivery of notice) under, (A) any bond, debenture, note or other evidence of indebtedness, or any agreement, lease, franchise, license, permit, contract, indenture, mortgage, deed of trust, loan agreement, joint venture or other agreement or instrument to which the Corporation is a party or by which it or its property is bound, where such conflict, violation or default would reasonably be expected to have a Material Adverse Effect, or (B) to the knowledge of the Corporation, any law, administrative regulation, ordinance or judgment, order or decree of any court or governmental agency, arbitration panel or authority binding upon the Corporation or any of its property, where such conflict, violation or default would reasonably be expected to have a Material Adverse Effect, or (ii) violate any of the provisions of the Articles of Amendment and Restatement, or Amended and Restated Bylaws, of the Corporation; and no consent, approval, authorization or order of, or filing or registration with any such person (including, without limitation, any such court or governmental agency or body) is required for the consummation of the Transactions by the Corporation, except such as may be required under state securities laws or Regulation D under the Securities Act, or required by The NASDAQ Stock Market (" NASDAQ ").

                      (l)           The audited consolidated financial statements (including the related notes) included or incorporated in the Disclosure Materials present fairly, in all material respects, the financial condition and results of operations of the Corporation, at the dates and for the periods indicated, and have been prepared in conformity with U.S. generally accepted accounting principles applied on a consistent basis throughout the periods involved.

                      (m)           Except as disclosed in the Disclosure Materials or as previously disclosed to the Purchasers, there is no action, suit or proceeding before or by any court or governmental agency or body or any labor dispute now pending or, to the knowledge of the Corporation, threatened against the Corporation, which would reasonably be expected to have a Material Adverse Effect.

                      (n)           No temporary restraining order, preliminary or permanent injunction or other order issued by any court of competent jurisdiction or other legal restraint or prohibition preventing the consummation of the Transactions is in effect nor has any action been filed or is any proceeding pending that seeks any such event.

                      (o)           Except for payments made or to be made to the Corporation's placement agent, no broker's, finder's, investment banker's or similar fee or commission has been paid or will be payable by the Corporation with respect to, or for any services rendered to the Corporation ancillary to, the offer, issue and sale of the Shares contemplated by this Agreement.  Any such fee or commission shall be payable by the Corporation and not any of the Purchasers.

                      (p)           Except as set forth in the Disclosure Materials, the Corporation does not own or control, directly or indirectly, any " Significant Subsidiary " as defined in SEC Regulation S-X.

                      (q)           The Corporation has filed on a timely basis all material federal, state, local and foreign income and franchise tax returns required to be filed by it through the date hereof or had properly requested extension thereof and has paid all material taxes shown as due thereon, and any related material assessments, fines or penalties, except where the failure to do so would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.  The Corporation has made reasonably adequate charges, accruals and reserves in the applicable financial statements referred to in this Section 4.1(q) in respect of all federal, state, local and foreign income and franchise taxes for all periods as to which the tax liability of the Corporation has not been finally determined.  The Corporation has no knowledge of a material tax deficiency which has been or is reasonably likely to be asserted or threatened against it.

                      (r)           To its knowledge, the Corporation is in compliance with all applicable laws, rules, regulations, orders, decrees and judgments applicable to it, including, without limitation, the Investment Company Act of 1940, as amended, and the rules promulgated thereunder, all applicable local, state and federal environmental laws and regulations and the provisions of the Sarbanes-Oxley Act of 2002, as amended (" Sarbanes-Oxley Act ") and the applicable federal and state banking laws, rules and regulations, together with the Sarbanes-Oxley Act, the " Applicable Laws "), except where failure to be so in compliance would not have a Material Adverse Effect.  The Corporation has not received any notice of purported or actual non-compliance with Applicable Laws, except to the extent it would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. The Corporation has not received any communication from any Governmental Authority threatening to revoke any permit, license, franchise, certificate of authority or other governmental authorization.

                      (s)           To its knowledge, the Corporation's Common Stock is in compliance with all the requirements of NASDAQ for continued listing of the Common Stock thereon.  Furthermore, the Corporation has taken no action designed to, or reasonably likely to have the effect of, terminate the registration of the Common Stock under the Exchange Act or de-listing the Common Stock from NASDAQ, nor has the Corporation received any notification that the SEC or NASDAQ is contemplating terminating such registration or listing.

       (t)           The Corporation maintains insurance (issued by insurers of recognized financial responsibility) of the types, against such losses and in the amounts, with such insurers and subject to deductibles and exclusions as are customary in the Corporation's industry and otherwise reasonably prudent, including, without limitation, insurance covering all real and personal property owned or leased by the Corporation against theft, damage, destruction, acts of vandalism and all other risks customarily insured against by similarly situated companies, all of which insurance is in full force and effect.

       (u)           The Corporation has satisfied the conditions for use of Form N-2 as set forth in the General Instructions to such Form.

                      (w)           None of the Corporation, any of its affiliates, and any Person acting on its behalf, including the Corporation's placement agent has, directly or indirectly, made any offers or sales of the Shares or solicited any offers to buy the Shares, under circumstances that would require registration of the Shares under the Securities Act.  For the purposes of this Agreement, " Person " shall mean any individual, corporation, partnership, joint venture, limited liability company, business trust, joint stock corporation, trust or unincorporated organization or any government or agency or political subdivision thereof.

                    (x)           Except as disclosed in the Disclosure Materials or as is exempt from such disclosure under applicable SEC regulations, none of the officers, directors or employees of the Corporation is presently a party to any transaction with the Corporation (other than for ordinary course services as employees, officers or directors), including any contract, agreement or other arrangement providing for the furnishing of services to or by, providing for rental of real or personal property to or from, or otherwise requiring payments to or from any such officer, director or employee or, to the knowledge of the Corporation, any corporation, partnership, trust or other entity in which any such officer, director, or employee has a substantial interest or is an officer, director, trustee or partner.