Exhibit 10.12

KATONAH DEBT ADVISORS, L.L.C.

CONSULTING AGREEMENT

This Consulting Agreement is entered into by and between Katonah Debt Advisors,
L.L.C. and John M. Stack (“Consultant”), effective as of January 1, 2011 (the
“Effective Date”).

1.           Consulting Services.  During the one-year period commencing on the
Effective Date, Consultant will provide consultancy services (the “Services”) to
Katonah Debt Advisors, L.L.C. and Kohlberg Capital Corporation (collectively,
the “Company”).  The Services shall include assisting the Company connection
with the transition of oversight of investment analysts and credit processes and
such other consultancy services as may be mutually agreed to by Consultant and
the Company from time to time (the “Services”).  Consultant shall devote that
amount of time as is reasonably required by the Company for Consultant to
perform the Services, taking into account Consultant’s other business
obligations as in effect from time to time.  Consultant shall use Consultant’s
best efforts to perform the Services such that the results are satisfactory to
the Company.  In no event shall the level of Services exceed 20% of the average
level of services Consultant provided to the Company over the 36-month period
immediately preceding the Effective Date.

2.           Term.  The initial term of this Agreement shall be the one-year
period beginning on the Effective Date (the “Term”) on the terms and conditions
set forth herein.  The Company shall have the right (but not the obligation) to
renew this Agreement for additional one-year periods by written notice to the
Consultant within 30 days prior to the end of the Term (as extended by
subsequent renewals hereof) on conditions (including amounts payable) that may
differ from those contained herein.

3.           Consulting Payments.  In consideration of the performance of
Services under this Agreement, the Company will pay to Consultant the amounts
described in Sections 3(a) and 3(b).

(a)          Monthly Payments.  On the last day of each calendar month (in
arrears) during the Term, the Company will pay to Consultant the following
amounts:

i.          Initial Consultancy Fee.  The Company shall pay Consultant a
consultancy fee (the “Initial Consulting Fee”) of $16,030 per month for the
period beginning on the Effective Date and ending on the six-month anniversary
of the Effective Date (the “Initial Term”).

ii.          Subsequent Consultancy Fee.  Following the end of the Initial Term,
Consultant shall continue to provide Services for an additional six month period
and, in consideration thereof, the Company shall pay Consultant a consultancy
fee (the “Subsequent Consulting Fee”) of $20,180 per month   (together, the
Initial Consulting Fee and the Subsequent Consulting Fee are referred to as the
“Consultancy Fee”).  

 
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(b)         Lump-Sum Payment.   On July 31, 2011, the Company shall pay
Consultant a lump-sum payment of $20,000, subject to his continued provision of
Services hereunder on such date.

4.           Expenses, Office Space, etc.  The Company shall reimburse
Consultant for all expenses reasonably incurred in connection with the
performance of the Services.  As a condition to receipt of reimbursement,
Consultant shall be required to submit to the Company reasonable evidence that
the amount involved was expended and related to Services provided under this
Agreement in accordance with the Company’s reimbursement policy.  Reimbursements
shall be made no later than December 31 of the year following the year in which
the related expenses were incurred.  During the Term, the Company shall provide
Consultant with reasonable office space at the Company’s headquarters, when
available, and access to secretarial and administrative assistance so that he
may perform his duties hereunder.

5.           Termination of Consulting Services.  The consultancy relationship
may be terminated by the Company for Cause.  In the event of a termination of
the consultancy relationship by the Company for Cause, the Company’s only
obligation shall be to pay Consultant any earned but unpaid Consultancy Fee as
of the termination date.  For purposes of this Agreement, “Cause” shall mean the
conviction or a plea of nolo contendere of the Consultant for the commission of
a felony, or willful misconduct by the Consultant in connection with his
consultancy with the Company that results in material and demonstrable financial
harm to the Company, or the breach of any restrictive covenants described
Section 7 of this Agreement.

6.           Termination by Consultant.  The Consultant may terminate the
consultancy relationship for any reason upon giving the Company ten (10) days’
advance notice of such termination.  In the event of the Consultant’s
termination of the consultancy relationship, the Company’s only obligation shall
be to pay Consultant any earned but unpaid Consultancy Fee as of the termination
date.

7.           Confidential Information and Restrictive Covenants.

(a)         Confidential Information. During the course of Consultant’s prior
employment with the Company and his provision of services as a Consultant under
this Agreement, he has and will learn of Confidential Information, as defined
below, and he may develop Confidential Information on behalf of the Company.
Consultant agrees that he will not use or disclose to any Person (except as
required by applicable law or for the proper performance of Consultant’s regular
duties and responsibilities for the Company) any Confidential Information
obtained by him incident to his employment or consulting services or any other
association with the Company or any of its Affiliates. Consultant understands
that this restriction shall continue to apply after his service terminates,
regardless of the reason for such termination.

 
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(b)           Protection of Documents.  All documents, records and files, in any
media of whatever kind and description, relating to the business, present or
otherwise, of the Company or any of its Affiliates, and any copies, in whole or
in part, thereof (the “Documents”), whether or not prepared by Consultant shall
be the sole and exclusive property of the Company. Consultant agrees to
safeguard all Documents and to surrender to the Company, at the time his service
terminates or at such earlier time or times as the Company or its designee may
specify, all Documents then in Consultant’s possession or control.

(c)          Non-Competition. Consultant acknowledges that in connection with
his prior employment and his present consultancy services with the Company he
has had and will have access to Confidential Information which, if disclosed,
would assist in competition against the Company and its Affiliates and that he
will also generate goodwill for the Company and its Affiliates in the course of
his performing Services hereunder. Therefore, Consultant agrees that the
following restrictions on his activities during and after the Term is necessary
protect the goodwill, Confidential Information and other legitimate interests of
the Company and its Affiliates:

i.          While Consultant is performing services for the Company (the
“Non-Competition Period”), Consultant agrees that he will not, without the prior
written consent of the Company, directly or indirectly, own, manage, operate,
join, control, finance, or participate in the ownership, marketing, management,
operation, control, fundraising or financing of, or be connected as an officer,
director, employee, partner, principal, agent, representative, consultant, or
otherwise use or permit his name to be used in connection with any business or
enterprise engaged in the United States in the business of structuring CDO or
CLO securitization vehicles, analyzing and acquiring loans and other assets to
be held by CDO or CLO vehicles, arranging for the issuance of debt and preferred
securities by CDO or CLO vehicles, acting as collateral managers for such
securitizations, or performing similar functions.

ii.          Consultant agrees that during the Non-Competition Period, he will
not, directly or through any other Person, (i) hire any employee of the Company
or any of its Affiliates or seek to persuade any employee of the Company or any
of its Affiliates to discontinue employment, (ii) solicit or encourage any
customer or investor of the Company or any of its Affiliates or independent
contractor providing services to the Company or any of its Affiliates to
terminate or diminish its relationship with them or (iii) seek to persuade any
customer or investor or prospective customer or investor of the Company or any
of its Affiliates to conduct with anyone else any business or activity that such
customer or investor or prospective customer or investor conducts or could
conduct with the Company or any of its Affiliates.

 
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(d)           Remedies.  In signing this agreement, Consultant gives the Company
assurance that he has carefully read and considered all the terms and conditions
of this agreement, including the restraints imposed on him under this Section 7.
Consultant agrees without reservation that these restraints are necessary for
the reasonable and proper protection of the Company and its Affiliates and that
each and every one of the restraints is reasonable in respect to subject matter,
length of time and geographic area. He further agrees that, were he to breach
any of the covenants contained in this Section 7, the damage to the Company and
its Affiliates would be irreparable. Consultant therefore agrees that the
Company, in addition to any other remedies available to it, shall be entitled to
preliminary and permanent injunctive relief against any breach or threatened
breach by him of any of those covenants, without having to post bond. Consultant
and the Company further agree that, in the event that any provision of this
Section 7 is determined by any court of competent jurisdiction to be
unenforceable by reason of its being extended over too great a time, too large a
geographic area or too great a range of activities, that provision shall be
deemed to be modified to permit its enforcement to the maximum extent permitted
by law. It is also agreed that each of the Company’s Affiliates shall have the
right to enforce all of Consultant’s obligations to that Affiliate under this
agreement, including without limitation pursuant to this Section 7.

8.           Independent Contractor.  Consultant’s relationship with the Company
will be that of an independent contractor and not that of an employee.
 
(a)         Method of Provision of Services.  Consultant shall be solely
responsible for determining the method, details and means of performing the
Services.

(b)         No Authority to Bind Company.  Neither Consultant, nor any of his
partners, agents or employees, has authority to enter into contracts that bind
the Company or create obligations on the part of the Company without the prior
written authorization of the Company.

(c)         No Benefits.  Consultant acknowledges and agrees that Consultant
will not be eligible for any Company employee benefits under this Agreement.

(d)         Withholding During Consultancy Period; Indemnification.  Following
the Effective Date, Consultant shall have full responsibility for applicable
withholding taxes for all compensation paid to him, his partners, agents or
employees under this Agreement, and for compliance with all applicable labor and
employment requirements with respect to his self-employment, sole proprietorship
or other form of business organization, and his partners, agents and employees,
including state worker’s compensation insurance coverage requirements and any US
immigration visa requirements.  Consultant agrees to indemnify, defend and hold
the Company harmless from any liability for, or assessment of, any claims or
penalties with respect to such withholding taxes, labor or employment
requirements, including any liability for, or assessment of, withholding taxes
imposed on the Company by the relevant taxing authorities with respect to any
compensation paid to Consultant or Consultant’s partners, agents or employees.

 
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(e)         Supervision of Consultant’s Services.  All of the services to be
performed by Consultant, including but not limited to the Services, will be as
agreed between Consultant and E.A. Kratzman III, President, Katonah Debt
Advisors, L.L.C.  The nature and frequency of these reports will be left to the
discretion of Mr. Kratzman.

9.           Conflicts with this Agreement.  Consultant represents and warrants
that he is not under any pre-existing obligation in conflict or in any way
inconsistent with the provisions of this Agreement. Consultant represents and
warrants that Consultant’s performance of all the terms of this Agreement will
not breach any agreement to keep in confidence proprietary information acquired
by Consultant in confidence or in trust prior to commencement of this Agreement.
Consultant warrants that Consultant has the right to disclose and/or or use all
ideas, processes, techniques and other information, if any, which Consultant has
gained from third parties, and which Consultant discloses to the Company or uses
in the course of performance of this Agreement, without liability to such third
parties.  Notwithstanding the foregoing, Consultant agrees that he shall not
bundle with or incorporate into any deliveries provided to the Company herewith
any third party products, ideas, processes, or other techniques, without the
express, written prior approval of the Company.  Consultant represents and
warrants that Consultant has not granted and will not grant any rights or
licenses to any intellectual property or technology that would conflict with
Consultant’s obligations under this Agreement.  Consultant will not knowingly
infringe upon any copyright, patent, trade secret or other property right of any
former client, employer or third party in the performance of the Services
required by this Agreement.
 
10.         Miscellaneous.
 
(a)         Amendments and Waivers. Any term of this Agreement may be amended or
waived only with the written consent of the parties.
 
(b)         Sole Agreement.  This Agreement constitutes the sole agreement of
the parties and supersedes all oral negotiations and prior writings with respect
to the subject matter hereof.
 
(c)         Choice of Law, Attorneys’ Fees.  The validity, interpretation,
construction and performance of this Agreement shall be governed by the laws of
the State of Delaware, without giving effect to the principles of conflict of
laws.
 
(d)         Severability.  If one or more provisions of this Agreement are held
to be unenforceable under applicable law, such portion shall be deemed to be
modified or altered to the extent necessary to conform thereto or, if that is
not possible, to be omitted from this Agreement.  The invalidity of any such
portion shall not affect the force, effect, and validity of the remaining
portion hereof.
 
(e)         Counterparts.  This Agreement may be executed in counterparts, each
of which shall be deemed an original, but all of which together will constitute
one and the same instrument.

 
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(f)          Successors.  This Agreement is personal to Consultant and, without
the prior written consent of the Company, shall not be assignable by Consultant
otherwise than by will or the laws of descent and distribution.  This Agreement
shall inure to the benefit of and be enforceable by Consultant’s legal
representatives.  This Agreement shall inure to the benefit of and be binding
upon the Company and its successors and assigns.  As used in this Agreement,
“the Company” shall mean both the Company as defined above and any such
successor that assumes and agrees to perform this Agreement, by operation of law
or otherwise.
 
(g)          Advice of Counsel.  EACH PARTY ACKNOWLEDGES THAT, IN EXECUTING THIS
AGREEMENT, SUCH PARTY HAS HAD THE OPPORTUNITY TO SEEK THE ADVICE OF INDEPENDENT
LEGAL COUNSEL, AND HAS READ AND UNDERSTOOD ALL OF THE TERMS AND PROVISIONS OF
THIS AGREEMENT.  THIS AGREEMENT SHALL NOT BE CONSTRUED AGAINST ANY PARTY BY
REASON OF THE DRAFTING OR PREPARATION HEREOF.
 
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IN WITNESS WHEREOF, the parties have executed this Agreement effective as of the
Effective Date first set forth above.

 
KATONAH DEBT ADVISORS, L.L.C.
 
By:
/s/ E.A. Kratzman
   
Name:
E.A. Kratzman
   
Title:
President

 
Accepted and agreed:
 
Signature:
  /s/ John M. Stack
 
Date:
December 10, 2010

 
 
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