EX 10.6


    
      EXHIBIT
        10.6

       

       

      INVESTMENT
        ADVISORY AGREEMENT

       

      THIS
        INVESTMENT
        ADVISORY AGREEMENT ("Agreement")
        made this 1st day of March, 2007, by and between Renaissance
        Capital Growth & Income Fund III, Inc., a
        Texas
        corporation (the "Fund"), and RENN
        Capital Group, Inc., a
        Texas
        corporation (the "Adviser"):

      


      WHEREAS,
        the
        Fund operates as a business development company (a “BDC”) under the Investment
Company
        Act of 1940, as amended (the“Act"),
        and
        engages in the business of making investments consistent with its operation
        as a
        BDC;

      


      WHEREAS,
        the
        Adviser is engaged in the business of rendering investment advisory, management
        and administrative services with respect to investments of the type made
        by the
        Fund; and

      


      WHEREAS,
        the
        Fund deems it advisable to retain the Adviser to render certain investment
        advisory, management and administrative services to the Fund, and the Adviser
        desires to provide such services to the
        Fund, on
        the terms and conditions hereinafter set forth;

      


      NOW,
        THEREFORE,
        in
        consideration of the premises and the mutual agreements contained herein,
        the
        Fund and the Adviser hereby agree as follows:

      


      1.    Engagement.
        Commencing
        on the date hereof, the Fund engages and retains the Adviser to provide,
        or to
        make arrangements with suitable third parties to provide, the investment
        advisory, management and administrative services described below, subject
        to the
        supervision of the Board of Directors of the Fund (collectively, the “Board” and
        each member, a “Director”), for the period and on the terms and conditions set
        forth in this Agreement. The Adviser hereby accepts such engagement and agrees,
        during the terms of this Agreement, at its own expense (except as otherwise
        provided herein), to provide, or to make satisfactory arrangements for the
        provision of, such services and to assume the obligations herein set forth
        for
        the compensation provided herein.

       

      2.    Term.
        Subject
        to the provisions of Section 13 hereof, the initial term of this Agreement
        will
        be for the period commencing on the date of this Agreement and expiring two
        years from said date. Thereafter, this Agreement shall automatically be extended
        for successive one-year terms until terminated by either party hereto in
        accordance with the provisions of Section 13.

       

      3.    Provision
        of Investment Advisory Services.
        The
        Adviser shall, within a reasonable period of time after any request by the
        Fund,
        provide the Fund with such investment research and advice as the Fund may
        request with respect to any existing or proposed investment that is consistent
        with the investment objective and policies of the Fund as set forth in the
        Fund's most recent prospectus as filed with the Securities and Exchange
        Commission or in such other, more recent document as may properly set forth
        such
        information. The Adviser agrees to comply with all provisions of the Act
        and all
        rules and regulations promulgated thereunder in providing the services to
        the
        Fund described herein. The Adviser's investment services shall include
        identifying, evaluating, structuring, acquiring, monitoring, holding, managing
        and arranging for the disposition of investments for the Fund.

       

      4.    Provision
        of Management and Administrative Services.
        The
        Adviser shall provide, or arrange for suitable third parties to provide,
        any and
        all management and administrative services

        
          
             

          

          
             

            
              

            

          

          
             

          

        



      reasonably
        necessary for the operation
        of the
        Fund and the conduct of its business. Such management and administrative
        services shall include,
        but not
        be limited to, the following:

       

      a.    Providing
        the Fund with such office space, equipment, facilities and certain supplies,
        and
        the services of such clerical and other personnel of the Adviser, as may
        be
        necessary or required for the reasonable conduct of the business of the
        Fund:

       

      b.    Keeping
        and maintaining the books and records of the Fund and handling communications
        and correspondence with shareholders of the Fund:

       

      c.    Preparing
        such accounting, management and other reports and documents as may be necessary
        or appropriate for the reasonable conduct of the business of the
        Fund;

       

      d.    Making
        such arrangements and handling such communications with accountants, attorneys,
        banks, transfer agents, custodians, underwriters, insurance companies,
        depositories and other persons as may from time to time be requested by the
        Fund
        or may be reasonably necessary to perform any of the other services to be
        rendered by the Adviser under this Agreement;

       

      e.    Providing
        such other managerial and administrative services as may be reasonably requested
        by the Fund to identify, evaluate, structure, monitor, acquire and dispose
        of
        Fund investments;

       

      f.    Providing
        such other advice and recommendations with respect to the business and affairs
        of the Fund as the Adviser shall deem to be desirable or appropriate;
        and

       

      g.    Providing,
        as may be appropriate or necessary, from time to time, a director designee
        or
        advisory director
        to the Fund’s portfolio companies and making arrangements for the provision, at
        such costs as are reasonable
        and
        appropriate and for the benefit of the Fund, of such other management assistance
        to portfolio companies as may be appropriate or necessary pursuant to the
        applicable requirements of the Act.

       

      5.    Supervision.
        The
        performance by the Adviser of its duties and obligations hereunder shall
        be
        subject to the control and supervision of the Board, including those Directors
        who are not “interested persons” of the Fund within the meaning of Section
        2(a)(19) of the Act (the “Disinterested Directors”). The Adviser's determination
        of what services are necessary or required for the operation or to reasonably
        conduct the business of the Fund shall be subject to review by the Board
        and
        such Disinterested Directors. The Adviser shall provide such periodic reports
        to
        the Fund of the performance of its obligations hereunder as may be requested
        by
        the Board. The Adviser and its affiliates shall, for all purposes herein
        described, be deemed to be an independent contractor and shall, unless otherwise
        expressly provided or authorized, have no authority to act for or represent
        the
        Fund in any way or otherwise be deemed an agent of the Fund.

       

      6.    Allocation
        of Costs and Expenses.

       

      a.    Costs
        and Expenses of the Adviser.
        Except
        as set forth below, the Adviser shall bear the costs and expenses incurred
        or
        paid by the Adviser in providing the services to the Fund under Section 3
        hereof
        that are not directly allocable and identifiable to the Fund or its business
        or
        its investments or proposed investments. Included in such costs to be borne
        by
        the Adviser are the cost of office space, equipment and certain supplies
        utilized by the Fund's personnel and all wages, salaries and benefits of
        the
        Adviser's staff and personnel (except for (i) consultants retained by the
        Adviser or the Fund with respect to proposed or actual investments and (ii)
        persons responsible for the Fund’s compliance with applicable

        
          
             

          

          
             

            
              

            

          

          
             

          

        



      laws
        and
        regulations). Notwithstanding the foregoing, the Adviser shall not be
        responsible for the cost of services provided by any custodian, transfer
        agent,
        accountant or counsel required by the Fund.

       

      b.     Expenses
        of the Fund.
        Except
        as provided in Section 6(a) above, the Fund shall bear (and shall reimburse
        the
        Adviser for) all costs and expenses directly allocable and identifiable to
        the
        Fund or its business or its investments,
        including, but not limited to, all out-of-pocket expenses with respect to
        proposed or actual investments
        or
        dispositions thereof, expenses of registering securities under federal and
        state
        securities laws, costs of printing proxies and other expenses related to
        meetings of shareholders, calculating the Fund’s net asset value (including the
        cost and expenses of any independent valuation firm), litigation expenses,
        costs
        of third party evaluations or appraisals of the Fund (or its assets) or its
        proposed or actual investments, the Fund’s fidelity bond, directors and
        officers/errors and omissions liability insurance, and any other insurance
        premiums, fees for Disinterested Directors, fees of legal counsel and other
        legal fees, fees of independent public accountants, Director fees, expenses
        of
        printing or distributing reports to shareholders and regulatory bodies, federal,
        state and local taxes, and any other costs and expenses directly allocable
        and
        identifiable to the Fund or its business or investments.

      


      7.    Compensation
        of the Adviser.
        The Fund
        agrees to pay, and the Adviser agrees to accept, as compensation for the
        services provided by the Adviser hereunder, a Base Management Fee (“Base
        Management Fee”) and an Incentive Fee (“Incentive Fee”) as set forth below. The
        Base Management Fee shall be calculated on a quarterly basis. The Base
        Management Fee for each fourth quarter shall be calculated net of any Incentive
        Fee payable as of the end of the calendar year ended with that quarter. The
        Fund
        shall make any payments due hereunder to the Adviser or to the Adviser’s
        designee as the Adviser may otherwise direct.

       

      a.    Base
        Management Fee.
        The
        Base Management Fee shall be calculated at an annual rate of 1.75 percent
        (0.4375 on a quarterly basis) of the Fund’s Net Assets. The Base Management Fee
        will be payable in arrears, based on the Net Assets of the Fund at the end
        of
        each calendar quarter. Such payment shall be payable to the Adviser no later
        than the day after which filings with the Securities and Exchange Commission
        are
        required to be made by the Fund for such calendar quarter. If this agreement
        is
        terminated prior to the end of a quarter of a calendar quarter, then the
        Base
        Management Fee shall be appropriately pro rated. For this purpose, “Net Assets”
shall mean the gross assets of the Fund, less any outstanding liabilities, as
        determined consistent with generally accepted accounting principals then
        in
        affect. 

       

      b.    Incentive
        Fee.
        The
        Incentive Fee will be calculated and payable in arrears as of the end of
        each
        calendar year (or upon termination of this Agreement as set forth below),
        and
        will equal 20 percent of the Fund’s realized capital gains for the calendar
        year, if any, computed net of all realized capital losses and unrealized
        capital
        depreciation at the end of the calendar year. The effect of the use of this
        method to calculate the Incentive Fee is that each year, the cumulative
        performance of the Fund since its inception will provide the basis for the
        calculation of the Incentive Fee. In the event that this Agreement shall
        terminate as of a date that is not a calendar year end, the termination date
        shall be treated as though it were a calendar year end for purposes of
        calculating and paying the Incentive Fee. 

       

      8.    Covenants
        of the Adviser.
        The
        Adviser covenants that it is registered as an investment adviser under the
        Investment Advisers Act of 1940, as amended. The Adviser agrees that its
        activities will at all times be in compliance in all material respects with
        all
        applicable federal and state laws governing its operations and
        investments.

       

      9.    Covenants
        of the Fund.
        The Fund
        covenants that it has elected to be regulated as a BDC pursuant to Section
        54(a)
        of the Act. The Fund agrees that, for the duration of this Agreement, it
        will
        not

        
          
             

          

          
             

            
              

            

          

          
             

          

        



      have
        outstanding any option, warrant or right issued pursuant to Section 61(a)(3)(B)
        of the Act and will not have in place any profit-sharing plan as described
        in
        Section 57(n) of the Act.

       

      10.    Liability
        of the Adviser.
        The
        Adviser, its officers, directors, employees, agents and affiliates
        (collectively, "Affiliates") shall not be liable to the Fund, or any shareholder
        of the Fund, for any error of judgment or mistake of law or any loss or damage
        with respect to any investment of the Fund or arising from any act or omission
        of the Adviser or any of its Affiliates in the performance of its obligations
        hereunder, unless such loss or damage is the result of bad faith, negligence,
        misconduct or any breach of fiduciary duty, disregard of any duties or
        obligations owed to the Fund by the Adviser or such Affiliates by reason
        of this
        Agreement or any relation created hereby.

       

      11.    Indemnification
        of the Adviser.
        The
        Fund
        shall indemnify and hold harmless, to the extent permitted by law, the Adviser
        and any of its Affiliates, who was or is a party or is threatened to be made
        a
        party to any threatened, pending or completed action, suit or proceeding
        whether
        civil, criminal, administrative or investigative (including any action by
        or in
        the right of the Fund), by reason of any acts or omissions or alleged acts
        or
        omissions arising out of the activities of such person, if such activities
        were
        performed in good faith either on behalf of the Fund or in furtherance of
        the
        interest of the Fund, and in a manner reasonably believed by such person
        to be
        within the scope of the authority conferred by this Agreement or by law against
        losses, damages or expenses for which such person has not otherwise been
        reimbursed (including, but not limited to, accountants' and attorneys' fees,
        judgments, fines and amounts paid in settlement) actually and reasonably
        incurred by such person in connection with such action, suit or proceeding,
        so
        long as such person was not guilty of willful misfeasance, bad faith, gross
        negligence, or reckless disregard in the performance of his obligations and
        duties under such contract, and, with respect to any criminal action or
        proceedings, had no reasonable cause to believe his conduct was unlawful.
        The
        satisfaction of any indemnification and any holding harmless hereunder shall
        be
        from and limited to Fund assets. Notwithstanding the foregoing, absent a
        court
        determination that the person seeking indemnification was not liable by reason
        of "disabling conduct"
        within
        the meaning of Section 17(h) of the Act, the decision by the Fund to indemnify
        such person shall be based upon the reasonable determination, after review
        of
        the facts, of the non-party Directors of the Fund, or of independent legal
        counsel in a written opinion that such person was not liable by reason of
        such
        disabling conduct.

       

      12.    Obligations
        of the Adviser Not Exclusive.
        The
        obligations of the Adviser to the Fund are not exclusive. The Adviser may,
        in
        its discretion, render the same or similar services to any person or persons
        whose business may be in direct or indirect competition with the business
        of the
        Fund and may be in direct competition with the Fund for particular investments.
        Additionally, it is contemplated that from time to time one or more of
        Affiliates of the Adviser may serve as directors, officers or employees of
        the
        Fund or the portfolio companies of the Fund or otherwise have an interest
        or
        affiliation with the Fund or such portfolio companies or have the same or
        similar relationships with competitors of the Fund and their portfolio
        companies. Neither the Adviser nor any of its Affiliates shall in any manner
        be
        liable to the Fund solely by reason of the aforementioned activities of the
        Adviser or such Affiliates.

       

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

        
          
             

          

          
             

            
              

            

          

          
             

          

        



      Act).
        Notwithstanding the termination or expiration of this Agreement as aforesaid,
        the Adviser shall be entitled to any amounts owed under Section 7 through
        the
        date of termination or expiration and Sections 8, 9 and 10 shall continue
        in
        force and effect and apply to the Parties and their representatives as and
        to
        the extent applicable.

       

      14.    Use
        of Name.
        The
        Adviser reserves the right to grant the use of the names "Renaissance" or
        "Renaissance
        Capital" or similar names to another investment company, business development
        company or business enterprise. The Adviser also reserves the right to withdraw
        from the Fund the right to use the name or names "Renaissance" or "Renaissance
        Capital" upon termination of this Agreement or at any other time, provided
        that,
        if the right to withdraw the name or names "Renaissance" or "Renaissance
        Capital" is exercised by the Adviser, the Directors will submit the question
        of
        continuing this Agreement to a vote of the shareholders of the
        Fund.

       

      15.    Notices.
        All
        notices, requests, consents and other communications under this Agreement
        shall
        be in writing and shall be deemed to have been delivered on the date personally
        delivered, as evidenced by an executed receipt, or on the date received if
        mailed, postage prepaid, by certified mail, return receipt requested, or
        upon
        the date of transmission if telegraphed or faxed and confirmed the same day,
        if
        addressed to the respective parties as follows:

       

      
        	
                If
                  to the Fund:

                Renaissance
                  Capital Growth & Income Fund III, Inc.

                8080
                  North Central Expressway, 

                Suite
                  210/ LB 59

                Dallas,
                  TX 75206

                Fax
                  No: 214/ 891-8291

                ATTN:
                  President

              	
                If
                  to the Adviser:

                RENN
                  Capital Group, Inc. 

                8080
                  North Central Expressway

                Suite
                  210/ LB 59

                Dallas,
                  TX 75206

                Fax
                  No: 214/891-8106

                ATTN:
                  President

              


      

      


      16.    Definitions.
        The
        terms
        "assignment" and "majority
        of the outstanding voting securities" shall have the meanings given to them
        by
        Sections 2(a)(4) and 2(a)(42), respectively, of the Act.

       

      17.    Assignment.
        This
        Agreement may not be assigned by either party hereto and will automatically
        terminate in the event of its assignment.

       

      18.    Amendment.
        This
        Agreement may be amended only by an instrument in writing executed by both
        parties thereto; provided, however, that this Agreement may be amended by
        the
        parties only if such amendment is approved in conformity with the
        Act.

       

      19.    Governing
        Law.
        This
        Agreement shall be construed and enforced in accordance with and governed
        by the
        laws of the State of Texas and the applicable provisions of the
        Act.

       

      20.    Prior
        Agreements.
        This
        Agreement supersedes any prior Investment Advisory Agreements between the
        parties hereto.

       

       

       

      
        
          	
                  By:
                    /s/
                    Russell Cleveland

                	 	
                  By:
                    /s/
                    Russell Cleveland

                
	
                  Russell
                    Cleveland, President

                	 	
                  Russell
                    Cleveland, President

                
	
                  RenaissanceCapital
                    Growth

                	 	
                  RENN
                    Capital Group, Inc.

                
	
                  &
                    Income Fund III, Inc.