Exhibit
No. 10.5
 
 CONFIDENTIAL
 
 February
13, 2009
 
 Dr. Craig
A Zabala
 Chairman
of the Board, President & Chief Executive Officer
 Blackhawk
Capital Group BDC, Inc.
 14 Wall
Street, Suite 1100B
 New York,
NY 10005
 
 Dear Dr.
Zabala,
 
 This
letter (the "Agreement") will confirm the engagement of EquitySmith, Inc.
("ESI"), by Blackhawk Capital Group BDC, Inc., a Delaware corporation and a
business development company registered under the Investment Company Act of
1940, as amended (the "Company"), as placement agent in connection with the
Company's Rule 506 offering (“Offering”) under Regulation D under the Securities
Act of 1933, as amended (the "Securities Act"), of up to $10 million in common
stock ("Securities") to qualified institutional buyers ("QIBs") and "accredited
investors" (as those terms are defined under the Securities Act) (the
"Investors").  The Offering will be pursuant to a Confidential Private
Placement Memorandum and a subscription agreement and purchaser questionnaire
("Subscription Agreement").  This Agreement is separate from the
agreement executed January 16, 2009 (“Other Placement Agreement”) by the
Company, ESI and John W. Loofbourrow Associates, Inc. (“JWL”) pertaining to the
Company retaining JWL and ESI as placement agents for the Offering, and covers
incremental offerings of Securities in the Offering from  $10,000,000
to maximum amount to be raised in the Offering of $25,000,000.  The
Company reserves the right to increase the maximum at its sole
discretion.  The purchase price shall be $5.00 per share.
  
 1.
              Scope
      of ESI's Services.  ESI will distribute Offering
      Materials (as hereinafter defined) to potential investors, report the
      status of the Offering to the Company, and assist in consummating the
      Offering, including, but not limited
to:
  a.
              familiarizing
      itself to the extent it deems appropriate and feasible with the business
      operations, properties, financial condition, and prospects of the
      Company,
  b.
              assisting
      the Company in preparing Offering Materials for distribution by ESI to
      potential investors selected by ESI and the
  Company,
  c.
              screening
      and contacting prospective
investors,
  d.
              assisting
      in negotiations with prospective investors,
and
  
 
 e.
              advising
      and assisting the Company in structuring and pricing the
      Offering.
  It is
understood by both parties that ESI intends to solicit interest from a limited
number of potential Investors (QIBs and accredited investors).  ESI
will, in its sole discretion, determine the reasonableness of its efforts and
will be under no obligation to perform at any level other than what it deems
reasonable.  The Company shall retain control of the Offering and
shall have the right to determine (a) whether to accept and close the sale of
the Securities to a specific Investor, (b) whether to close or terminate the
Offering, and (c) the content of the Offering Materials.
  2.
              Fees.In return
      for ESI's services in the placement of Securities, the Company will pay
      ESI a cash fee equal to 10% of the gross proceeds (the "Financing Fee") of
      any Securities placed by ESI.  Any Financing Fees payable to ESI
      will be due at the closing date of the Offering and shall be payable to
      ESI by the Company.  ESI shall not (a) receive any Financing
      Fees for securities purchased by it or by an affiliate, and (b) receive
      reimbursement of any expenses from the
Company.
  3.
              Term.  Unless
      extended or earlier terminated by mutual agreement in writing of the
      parties, the term of this Agreement shall commence February 13, 2009 and
      terminate on March 2, 2009 (the "Term").  The parties may extend
      the Term by mutual agreement.  Upon any termination or
      expiration of this Agreement, neither the Company nor any prospective
      Investor shall have any obligation or liability to any other party under
      this Agreement.  For the period up to and including March 17,
      2009 ("Period"), as long as the Other Placement Agreement has been
      terminated or expired, ESI shall have the exclusive right on behalf of the
      Company to solicit prospective Investors who are QIBs and/or accredited
      investors regarding the possible sale to such Investors of
      shares.  During the Period, ESI shall not have the right to
      conduct any other discussions on behalf of the Company regarding any
      matter other than the sale of the Shares to the prospective
      Investors.  For purposes of clarification, as long as the Other
      Placement Agreement has terminated or expired, the Company during the
      Period shall deal exclusively with ESI concerning the sale of the shares
      and discontinue any discussions with respect to any previously received
      third party proposals with respect to the sale of such
      shares.  If this exclusivity provision is breached, in addition
      to any other compensation for damages, ESI and/or its shareholders,
      jointly and severally, shall promptly upon demand pay to the Company an
      amount equal to all expenses incurred by the Company in connection with
      the Offering, including the expenses of the Company's agents, advisors,
      bankers, attorneys, accountants and the other
    representatives.
  For a
period up to one year from the termination of this Agreement and if ESI enters
into a selling group of any subsequent securities offerings of the Company, then
ESI shall receive additional financing fees ("Additional Fees") if the Company
sells securities to those Investors previously introduced by ESI ("Protected
Investors").  Prior to the termination date, ESI will furnish the
Company with a written list of the Protected Investors.  The
Additional Fees will be equal to any underwriting or placement fees that are
listed in any future offering document or prospectus.
  
 
 4.
              Company
      Information.  The Company
      will furnish ESI such information concerning the Company as ESI reasonable
      determines to be appropriate with respect to the Offering
      ("Information").  The Company shall afford ESI and its counsel
      and representatives full and complete access to its books and records and
      will use commercially reasonable efforts to afford ESI with full and
      complete cooperation of management to gather the Information on a
      reasonable basis.  The Company recognizes and confirms that ESI
      (a) will use and rely on the Information in performing the services
      contemplated by this Agreement, without independently verifying the
      accuracy and completeness of the same, (b) does not assume responsibility
      for the accuracy or completeness of the Information, and (c) will not make
      an appraisal of any assets or liability of the
  Company.
  The
Company hereby represents to ESI that all solicitation materials prepared by the
Company and used in connection with the Offering, including, without limitation,
the Confidential Private Placement Memorandum (the "Offering Materials") will
not, as of the date of any offer or sale in connection with the Offering,
contain any untrue statement of a material fact or omit a material fact
necessary to make the statements contained therein, not misleading, in light of
the circumstances under which they were made.  If at any time an event
occurs as a result of which the Offering Materials, as then amended or
supplemented, would include an untrue statement of a material fact or omit to
state any material fact necessary to make the statements therein, in light of
the circumstances under which they were made when such Offering Materials are
delivered to a prospective purchaser pursuant hereto, not misleading, the
Company will promptly notify ESI to suspend solicitation of prospective
purchasers in connection with the Offering; and if the Company decides to amend
or supplement the Offering Materials, it will promptly advise ESI by telephone
(with confirmation in writing) and will promptly prepare an amendment or
supplement that will correct such statement or omission.
  ESI will
not violate, or cause the Company to violate, any applicable federal and state
securities laws in connection with the Offering.
  5.
              Confidentiality.In
      connection with this engagement, it is contemplated that ESI will receive
      from the Company certain information (including certain business planning,
      investment, product, marketing, technical, financial, and other
      information and materials) the Company considers
      confidential.  ESI shall use this confidential information
      solely for the purpose of providing services to the Company and will not
      disclose to any party (other than ESI's officers, directors, employees,
      affiliates, and counsel who have a need to know such information, herein
      “Representatives”) any such confidential information, except with the
      prior written approval of the Company; provided, however, that the
      foregoing restrictions shall not apply to any information that: (a) is
      included in the Offering Materials and disclosed pursuant to the
      distribution of the Offering Materials as permitted by the Company, (b)
      the Company consents to having disclosed in connection with the Offering,
      (c) is publicly available when provided or thereafter becomes publicly
      available other than through disclosure by ESI or its Representatives, or
      (d) is required to be disclosed by ESI by judicial or administrative
      process in connection with any action, suit, proceeding, or investigation;
      and provided, further, however, that ESI shall give the Company notice of
      any such requirement immediately upon the becoming aware of same and shall
      not disclose such information except only to the extent required after the
      maximum time permitted.  Information shall be deemed “publicly
      available” if it becomes a matter of public knowledge or is contained in
      materials available to the public or is obtained by ESI from any source
      other than the Company or its representatives, provided that such source
      was not to ESI's actual knowledge subject to a confidentiality agreement
      with the Company.  ESI will take reasonable steps to assure that
      the Offering Materials are not distributed to any persons not permitted to
      receive them pursuant to the terms hereof.  ESI will not provide
      any confidential information to prospective Investors or any other third
      party without the express written consent of the Company unless the
      prospective Investor has executed a confidentiality agreement acceptable
      to the Company.
  
 
 6.
              Representations
      and Warranties of ESI.  ESI represents and warrants to
      the Company as follows:  (a) it is a licensed broker-dealer
      registered with the SEC, FINRA and each State securities commission in any
      State in which it solicits customers or securities’ purchasers; (b) there
      are no judgments, orders, decrees, or like actions, or any proceedings
      pending, before the SEC, FINRA, any State, or any court or arbitration
      panel that prohibit or effect it from carrying out its obligations under
      this Agreement; and (c) this Agreement has been duly authorized and
      approved by it, does not contravene its organizational documents or any
      agreement or order to which it is a party, and is a legal and valid
      obligation binding on it.
  7.
              Indemnification.  The Company
      acknowledges that ESI will be acting on behalf of the Company and will
      require indemnification by the Company.  The Company further
      acknowledges that ESI's indemnification provisions attached hereto as
      Exhibit A are
      incorporated by reference herein or are made a part hereof for all
      purposes as though set forth entirely
herein.
  8.
              Miscellaneous.  The
      Offering will be completed in accordance with Rule 506 under Regulation D
      under the Securities Act and all applicable state or other jurisdictional
      securities laws (i.e. "blue sky" laws).  All prospective
      Investors will be persons who qualify as QIBs and/or accredited investors
      under all applicable federal and state securities laws and who execute a
      Subscription Agreement.
  The
Company shall have the right to identify Investors with which it has
affiliations who would be suitable QIBs and/or accredited investors for the
Offering ("Company-Introduced Investors"). In the event that the Company decides
that these Investors are suitable for the Offering and these Investors purchase
Securities in the Offering, no fees shall be due to ESI respecting Securities
purchased by Company-Introduced Investors pursuant to Section 2
above.
  The
Company agrees that, following the closing of the Offering, ESI shall have the
right to place advertisements in financial and other newspapers and journals at
its own expense describing its services to the Company hereunder, provided that
ESI will submit a copy of any such advertisement to the Company for its
approval, which approval shall not be unreasonably withheld or delayed, and that
such action is not in violation of Rule 506 under Regulation D or other federal
and state securities laws.
  
 
 The
parties agree that their relationship under this Agreement is an independent
contractor relationship only, and nothing herein shall cause ESI to be partners,
agents or fiduciaries of, or joint venture partners with, the Company or with
each other.
  This
Agreement may not be amended or modified except in writing and shall be governed
by, and construed in accordance with the laws of the State of New
York.
  
 
 If this
Agreement reflects our mutual understanding, please execute two copies in the
space indicated below and return one to us.
   Very
truly yours,
 
 EQUITYSMITH,
INC.
 
 
 /s/ Hugo
A. Delgado, Jr.
 _____________________________
 Hugo
A. Delgado, Jr.
 President
 
 
 Accepted
and agreed to as of February 13, 2009:
 
 BLACKHAWK
CAPITAL GROUP BDC, INC.
 
 
 /s/ Craig
A. Zabala
 ____________________________________
 Dr.
Craig A Zabala
 Chairman
of the Board, President & Chief Executive Officer
 
 
  Exhibit
A
  Indemnification
  Blackhawk
Capital Group BDC, Inc., a Delaware corporation (the "Company") agrees to
indemnify and hold harmless EquitySmith, Inc. ("ESI"), together with its
affiliates, directors, officers, agents, and employees (ESI and each such entity
or person, an "Indemnified Person"), from and against any and all losses,
claims, damages, judgments, and liabilities, expenses, or costs (and all actions
in respect thereof and any legal or other expenses in giving testimony or
furnishing documents in response to a subpoena or otherwise), including the cost
of investigating, preparing for, or defending any such action or claim, whether
or not in connection with litigation in which an Indemnified Person is a party,
as and when incurred, directly or indirectly caused by, relating to, based upon,
or arising out of ESI's performance of its engagement by the Company under the
letter agreement dated as of February 13, 2009, as it may be amended from time
to time (the "Agreement"), or otherwise arising out of or in connection with
advice or services provided or to be provided by Indemnified Persons pursuant to
the Agreement, the transactions contemplated thereby, or any Indemnified
Person’s actions or inactions in connection with any such advice, services, or
transactions, including any indemnified person's sole or contributory
negligence, if such activities were performed (i) in good faith and (ii) in such
manner reasonably believed by such Indemnified Person to be within the scope of
the authority conferred by the Agreement or by law and to be on behalf of the
Company or in furtherance of the performance of ESI's services under the
Agreement; provided, however, such indemnity agreement shall not apply to any
such loss, claim, damage, liability, or cost incurred by any Indemnified Person
to the extent it is found in a final judgment by a court of competent
jurisdiction (not subject to further appeal) to have resulted primarily and
directly from the gross negligence or willful misconduct or bad faith of such
Indemnified Person.  The Company also agrees that no Indemnified
Person shall have any liability (whether direct or indirect, in contract or tort
or otherwise) to the Company for or in connection with the any advice or
services provided by any Indemnified Persons in connection with the Agreement,
the transactions contemplated by the Agreement, or any Indemnified Persons’
actions or inactions in connection with any such advice, services, or
transactions except for any such liability for losses, claims, damages,
liabilities, or costs found in a final judgment by a court of competent
jurisdiction (not subject to further appeal) to have resulted primarily and
directly from such Indemnified Person’s gross negligence or willful misconduct
or bad faith in connection with such advice, actions, inactions, or
services.
 
 These
indemnification provisions shall be in addition to any liability that the
Company may otherwise have to any Indemnified Person and shall extend to the
following: ESI, its affiliated entities, directors, officers, employees, agents,
legal counsel and controlling persons of ESI within the meaning of the federal
securities laws, and the respective successors, assigns, heirs, beneficiaries,
and legal representatives of each of the foregoing indemnified persons or
entities.  All references to ESI or Indemnified Persons in these
Indemnification Provisions shall be understood to include any and all of the
foregoing indemnified persons or entities.
  
 
 If any
action, proceeding, or investigation is commenced, as to which an Indemnified
Person proposes to demand such indemnification, it will notify the Company with
reasonable promptness; provided, however, that any failure by an Indemnified
Person to notify the Company will not relieve the Company from itsobligations
hereunder except if and only to the extent that the Company’s defense of such
action, proceeding or investigation is actually prejudiced by the Indemnified
Person’s failure so to notify the Company.  ESI will have the right to
retain counsel of its own choice to represent it; however, such firm shall be
acceptable to the Company, which acceptance shall not be unreasonably withheld,
and unless the Company assumes ESI's defense as provided below, the Company will
pay the reasonable fees and expenses of such counsel, and such counsel shall to
the fullest extent consistent with its professional responsibilities cooperate
with the Company and any counsel designated by it.  The Company will
be entitled to participate at its own expense in the defense, or if it so
elects, to assume and control the defense of any action, proceeding, or
investigation, but if the Company elects to assume the defense, such defense
shall be conducted by counsel reasonably acceptable to ESI.  Any
Indemnified Person may retain additional counsel of its own choice to represent
it but shall bear the fees and expenses of such counsel unless the Company shall
have specifically authorized the retaining of such counsel.  The
Company will not be liable for any settlement of any claim against an
Indemnified Person made without its written consent.
 
 In order
to provide for just and equitable contribution, if a claim for indemnification
pursuant to these indemnification provisions is made but it is found in a final
judgment by a court of competent jurisdiction (not subject to further appeal)
that such indemnification may not be enforced in such case, even though the
express provisions hereof provide for indemnification in such case, then the
Company, on the one hand, and any Indemnified Person, on the other hand, shall
contribute to the losses, claims, damages, liabilities, or costs to which the
Indemnified Persons may be subject in accordance with the relative benefits
received by the Company, on the one hand, and ESI, on the other hand, and also
the relative fault of the Company, on the one hand, and ESI, on the other hand,
in connection with the statements, acts or omissions that resulted in such
losses, claims, damages, liabilities, or costs, and the relevant equitable
considerations shall also be considered.  No person found liable for a
fraudulent misrepresentation shall be entitled to contribution from any person
who is not also found liable for such
misrepresentation.  Notwithstanding the foregoing, neither ESI shall
be obligated to contribute any amount hereunder that exceeds the amount of fees
received by ESI pursuant to the Agreement.
 
 The
liability of the Company under the indemnification provisions set forth in this
Exhibit A shall be
limited to $25,000.
 
 Neither
termination nor completion of the engagement of ESI or any Indemnified Person
under the Agreement shall affect the provisions of these Indemnification
Provisions, which shall then remain operative and in full force and effect for
one year.
  
 
 If any
provision contained in this Exhibit A is held by a court
of competent jurisdiction or other authority to be invalid, void, unenforceable,
or against its regulatory policy, the remainder of the provisions contained in
this Exhibit A shall
remain in full force and effect and shall in no way be affected, impaired, or
invalidated.  These Indemnification Provisions may not be amended or
modified in any way, except by subsequent agreement executed in
writing.