Exhibit 10.1 

 

INVESTMENT ADVISORY AND MANAGEMENT SERVICES AGREEMENT

 

This Investment Advisory and Management Services Agreement (the “Agreement”) is
made as of February 1, 2019, by and between BUSINESS DEVELOPMENT CORPORATION OF
AMERICA, a Maryland corporation (the “Company”), and BDCA ADVISER, LLC, a
Delaware limited liability company (the “Adviser”).

 

WHEREAS, the Company is a non-diversified, closed-end management investment
company that has elected to be treated as a business development company (“BDC”)
under the Investment Company Act of 1940, as amended (together with the rules
promulgated thereunder, the “Investment Company Act”);

 

WHEREAS, the Adviser is registered as an investment adviser under the Investment
Advisers Act of 1940, as amended (together with the rules promulgated
thereunder, the “Advisers Act”); and

 

WHEREAS, the Company desires to retain the Adviser to provide investment
advisory services to the Company on the terms and conditions hereinafter set
forth, and the Adviser wishes to be retained to provide such services;

 

NOW, THEREFORE, in consideration of the premises and for other good and valuable
consideration, the parties hereby agree as follows:

 

1. Duties of the Adviser.

(a) Retention of Adviser. The Company hereby employs the Adviser to act as the
investment adviser to the Company and to manage the investment and reinvestment
of the assets of the Company, subject to the supervision of the Board of
Directors of the Company (the “Board”), for the period and upon the terms herein
set forth:

(i) in accordance with the investment objectives, policies and restrictions that
are set forth in the Company’s Registration Statement on Form N-2 filed with the
Securities and Exchange Commission (the “SEC”), as amended from time to time
(the “Registration Statement”), if any, and/or the Company’s periodic reports
filed with the SEC from time to time; and

(ii) during the term of this Agreement in accordance with all other applicable
federal and state laws, rules and regulations, and the Company’s charter and
bylaws, in each case as amended from time to time,

 

(b) Responsibilities of Adviser. Without limiting the generality of the
foregoing, the Adviser shall, during the term and subject to the provisions of
this Agreement:

(i) determine the composition and allocation of the portfolio of the Company,
the nature and timing of the changes therein and the manner of implementing such
changes;

(ii) identify, evaluate and negotiate the structure of the investments made by
the Company;

(iii) execute, monitor and service the Company’s investments;

(iv) determine the securities and other assets that the Company shall purchase,
retain, or sell;

(v) perform due diligence on prospective portfolio companies; and

(vi) provide the Company with such other investment advisory, research and
related services as the Company may, from time to time, reasonably require for
the investment of its funds.

 

(c) Power and Authority. To facilitate the Adviser’s performance of these
undertakings, but subject to the restrictions contained herein, the Company
hereby delegates to the Adviser, and the Adviser hereby accepts, the power and
authority on behalf of the Company to effectuate its investment decisions for
the Company, including the execution and delivery of all documents relating to
the Company’s investments and the placing of orders for other purchase or sale
transactions on behalf of the Company. In the event that the Company determines
to acquire debt financing, the Adviser shall arrange for such financing on the
Company’s behalf, subject to the oversight and approval of the Board. If it is
necessary for the Adviser to make investments on behalf of the Company through a
special purpose vehicle or a special tax blocker vehicle, the Adviser shall have
authority to create, or arrange for the creation of, such special purpose
vehicles and to make investments through such special purpose vehicles in
accordance with applicable law and after full consideration of the additional
upfront and recurring costs and taxes, and administrative requirements related
to such special purpose vehicle. The Company also grants to the Adviser power
and authority to engage in all activities and transactions (and anything
incidental thereto) that the Adviser deems, in its sole discretion, appropriate,
necessary or advisable to carry out its duties pursuant to this Agreement.

 

(d) Acceptance of Employment. The Adviser hereby accepts such employment and
agrees during the term hereof to render the services described herein for the
compensation provided herein, subject to the limitations contained herein.

 

(e) Sub-Advisers. The Adviser is hereby authorized to enter into one or more
sub-advisory agreements with other investment advisers (each, a “Sub-Adviser”)
pursuant to which the Adviser may obtain the services of the Sub-Adviser(s) to
assist the Adviser in fulfilling its responsibilities hereunder. Specifically,
the Adviser may retain a Sub-Adviser to recommend specific securities or other
investments based upon the Company’s investment objectives, policies and
restrictions, and work, along with the Adviser, in sourcing, structuring,
negotiating, arranging or effecting the acquisition or disposition of such
investments and monitoring investments on behalf of the Company, subject to the
oversight of the Adviser and the Company.

(i) The Adviser and not the Company shall be responsible for any compensation
payable to any Sub-Adviser.

(ii) Any sub-advisory agreement entered into by the Adviser shall be in
accordance with the requirements of the Investment Company Act, including
without limitation the requirements relating to Board and Company stockholder
approval thereunder, and other applicable federal and state law.

(iii) Any Sub-Adviser shall be subject to the same fiduciary duties imposed on
the Adviser pursuant to this Agreement, the Investment Company Act and the
Investment Advisers Act of 1940 (the “Advisers Act”), as well as other
applicable federal and state law.

 

 

 

 

(f) Independent Contractor Status. The Adviser shall, for all purposes herein
provided, be deemed to be an independent contractor and, except as expressly
provided or authorized herein, shall have no authority to act for or represent
the Company in any way or otherwise be deemed an agent of the Company.

 

(g) Record Retention. Subject to review by and the overall control of the Board,
the Adviser shall keep and preserve for the period required by the Investment
Company Act any books and records relevant to the provision of its investment
advisory services to the Company and shall specifically maintain all books and
records with respect to the Company’s portfolio transactions and shall render to
the Board such periodic and special reports as the Board may reasonably request
or as may be required under applicable federal and state law, and shall make
such records available for inspection by the Board and its authorized agents, at
any time and from time to time during normal business hours. The Adviser agrees
that all records that it maintains for the Company are the property of the
Company and shall surrender promptly to the Company any such records upon the
Company’s request and upon termination of this Agreement pursuant to Section 9,
provided that the Adviser may retain a copy of such records.

 

The following provisions in this Section 1 shall apply for only so long as the
shares of the Company are not listed on a national securities exchange.

 

(h) Administrator. The Adviser shall, upon request by an official or agency
administering the securities laws of a state, province, or commonwealth (an
“State Administrator”), submit to such State Administrator the reports and
statements required to be distributed to Company stockholders pursuant to this
Agreement, the Registration Statement and applicable federal and state law.

 

(i) Fiduciary Duty: It is acknowledged that the Adviser shall have a fiduciary
responsibility for the safekeeping and use of all funds and assets of the
Company, whether or not in the Adviser’s immediate possession or control. The
Adviser shall not employ, or permit another to employ, such funds or assets in
any manner except for the exclusive benefit of the Company. The Adviser shall
not, by entry into an agreement with any stockholder of the Company or
otherwise, contract away the fiduciary obligation owed to the Company and the
Company stockholders under common law.

 

2. Company’s Responsibilities and Expenses Payable by the Company.

(a) Costs. Subject to the limitations on reimbursement of the Adviser as set
forth in Section 2(b) below, the Company, either directly or through
reimbursement to the Adviser, shall bear all other costs and expenses of its
operations and transactions, including (without limitation) fees and expenses
relating to: expenses deemed to be “organization and offering expenses” of the
Company for purposes of Conduct Rule 2310(a)(12) of the Financial Industry
Regulatory Authority (for purposes of this Agreement, such expenses, exclusive
of commissions, the dealer manager fee and any discounts, are hereinafter
referred to as “Organization and Offering Expenses”); amounts paid to third
parties for administrative services; amounts paid to third party experts
relating to the investigation and monitoring of the Company’s investments; the
cost of calculating the Company’s net asset value; the cost of effecting sales
and repurchases of shares of the Company’s common stock and other securities;
management and incentive fees payable pursuant to the investment advisory
agreement; fees payable to third parties relating to, or associated with, making
investments and valuing investments (including third-party valuation firms),
transfer agent and custodial fees, fees and expenses associated with marketing
efforts (including attendance at investment conferences and similar events);
federal and state registration fees; any exchange listing fees; federal, state
and local taxes; independent directors’ fees and expenses; brokerage
commissions; costs of proxy statements; stockholders’ reports and notices; costs
of preparing government filings, including periodic and current reports with the
SEC; fidelity bond, liability insurance and other insurance premiums; and
printing, mailing, independent accountants and outside legal costs.

 

The following provisions in this Section 2 shall apply for only so long as the
shares of the Company are not listed on a national securities exchange.

 

Notwithstanding the foregoing, the Company shall not be liable for Organization
and Offering Expenses to the extent that Organization and Offering Expenses,
together with all prior Organization Offering Expenses, exceeds the greater of
$125,000 and 1.5% of the aggregate gross proceeds from the offering of the
Company’s securities (the “Offering Proceeds”). More specifically, the Company
shall be obligated to reimburse the Adviser for all current and past
Organization and Offering Expenses paid by the Adviser and not already
reimbursed by the Company (the “Reimbursable O&O Expenses”) as follows:

(i) if the Offering Proceeds are $8,333,333.33 or less, the Company shall
reimburse the Adviser for such Reimbursable O&O Expenses to the extent that the
Reimbursable O&O Expenses, together with all past Organization and Offering
Expenses for which the Adviser has received reimbursement, does not exceed
$125,000; or

(ii) if the Offering Proceeds exceed $8,333,333.33, the Company shall reimburse
the Adviser for such Reimbursable O&O Expenses to the extent that the
Reimbursable O&O Expenses, together with all past Organization and Offering
Expenses for which the Adviser has received reimbursement, does not exceed an
amount equal to 1.5% of the Offering Proceeds or a maximum reimbursement of
$22,500,000, assuming the maximum offering size is $1,500,000,000.

 

(b) Limitations on Reimbursement of Expenses. In addition to the compensation
paid to the Adviser pursuant to Section 3, the Company shall reimburse the
Adviser for all expenses of the Company incurred by the Adviser as well as the
actual cost of goods and services used for or by the Company and obtained from
entities not affiliated with the Adviser. The Adviser may be reimbursed for the
administrative services performed by it on behalf of the Company; provided,
however, the reimbursement shall be an amount equal to the lower of the
Adviser’s actual cost or the amount the Company would be required to pay third
parties for the provision of comparable administrative services in the same
geographic location; and provided, further, that such costs are reasonably
allocated to the Company on the basis of assets, revenues, time records or other
method conforming with generally accepted accounting principles. No
reimbursement shall be permitted for services for which the Adviser is entitled
to compensation by way of a separate fee. Excluded from the allowable
reimbursement shall be:

(i) rent or depreciation, utilities, capital equipment, and other administrative
items of the Adviser; and

(ii) salaries, fringe benefits, travel expenses and other administrative items
incurred or allocated to any executive officer or board member of the Adviser
(or any individual performing such services) or a holder of 10% or greater
equity interest in the Adviser (or any person having the power to direct or
cause the direction of the Adviser, whether by ownership of voting securities,
by contract or otherwise).

 

 

 

 

(c) Periodic Reimbursement. Expenses incurred by the Adviser on behalf of the
Company and payable pursuant to this Section 2 shall be reimbursed no less than
monthly to the Adviser. The Adviser shall prepare a statement documenting the
expenses of the Company and the calculation of the reimbursement and shall
deliver such statement to the Company prior to full reimbursement.

 

3. Compensation of the Adviser. The Company agrees to pay, and the Adviser
agrees to accept, as compensation for the services provided by the Adviser
hereunder, a base management fee (“Base Management Fee”) and an incentive fee
(“Incentive Fee”) as hereinafter set forth. The Adviser may agree to temporarily
or permanently waive, in whole or in part, the Base Management Fee and/or the
Incentive Fee.

(a) Base Management Fee. The Base Management Fee shall be calculated at an
annual rate of one and one half percent (1.5%) of the Company’s average gross
assets. The Base Management Fee shall be payable quarterly in arrears, and shall
be calculated based on the average value of the Company’s gross assets at the
end of the two most recently completed calendar quarters. All or any part of the
Base Management Fee not taken as to any quarter shall be deferred without
interest and may be taken in such other quarter as the Adviser shall determine.
The Base Management Fee for any partial month or quarter shall be appropriately
pro rated.

 

(b) Incentive Fee. The Incentive Fee shall consist of two parts, as follows:

(i) The first part, referred to as the “Incentive Fee on Income,” shall be
calculated and payable quarterly in arrears based on the Company’s
“Pre-Incentive Fee Net Investment Income” for the immediately preceding quarter.
The payment of the Incentive Fee on Income shall be subject to payment of a
preferred return to investors each quarter, expressed as a quarterly rate of
return on the value of the Company’s net assets at the end of the most recently
completed calendar quarter, of 1.75% (7.00% annualized), subject to a “catch up”
feature (as described below). The calculation of the Incentive Fee on Income for
each quarter is as follows:

(A) No Incentive Fee on Income shall be payable to the Adviser in any calendar
quarter in which the Company’s Pre-Incentive Fee Net Investment Income does not
exceed the preferred return rate of 1.75% or 7.00% annualized (the “Preferred
Return”) on net assets;

(B) 100% of the Company’s Pre-Incentive Fee Net Investment Income, if any, that
exceeds the preferred return but is less than or equal to 2.1875% in any
calendar quarter (8.75% annualized) shall be payable to the Adviser. This
portion of the company’s Incentive Fee on Income is referred to as the “catch
up” and is intended to provide the Adviser with an incentive fee of 20% on all
of the Company’s Pre-Incentive Fee Net Investment Income when the Company’s
Pre-Incentive Fee Net Investment Income reaches 2.1875% (8.75% annualized) in
any calendar quarter; and

(C) For any quarter in which the Company’s Pre-Incentive Fee Net Investment
Income exceeds 2.1875% (8.75% annualized), the Incentive Fee on Income shall
equal 20% of the amount of the Company’s Pre-Incentive Fee Net Investment
Income, as the Preferred Return and catch-up will have been achieved.

(ii) The second part of the incentive fee, referred to as the “Incentive Fee on
Capital Gains During Operations,” shall be an incentive fee on capital gains
earned on liquidated investments from the portfolio during operations prior to
the liquidation of the Company and shall be determined and payable in arrears as
of the end of each calendar year (or upon termination of the investment advisory
agreement, if earlier). This fee shall equal 20.0% of the Company’s incentive
fee capital gains, which shall equal the Company’s realized capital gains on a
cumulative basis from inception, calculated as of the end of each calendar year,
computed net of all realized capital losses and unrealized capital depreciation
on a cumulative basis, less the aggregate amount of any previously paid capital
gain incentive fees.

 

(iii) For purposes of Section 3(b), “Pre-Incentive Fee Net Investment Income”
means interest income, dividend income and any other income (including any other
fees, other than fees for providing managerial assistance, such as commitment,
origination, structuring, diligence and consulting fees or other fees that the
Company receives from portfolio companies) accrued during the calendar quarter,
minus the Company’s operating expenses for the quarter (including the base
management fee, expenses payable under the administration agreement and any
interest expense and dividends paid on any issued and outstanding preferred
stock, but excluding the incentive fee). Pre-Incentive Fee Net Investment Income
includes, in the case of investments with a deferred interest feature (such as
original issue discount debt instruments with payment-in-kind interest and zero
coupon securities), accrued income that the Company has not yet received in
cash. Pre-Incentive Fee Net Investment Income does not include any realized
capital gains, realized capital losses or unrealized capital appreciation or
depreciation.

(iv) Notwithstanding the foregoing, in no event will the Adviser’s compensation
on the basis of a share of capital gains exceed 20% of the realized capital
gains upon the funds of the Company over the life of the Company, computed net
of all realized capital losses and unrealized capital depreciation.

 

4. Covenants of the Adviser.

(a) Adviser Status. The Adviser covenants that it will register as an investment
adviser under the Advisers Act and will maintain such registration. The Adviser
agrees that its activities will at all times be in compliance in all material
respects with all applicable federal and state laws governing its operations and
investments.

 

The following provisions in this Section 4 shall apply for only so long as the
shares of the Company are not listed on a national securities exchange.

 

(b) Reports to Stockholders. The Adviser shall prepare or shall cause to be
prepared and distributed to stockholders during each year the following reports
of the Company (either included in a periodic report filed with the SEC or
distributed in a separate report):

(i) Quarterly Reports. Within 60 days of the end of each quarter, a report
containing the same financial information contained in the Company’s Quarterly
Report on Form 10-Q filed by the Company under the Securities Exchange Act of
1934, as amended.

(ii) Annual Report. Within 120 days after the end of the Company’s fiscal year,
an annual report containing:

(A) A balance sheet as of the end of each fiscal year and statements of income,
equity, and cash flow, for the year then ended, all of which shall be prepared
in accordance with generally accepted accounting principles and accompanied by
an auditor’s report containing an opinion of an independent certified public
accountant;

 

 

 

 

(B) A report of the activities of the Company during the period covered by the
report;

(C) Where forecasts have been provided to the Company’s stockholders, a table
comparing the forecasts previously provided with the actual results during the
period covered by the report;

(D) A report setting forth distributions by the Company for the period covered
thereby and separately identifying distributions from (i) cash flow from
operations during the period; (ii) cash flow from operations during a prior
period which have been held as reserves; and (iii) proceeds from disposition of
Company assets.

(iii) Previous Reimbursement Reports. The Adviser shall prepare or shall cause
to be prepared a report, prepared in accordance with the American Institute of
Certified Public Accountants United States Auditing Standards relating to
special reports, and distributed to stockholders not less than annually,
containing an itemized list of the costs reimbursed to the Adviser pursuant to
Section 2(b) for the previous fiscal year. The special report shall at a minimum
provide:

(A) A review of the time records of individual employees, the costs of whose
services were reimbursed; and

(B) A review of the specific nature of the work performed by each such employee.

(iv) Proposed Reimbursement Reports. The Adviser shall prepare or shall cause to
be prepared a report containing an itemized estimate of all proposed expenses
for which it shall receive reimbursements pursuant to Section 2(b) of this
Agreement for the next fiscal year, together with a breakdown by year of such
expenses reimbursed in each of the last five public programs formed by the
Adviser.

(v) Proposed Federal Income Tax Returns. Within 75 days after the end of the
Company’s fiscal year, all information necessary for Stockholders’ to prepare
their federal income tax returns.

 

(c) Reports to State Administrators. The Adviser shall, upon written request of
any State Administrator, submit any of the reports and statements to be prepared
and distributed by it pursuant to this Section 4 to such State Administrator.

 

(d) Reserves. In performing its duties hereunder, the Adviser shall cause the
Company to provide for adequate reserves for normal replacements and
contingencies (but not for payment of fees payable to the Adviser hereunder) by
causing the Company to retain a reasonable percentage of proceeds from offerings
and revenues.

 

(e) Recommendations Regarding Reviews. From time to time and not less than
quarterly, the Adviser must review the Company’s accounts to determine whether
cash distributions are appropriate. The Company may, subject to authorization by
the Board of Directors, distribute pro rata to the stockholders funds received
by the Company which the Adviser deems unnecessary to retain in the Company.

 

(f) Temporary Investments. The Adviser shall, in its sole discretion,
temporarily place proceeds from offerings by the Company into short term, highly
liquid investments which, in its reasonable judgment, afford appropriate safety
of principal during such time as it is determining the composition and
allocation of the portfolio of the Company and the nature, timing and
implementation of any changes thereto pursuant to Section 1(b); provided
however, that the Adviser shall be under no fiduciary obligation to select any
such short-term, highly liquid investment based solely on any yield or return of
such investment. The Adviser shall cause any proceeds of the offering of Company
securities not committed for investment within the later of two years from the
date of effectiveness of the Registration Statement or one year from termination
of the offering, unless a longer period is permitted by the applicable
Administrator, to be paid as a distribution to the stockholders of the Company
as a return of capital without deduction of Front End Fees (as defined below).

 

5. Brokerage Commissions. Limitations on Fees; Period of Offering; Assessments

(a) Brokerage Commissions. The Adviser is hereby authorized, to the fullest
extent now or hereafter permitted by law, to cause the Company to pay a member
of a national securities exchange, broker or dealer an amount of commission for
effecting a securities transaction in excess of the amount of commission another
member of such exchange, broker or dealer would have charged for effecting that
transaction, if the Adviser determines in good faith, taking into account such
factors as price (including the applicable brokerage commission or dealer
spread), size of order, difficulty of execution, and operational facilities of
the firm and the firm’s risk and skill in positioning blocks of securities, that
such amount of commission is reasonable in relation to the value of the
brokerage and/or research services provided by such member, broker or dealer,
viewed in terms of either that particular transaction or its overall
responsibilities with respect to the Company’s portfolio, and constitutes the
best net results for the Company.

 

The following provisions in this Section 5 shall apply for only so long as the
shares of the Company are not listed on a national securities exchange.

 

(b) Limitations. Notwithstanding anything herein to the contrary:

(i) All fees and expenses paid by any party for any services rendered to
organize the Company and to acquire assets for the Company (“Front End Fees”)
shall be reasonable and shall not exceed 18% of the gross offering proceeds,
regardless of the source of payment. Any reimbursement to the Adviser or any
other person for deferred organizational and offering expenses, including any
interest thereon, if any, will be included within this 18% limitation.

(ii) The Adviser shall commit at least eighty-two percent (82%) of the gross
offering proceeds towards the investment or reinvestment of assets and reserves
as set forth in Section 4(d) above on behalf of the Company. The remaining
proceeds may be used to pay Front End Fees.

 

6. Other Activities of the Adviser. The services of the Adviser to the Company
are not exclusive, and the Adviser may engage in any other business or render
similar or different services to others including, without limitation, the
direct or indirect sponsorship or management of other investment based accounts
or commingled pools of capital, however structured, having investment objectives
similar to those of the Company, so long as its services to the Company
hereunder are not impaired thereby, and nothing in this Agreement shall limit or
restrict the right of any manager, partner, member (including its members and
the owners of its members), officer or employee of the Adviser to engage in any
other business or to devote his or her time and attention in part to any other
business, whether of a similar or dissimilar nature, or to receive any fees or
compensation in connection therewith (including fees for serving as a director
of, or providing consulting services to, one or more of the Company’s portfolio
companies, subject to applicable law). The Adviser assumes no responsibility
under this Agreement other than to render the services called for hereunder. It
is understood that directors, officers, employees and stockholders of the
Company are or may become interested in the Adviser and its affiliates, as
directors, officers, employees, partners, stockholders, members, managers or
otherwise, and that the Adviser and directors, officers, employees, partners,
stockholders, members and managers of the Adviser and its affiliates are or may
become similarly interested in the Company as stockholders or otherwise.

 

 

 

 

7. Responsibility of Dual Directors, Officers and/or Employees. If any person
who is a manager, partner, member, officer or employee of the Adviser is or
becomes a director, officer and/or employee of the Company and acts as such in
any business of the Company, then such manager, partner, member, officer and/or
employee of the Adviser shall be deemed to be acting in such capacity solely for
the Company, and not as a manager, partner, member, officer or employee of the
Adviser or under the control or direction of the Adviser, even if paid by the
Adviser.

 

8. Indemnification.

(a) Indemnification. The Adviser (and its officers, managers, partners, members
(and their members, including the owners of their members), agents, employees,
controlling persons and any other person or entity affiliated with the Adviser)
shall not be liable to the Company for any action taken or omitted to be taken
by the Adviser in connection with the performance of any of its duties or
obligations under this Agreement or otherwise as an investment advisor of the
Company (except to the extent specified in Section 36(b) of the Investment
Company Act concerning loss resulting from a breach of fiduciary duty (as the
same is finally determined by judicial proceedings) with respect to the receipt
of compensation for services, and the Company shall indemnify, defend and
protect the Adviser (and its officers, managers, partners, members (and their
members, including the owners of their members), agents, employees, controlling
persons and any other person or entity affiliated with the Adviser, each of whom
shall be deemed a third party beneficiary hereof) (collectively, the
“Indemnified Parties”) and hold them harmless from and against all damages,
liabilities, costs and expenses (including reasonable attorneys’ fees and
amounts reasonably paid in settlement) incurred by the Indemnified Parties in or
by reason of any pending, threatened or completed action, suit, investigation or
other proceeding (including an action or suit by or in the right of the Company
or its security holders) arising out of or otherwise based upon the performance
of any of the Adviser’s duties or obligations under this Agreement or otherwise
as an investment adviser of the Company, to the extent such damages,
liabilities, costs and expenses are not fully reimbursed by insurance, and to
the extent that such indemnification would not be inconsistent with the laws of
the State of Maryland, the Investment Company Act, the charter of the Company.
Notwithstanding the preceding sentence of this Section 8 to the contrary,
nothing contained herein shall protect or be deemed to protect the Indemnified
Parties against or entitle or be deemed to entitle the Indemnified Parties to
indemnification in respect of, any liability to the Company or its security
holders to which the Indemnified Parties would otherwise be subject by reason of
willful misfeasance, bad faith or gross negligence in the performance of the
Adviser’s duties or by reason of the reckless disregard of the Adviser’s duties
and obligations under this Agreement.

 

The following provisions in this Section 8 shall apply for only so long as the
shares of the Company are not listed on a national securities exchange.

 

(b) Limitations on Indemnification. Notwithstanding Section 8(a) to the
contrary:

(i) the indemnification referred to in Section 8(a) shall only be provided to
the extent that such indemnification would not be inconsistent the provisions of
Section II.G of the Omnibus Guidelines published by the North American
Securities Administrators Association on March 29, 1992, as it may be amended
from time to time; and

(ii) the Company shall not provide for indemnification of the Indemnified
Parties for any liability or loss suffered by the Indemnified Parties, nor shall
the Company provide that any of the Indemnified Parties be held harmless for any
loss or liability suffered by the Company, unless all of the following
conditions are met:

(A) the Indemnified Party has determined, in good faith, that the course of
conduct which caused the loss or liability was in the best interests of the
Company;

(B) the Indemnified Party was acting on behalf of or performing services for the
Company;

(C) such liability or loss was not the result of negligence or misconduct by the
Indemnified Party; and

(D) such indemnification or agreement to hold harmless is recoverable only out
of the Company’s net assets and not from stockholders.

 

Furthermore, the Indemnified Party shall not be indemnified for any losses,
liabilities or expenses arising from or out of an alleged violation of federal
or state securities laws unless one or more of the following conditions are met:

(A) there has been a successful adjudication on the merits of each count
involving alleged securities law violations as to the particular indemnitee;

(B) such claims have been dismissed with prejudice on the merits by a court of
competent jurisdiction as to the particular indemnitee; or

(C) a court of competent jurisdiction approves a settlement of the claims
against a particular indemnitee and finds that indemnification of the settlement
and related costs should be made, and the court of law considering the request
for indemnification has been advised of the position of the SEC and the
published position of any state securities regulatory authority in which
securities of the Company were offered or sold as to indemnification for
violations of securities laws.

 

(c) Advancement of Funds. To the maximum extent permitted by law, the Company
shall be permitted to advance funds to the Indemnified Party for legal expenses
and other costs incurred as a result of any legal action for which
indemnification is being sought only if all of the following conditions are met:

(i) The legal action relates to acts or omissions with respect to the
performance of duties or services on behalf of the Company;

(ii) The legal action is initiated by a third party who is not a Company
stockholder, or the legal action is initiated by a Company stockholder and a
court of competent jurisdiction specifically approves such advancement; and

(iii) The Indemnified Party undertakes to repay the advanced funds to the
Company, together with the applicable legal rate of interest thereon, in cases
in which the Indemnified Party is not found to be entitled to indemnification.

 

 

 

 

9. Effectiveness, Duration and Termination of Agreement.

(a) Term and Effectiveness. This Agreement shall become effective as of the date
first written above. This Agreement shall remain in effect for two years, and
thereafter shall continue automatically for successive annual periods, provided
that such continuance is specifically approved at least annually by (i) the vote
of the Board, or by the vote of a majority of the outstanding voting securities
of the Company and (ii) the vote of a majority of the Company’s directors who
are not parties to this Agreement or “interested persons” (as such term is
defined in Section 2(a)(19) of the Investment Company Act) of any such party, in
accordance with the requirements of the Investment Company Act.

 

(b) Termination. This Agreement may be terminated at any time, without the
payment of any penalty, (a) by the Company upon 60 days’ written notice to the
Adviser, (i) upon the vote of a majority of the outstanding voting securities of
the Company, or (ii) by the vote of the Company’s independent directors, or (b)
by the Adviser upon 120 days’ written notice to the Company. This Agreement
shall automatically terminate in the event of its “assignment” (as such term is
defined for purposes of Section 15(a)(4) of the Investment Company Act). The
provisions of Section 8 of this Agreement shall remain in full force and effect,
and the Adviser shall remain entitled to the benefits thereof, notwithstanding
any termination of this Agreement. Further, notwithstanding the termination or
expiration of this Agreement as aforesaid, the Adviser shall be entitled to any
amounts owed to it under Section 3 through the date of termination or expiration
and Section 8 shall continue in force and effect and apply to the Adviser and
its representatives as and to the extent applicable.

 

The following provisions in this Section 9 shall apply for only so long as the
shares of the Company are not listed on a national securities exchange.

 

(c) Payments to and Duties of Adviser Upon Termination.

(i) After the termination of this Agreement, the Adviser shall not be entitled
to compensation for further services provided hereunder except that it shall be
entitled to receive from the Company within 30 days after the effective date of
such termination all unpaid reimbursements and all earned but unpaid fees
payable to the Adviser prior to termination of this Agreement. If the Company
and the Adviser cannot agree on the amount of such reimbursements and fees, the
parties will submit to binding arbitration.

(ii) The Adviser shall promptly upon termination:

(A) Deliver to the Board a full accounting, including a statement showing all
payments collected by it and a statement of all money held by it, covering the
period following the date of the last accounting furnished to the Board;

(B) Deliver to the Board all assets and documents of the Company then in custody
of the Adviser; and

(C) Cooperate with the Company to provide an orderly management transition.

 

(d) Miscellaneous Matters. Without the approval of holders of a majority of the
shares entitled to vote on the matter, the Adviser shall not: (i) amend the
investment advisory agreement except for amendments that do not adversely affect
the interests of the stockholders; (ii) voluntarily withdraw as the Adviser
unless such withdrawal would not affect the tax status of the Company and would
not materially adversely affect the stockholders; (iii) appoint a new Adviser;
(iv) sell all or substantially all of the Company’s assets other than in the
ordinary course of the Company’s business; or (v) cause the merger or other
reorganization of the Company. In the event that the Adviser should withdraw
pursuant to (ii) above, the withdrawing Adviser shall pay all expenses incurred
as a result of its withdrawal. The Company may terminate the Adviser’s interest
in the Company’s revenues, expenses, income, losses, distributions and capital
by payment of an amount equal to the then present fair market value of the
terminated Adviser’s interest, determined by agreement of the terminated Adviser
and the Company. If the Company and the Adviser cannot agree upon such amount,
then such amount will be determined in accordance with the then current rules of
the American Arbitration Association. The expenses of such arbitration shall be
borne equally by the terminated Adviser and the Company. The method of payment
to the terminated Adviser must be fair and must protect the solvency and
liquidity of the Company.

 

(e) With respect to any shares owned by the Adviser, the Adviser may not vote or
consent on matters submitted to the Stockholders regarding the removal of the
Adviser or regarding any transaction between the Company and the Adviser. In
determining the existence of the requisite percentage of shares necessary to
approve a matter on which the Adviser may not vote or consent, any shares owned
by the Adviser shall not be included.

 

10. Conflicts of Interests and Prohibited Activities. The following provisions
in this Section 10 shall apply for only so long as the shares of the Company are
not listed on a national securities exchange.

(a) No Exclusive Agreement. The Adviser is not hereby granted or entitled to an
exclusive right to sell or exclusive employment to sell assets for the Company.

 

(b) Rebates, Kickbacks and Reciprocal Arrangements.

(i) The Adviser agrees that it shall not (A) receive or accept any rebate,
give-up or similar arrangement that is prohibited under applicable federal or
state securities laws, (B) participate in any reciprocal business arrangement
that would circumvent provisions of applicable federal or state securities laws
governing conflicts of interest or investment restrictions, or (C) enter into
any agreement, arrangement or understanding that would circumvent the
restrictions against dealing with affiliates or promoters under applicable
federal or state securities laws.

(ii) The Adviser agrees that it shall not directly or indirectly pay or award
any fees or commissions or other compensation to any person or entity engaged to
sell the Company’s stock or give investment advice to a potential stockholder;
provided, however, that this subsection shall not prohibit the payment of a
registered broker-dealer or other properly licensed agent from sales commissions
for selling or distributing the Company’s common stock.

 

 

 

 

(c) Commingling. The Adviser covenants that it shall not permit or cause to be
permitted the Company’s funds from being commingled with the funds of any other
entity. Nothing in this Subsection 10(c) shall prohibit the Adviser from
establishing a master fiduciary account pursuant to which separate sub-trust
accounts are established for the benefit of affiliated programs, provided that
the Company’s funds are protected from the claims of other programs and
creditors of such programs.

 

11. Notices. Any notice under this Agreement shall be given in writing,
addressed and delivered or mailed, postage prepaid, to the other party at its
principal office.

 

12. Amendments. This Agreement may be amended by mutual consent. To the extent
required by the Investment Company Act, material amendments of this Agreement
will require the approval of a majority of the outstanding voting securities of
the Company.

 

13. Certain Definitions. For the purposes of this Agreement, the “approval of a
majority of the outstanding voting securities” of the Fund means the affirmative
vote, at a duly called and held meeting of shareholders of BDCA, (a) of the
holders of 67% or more of the shares of BDCA present (in person or by proxy) and
entitled to vote at the meeting, if the holders of more than 50% of the
outstanding shares of BDCA entitled to vote at the meeting are present in person
or by proxy or (b) of the holders of more than 50% of the outstanding shares of
BDCA entitled to vote at the meeting, whichever is less.

 

For the purposes of this Agreement, the term “approve at least annually” will be
construed in a manner consistent with the Investment Company Act and any
applicable guidance or interpretation of the Securities Exchange Commission or
its staff.

 

14. Entire Agreement; Governing Law. This Agreement contains the entire
agreement of the parties and supersedes all prior agreements, understandings and
arrangements with respect to the subject matter hereof. Notwithstanding the
place where this Agreement may be executed by any of the parties hereto, this
Agreement shall be construed in accordance with the laws of the State of New
York. For so long as the Company is regulated as a business development company
under the Investment Company Act, this Agreement shall also be construed in
accordance with the applicable provisions of the Investment Company Act. In such
case, to the extent the applicable laws of the State of New York, or any of the
provisions herein, conflict with the provisions of the Investment Company Act,
the latter shall control.

 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

 

 

 

 

IN WITNESS WHEREOF, the parties hereto have caused this Investment Advisory and
Management Services Agreement to be duly executed on the date above written.

 

  BUSINESS DEVELOPMENT CORPORATION OF AMERICA               By:  /s/ Richard J.
Byrne   Name: Richard J. Byrne   Title:  Chief Executive Officer and President

 

[Signature Page to Investment Advisory and Management Services Agreement]

 

 

  BDCA ADVISER, LLC   By: BSP Acquisition I, LLC, its sole member              
By: /s/ Thomas J. Gahan   Name: Thomas J. Gahan   Title: Chief Executive Officer

 

[Signature Page to Investment Advisory and Management Services Agreement]