EXHIBIT 10.1

 

AMENDED AND RESTATED INVESTMENT MANAGEMENT AGREEMENT

 

AMENDED AND RESTATED INVESTMENT MANAGEMENT

AGREEMENT (this “Agreement”), dated as of January 16, 2018, between BlackRock
Capital Investment Corporation, a Delaware corporation (the “BDC”), and
BlackRock Capital Investment Advisors, LLC, a Delaware limited liability company
(the “Advisor”).

 

WHEREAS, the BDC and BlackRock Advisors, LLC (the “Previous Advisor”) were
parties to that certain Investment Management Agreement, dated March 6, 2015
(the “Previous Agreement”), pursuant to which the Previous Advisor provided
investment management services to the BDC; and

 

WHEREAS, the Previous Advisor and the Advisor, a wholly-owned subsidiary of the
Previous Advisor, entered into that certain Assignment and Assumption Agreement,
dated January 16, 2018, to assign the Previous Agreement to the Advisor under
state law and in a manner that is not an “assignment” for purposes of the
Investment Company Act of 1940 (the “1940 Act”) in reliance on Rule 2a-6
thereunder; and

 

WHEREAS, the BDC and the Advisor desire to amend and restate the Previous
Agreement in its entirety to acknowledge such assignment and to delete those
portions of the Previous Agreement that are no longer operative in accordance
with their terms; and

 

WHEREAS, the Advisor has agreed to furnish investment advisory services to the
BDC, a closed-end management company that has elected to be regulated as a
business development company under the 1940 Act; and

 

WHEREAS, this Agreement has been approved in accordance with the provisions of
the 1940 Act, and the Advisor is willing to furnish such services upon the terms
and conditions herein set forth.

 

NOW, THEREFORE, in consideration of the mutual premises and covenants herein
contained and other good and valuable consideration, the receipt of which is
hereby acknowledged, it is agreed by and between the parties hereto as follows:

 

1.In General.  The Advisor agrees, all as more fully set forth herein, to act as
investment advisor to the BDC with respect to the investment of the BDC’s assets
and to supervise and arrange for the day-to-day operations of the BDC and the
purchase of securities for and the sale of securities held in the investment
portfolio of the BDC.

 

2.Duties and Obligations of the Advisor with Respect to Investment of Assets of
the BDC.

 

(a)Subject to the succeeding provisions of this paragraph and subject to the
direction and control of the BDC’s Board of Directors, the Advisor shall (i) act
as investment advisor for and supervise and manage the investment and
reinvestment

 

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of the BDC’s assets and in connection therewith have complete discretion in
purchasing and selling securities and other assets for the BDC and in voting,
exercising consents and exercising all other rights appertaining to such
securities and other assets on behalf of the BDC; (ii) supervise continuously
the investment program of the BDC and the composition of its investment
portfolio; (iii) arrange, subject to the provisions of Section 3(b) hereof, for
the purchase and sale of securities and other assets held in the investment
portfolio of the BDC; and (iv) oversee the administration of all aspects of the
BDC’s business and affairs and provide, or arrange for others whom it believes
to be competent to provide, certain services as specified in paragraph (b)
below.  Nothing contained herein shall be construed to restrict the BDC’s right
to hire its own employees or to contract for administrative services to be
performed by third parties, including but not limited to, the calculation of the
net asset value of the BDC’s shares.

 

(b)Except to the extent provided for directly by the BDC, the specific services
to be provided or arranged for by the Advisor for the BDC pursuant to paragraph
(a)(iv) above are (i) maintaining the BDC’s books and records, to the extent not
maintained by the BDC’s custodian, transfer agent and dividend disbursing agent
in accordance with applicable laws and regulations; (ii) initiating all money
transfers to the BDC’s custodian and from the BDC’s custodian for the payment of
the BDC’s expenses, investments and dividends; (iii) reconciling account
information and balances among the BDC’s custodian, transfer agent and dividend
disbursing agent; (iv) preparing all governmental filings by the BDC and all
reports by the BDC to its shareholders; (v) supervising the calculation of the
net asset value of the BDC’s shares; and (vi) preparing notices and agendas for
meetings of the BDC’s shareholders and the BDC’s Board of Directors as well as
minutes of such meetings in all matters required by applicable law to be acted
upon by the Board of Directors.

 

(c)In the performance of its duties under this Agreement, the Advisor shall at
all times use all reasonable efforts to conform to, and act in accordance with,
any requirements imposed by (i) the provisions of the 1940 Act, and of any rules
or regulations in force thereunder; (ii) any other applicable provision of law;
(iii) the provisions of the Certificate of Incorporation and the By-Laws of the
BDC, as such documents are amended from time to time; (iv) the investment
objectives, policies and restrictions applicable to the BDC as set forth in the
BDC’s Registration Statement on Form N-2 (the “Registration Statement”); and (v)
any policies and determinations of the Board of Directors of the BDC.

 

(d)The Advisor will seek to provide qualified personnel to fulfill its duties
hereunder and, except as set forth in the following sentence, will bear all
costs and expenses incurred in connection with its investment advisory duties
thereunder. The BDC shall reimburse the Advisor for all direct and indirect cost
and expenses incurred by the Advisor (i) for office space rental, office
equipment and utilities allocable to performance of investment advisory and non
investment advisory administrative or operating services hereunder by the
Advisor and (ii) allocable to any non-investment advisory administrative or
operating services provided by the Advisor hereunder, including salaries,
bonuses, health insurance, retirement benefits and all similar employment costs,
such as office equipment and other overhead items. All allocations

 

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made pursuant to this paragraph (d) shall be made pursuant to allocation
guidelines approved from time to time by the Board of Directors. The BDC shall
also be responsible for the payment of all the BDC’s other expenses, including
(i) payment of the fees payable to the Advisor under Section 8 hereof; (ii)
organizational expenses; (iii) brokerage fees and commissions; (iv) taxes; (v)
interest charges on borrowings; (vi) the

cost of liability insurance or fidelity bond coverage for the BDC’s officers and
employees, and directors’ and officers’ errors and omissions insurance coverage;
(vii) legal, auditing and accounting fees and expenses; (viii) charges of the
BDC’s administrator (if any), custodian, transfer agent and dividend disbursing
agent and any other service providers;

(ix) the BDC’s dues, fees and charges of any trade association of which the BDC
is a member; (x) the expenses of printing, preparing and mailing proxies, stock
certificates, reports, prospectuses, registration statements and other documents
used by the BDC; (xi) expenses of registering and offering securities of the BDC
under applicable law; (xii) the expenses of holding shareholder meetings; (xiii)
the compensation, including fees, of any of the BDC’s directors, officers or
employees who are not affiliated persons of the Advisor; (xiv) all expenses of
computing the BDC’s net asset value per share; (xv) litigation and
indemnification and other extraordinary or non recurring expenses; and (xvi) all
other non investment advisory expenses of the BDC.

 

(e)The Advisor shall give the BDC the benefit of its professional judgment and
effort in rendering services hereunder, but neither the Advisor nor any of its
officers, directors, employees, agents or controlling persons shall be liable
for any act or omission or for any loss sustained by the BDC in connection with
the matters to which this Agreement relates, except a loss resulting from
willful misfeasance, bad faith or gross negligence in the performance of its
duties, or by reason of its reckless disregard of its obligations and duties
under this Agreement; provided, however, that the foregoing shall not constitute
a waiver of any rights which the BDC may have which may not be waived under
applicable law.

 

3.Covenants.  (a) In the performance of its duties under this Agreement, the
Advisor shall at all times conform to, and act in accordance with, any
requirements imposed by: (i) the provisions of the 1940 Act and the Investment
Advisers Act of 1940, as amended (the “Advisers Act”), and all applicable Rules
and Regulations of the Securities and Exchange Commission (the “SEC”); (ii) any
other applicable provision of law; (iii) the provisions of the Certificate of
Incorporation and By-Laws of the BDC, as such documents are amended from time to
time; (iv) the investment objectives and policies of the BDC as set forth in its
Registration Statement; and (v) any policies and determinations of the Board of
Directors of the BDC.

 

 

(b)

In addition, the Advisor will:

 

(i)place orders either directly with the issuer or with any broker or dealer.
Subject to the other provisions of this paragraph, in placing orders with
brokers and dealers, the Advisor will attempt to obtain the best price and the
most favorable execution of its orders. In placing orders, the Advisor will
consider the experience and skill of the firm’s securities traders as well as
the firm’s financial responsibility and administrative efficiency. Consistent
with this

 

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obligation, the Advisor may select brokers on the basis of the research,
statistical and pricing services they provide to the BDC and other clients of
the Advisor.

Information and research received from such brokers will be in addition to, and
not in lieu of, the services required to be performed by the Advisor
hereunder.  A commission paid to such brokers may be higher than that which
another qualified broker would have charged for effecting the same transaction,
provided that the Advisor determines in good faith that such commission is
reasonable in terms either of the transaction or the overall responsibility of
the Advisor to the BDC and its other clients and that the total commissions paid
by the BDC will be reasonable in relation to the benefits to the BDC over the
long term. In addition, the Advisor is authorized to take into account the sale
of shares of the BDC in allocating purchase and sale orders for portfolio
securities to brokers or dealers (including brokers and dealers that are
affiliated with the Advisor), provided that the Advisor believes that the
quality of the transaction and the commission are comparable to what they would
be with other qualified firms. In no instance, however, will the BDC’s
securities be purchased from or sold to the Advisor, or any affiliated person
thereof, except to the extent permitted by the SEC or by applicable law;

 

(ii)maintain a policy and practice of conducting its investment advisory
services hereunder independently of the commercial banking operations of its
affiliates.  When the Advisor makes investment recommendations for the BDC, its
investment advisory personnel will not inquire or take into consideration
whether the issuer of securities proposed for purchase or sale for the BDC’s
account are customers of the commercial department of its affiliates; and

 

(iii)treat confidentially and as proprietary information of the BDC all records
and other information relative to the BDC, and the BDC’s prior, current or
potential shareholders, and will not use such records and information for any
purpose other than performance of its responsibilities and duties hereunder,
except after prior notification to and approval in writing by the BDC, which
approval shall not be unreasonably withheld and may not be withheld where the
Advisor may be exposed to civil or criminal contempt proceedings for failure to
comply, when requested to divulge such information by duly constituted
authorities, or when so requested by the BDC.

 

4.Services Not Exclusive.  Nothing in this Agreement shall prevent the Advisor
or any officer, employee or other affiliate thereof from acting as investment
advisor for any other person, firm or corporation, or from engaging in any other
lawful activity, and shall not in any way limit or restrict the Advisor or any
of its officers, employees or agents from buying, selling or trading any
securities for its or their own accounts or for the accounts of others for whom
it or they may be acting; provided, however, that the Advisor will undertake,
and will cause its employees to undertake, no activities which, in its judgment,
will adversely affect the performance of the Advisor’s obligations under this
Agreement.

 

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5.Books and Records. In compliance with the requirements of Rule 31a-3 under the
1940 Act, the Advisor hereby agrees that all records which it maintains for the
BDC are the property of the BDC and further agrees to surrender promptly to the
BDC any such records upon the BDC’s request. The Advisor further agrees to
preserve for the periods prescribed by Rule 31a-2 under the 1940 Act the records
required to be maintained by Rule 31a-1 under the 1940 Act.

 

6.Agency Cross Transactions.  From time to time, the Advisor or brokers or
dealers affiliated with it may find themselves in a position to buy for certain
of their brokerage clients (each an “Account”) securities which the Advisor’s
investment advisory clients wish to sell, and to sell for certain of their
brokerage clients securities which advisory clients wish to buy.  Where one of
the parties is an advisory client, the Advisor or the affiliated broker or
dealer cannot participate in this type of transaction (known as a cross
transaction) on behalf of an advisory client and retain commissions from one or
both parties to the transaction without the advisory client’s consent. This is
because in a situation where the Advisor is making the investment decision (as
opposed to a brokerage client who makes his own investment decisions), and the
Advisor or an affiliate is receiving commissions from both sides of the
transaction, there is a potential conflicting division of loyalties and
responsibilities on the Advisor’s part regarding the advisory client.  The SEC
has adopted a rule under the Advisers Act, which permits the Advisor or its
affiliates to participate on behalf of an Account in agency cross transactions
if the advisory client has given written consent in advance. By execution of
this Agreement, the BDC authorizes the Advisor or its affiliates to participate
in agency cross transactions involving an Account. The BDC may revoke its
consent at any time by written notice to the Advisor.

 

7.Expenses.  During the term of this Agreement, the Advisor will bear all costs
and expenses of its employees and any overhead incurred in connection with its
duties hereunder and shall bear the costs of any salaries or Directors’ fees of
any officers or Directors of the BDC who are affiliated persons (as defined in
the 1940 Act) of the Advisor; provided that the Board of Directors of the BDC
may approve reimbursement to the Advisor of the pro rata portion of the
salaries, bonuses, health insurance, retirement benefits and all similar
employment costs for the time spent on BDC operations (other than the provision
of investment advice and administrative services required to be provided
hereunder) of all personnel employed by the Advisor who devote substantial time
to BDC operations or the operations of other investment companies advised by the
Advisor.

 

 

8.

Compensation.

 

(a)The provisions of this Section 8 shall apply with respect to the compensation
of the Advisor.

 

(b)The Advisor, for its services to the BDC, will be entitled to receive a
Management Fee from the BDC. The Management Fee will be calculated at an annual
rate of 1.75% of total assets, excluding cash. The Management Fee will be paid

 

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quarterly in arrears based on the asset valuation as of the end of the prior
quarter and will be prorated for any period of less than a quarter.

 

(c)For purposes of this Agreement, the assets and net assets of the BDC shall be
calculated pursuant to the procedures adopted by resolutions of the Directors of
the BDC for calculating the value of the BDC’s assets or delegating such
calculations to third parties.

 

(d)The Advisor will be entitled to receive the Incentive Fee during each
calendar quarter (which will apply only to the portion of the Incentive Fee
based on income) and each Annual Period (which will apply only to the portion of
the Incentive Fee based on capital gains), as follows:

 

 

(i)

Incentive Fee Based on Income.

 

(A)The portion of the Incentive Fee based on income other than capital gains
will be calculated separately for each calendar quarter and will be paid on a
quarterly basis. The BDC will pay the Advisor the portion of the Incentive Fee
based on income for each period as follows:

 

 

(i)

No Incentive Fee based on income other than capital gains for any calendar
quarter in which the BDC’s Pre-Incentive Fee Net Investment Income does not
exceed 1.75% (7.00% annualized) of the BDC’s net assets attributable to common
stock at the beginning of such quarter.

 

 

 

(ii)

100% of the BDC’s Pre-Incentive Fee Net Investment Income in any calendar
quarter with respect to that portion of such Pre- Incentive Fee Net Investment
Income, if any, for such calendar quarter, that exceeds 1.75% (7.00% annualized)
of the BDC’s net assets attributable to common stock at the beginning of such
quarter but is less than 2.1875% (8.75% annualized).

 

 

 

(iii)

0% of the BDC’s Pre-Incentive Fee Net Investment Income, if any, for any
calendar quarter, that exceeds 2.1875% (8.75% annualized) of the BDC’s net
assets attributable to common stock at the beginning of such quarter.

 

 

(B)The calculations described above in sub- paragraph (A) will be appropriately
pro rated for any period of less than a quarter and adjusted for the net
proceeds from any common stock issuances and the cost of any common stock
repurchases during such quarter. The payment of any such Incentive Fee based on
income otherwise earned by the Advisor shall be deferred if, for the most recent
four full calendar quarter period ending on or prior to the date such payment is
to be made, the Annualized Rate of Return is less than 7.0% of the BDC’s net
assets attributable to common stock at the beginning of such four quarter period
as adjusted for the net proceeds from any common stock issuances and the cost of
any common stock repurchases during such four full

 

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calendar quarter period, with any deferred Incentive Fees to be carried over for
payment in subsequent quarterly calculation periods to the extent such payment
can then be made in accordance with this Agreement.

 

(ii)Incentive Fee Based on Capital Gains.

 

(A)The portion of the Incentive Fee based on capital gains will be calculated
separately for each Annual Period.  The Advisor will be entitled to receive an
Incentive Fee based on capital gains for each Annual Period in an amount equal
to 20% of the amount by which (1) the BDC’s net realized capital gains occurring
during the period, if any, exceeds (2) its unrealized capital depreciation, if
any, occurring during the period.

 

(B)In calculating the portion of the Incentive Fee based on capital gains
payable for any period, the BDC’s investments shall be accounted for on a
security-by-security basis. In addition, the portion of the Incentive Fee based
on capital gains will be determined using the “period-to- period” method
pursuant to which the portion of the Incentive Fee based on capital gains for
any period will be based on realized capital gains for the period reduced by
realized capital losses for the period and unrealized capital depreciation for
the period.

 

(iii)The calculation of the Incentive Fee described above in this Section 8(d)
is illustrated in the examples attached to this Agreement in Annex A. In the
event of a conflict between the language above and the examples, the examples
shall prevail.

 

(iv)Notwithstanding anything else set forth herein, the Incentive Fee shall not
include any amounts of capital gain that would violate Section 205(b)(3) of the
Advisers Act as interpreted from time to time by the SEC or its staff.

 

(e)For purposes of Section 8(d), the following terms shall have the meanings
ascribed to them below:

 

(i)“Annual Period” means the period beginning on July 1 of each calendar year
and ending on June 30 of the next calendar year;

 

(ii)“Annualized Rate of Return” is computed by reference to the sum of (i) the
aggregate distributions to the BDC’s common stockholders for the period in
question and (ii) the change in the BDC’s net assets attributable to common
stock (before taking into account any Incentive Fees otherwise payable during
such period);

 

(iii)“net assets attributable to common stock” means the BDC’s total assets less
indebtedness and preferred stock; and

 

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(iv)“Pre-Incentive Fee Net Investment Income” means net investment income (as
determined in accordance with United States generally accepted accounting
principles) accrued by the BDC during the calendar quarter excluding any
accruals for or payments in respect of the Incentive Fee.

 

9.Indemnity. (a) The BDC may, in the discretion of the Board of Directors of the
BDC, indemnify the Advisor, and each of the Advisor’s directors, officers,
employees, agents, associates and controlling persons and the directors,
partners, members, officers, employees and agents thereof (including any
individual who serves at the Advisor’s request as director, officer, partner,
member or the like of another entity) (each such person being an “Indemnitee”)
against any liabilities and expenses, including amounts paid in satisfaction of
judgments, in compromise or as fines and penalties, and counsel fees (all as
provided in accordance with applicable state law) reasonably incurred by such
Indemnitee in connection with the defense or disposition of any action, suit or
other proceeding, whether civil or criminal, before any court or administrative
or investigative body in which such Indemnitee may be or may have been involved
as a party or otherwise or with which such Indemnitee may be or may have been
threatened, while acting in any capacity set forth herein or thereafter by
reason of such Indemnitee having acted in any such capacity, except with respect
to any matter as to which such Indemnitee shall have been adjudicated not to
have acted in good faith in the reasonable belief that such Indemnitee’s action
was in the best interest of the BDC and furthermore, in the case of any criminal
proceeding, so long as such Indemnitee had no reasonable cause to believe that
the conduct was unlawful; provided, however, that (1) no Indemnitee shall be
indemnified hereunder against any liability to the BDC or its shareholders or
any expense of such Indemnitee arising by reason of (i) willful misfeasance,
(ii) bad faith, (iii) gross negligence or (iv) reckless disregard of the duties
involved in the conduct of such Indemnitee’s position (the conduct referred to
in such clauses (i) through (iv) being sometimes referred to herein as
“disabling conduct”), (2) as to any matter disposed of by settlement or a
compromise payment by such Indemnitee, pursuant to a consent decree or
otherwise, no indemnification either for said payment or for any other expenses
shall be provided unless there has been a determination that such settlement or
compromise is in the best interests of the BDC and that such Indemnitee appears
to have acted in good faith in the reasonable belief that such Indemnitee’s
action was in the best interest of the BDC and did not involve disabling conduct
by such Indemnitee and (3) with respect to any action, suit or other proceeding
voluntarily prosecuted by any Indemnitee as plaintiff, indemnification shall be
mandatory only if the prosecution of such action, suit or other proceeding by
such Indemnitee was authorized by a majority of the full Board of Directors of
the BDC.

 

(b)The BDC may make advance payments in connection with the expenses of
defending any action with respect to which indemnification might be sought
hereunder if the BDC receives a written affirmation of the Indemnitee’s good
faith belief that the standard of conduct necessary for indemnification has been
met and a written undertaking to reimburse the BDC unless it is subsequently
determined that such Indemnitee is entitled to such indemnification and if the
Directors of the BDC determine that the facts then known to them would not
preclude indemnification. In addition, at least one of the following conditions
must be met: (A) the Indemnitee shall provide

 

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security for such Indemnitee-undertaking, (B) the BDC shall be insured against
losses arising by reason of any unlawful advance, or (C) a majority of a quorum
consisting of Directors of the BDC who are neither “interested persons” of the
BDC (as defined in Section 2(a)(19) of the 1940 Act) nor parties to the
proceeding (“Disinterested Non-Party Directors”) or an independent legal counsel
in a written opinion, shall determine, based on a review of readily available
facts (as opposed to a full trial-type inquiry), that there is reason to believe
that the Indemnitee ultimately will be found entitled to indemnification.

 

(c)All determinations with respect to the standards for indemnification
hereunder shall be made (1) by a final decision on the merits by a court or
other body before whom the proceeding was brought that such Indemnitee is not
liable or is not liable by reason of disabling conduct, or (2) in the absence of
such a decision, by

(i)a majority vote of a quorum of the Disinterested Non-Party Directors of the
BDC, or

(ii)if such a quorum is not obtainable or, even if obtainable, if a majority
vote of such quorum so directs, independent legal counsel in a written opinion.
All determinations that advance payments in connection with the expense of
defending any proceeding shall be authorized and shall be made in accordance
with the immediately preceding clause (2) above.

 

The rights accruing to any Indemnitee under these provisions shall not exclude
any other right to which such Indemnitee may be lawfully entitled.

 

10.Limitation on Liability. (a) The Advisor will not be liable for any error of
judgment or mistake of law or for any loss suffered by Advisor or by the BDC in
connection with the performance of this Agreement, except a loss resulting from
a breach of fiduciary duty with respect to the receipt of compensation for
services or a loss resulting from willful misfeasance, bad faith or gross
negligence on its part in the performance of its duties or from reckless
disregard by it of its duties under this Agreement.

 

(b)Notwithstanding anything to the contrary contained in this Agreement, the
parties hereto acknowledge and agree that, as provided in the Certificate of
Incorporation, this Agreement is executed by the Directors and/or officers of
the BDC, not individually but as such Directors and/or officers of the BDC, and
the obligations hereunder are not binding upon any of the Directors or
Shareholders individually but bind only the estate of the BDC.

 

11.Duration and Termination.  This Agreement shall become effective as of the
date hereof and, unless sooner terminated with respect to the BDC as provided
herein,  shall continue in effect for a period of two years. Thereafter, if not
terminated, this Agreement shall continue in effect with respect to the BDC for
successive periods of 12 months, provided such continuance is specifically
approved at least annually by both

(a)) the vote of a majority of the BDC’s Board of Directors or the vote of a
majority of the outstanding voting securities of the BDC at the time outstanding
and entitled to vote, and

(b)by the vote of a majority of the Directors who are not parties to this
Agreement or interested persons of any party to this Agreement, cast in person
at a meeting called for the purpose of voting on such approval. Notwithstanding
the foregoing, this Agreement

 

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may be terminated by the BDC at any time, without the payment of any penalty,
upon giving the Advisor 60 days’ notice (which notice may be waived by the
Advisor), provided that such termination by the BDC shall be directed or
approved by the vote of a majority of the Directors of the BDC in office at the
time or by the vote of the holders of a majority of the voting securities of the
BDC at the time outstanding and entitled to vote, or by the Advisor on 60 days’
written notice (which notice may be waived by the BDC). This Agreement will also
immediately terminate in the event of its assignment. (As used in this
Agreement, the terms “majority of the outstanding voting securities,”
“interested person” and “assignment” shall have the same meanings of such terms
in the 1940 Act.) If this Agreement is terminated pursuant to this Section, the
BDC shall pay the Advisor a pro rated portion of the Management Fee and the
Incentive Fee. The Management Fee and the Incentive Fee due to the Adviser in
the event of termination pursuant to this Section will be determined according
to the method set forth in the following paragraph.

 

The BDC will engage at its own expense a firm acceptable to the BDC and the
Advisor to determine the maximum reasonable fair value as of the termination
date of the BDC’s consolidated assets (assuming each asset is readily marketable
among institutional investors without minority discount and with an appropriate
control premium for any control positions and ascribing an appropriate net
present value to unamortized organizational and offering costs and going concern
value).  After review of such firm’s work papers by the Advisor and the BDC and
resolution of any comments therefrom, such firm will render its report as to
valuation, and the BDC will pay to the Advisor or its affiliates any Management
Fees or Incentive Fee, as the case may be, payable pursuant to the paragraphs
above as if all of the consolidated assets of the BDC had been sold at the
values indicated in such report and any net income and gain distributed.  Such
report will be completed within 90 days after notice of termination is delivered
hereto.

 

12.Notices. Any notice under this Agreement shall be in writing to the other
party at such address as the other party may designate from time to time for the
receipt of such notice and shall be deemed to be received on the earlier of the
date actually received or on the fourth day after the postmark if such notice is
mailed first class postage prepaid.

 

13.Amendment of this Agreement. No provision of this Agreement may be changed,
waived, discharged or terminated orally, but only by an instrument in writing
signed by the party against which enforcement of the change, waiver, discharge
or termination is sought. Any amendment of this Agreement shall be subject to
the 1940 Act.

 

14.Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York for contracts to be performed
entirely therein without reference to choice of law principles thereof and in
accordance with the applicable provisions of the 1940 Act.

 

15.Use of the Name BlackRock.  The Advisor has consented to the use by the BDC
of the name or identifying word “BlackRock” in the name of the BDC. Such consent
is conditioned upon the employment of the Advisor as the investment

 

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advisor to the BDC.  The name or identifying word “BlackRock” may be used from
time to time in other connections and for other purposes by the Advisor and any
of its affiliates. The Advisor may require the BDC to cease using “BlackRock” in
the name of the BDC if the BDC ceases to employ, for any reason, the Advisor,
any successor thereto or any affiliate thereof as investment advisor of the BDC.

 

16.Miscellaneous.  The captions in this Agreement are included for convenience
of reference only and in no way define or delimit any of the provisions hereof
or otherwise affect their construction or effect. If any provision of this
Agreement shall be held or made invalid by a court decision, statute, rule or
otherwise, the remainder of this Agreement shall not be affected thereby.  This
Agreement shall be binding on, and shall inure to the benefit of the parties
hereto and their respective successors.

 

17.Counterparts. This Agreement may be executed in counterparts by the parties
hereto, each of which shall constitute an original counterpart, and all of
which, together, shall constitute one Agreement.

 

11

 

 

--------------------------------------------------------------------------------

 

IN WITNESS WHEREOF, the parties hereto have caused the foregoing

instrument to be executed by their duly authorized officers, all as of the day
and the year fi rst above wri tten.

 

BLACK.ROCK CAPITAL INVESTMENT CORPORATION

 

 

 

 

ichael Zugay

Chief Executive Officer

 

 

 

 

 

 

 

 

BLACK.ROCK CAPITAL INVESTMENT ADVISORS, LLC

 

 

 

 

By:

_

Name: Laurence D. Paredes Title:Secretary

 

 

--------------------------------------------------------------------------------

 

IN WITNESS WHEREOF, the parties hereto have caused the foregoing instrument to
be executed by their duly authorized officers, all as of the day and the year
first above written.

 

BLACKROCK CAPITAL INVESTMENT CORPORATION

 

 

 

By:­

Name: Michael Zugay

Title:Chief Executive Officer

 

 

 

 

 

 

 

 

 

Laurence D. Paredes Secretary

 

 

 

 

 

 

 

 

 

 

--------------------------------------------------------------------------------

Annex A

 

Examples of Fee Calculation Under Section 8 of the Agreement

 

Example 1—Incentive Fee Based on Income(1)

Formula

The formula for the portion of the Incentive Fee based on income for any quarter
can be expressed as follows:

Incentive Fee with respect to Pre-Incentive Fee Net Investment Income —

 

•

When the Pre-Incentive Fee Net Investment Income for such quarter exceeds
1.75%(2) but does not exceed 2.1875% = 100% x (Pre-Incentive Fee Net Investment
Income – 1.75%)

 

 

•

When the Pre-Incentive Fee Net Investment Income for such quarter exceeds
2.1875% = 100% x (2.1875% – 1.75%) + 20% x (Pre-Incentive Fee Net Investment
Income – 2.1875%)

 

 

Notwithstanding the foregoing, if the Annualized Rate of Return for the most
recent four full calendar quarter period ending on or prior to the date such
payment is to be made payment is less than 7.0% of the BDC’s net assets
attributable to common stock at the beginning of such four quarter period,
adjusted for the net proceeds from any common stock issuances and the cost of
any common stock repurchases during the period, the payment of such Incentive
Fee will be deferred until the earliest quarter such four full calendar quarter
Annualized Rate of Return requirement is satisfied. “Annualized Rate of Return”
in this context is computed by reference to the sum of (i) the aggregate
distributions the BDC’s common stockholders during the period and (ii) the
change in the BDC’s net asset value attributable to common stock prior to
calculation of any income or capital gain Incentive Fees during the period and
does not take into account changes in the market price of the BDC’s common
stock.

 

Assumptions

 

•

Management fee(3) = 0.4375%

 

•

Other expenses (legal, accounting, custodian, transfer agent, etc.)(4) = 0.0625%

 

•

After accounting for the distribution of income during each period, there is no
change in the Company’s net assets

 

 

 

(1)

The hypothetical amount of Pre-Incentive Fee Net Investment Income shown is
based on a percentage of net assets attributable to common stock (defined as
total assets less indebtedness and preferred stock). The example assumes that
during the most recent four full calendar quarter period ending on or prior to
the date the payment set forth in the example is to be made, the sum of (a) the
BDC’s aggregate distributions to stockholders and (b) the BDC’s change in net
assets attributable to common stock (defined as total assets less indebtedness
and preferred stock) before taking into account any Incentive Fees accrued
during the period, is at least 7.0% of the BDC’s net assets attributable to
common stock (defined as total assets less indebtedness and preferred stock) at
the beginning of such four quarter period (as adjusted for the net proceeds from
any common stock issuances and the cost of any common stock repurchases during
such four full calendar period). See Alternative 4 for an example of a failure
to satisfy this assumption and Alternative 5 for an example of subsequent
satisfaction of this assumption.

 

 

(2)

Represents quarterly percentage of the value of net assets attributable to
common stock at the beginning of the quarter, adjusted for the net proceeds from
any common stock issuances and the cost of any common stock repurchases during
the quarter.

 

 

(3)

Represents quarterly portion of an annual base management fee of 1.75% of the
value of total assets.

 

(4)

Expressed as a percentage of the value of net assets attributable to common
stock at the beginning of the quarter, adjusted for the net proceeds from any
common stock issuances and the cost of any common stock repurchases during the
period.

 

 

Alternative 1

Additional Assumptions

 

 

--------------------------------------------------------------------------------

 

•

Investment Income (including interest, dividends, fees, etc.) = 1.25%

 

•

Pre-Incentive Fee Net Investment Income

= (investment income - (management fee + other expenses))

= (1.25% - (0.4375% + 0.0625%))

= 0.75%

Conclusion

Pre-Incentive Fee Net Investment Income does not exceed the Hurdle rate,
therefore there is no Incentive Fee based on income.

 

Alternative 2

Additional Assumptions

 

•

Investment Income (including interest, dividends, fees, etc.) = 2.40%

 

•

Pre-Incentive Fee Net Investment Income

= (investment income – (management fee + other expenses))

= (2.40% - (0.4375% + 0.0625%))

= 1.90%

Determination of Incentive Fee

Pre-Incentive Fee Net Investment Income for the quarter exceeds the Hurdle rate,
therefore there is an Incentive Fee payable with respect to net income for the
quarter.

 

•

Incentive Fee Based on Income

= 100% x the lesser of (2.1875% – 1.75%) AND (Pre-Incentive Fee Net Investment
Income – 1.75%) + the greater of 0% and 20% x (Pre-Incentive Fee Net Investment
Income – 2.1875%)

= 100% x (1.90% – 1.75%) + 0%

= 100% x 0.15%

= 0.15%

 

Alternative 3

Additional Assumptions

 

•

Investment Income (including interest, dividends, fees, etc.) = 3.50%

 

•

Pre-Incentive Fee Net Investment Income

= (investment income – (management fee + other expenses))

= (3.50% - (0.4375% + 0.075%))

= 3.00%

Determination of Incentive Fee

Pre-Incentive Fee Net Investment Income for the quarter exceeds the Hurdle rate,
therefore there is an Incentive Fee payable with respect to net income for the
quarter.

 

•

Income Based Incentive Fee

= 100% x the lesser of (2.1875% – 1.75%) AND (Pre-Incentive Fee Net Investment
Income – 1.75%) + the greater of 0% AND 20% x (Pre-Incentive Fee Net Investment
Income – 2.1875%)

= 100% x (2.1875% – 1.75%) + 20% x (3.0% - 2.1875%)

= 0.4375% + (20% × 0.1825%)

= 0.4375% + 0.1625%

 

A-2

 

 

--------------------------------------------------------------------------------

= 0.60%

 

Alternative 4

Additional Assumptions

During most recently completed quarter (Q4):

 

•

Investment Income = 3.50%

 

•

Pre-Incentive Fee Net Investment Income

= (investment income – (management fee + other expenses))

= (3.50% - (0.4375% + 0.0625%))

= 3.00%

During four quarter period ending with most recently completed quarter:

 

•

Q1 Pre-Incentive Fee Net Investment Income = 1.00%

 

•

Q2 Pre-Incentive Fee Net Investment Income = 1.00%

 

•

Q3 Pre-Incentive Fee Net Investment Income = 1.50%

 

•

All Pre-Incentive Fee Net Investment Income is distributed during the period.

 

•

After accounting for the distribution of the net investment income during the
period, there is no change in the BDC’s net assets during the period.

 

Determination of Incentive Fee

During most recently completed quarter:

Pre-Incentive Fee Net Investment Income for the quarter exceeds the Hurdle rate,
therefore there is an Incentive Fee based on income payable for the quarter.

 

•

Incentive Fee Based on Income

= 100% x the lesser of (2.1875% – 1.75%) AND (Pre-Incentive Fee Net Investment
Income – 1.75%) + the greater of 0% AND 20% x (Pre-Incentive Fee Net Investment
Income – 2.1875%)

= 100% x (2.1875% – 1.75%) + 20% x (3.00% – 2.1875%)

= 0.4375% + 0.1625%

= 0.60%

During four quarter period ending with most recently completed quarter:

 

•

Annualized Rate of Return (5)

= (Q1 Pre-Incentive Fee Net Investment Income + Q2 Pre-Incentive Fee Net
Investment Income + Q3 Pre-Incentive Fee Net Investment Income + Q4
Pre-Incentive Fee Net Investment Income) + (BDC’s change in net assets
attributable to common stock)

= (1.00% + 1.00% + 1.50% + 3.00%) + (0)

= 6.50%

 

 

(5)

Annualized Rate of Return is measured before any calculation of Incentive Fees
for income or capital gains.

 

Conclusion

Although an Incentive Fee is payable for such quarter, because the Annualized
Rate of Return over the four quarter period is less than 7.00%, the payment is
deferred until the first quarter for which the Annualized Rate of Return over
the four quarter period including such subsequent quarter equals or exceeds
7.00%.

 

A-3

 

 

--------------------------------------------------------------------------------

Alternative 5

Additional Assumptions

During most recently completed quarter (Q4):

 

•

Investment Income = 4.00%

 

•

Pre-Incentive Fee Net Investment Income

= (investment income – (management fee + other expenses)

= (4.00% - (0.4375% + 0.0625%))

= 3.50%

During four quarter period ending with most recently completed quarter:

 

•

Q1 Pre-Incentive Fee Net Investment Income = 1.00%

 

•

Q2 Pre-Incentive Fee Net Investment Income = 1.50%

 

•

Q3 Pre-Incentive Fee Net Investment Income = 3.00%

 

•

All Pre-Incentive Fee Net Investment Income is distributed during the period.

 

•

After accounting for the distribution of the Pre-Incentive Fee Net Investment
Income during the period, there is no change in the BDC’s net assets
attributable to common stock during the period.

 

 

•

Deferred income based Incentive Fee during the period = 0.60%

Determination of Incentive Fee

During most recently completed quarter:

Pre-Incentive Fee Net Investment Income for the quarter exceeds the Hurdle rate,
therefore there is an Incentive Fee based on income payable for the quarter.

 

•

Incentive Fee Based on Income

= 100% x the lesser of (2.1875% – 1.75%) AND (Pre-Incentive Fee Net Investment
Income – 1.75%) + the greater of 0% AND 20% x (Pre-Incentive Fee Net Investment
Income – 2.1875%)

= 100% x (2.1875% – 1.75%) + 20% x (3.50% – 2.1875%)

= 0.4375% + 0.2625%

= 0.70%

During four quarter period ending with most recently completed quarter:

 

•

Annualized Rate of Return (5)

= (Q1 Pre-Incentive Fee Net Investment Income + Q2 Pre-Incentive Fee Net
Investment Income + Q3 Pre-Incentive Fee Net Investment Income + Q4
Pre-Incentive Fee Net Investment Income) + (BDC’s change in net assets
attributable to common stock)

= (1.00% + 1.50% + 3.00% + 3.50%) + (0)

= 9.00%

 

 

(5)

Annualized rate of return is measured before any calculation of Incentive Fees
for income or capital gains.

 

Conclusion

Both the current quarter income based Incentive Fee of 0.70% and the earlier
deferred income based Incentive Fee of 0.60% are paid.

 

A-4

 

 

--------------------------------------------------------------------------------

Example 1—Incentive Fee Based on Capital Gains

 

Formula

The formula for the capital gains portion of the Incentive Fee for each July 1
through June 30 “Annual Period” can be expressed as follows:

Incentive Fee with respect to capital gains = 20% x (net realized capital gains
to the extent in excess of gross unrealized capital depreciation)

 

Alternative 1

Assumptions

 

•

Year 1: $20.0 million investment made in Company A (“Investment A”), and $30.0
million investment made in Company B (“Investment B”)

 

 

•

Year 2: Investment A is sold for $50.0 million and fair value of Investment B
determined to be

$32.0 million

 

•

Year 3: fair value of Investment B determined to be $25.0 million

 

•

Year 4: Investment B sold for $31.0 million

Determination of Incentive Fee

 

The capital gains portion of the Incentive Fee, if any, would be:

 

•

Year 1: None (No sales transactions)

 

•

Year 2: $6.0 million (20% multiplied by $30.0 million realized capital gains on
sale of Investment A)

 

 

•

Year 3: None

 

•

Year 4: $1.2 million (20% multiplied by $6.0 million realized capital gains on
sale of Investment B)

 

Alternative 2

Assumptions

 

•

Year 1: $20.0 million investment made in Company A (“Investment A”), $30.0
million investment made in Company B (“Investment B”) and $25.0 million
investment made in Company C (“Investment C”)

 

 

•

Year 2: Investment A sold for $50.0 million, fair value of Investment B
determined to be $25.0 million and fair value of Investment C determined to be
$25.0 million

 

 

•

Year 3: fair value of Investment B determined to be $27.0 million and Investment
C sold for

$30.0 million

 

•

Year 4: fair value of Investment B determined to be $35.0 million

 

•

Year 5: Investment B sold for $20.0 million

 

Determination of Incentive Fee

The capital gains portion of the Incentive Fee, if any, would be:

 

•

Year 1: None (No sales transactions)

 

•

Year 2: $5.0 million (20% multiplied by $25.0 million ($30.0 million realized
capital gains on Investment A less $5.0 million unrealized capital depreciation
on Investment B))

 

 

•

Year 3: $1.0 million (20% multiplied by $5.0 million realized capital gains on
Investment C)

 

•

Year 4: None (No sales transactions)

 

•

Year 5: None