Exhibit 10.1

SECOND AMENDED AND RESTATED

INVESTMENT ADVISORY MANAGEMENT AGREEMENT

BETWEEN

PENNANTPARK FLOATING RATE CAPITAL LTD.

AND

PENNANTPARK INVESTMENT ADVISERS, LLC

SECOND AMENDED AND RESTATED AGREEMENT (this “Agreement”) made this 2nd day of
February 2016, by and between PENNANTPARK FLOATING RATE CAPITAL LTD., a Maryland
corporation (the “Corporation”), and PENNANTPARK INVESTMENT ADVISERS, LLC, a
Delaware limited liability company (the “Adviser”).

WHEREAS, the Corporation operates as a closed-end management investment company;

WHEREAS, the Corporation has filed an election to be treated as a business
development company under the Investment Company Act of 1940, as amended (the
“1940 Act”);

WHEREAS, the Corporation and the Adviser are parties to that certain investment
advisory management agreement dated April 7, 2011, as amended and restated on
August 7, 2012, by and between the Corporation and the Adviser (the “Prior
Agreement”);

WHEREAS, the Corporation and the Adviser desire to amend and restate the Prior
Agreement to set forth the terms and conditions for the continued provision by
the Adviser of investment advisory services to the Corporation; and

WHEREAS, the Corporation’s board of directors has determined that such amendment
and restatement clarifies the intent of the Prior Agreement in a manner that is
consistent with the Corporation’s public disclosures and is not detrimental to
the Corporation.

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) The Corporation hereby employs the Adviser to act as the investment adviser
to the Corporation and to manage the investment and reinvestment of the assets
of the Corporation, subject to the supervision of the Board of Directors of the
Corporation, for the period and upon the terms herein set forth, (i) in
accordance with the investment objective, policies and restrictions that are set
forth in the Corporation’s registration statement, as the same may be amended
from time to time, (ii) in accordance with the 1940 Act and (iii) during the
term of this Agreement in accordance with all other applicable federal and state
laws, rules and regulations, and the Corporation’s charter and by-laws. 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 of
the portfolio of the Corporation, 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 Corporation; (iii) close
and monitor the Corporation’s investments; determine the securities and other
assets that the Corporation will purchase, retain, or sell; perform due
diligence on prospective portfolio companies; and (vi) provide the Corporation
with such other investment advisory, research and related services as the
Corporation may, from time to time, reasonably require for the investment of its
funds. The Adviser shall have the power and authority on behalf of the
Corporation to effectuate its investment decisions for the Corporation,
including the execution and delivery of all documents relating to the
Corporation’s investments and the placing of orders for other purchase or sale
transactions on behalf of the Corporation. In the event that the Corporation
determines to acquire debt financing, the Adviser will arrange for such
financing on the Corporation’s behalf, subject to the oversight and approval of
the Corporation’s Board of Directors. If it is necessary for the Adviser to make
investments on behalf of the Corporation through a special purpose vehicle, the
Adviser shall have authority to create or arrange for the creation of such
special purpose vehicle and to make such investments through such special
purpose vehicle in accordance with the 1940 Act.

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(b) The Adviser hereby accepts such employment and agrees during the term hereof
to render the services described herein for the compensation provided herein.

(c) Subject to the requirements of the 1940 Act, 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
Corporation’s investment objective and policies, and work, along with the
Adviser, in structuring, negotiating, arranging or effecting the acquisition or
disposition of such investments and monitoring investments on behalf of the
Corporation, subject to the oversight of the Adviser and the Corporation. The
Adviser, and not the Corporation, shall be responsible for any compensation
payable to any Sub-Adviser. Any sub-advisory agreement entered into by the
Adviser shall be in accordance with the requirements of the 1940 Act and other
applicable federal and state law.

(d) 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 Corporation in any way or
otherwise be deemed an agent of the Corporation.

(e) The Adviser shall keep and preserve, in the manner and for the period that
would be applicable to investment companies registered under the 1940 Act any
books and records relevant to the provision of its investment advisory services
to the Corporation and shall specifically maintain all books and records with
respect to the Corporation’s portfolio transactions and shall render to the
Corporation’s Board of Directors such periodic and special reports as the Board
may reasonably request. The Adviser agrees that all records that it maintains
for the Corporation are the property of the Corporation and will surrender
promptly to the Corporation any such records upon the Corporation’s request,
provided that the Adviser may retain a copy of such records.

2. Corporation’s Responsibilities and Expenses Payable by the Corporation. All
investment professionals of the Adviser and their respective staffs, when and to
the extent engaged in providing investment advisory and management services
hereunder, and the compensation and routine overhead expenses of such personnel
allocable to such services, will be provided and paid for by the Adviser and not
by the Corporation. The Corporation will bear all other costs and expenses of
its operations and transactions, including (without limitation) those relating
to: organization and offering; calculating the Corporation’s net asset value
(including the cost and expenses of any independent valuation firm); expenses
incurred by the Adviser payable to third parties, including agents, consultants
or other advisors, in monitoring financial and legal affairs for the Corporation
and in monitoring the Corporation’s investments and performing due diligence
(including related legal expenses) on its prospective portfolio companies;
interest payable on debt, if any, incurred to finance the Corporation’s
investments and expenses related to unsuccessful portfolio acquisition efforts;
offerings of the Corporation’s common stock and other securities; investment
advisory and management fees; administration fees payable under the
Administration Agreement (the “Administration Agreement”) between the
Corporation and PennantPark Investment Administration, LLC (the
“Administrator”), the Corporation’s administrator; fees payable to third
parties, including agents, consultants or other advisors, relating to, or
associated with, evaluating and making investments, including costs associated
with meeting potential financial sponsors; transfer agent and custodial fees;
federal and state registration fees; all costs of registration and listing the
Corporation’s shares on any securities exchange; federal, state and local taxes;
independent directors’ fees and expenses; costs of preparing and filing reports
or other documents required by the Securities and Exchange Commission; costs of
any reports, proxy statements or other notices to stockholders, including
printing costs; costs associated with individual or group stockholders; the
Corporation’s allocable portion of the fidelity bond, directors and
officers/errors and omissions liability insurance, and any other insurance
premiums; direct costs and expenses of administration, including printing,
mailing, long distance telephone, copying, secretarial and other staff,
independent auditors and outside legal costs; and all other expenses incurred by
the Corporation or the Administrator in connection with administering the
Corporation’s business, including payments under the Administration Agreement
between the Corporation and the Administrator based upon the Corporation’s
allocable portion of the Administrator’s overhead in performing its obligations
under the Administration Agreement, including rent and the allocable portion of
the cost of the Corporation’s chief compliance officer and chief financial
officer and their respective staffs.

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3. Compensation of the Adviser. The Corporation 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 Corporation shall make any
payments due hereunder to the Adviser or to the Adviser’s designee as the
Adviser may otherwise direct. To the extent permitted by applicable law, the
Adviser may elect, or adopt a deferred compensation plan pursuant to which it
may elect, to defer all or a portion of its fees hereunder for a specified
period of time.

(a) The Base Management Fee shall be calculated at an annual rate of 1.00% of
the Corporation’s “average adjusted gross assets,” which equals the
Corporation’s gross assets (net of U.S. Treasury Bills, temporary draws under
any credit facility, cash and cash equivalents, repurchase agreements or other
balance sheet transactions undertaken at the end of a fiscal quarter for
purposes of preserving investment flexibility for the next quarter and adjusted
to exclude cash, cash equivalents and unfunded commitments, if any). For
services rendered under this Agreement, the Base Management Fee will be payable
quarterly in arrears. The Base Management Fee will be calculated based on the
average adjusted gross assets at the end of the two most recently completed
calendar quarters, and appropriately adjusted for any share issuances or
repurchases during the current calendar quarter. Base Management Fees for any
partial month or quarter will be appropriately pro-rated.

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

 

  (i) One part will be calculated and payable quarterly in arrears based on the
Corporation’s pre-Incentive Fee net investment income for the immediately
preceding calendar quarter. For this purpose, 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
amendment, commitment, origination, structuring, prepayment penalties, diligence
and consulting fees or other fees that the Corporation receives from portfolio
companies, accrued during the calendar quarter, minus the Corporation’s
operating expenses for the quarter (including the Base Management Fee, any
expenses payable under the Administration Agreement, and any interest expense or
amendment fees under any credit facility and distribution 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
Corporation has not yet received in cash. Pre-Incentive Fee net investment
income does not include any realized capital gains, computed net of all realized
capital losses or unrealized capital appreciation or depreciation. Pre-Incentive
Fee net investment income, expressed as a percentage of the value of the
Corporation’s net assets at the end of the immediately preceding calendar
quarter, will be compared to a “hurdle rate” of 1.75% per quarter (7.00%
annualized). The Corporation’s net investment income used to calculate this part
of the Incentive Fee is also included in the amount of its gross assets used to
calculate the 1.00% Base Management Fee. The Corporation will pay the Adviser an
Incentive Fee with respect to the Corporation’s pre-Incentive Fee net investment
income in each calendar quarter as follows: (1) no Incentive Fee in any calendar
quarter in which the Corporation’s pre-Incentive Fee net investment income does
not exceed the hurdle rate of 1.75%; (2) 50% of the Corporation’s pre-Incentive
Fee net investment income with respect to that portion of such pre-Incentive Fee
net investment income, if any, that exceeds the hurdle rate but is less than
2.9167% in any calendar quarter (11.67% annualized) (this portion of the
pre-Incentive Fee net investment income (which exceeds the hurdle but is less
than 2.9167%) is referred to herein as the “catch-up,” which is meant to provide
the Adviser with 20% of the Corporation’s pre-Incentive Fee net investment
income, as if a hurdle did not apply, if this net investment income exceeds
2.9167% in any calendar quarter); and (3) 20% of the amount of the Corporation’s
pre-Incentive Fee net investment income, if any, that exceeds 2.9167% in any
calendar quarter. These calculations will be appropriately pro-rated for any
period of less than three months and adjusted for any share issuances or
repurchases during the relevant quarter.

 

  (ii) The second part of the Incentive Fee (the “Capital Gains Fee”) will be
determined and payable in arrears as of the end of each calendar year (or upon
termination of this Agreement as set forth below), commencing with December 31,
2011, and will equal 20.0% of the Corporation’s realized capital gains, if any,
on a cumulative basis from inception through 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
Gains Fees. In the event that this Agreement shall terminate as of a date that
is not a calendar year end, the termination date shall be treated as though it
were a calendar year end for purposes of calculating and paying a Capital Gains
Fee.

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4. Covenants of the Adviser. The Adviser covenants that it is registered as an
investment adviser under the Advisers Act. 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.

5. Excess Brokerage Commissions. The Adviser is hereby authorized, to the
fullest extent now or hereafter permitted by law, to cause the Corporation 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 Corporation’s portfolio, and
constitutes the best net results for the Corporation.

6. Limitations on the Employment of the Adviser. The services of the Adviser to
the Corporation 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 Corporation, so long as its
services to the Corporation hereunder are not impaired thereby, and nothing in
this Agreement shall limit or restrict the right of any manager, partner,
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 Corporation’s portfolio companies,
subject to applicable law). So long as this Agreement or any extension, renewal
or amendment remains in effect, the Adviser shall be the only investment adviser
for the Corporation, subject to the Adviser’s right to enter into sub-advisory
agreements. 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 Corporation 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 Corporation as stockholders or otherwise.

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

8. Limitation of Liability of the Adviser; Indemnification. The Adviser (and its
officers, managers, partners, agents, employees, controlling persons, members
and any other person or entity affiliated with the Adviser, including without
limitation its general partner and the Administrator) shall not be liable to the
Corporation 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 adviser of the Corporation, except to
the extent specified in Section 36(b) of the 1940 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
Corporation shall indemnify, defend and protect the Adviser (and its officers,
managers, partners, agents, employees, controlling persons, members and any
other person or entity affiliated with the Adviser, including without limitation
its general partner and the Administrator, 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 Corporation 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

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adviser of the Corporation. Notwithstanding the preceding sentence of this
Paragraph 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
Corporation 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
(as the same shall be determined in accordance with the 1940 Act and any
interpretations or guidance by the Securities and Exchange Commission or its
staff thereunder).

9. Effectiveness, Duration and Termination of Agreement. This Agreement shall
become effective as of the first date above written. This Agreement shall
continue automatically for successive annual periods, provided that such
continuance is specifically approved at least annually by (a) the vote of the
Corporation’s Board of Directors, or by the vote of a majority of the
outstanding voting securities of the Corporation and (b) the vote of a majority
of the Corporation’s directors who are not parties to this Agreement or
“interested persons” (as such term is defined in Section 2(a)(19) of the 1940
Act) of any such party, in accordance with the requirements of the 1940 Act.
This Agreement may be terminated at any time, without the payment of any
penalty, upon 60 days’ written notice, by the vote of a majority of the
outstanding voting securities of the Corporation, or by the vote of the
Corporation’s Directors or by the Adviser. This Agreement will automatically
terminate in the event of its “assignment” (as such term is defined for purposes
of Section 15(a)(4) of the 1940 Act). The provisions of Paragraph 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 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.

10. 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.

11. Amendments. This Agreement may be amended by mutual consent, but the consent
of the Corporation must be obtained in conformity with the requirements of the
1940 Act.

12. 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. This Agreement shall be
construed in accordance with the laws of the State of New York and the
applicable provisions of the 1940 Act. To the extent the applicable laws of the
State of New York, or any of the provisions herein, conflict with the provisions
of the 1940 Act, the latter shall control.

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

 

PENNANTPARK FLOATING RATE CAPITAL LTD. By:  

/s/ Arthur Penn

Name:   Arthur Penn Title:   Chief Executive Officer and Chairman of the Board
of Directors PENNANTPARK INVESTMENT ADVISERS, LLC By:  

/s/ Arthur Penn

Name:   Arthur Penn Title:   Managing Member