Exhibit 10.9

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Mr. E.A. Kratzman, III

544 North Street

Greenwich, CT 06830

Dear Mr. Kratzman:

This letter agreement will confirm the terms of your continuing service as an
officer of Kohlberg Capital Corporation (the “Company”) under the terms and
conditions that follow. This letter agreement supersedes the letter agreement
dated November 28, 2006 in its entirety and is effective January 1, 2008.

1. Term, Position and Duties. Your title will continue to be “Vice President”
and you will serve at the pleasure of the Board of Directors (the “Board”). This
agreement will terminate in accordance with the provisions of Section 5 herein.
You agree to the perform the duties as may be reasonably assigned to you from
time to time including, but not limited to, advising the Company on its
investment in various collateralized loan obligation funds, synthetic debt
obligation funds and other credit based funds (together, the “Funds”), as
directed by the Board or the Chief Executive Officer of the Company.

2. Compensation. In consideration of your continued services as an officer of
the Company but subject to (i) the prior receipt by the Company of the necessary
exemptive relief from the Securities and Exchange Commission and the
establishment thereafter by the Company of an equity incentive plan providing
for the issuance of restricted stock, (ii) the receipt of shareholder approval
in respect of such equity incentive plan, and (iii) the availability under such
equity incentive plan of shares of restricted stock, you will receive, so long
as you remain an officer of the Company through the grant date, an annual grant
of restricted stock having a value of Five Hundred Thousand Dollars ($500,000).
Such restricted stock award will vest 50% on the third anniversary of the date
of grant and 50% on the fourth anniversary of the date of grant, in each case
subject to your remaining an officer of the Company through such date (or, if
the foregoing vesting schedule is not permitted under the terms of the equity
incentive plan and the exemptive relief obtained from the Securities and
Exchange Commission, such other vesting schedule as determined by the Board
consistent with the requirements of the equity incentive plan and such exemptive
relief). Consistent with the foregoing, the terms of any grant of restricted
stock will be as provided for in the equity incentive plan and the award
agreement governing such award. Except as explicitly provided by the Board, you
will not be entitled to receive other compensation, including without limitation
salary or bonuses, by reason of your service as an officer of the Company.

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3. Other Benefits. You will not be entitled to participate in any benefits or
benefit plans sponsored by the Company by reason of your service as an officer
of the Company (though you may be entitled to participate in such plans by
reason of your employment with an Affiliate (as hereinafter defined) of the
Company).

4. Confidential Information and Restricted Activities. You are already subject
to a confidentiality and non-competition agreement with Katonah Debt Advisors
(“KDA”), an Affiliate of the Company, that refers to and includes KDA’s
Affiliates, as part of your letter agreement with KDA dated
[                        ] (as amended from time to time) (“KDA Agreement”).
Accordingly, the confidentiality and non-competition provisions in that
agreement already apply to your service with the Company. In the event that KDA
and the Company become unaffiliated, you agree that you will be subject to a
confidentiality and non-competition provision with respect to the Company that
is substantially the same as the confidentiality and non-competition provisions
of the KDA Agreement. For purposes of this agreement, “Affiliates” means all
persons and entities directly or indirectly controlling, controlled by or under
common control with the Company, where control may be by management authority,
equity interest or otherwise.

5. Termination of Service. Your service as an officer with the Company will
terminate upon the earliest to occur of (1) your voluntary resignation upon
written notice to the Company (including your resignation for Good Reason),
(2) your involuntary termination of service by the Company without “cause” upon
written notice to you, (3) your death, or (4) your immediate involuntary
termination by the Company for “cause”. For this purpose, “cause” and “Good
Reason” each have the same meaning as set forth in the KDA Agreement. Upon such
termination, this agreement will terminate. Your restricted stock award
agreement will govern your shares of restricted stock, if any, following
termination of employment.

6. Withholding. All payments made by the Company under this agreement shall be
reduced by any tax or other amounts required to be withheld by the Company under
applicable law.

7. Applicability of Section 409A. If at the time of your separation from
service, you are a “specified employee,” as hereinafter defined, any and all
amounts payable under this agreement in connection with such separation from
service that constitute deferred compensation subject to Section 409A of the
Internal Revenue Code of 1986, as amended (“Section 409A”), including without
limitation by reason of the safe harbor set forth in Treasury Regulations
1.409A-1(b)(9)(iii) and 1.409A-1(b)(4), as determined by the Company in its sole
discretion, and that would (but for this sentence) be payable within six months
following such separation from service, shall instead be paid on the date that
follows the date of such separation from service by six (6) months. For purposes
of the preceding sentence, “separation from service” shall be determined in a
manner consistent with subsection (a)(2)(A)(i) of Section 409A and the term
“specified

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employee” shall mean an individual determined by the Company to be a specified
employee as defined in subsection (a)(2)(B)(i) of Section 409A. For the
avoidance of doubt, the payments and benefits described in this agreement are
intended either to comply with Section 409A (to the extent they are subject to
such section) or to be exempt from the requirements of such section (where an
exemption is available), and shall be construed accordingly.

8. Assignment. Neither you nor the Company may make any assignment of this
letter agreement or any interest in it, by operation of law or otherwise,
without the prior written consent of the other; provided, however, that the
Company may assign its rights and obligations under this agreement without your
consent to one of its Affiliates or to any person (including any individual,
corporation, limited liability company, association, partnership, or any entity
or organization, other than the Company or its Affiliates) with whom the Company
shall hereafter affect a reorganization, consolidate with, or merge into or to
whom it transfers all or substantially all of its properties or assets. This
agreement shall inure to the benefit of and be binding upon you and the Company,
and each of your and its respective successors, executors, administrators, heirs
and permitted assigns.

9. Severability. If any portion or provision of this agreement shall to any
extent be declared illegal or unenforceable by a court of competent
jurisdiction, then the remainder of this agreement, or the application of such
portion or provision in circumstances other than those as to which it is so
declared illegal or unenforceable, shall not be affected thereby, and each
portion and provision of this agreement shall be valid and enforceable to the
fullest extent permitted by law.

10. Miscellaneous. This agreement sets forth the entire agreement between you
and the Company and replaces all prior and contemporaneous communications,
agreements and understandings, written or oral, with respect to the terms and
conditions of your service as an officer of the Company; provided, however, that
this agreement shall not shall not constitute a waiver by the Company or any of
its Affiliates of any existing right any of them now has or might now have under
any agreement imposing obligations on you with respect to confidentiality,
non-competition, non-solicitation or similar obligations with respect to conduct
or events prior to the effective date of this agreement. This agreement may not
be modified or amended, and no breach shall be deemed to be waived, unless
agreed to in writing by you and an expressly authorized representative of the
Board. The headings and captions in this agreement are for convenience only and
in no way define or describe the scope or content of any provision of this
agreement. This agreement may be executed in two or more counterparts, each of
which shall be an original and all of which together shall constitute one and
the same instrument. This is a Delaware contract and shall be governed and
construed in accordance with the laws of the State of Delaware, without regard
to the conflict of laws principles thereof.

11. Notices. Any notices provided for in this agreement shall be in writing and
shall be effective when delivered in person or deposited in the United States
mail,

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postage prepaid, and addressed to you at your last known address on the books of
the Company or, in the case of the Company, to it at its principal place of
business, attention of the Board, or to such other address as either party may
specify by notice to the other actually received.

[Remainder of Page Intentionally Left Blank]

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If the foregoing is acceptable to you, please sign this letter in the space
provided and return it to me. We will provide a countersigned copy for your
records.

 

Sincerely yours,   Christopher Lacovara   Chairman   Accepted and Agreed:  

 

  E.A. Kratzman, III  

 

  Date   cc: Michael I. Wirth