Document:

Exhibit 10.1

 

INVESTMENT
ADVISORY AGREEMENT

 

This
Investment Advisory Agreement (this “Agreement”) is made as of ____________, by and between Palmer Square Capital
BDC Inc., a Maryland corporation (the “Company”), and Palmer Square BDC Advisor LLC, a Delaware limited liability
company (the “Adviser”).

 

WHEREAS,
the Company is a closed-end management investment company that intends to elect to be regulated as a business development company
(“BDC”) under the Investment Company Act of 1940, as amended (together with the rules promulgated thereunder,
the “1940 Act”);

 

WHEREAS,
the Adviser is registered as an investment adviser under the Investment Advisers Act of 1940, as amended (together with the rules
promulgated thereunder, the “Advisers Act”);

 

WHEREAS,
the Company desires to retain the Adviser to provide investment advisory services to the Company on the terms and conditions hereinafter
set forth; and

 

WHEREAS,
the Adviser is willing to provide investment advisory services to the Company on the terms and conditions hereinafter set forth.

 

NOW,
THEREFORE, in consideration of the premises and the covenants hereinafter contained and for other good and valuable consideration,
the receipt and adequacy of which are hereby acknowledged, the Company and the Adviser hereby agree as follows:

 

Section
1. Duties of the Adviser.

 

(a) Retention
of Adviser. The Company hereby appoints the Adviser to act as the investment adviser to the Company and to manage the investment
and reinvestment of the assets of the Company, subject to the supervision of the Board of Directors of the Company (the “Board
of Directors”), for the period and upon the terms herein set forth and in accordance with:

 

(i) the
investment objective, policies and restrictions that are set forth in the Company’s Registration Statement on Form 10 or
Form N-2 filed with the U.S. Securities and Exchange Commission (the “SEC”), as supplemented, amended or superseded
from time to time, including in the periodic reports filed by the Company under the Securities Exchange Act of 1934, as amended
(together with the rules promulgated thereunder, the “Exchange Act”);

 

(ii) the
1940 Act, the Advisers Act, and all other applicable federal and state laws;

 

(iii) the
Company’s articles of incorporation and bylaws, as amended from time to time; and

 

(iv) such
investment policies, directives, and restrictions as the Company may from time to time establish or issue and communicate to the
Adviser in writing.

 

     

     

    

 

(b) Responsibilities
of Adviser. Without limiting the generality of the foregoing, the Adviser shall, during the term and subject to the provisions
of this Agreement:

 

(i) determine
the composition and allocation of the Company’s investment portfolio, the nature and timing of any changes therein and the
manner of implementing such changes;

 

(ii) identify,
evaluate and negotiate the structure of the investments made by the Company;

 

(iii) perform
due diligence on prospective portfolio companies;

 

(iv) execute,
close, service and monitor the Company’s investments;

 

(v) determine
the securities and other assets that the Company shall purchase, retain or sell;

 

(vi) arrange
financings and borrowing facilities for the Company; and

 

(vii) provide
the Company with such other investment advisory, research and related services as the Company may, from time to time, reasonably
require for the investment of its funds.

 

(c) Power
and Authority. To facilitate the Adviser’s performance of these undertakings, but subject to the restrictions contained
herein, the Company hereby delegates to the Adviser, and the Adviser hereby accepts, the power and authority to act on behalf
of the Company to effectuate investment decisions for the Company, including the negotiation, execution and delivery of all documents
relating to the Company’s investments and the placing of orders for other purchase or sale transactions on behalf of the
Company. In the event that the Company determines to acquire debt or other financing (or to refinance existing debt or other financing),
the Adviser shall use commercially reasonable efforts to arrange for such financing on the Company’s behalf, subject to
the oversight and approval of the Board of Directors. If it is necessary for the Adviser to make investments or obtain financing
on behalf of the Company through a special purpose vehicle, the Adviser shall have the authority to create, or arrange for the
creation of, such special purpose vehicle and to make investments or obtain financing through such special purpose vehicle in
accordance with applicable law. The Company also grants to the Adviser the power and authority to engage in all activities and
transactions (and anything incidental thereto) that the Adviser deems, in its sole discretion, appropriate, necessary or advisable
to carry out its duties pursuant to this Agreement.

 

(d) Acceptance
of Appointment. The Adviser hereby accepts such appointment and agrees during the term hereof to render the services described
herein for the compensation provided herein, subject to the limitations contained herein.

 

(e) Sub-Advisers.
Subject to the requirements of the 1940 Act, the Adviser is hereby authorized, but not required, to enter into one or more sub-advisory
agreements with other investment advisers (each, a “Sub-Adviser”) pursuant to which the Adviser may obtain
the services of the Sub-Adviser(s) to assist the Adviser in fulfilling its responsibilities hereunder. Specifically, the Adviser
may retain a Sub-Adviser to recommend specific securities or other investments based upon the Company’s investment objective
and policies, and work, along with the Adviser, in structuring, negotiating, arranging or effecting the acquisition, retention
or disposition of such investments and monitoring investments on behalf of the Company, subject in all cases to the oversight
of the Adviser and the Company. The Adviser, and not the Company, shall be responsible for any compensation payable to any Sub-Adviser.
Any sub-advisory agreement entered into by the Adviser shall be in accordance with the requirements of the 1940 Act, the Advisers
Act and other applicable federal and state law.

 

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(f) Independent
Contractor Status. The Adviser shall, for all purposes herein provided, be deemed to be an independent contractor and, except
as expressly provided or authorized herein, shall have no authority to act for or represent the Company in any way or otherwise
be deemed an agent of the Company.

 

(g) Record
Retention. Subject to review by and the overall control of the Board of Directors, the Adviser shall maintain and keep all
books, accounts and other records of the Adviser that relate to activities performed by the Adviser hereunder as required under
the 1940 Act and the Advisers Act, shall specifically maintain all books and records with respect to the Company’s portfolio
transactions, and shall render to the Board of Directors such periodic and special reports as the Board of Directors may reasonably
request. The Adviser agrees that all records that it maintains and keeps for the Company shall at all times remain the property
of the Company, shall be readily accessible during normal business hours, and shall be promptly surrendered to the Company upon
the termination of this Agreement or otherwise on written request by the Company, provided that the Adviser may retain copies
of such records.

 

Section
2. Expenses Payable by the Company.

 

(a) Adviser
Personnel. All investment personnel of the Adviser, when and to the extent engaged in providing investment advisory services,
and the compensation and routine overhead expenses of such personnel allocable to such services, shall be provided and paid for
by the Adviser and not by the Company.

 

(b) Company’s
Costs. Subject to the limitations on expense reimbursement of the Adviser as set forth in Sections 2(a) and (c), the Company,
either directly or through reimbursement to the Adviser, shall bear all costs and expenses of its investment operations and its
investment transactions, including costs and expenses relating to:

 

		(i)	initial
organization costs incurred prior to the commencement of the Company’s operations;

 

		(ii)	operating
costs incurred prior to the commencement of the Company’s operations;

 

		(iii)	costs
of calculating the Company’s net asset value, including the cost and expenses of any independent valuation firm;

 

		(iv)	fees
and expenses payable to third parties relating to making investments, including the Adviser’s or its affiliates’ travel
expenses, research costs and out-of-pocket fees and expenses associated with performing due diligence and reviews of prospective
investments;

 

		(v)	interest
                                         expense and other costs associated with the Company’s indebtedness;

 

		(vi)	transfer
                                         agent and custodial fees;

 

		(vii)	out-of-pocket
fees and expenses associated with marketing efforts;

 

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		(viii)	federal
                                         and state registration fees and any stock exchange listing fees;

 

		(ix)	U.S.
                                         federal, state and local taxes;

 

		(x)	the
                                         fees and expenses of each member of the Board of Directors who is not an “interested
                                         person” the Company and the Adviser (such members of the Board of Directors are
                                         collectively referred to herein as the “Independent Directors”);

 

		(xi)	brokerage
                                         commissions and markups;

 

		(xii)	fidelity
                                         bond, directors’ and officers’ liability insurance and other insurance premiums;

 

		(xiii)	direct
costs, such as printing, mailing, long distance telephone and staff;

 

		(xiv)	fees
                                         and expenses associated with independent audits and outside legal costs;

 

		(xv)	costs
associated with the Company’s reporting and compliance obligations under the Exchange Act, the 1940 Act and other applicable
U.S. federal and state securities laws; and

 

		(xvi)	all
                                         other expenses incurred by the Adviser in its capacity as the administrator or the Company
                                         in connection with administering the Company’s business, including payments under
                                         the administration agreement (the “Administration Agreement”) that
                                         will be based upon the Company’s allocable portion (subject to the review and approval
                                         of the Board) of overhead, including rent and the allocable portion of the cost of the
                                         Corporation’s chief compliance officer and chief financial officer and their respective
                                         staffs.

 

To
the extent that expenses borne by the Company are paid by the Adviser, or its affiliates, the Company will reimburse the Adviser
for such expenses.

 

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(c) Portfolio
Company’s Compensation. In certain circumstances the Adviser or any of its respective affiliates may receive compensation
from a portfolio company, in connection with the Company’s investment in such portfolio company. Any compensation received
by the Adviser or any of its affiliates attributable to the Company’s investment in any portfolio company, in excess of
any of the limitations in or exemptions granted from the 1940 Act, any interpretation thereof by the staff of the SEC, or the
conditions set forth in any exemptive relief granted to the Adviser or the Company by the SEC, shall be delivered promptly to
the Company and the Company will retain such excess compensation for the benefit of its shareholders.

 

Section
3. Compensation of the Adviser.

 

The
Company 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 hereinafter
set forth. Any of the fees payable to the Adviser under this Agreement for any partial calendar quarter shall be appropriately
prorated based on the actual number of days elapsed during such partial quarter as a fraction of the number of days in the relevant
calendar year. The Corporation shall make any payments due hereunder to the Adviser or to the Adviser’s designee as the
Adviser may otherwise direct. To the extent permitted by applicable law, the Adviser may elect, or adopt a deferred compensation
plan pursuant to which it may elect to defer all or a portion of its fees hereunder for a specified period of time.

 

(a) Base
Management Fee. The Base Management Fee is calculated at an annual rate of 2.0% of the average of the weighted average (based
on the number of shares outstanding each day in the quarter) of the Company’s total net assets at the end of each of the
two most recently completed calendar quarters. For the Company’s first quarter, the Base Management Fee is calculated based
on the weighted average of the Company’s total net assets as of such quarter-end. The Base Management Fee for any partial
quarter will be pro-rated based on the number of days actually elapsed in that quarter relative to the total number of days in
such quarter.

 

(b) Incentive
Fee. The Adviser will not be entitled to an Incentive Fee prior to a Listing. “Listing” means, at the discretion
of the Board of Directors, the listing of the Company’s common stock on a national securities exchange or an initial public
offering of the Company’s common stock that results in an unaffiliated public float of at least the lower of (i) $75 million
and (ii) 15% of the aggregate capital commitments received prior to the date of such initial public offering. Following a Listing,
the Adviser will be entitled to an Incentive Fee based on the Company’s income. The Incentive Fee will be calculated and
payable quarterly in arrears following a Listing and will be based on the Company’s Adjusted Net Investment Income (as defined
below) for the immediately preceding calendar quarter during which this Agreement is in effect.

 

(i) For
purposes of calculating the Incentive Fee, the following terms shall have the following meaning:

 

A.
“Adjusted Net Investment Income” shall mean the Company’s “Pre-Incentive Fee Net Investment Income”
during the then most recently completed calendar quarter minus the difference, if positive, between (i) the Company’s “Net
Realized Losses” over the then most recently completed and three preceding calendar quarters (or if shorter, the number
of calendar quarters that have occurred since the Listing) and (ii) the Company’s “Net Investment Income” over
the then most recently completed and three preceding calendar quarters (or if shorter, the number of calendar quarters that have
occurred since the Listing). No adjustment (downward or upward) will be made to “Pre-Incentive Fee Net Investment Income”
if the difference between clause (i) minus clause (ii) is zero or negative.

 

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B. “Pre-Incentive
Fee Net Investment Income” shall mean interest income, dividend income and any other income (including any other fees
such as commitment, origination, structuring, diligence and consulting fees or other fees that the Company receives from portfolio
companies but excluding fees for providing managerial assistance) accrued during the calendar quarter, minus operating expenses
for the quarter (including the Base Management Fee, any expenses payable under the Administration Agreement, and any interest
expense and dividends paid on any outstanding preferred stock, but excluding the Incentive Fee). In addition, “Pre-Incentive
Fee Net Investment Income” shall include, in the case of investments with a deferred interest feature such as market discount,
original issue discount (“OID”), debt instruments with payment-in-kind (“PIK”) interest,
preferred stock with PIK dividends and zero-coupon securities, accrued income that the Company has not yet received in cash.

 

C. “Net
Realized Losses” in respect of a particular period means the difference, if positive, between (i) the aggregate realized
capital losses on the Company’s investments in such period and (ii) the aggregate realized capital gains on the Company’s
investments in such period.

 

D. “Net
Investment Income” in respect of the particular period means interest income, dividend income and any other income (including
any other fees such as commitment, origination, structuring, diligence and consulting fees or other fees that the Company receives
from portfolio companies but excluding fees for providing managerial assistance) accrued during the particular period, minus operating
expenses for the particular (including the base management fee, the Incentive Fee, any expenses payable under the Administration
Agreement, and any interest expense and dividends paid on any outstanding preferred stock). Net investment income includes, in
the case of investments with a deferred interest feature such as market discount, OID, debt instruments with PIK interest, preferred
stock with PIK dividends and zero-coupon securities, accrued income that the Company has not yet received in cash.

 

(ii) Adjusted
Net Investment Income shall be compared to a “Hurdle Amount” equal to the product of (i) the “hurdle
rate” of 1.50% per quarter (6.0% annualized) and (ii) the Company’s total net assets at the end of the immediately
preceding calendar quarter.

 

(iii) On
and after the occurrence of a Listing, the Company will pay the Adviser an Incentive Fee in each calendar quarter as follows:

 

		●	no
                                         Incentive Fee in any calendar quarter in which the Company’s Adjusted Net Investment
                                         Income does not exceed the Hurdle Amount;

 

		●	100%
                                         of the Company’s Adjusted Net Investment Income with respect to that portion of
                                         such Adjusted Net Investment Income, if any, that exceeds the Hurdle Amount but is less
                                         than or equal to an amount (the “Catch-Up Amount”) determined on a
                                         quarterly basis by multiplying 1.6875% by the Company’s total net asset value for
                                         the immediately preceding calendar quarter. The Catch-Up Amount is intended to provide
                                         the Adviser with an Incentive Fee of 12.5% on all of the Company’s Adjusted Net
                                         Investment Income when the Company’s Adjusted Net Investment Income reaches the
                                         Catch-Up Amount in any calendar quarter; and

 

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		●	for
                                         any calendar quarter in which the Company’s Adjusted Net Investment Income exceeds
                                         the Catch-Up Amount, the Incentive Fee shall equal 12.5% of the amount of the Company’s
                                         Adjusted Net Investment Income for the calendar quarter.

 

(iv) The
Incentive Fee amount or the calculations pertaining thereto, as appropriate, will be pro-rated for any period less than a full
calendar quarter.

 

Section
4. Covenant of the Adviser.

 

The
Adviser covenants that it is or will be registered as an investment adviser under the Advisers Act on the effective date of this
Agreement, and shall maintain such registration until the expiration or termination of this Agreement. The Adviser agrees that
its activities shall at all times comply in all material respects with all applicable federal and state laws governing its operations
and investments.

 

Section
5. Brokerage Commissions.

 

The
Adviser is hereby authorized, to the fullest extent now or hereafter permitted by law, to cause the Company to pay a member of
a national securities exchange, broker or dealer an amount of commission for effecting a securities transaction in excess of the
amount of commission another member of such exchange, broker or dealer would have charged for effecting that transaction, if the
Adviser determines in good faith, taking into account factors, including without limitation, price (including the applicable brokerage
commission or dealer spread), size of order, difficulty of execution, and operational facilities of the firm and the firm’s
risk and skill in positioning blocks of securities, that such amount of commission is reasonable in relation to the value of the
brokerage and/or research services provided by such member, broker or dealer, viewed in terms of either that particular transaction
or its overall responsibilities with respect to the Company’s portfolio, and is consistent with the Adviser’s duty
to seek the best execution on behalf of the Company.

 

Section
6. Proxy Voting. 

 

The
Adviser shall be responsible for voting any proxies solicited by an issuer of securities held by the Company in the best interest
of the Company and in accordance with the Adviser’s proxy voting policies and procedures, as any such proxy voting policies
and procedures may be amended from time to time. The Company has been provided with a copy of the Adviser’s proxy voting
policies and procedures and has been informed as to how it can obtain further information from the Adviser regarding proxy voting
activities undertaken on behalf of the Company.

 

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Section
7. Other Activities of the Adviser.

 

The
services of the Adviser to the Company are not, and shall not be exclusive, and the Adviser may engage in any other business or
render similar or different services to others including, without limitation, the direct or indirect sponsorship or management
of other investment-based accounts or commingled pools of capital, however structured, having investment objectives similar to
or different from those of the Company, and nothing in this Agreement shall limit or restrict the right of any manager, partner,
officer, director, shareholder (and their shareholders or members, including the owners of their shareholders or members), officer
or employee of the Adviser to engage in any other business or to devote his or her time and attention in part to any other business,
whether of a similar or dissimilar nature, or to receive any fees or compensation in connection therewith (including fees for
serving as a director of, or providing consulting services to, one or more of the Company’s portfolio companies, subject
to applicable law). The Adviser assumes no responsibility under this Agreement other than to render the services set forth herein.
So long as this Agreement or any extension, renewal or amendment hereof remains in effect, the Adviser shall be the only investment
adviser for the Company, subject to the Adviser’s right to enter into sub-advisory agreements. It is understood that directors,
officers, employees and stockholders of the Company are or may become interested in the Adviser and its affiliates, as directors,
officers, employees, partners, stockholders, members, managers or otherwise, and that the Adviser and directors, officers, employees,
partners, stockholders, members and managers of the Adviser and its affiliates are or may become similarly interested in the Company
as stockholders or otherwise.

 

Section
8. Responsibility of Dual Directors, Officers and/or Employees.

 

If
any person who is a manager, partner, officer or employee of the Adviser is or becomes a director, officer, and/or employee of
the Company and acts as such in any business of the Company, then such manager, partner, officer, and/or employee of the Adviser
shall be deemed to be acting in such capacity solely for the Company, and not as a manager, partner, officer, or employee of the
Adviser or under the control or direction of the Adviser, even if paid by the Adviser.

 

Section
9. Limitation of Liability of the Adviser; Indemnification.

 

The
Adviser (and its managers, partners, officers, employees, agents, controlling persons, members and any other person or entity
affiliated with the Adviser) shall not be liable to the Company for any action taken or omitted to be taken by the Adviser in
connection with the performance of any of its duties or obligations under this Agreement or otherwise as an investment adviser
of the Company, except to the extent specified in Section 36(b) of the 1940 Act concerning loss resulting from a breach of fiduciary
duty (as the same is finally determined by judicial proceedings) with respect to the receipt of compensation for services, and
the Company shall indemnify, defend and protect the Adviser (and its managers, partners, officers, employees, agents, controlling
persons, members and any other person or entity affiliated with the Adviser, each of whom shall be deemed a third party beneficiary
hereof) (collectively, the “Indemnified Parties”) and hold them harmless from and against all damages, liabilities,
costs and expenses (including reasonable attorneys’ fees and amounts reasonably paid in settlement) incurred by the Indemnified
Parties in or by reason of any pending, threatened or completed action, suit, investigation or other proceeding (including an
action or suit by or in the right of the Company or its security holders) arising out of or otherwise based upon the performance
of any of the Adviser’s duties or obligations under this Agreement or otherwise as an investment adviser of the Company.
Notwithstanding the preceding sentence of this Section 9 to the contrary, nothing contained herein shall protect or be deemed
to protect the Indemnified Parties against or entitle or be deemed to entitle the Indemnified Parties to indemnification in respect
of, any liability to the Company or its security holders to which the Indemnified Parties would otherwise be subject by reason
of willful misfeasance, bad faith or gross negligence in the performance of the Adviser’s duties or by reason of the reckless
disregard of the Adviser’s duties and obligations under this Agreement (as the same shall be determined in accordance with
the 1940 Act and any interpretations or guidance by the Securities and Exchange Commission or its staff thereunder). Notwithstanding
anything contrary in this Agreement, for so long as the Company is subject to the 1940 Act, the Company shall not advance an Indemnified
Party any expenses to the extent such advancement would violate the 1940 Act.

 

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Section
10. Effectiveness, Duration and Termination of Agreement.

 

(a) Term
and Effectiveness. This Agreement shall become effective as of the first date written
above. Once effective, this Agreement shall remain in effect for two years, and thereafter shall continue automatically
for successive one-year periods; provided that such continuance is specifically approved at least annually by: (i) the vote of
the Board of Directors, or by the vote of a majority of the outstanding voting securities of the Company and (ii) the vote of
a majority of the Independent Directors, in accordance with the requirements of the 1940 Act.

 

(b) Termination.
This Agreement may be terminated at any time, without the payment of any penalty, (i) by the Company upon 60 days’ prior
written notice to the Adviser: (A) upon the vote of a “majority of the outstanding voting securities” of the
Company (as defined in Section 2(a)(42) of the 1940 Act) or (B) by the vote of the Independent Directors; or (ii) by
the Adviser upon not less than 60 days’ prior written notice to the Company. This Agreement shall automatically terminate
in the event of its “assignment” (as such term is defined for purposes of construing Section 15(a)(4) of the
1940 Act). The provisions of Sections 9 and 10 shall remain in full force and effect, and the Adviser shall remain entitled
to the benefits thereof, notwithstanding any termination of this Agreement. Further, notwithstanding the termination or expiration
of this Agreement as aforesaid, the Adviser shall be entitled to any amounts owed to it under Section 3 through the date of termination
or expiration and Sections 9 and 10 shall continue in force and effect and apply to the Adviser and its representatives as and
to the extent applicable.

 

Section
11. Notices.

 

Any
notice under this Agreement shall be given in writing, addressed and delivered or mailed, postage prepaid, to the other party
at the address listed below or at such other address for a party as shall be specified in a notice given in accordance with this
Section.

 

Section
12. Amendments.

 

This
Agreement may be amended by mutual written consent of the parties; provided that the consent of the Company is required to be
obtained in conformity with the requirements of the 1940 Act.

 

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Section
13. Severability.

 

If
any provision of this Agreement shall be declared illegal, invalid, or unenforceable in any jurisdiction, then such provision
shall be deemed to be severable from this Agreement (to the extent permitted by law) and in any event such illegality, invalidity
or unenforceability shall not affect the remainder hereof.

 

Section
14. Counterparts.

 

This
Agreement may be executed in counterparts, each of which shall be deemed to be an original copy and all of which together shall
constitute one and the same instrument binding on all parties hereto, notwithstanding that all parties shall not have signed the
same counterpart.

 

Section
15. Governing Law.

 

Notwithstanding
the place where this Agreement may be executed by any of the parties hereto, this Agreement shall be construed in accordance with
the laws of the State of Maryland. For so long as the Company is regulated as a BDC under the 1940 Act, this Agreement shall also
be construed in accordance with the applicable provisions of the 1940 Act and the Advisers Act. In such case, to the extent the
applicable laws of the State of Maryland or any of the provisions herein conflict with the provisions of the 1940 Act or the Advisers
Act, the 1940 Act and the Advisers Act shall control.

 

Section
16. Third Party Beneficiaries.

 

Except
for any Sub-Adviser and any Indemnified Party, such Sub-Adviser and the Indemnified Parties each being an intended beneficiary
of this Agreement, this Agreement is for the sole benefit of the parties hereto and their permitted assigns and nothing herein
express or implied shall give or be construed to give to any person, other than the parties hereto and such assigns, any legal
or equitable rights hereunder.

 

Section
17. Entire Agreement.

 

This
Agreement contains the entire agreement of the parties and supersedes all prior agreements, understandings and arrangements with
respect to the subject matter hereof.

 

(signature
page follows)

 

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IN
WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed on the date above written.

 

	 	PALMER SQUARE CAPITAL BDC INC.
	 	1900 Shawnee Mission Parkway
	 	Suite 315
	 	Mission Woods, KS 66205
	 	 	 
	 	By:	                 
	 	Name:	 
	 	Title:	 
	 	 	 
	 	PALMER SQUARE BDC ADVISOR LLC
	 	1900 Shawnee Mission Parkway
	 	Suite 315
	 	Mission Woods, KS 66205
	 	 	 
	 	By:	 
	 	Name:	 
	 	Title:	 

 

[Signature Page to Investment Advisory
Agreement]Exhibit 10.2

 

ADMINISTRATION AGREEMENT

 

This Agreement (“Agreement”)
is made as of ______________ by and between Palmer Square Capital BDC Inc., a Maryland corporation (the “Company”),
and Palmer Square BDC Advisor LLC, a Delaware limited liability company (the “Administrator”).

 

WHEREAS, the Company
is a newly organized closed-end management investment fund that intends to elect to be treated as a business development company
(“BDC”) under the Investment Company Act of 1940, as amended (the “Investment Company Act”);

 

WHEREAS, the Company
desires to retain the Administrator to provide administrative services to the Company in the manner and on the terms hereinafter
set forth; and

 

WHEREAS, the Administrator
is willing to provide administrative services to the Company on the terms and conditions hereafter set forth.

 

NOW, THEREFORE, in
consideration of the premises and the covenants hereinafter contained and for other good and valuable consideration, the receipt
and adequacy of which is hereby acknowledged, the Company and the Administrator hereby agree as follows:

 

		1.	Duties of the Administrator

 

(a) Engagement
of Administrator. The Company hereby retains the Administrator to act as administrator of the Company, and to furnish or arrange
for others to furnish the administrative services, personnel and facilities described below, subject to review by and the overall
control of the Board of Directors of the Company (the “Board”), for the period and on the terms and conditions
set forth in this Agreement. The Administrator hereby accepts such retention and agrees during such period to render, or arrange
for the rendering of, such services and to assume the obligations herein set forth subject to the reimbursement of costs and expenses
provided for below. The Administrator, and any others with whom the Administrator subcontracts to provide the services set forth
herein, shall for all purposes herein be deemed to be independent contractors of the Company and shall, unless otherwise expressly
provided or authorized herein or in another contract with the Company, have no authority to act for or represent the Company in
any way or otherwise be deemed agents of the Company.

 

(b) Services.
The Administrator shall perform (or oversee, or arrange for, the performance of) the administrative services necessary for the
operation of the Company. Without limiting the generality of the foregoing, the Administrator shall provide the Company with office
facilities, equipment, clerical, bookkeeping, compliance, and recordkeeping services at such facilities and such other services
as the Administrator, subject to review by the Board, shall from time to time determine to be necessary or useful to perform its
obligations under this Agreement. The Administrator shall also, on behalf of the Company, conduct relations with custodians, depositories,
transfer agents, dividend disbursing agents, other stockholder servicing agents, accountants, attorneys, underwriters, brokers
and dealers, corporate fiduciaries, insurers, banks, and other persons in any other capacity deemed by the Administrator to be
necessary or desirable. The Administrator shall make reports to the Board of its performance of its obligations hereunder and shall
furnish advice and recommendations with respect to such other aspects of the business and affairs of the Company as it shall determine
to be desirable; provided, however, nothing herein shall be construed to require the Administrator to, and the Administrator
shall not, provide any advice or recommendation relating to the securities and other assets that the Company should purchase, retain
or sell or provide any other investment advisory services to the Company pursuant to this Agreement. The Administrator shall be
responsible for the financial and other records that the Company is required to maintain, and under the Investment Company Act,
shall prepare, print and disseminate reports to stockholders, and reports and other materials filed with the Securities and Exchange
Commission (the “SEC”). The Administrator will also provide on the Company’s behalf managerial
assistance to the Company’s portfolio companies to which the Company is required to provide such assistance. In addition,
the Administrator shall assist the Company in determining and publishing the Company’s net asset value, oversee the preparation
and filing of the Company’s tax returns, and the printing and dissemination of reports to stockholders of the Company, and
generally overseeing the payment of the Company’s expenses and the performance of administrative and professional services
rendered to the Company by others.

 

     

     

    

 

(c) For
the avoidance of any doubt, the parties agree that the Administrator is authorized, but not required, to enter into such sub-administration
agreements as the Administrator may determine to be necessary or desirable in order to carry out the services set forth in paragraph
1(b) of this Agreement.

 

		2.	Records

 

The Administrator agrees
to maintain and keep all books, accounts and other records of the Company that relate to activities performed by the Administrator
hereunder and shall maintain and keep such books, accounts and records in accordance with the Investment Company Act. In compliance
with the requirements of Rule 31a-3 under the Investment Company Act, the Administrator agrees that all records which it maintains
for the Company shall at all times remain the property of the Company, shall be readily accessible during normal business hours,
and shall be promptly surrendered upon the termination of this Agreement or otherwise on written request. The Administrator further
agrees that all records which it maintains for the Company pursuant to Rule 31a-1 under the Investment Company Act shall be preserved
for the periods prescribed by Rule 31a-2 under the Investment Company Act unless any such records are earlier surrendered as provided
above. Records shall be surrendered in usable machine-readable form. The Administrator shall have the right to retain copies of
such records subject to observance of its confidentiality obligations under this Agreement.

 

		3.	Confidentiality

 

The parties hereto
agree that each shall treat confidentially the terms and conditions of this Agreement and all information provided by each party
to the other regarding its business and operations. All confidential information provided by a party hereto, including nonpublic
personal information (regulated pursuant to Regulation S-P), shall be used by any other party hereto solely for the purpose of
rendering services pursuant to this Agreement and, except as may be required in carrying out this Agreement, shall not be disclosed
to any third party, without the prior consent of such providing party. The foregoing shall not be applicable to any information
that is publicly available when provided or thereafter becomes publicly available other than through a breach of this Agreement,
or that is required to be disclosed by any regulatory authority, any authority or legal counsel of the parties hereto, by judicial
or administrative process, or otherwise by applicable law or regulation.

 

    2

     

    

 

		4.	Compensation; Allocation of Costs and Expenses

 

(a) In
full consideration for the provision of the services provided by the Administrator under this Agreement, the Company will reimburse
the Administrator for its costs and expenses incurred by the Administrator in performing its obligations and providing services
hereunder, including the allocable portion of the Administrator’s overhead in performing its obligations under this Agreement.
Reimbursement permitted to be made by the Company to the Administrator shall include, but is not limited to the allocable portion
of rent and the compensation paid to, or compensatory distributions received by, the Company’s officers (including the chief
compliance officer and chief financial officer) and any of their respective staff who provide services to the Company, operations
staff who provide services to the Company, and internal audit staff, if any, to the extent internal audit performs a role in the
Company’s Sarbanes-Oxley internal control assessment.

 

(b) The
Company shall bear all costs and expenses that are incurred in its operation, administration and in the execution of its transactions
and are not specifically assumed by Palmer Square BDC Advisor LLC (the “Adviser”) pursuant to that certain
Investment Advisory Agreement, dated as of [●], 201[●] (the “Investment Advisory Agreement”),
by and between the Company and the Adviser. Costs and expenses to be borne by the Company include, but are not limited to, those
relating to:

 

(i) the
Company’s initial organization costs and operating costs incurred prior to the filing of its election to be treated as a
BDC;

 

(ii) the
costs of effecting sales and repurchase of shares of the Company’s common stock and other securities;

 

(iii) costs
incurred in calculating the Company’s net asset value (including the cost and expenses of any third-party valuation services);

 

(iv) fees
payable to third parties relating to making investments, including the Adviser’s or its affiliates travel expenses, research
costs and out-of-pocket fees and expenses associated with performing due diligence and review of prospective investments;

 

(v) interest
expense and other costs associated with the Company’s indebtedness;

 

(vi) transfer
agent and custodial fees;

 

(vii) out-of-pocket
fees and expenses associated with marketing efforts;

 

(viii) federal
and state registration fees and any stock exchange listing fees;

 

    3

     

    

 

(ix) U.S.
federal, state, and local taxes; fees and expenses associated with the independent directors of the Board;

 

(x) brokerage
commissions and markups;

 

(xi) fidelity
bond, directors’ and officers’ liability insurance and other insurance premiums;

 

(xii) direct
costs, such as printing, mailing, long distance telephone and staff;

 

(xiii) fees
and expenses associated with independent audits and outside legal costs;

 

(xiv) costs
associated with the Company’s reporting and compliance obligations under the Investment Company Act and other applicable
U.S. federal and state securities laws; and

 

(xv) other
expenses incurred by the Administrator or the Company in connection with administering the Company’s business, including
payments under this agreement that will be based upon the Company’s allocable portion of overhead costs, including rent and
the allocable portion of the cost of the Corporation’s chief compliance officer and chief financial officer and their respective
staffs.

 

The presence of an item in or its absence
from the foregoing list, on the one hand, and the list of Company expenses set forth in Section 2(b) of Investment Advisory Agreement,
on the other, shall in no way be construed to limit the responsibility of the Company for such expense under either Agreement.

 

For avoidance of doubt, it is agreed and understood
that, from time to time, the Administrator or its affiliates may pay amounts or bear costs properly constituting Company expenses
as set forth herein or otherwise and that the Company shall reimburse the Administrator or its affiliates for all such costs and
expenses that have been paid by the Administrator or its affiliates on behalf of the Company.

 

		5.	Limitation of Liability of the Administrator; Indemnification

 

(a) The
Administrator (and its officers, managers, partners, agents, employees, controlling persons, members and any other person or entity
affiliated with the Administrator or the Adviser to the extent that it is providing services for or otherwise acting on behalf
of the Administrator, Adviser or the Company) shall not be liable to the Company for any action taken or omitted to be taken by
the Administrator or such other person in connection with the performance of any of the Administrator’s duties or obligations
under this Agreement or otherwise as administrator for the Company, and the Company shall indemnify, defend and protect the Administrator
(and its officers, managers, partners, agents, employees, controlling persons, members and any other person or entity affiliated
with the Administrator or the Adviser, each of whom shall be deemed a third party beneficiary hereof) (each, individually, an “Indemnified
Party” and collectively, the “Indemnified Parties”) and hold each of them harmless
from and against all damages, liabilities, costs and expenses (including reasonable attorneys’ fees and amounts reasonably
paid in settlement) incurred by any of them in or by reason of any pending, threatened or completed action, suit, investigation
or other proceeding (including an action or suit by or in the right of the Company or its security holders) arising out of or otherwise
based upon the performance in good faith of any of the Administrator’s duties or obligations under this Agreement or otherwise
as administrator for the Company. The Company’s indemnification of Indemnified Parties shall, to the extent not in conflict
with such insurance policy, be secondary to any and all payment to which any Indemnified Party is entitled from any relevant insurance
policy issued to or for the benefit of the Company and its affiliates or any Indemnified Party. The Company’s indemnification
of the Indemnified Parties shall also be secondary to any payment pursuant to any other indemnification obligation of any other
relevant entity or person, including under any insurance policy issued to or for the benefit of such other entity or person, in
all cases, to the extent not in conflict with the applicable other indemnification or insurance contract. In the event of payment
by the Company under this Agreement and pursuant to its indemnification obligations, the Company shall be subrogated to the extent
of such payment to all of the rights of recovery of the Indemnified Parties, including the rights of any Indemnified Party under
any insurance policies. 

 

    4

     

    

 

(b) For
any claims indemnified by the Company under Section 5(a) above, to the fullest extent permitted by and subject to the applicable
conditions of law, the Company shall promptly pay expenses (including legal fees and expenses) incurred by any Indemnified Party
in appearing at, participating in or defending any action, suit, claim, demand or proceeding in advance of the final disposition
of such action, suit, claim, demand or proceeding, including appeals, within 30 days after receipt by the Company of a statement
or statements from the Indemnified Party requesting such advance or advances from time to time.  Each Indemnified Party hereby
undertakes to repay any amounts advanced on its behalf (without interest) to the extent that it is ultimately determined that the
Indemnified Party is not entitled under this Agreement to be indemnified by the Company.  Such undertaking shall be unsecured
and accepted without reference to the financial ability of the Indemnified Parties to make repayment and without regard to the
Indemnified Parties’ ultimate entitlement to indemnification under the other provisions of this Agreement. No other form
of undertaking shall be required of the Indemnified Parties other than the execution of this Agreement. 

 

(c) Notwithstanding
the above provisions of Section 5 of this Agreement, nothing contained herein shall protect or be deemed to protect the Indemnified
Parties against or entitle or be deemed to entitle the Indemnified Parties to indemnification in respect of, any liability to the
Company or its security holders to which the Indemnified Parties would otherwise be subject by reason of willful misfeasance, bad
faith or gross negligence in the performance of the Administrator’s duties or by reason of the reckless disregard of the
Administrator’s duties and obligations under this Agreement (to the extent applicable, as the same shall be determined in
accordance with the Investment Company Act and any interpretations or guidance by the SEC or its staff thereunder).

 

		6.	Activities of the Administrator

 

The services of the
Administrator to the Company are not to be deemed to be exclusive, and the Administrator and each affiliate is free to render services
to others. It is understood that directors, officers, employees and stockholders of the Company are or may become interested in
the Administrator and its affiliates, as directors, officers, members, managers, employees, partners, stockholders or otherwise,
and that the Administrator and directors, officers, members, managers, employees, partners and stockholders of the Administrator
and its affiliates are or may become similarly interested in the Company as stockholders or otherwise.

 

    5

     

    

 

		7.	Duration and Termination of this Agreement

 

(a) This
Agreement shall become effective as of the first date above written. The provisions of Section 5 of this Agreement shall remain
in full force and effect, and the Administrator shall remain entitled to the benefits thereof, notwithstanding any termination
of this Agreement. Further, notwithstanding the termination or expiration of this Agreement as aforesaid, the Administrator shall
be entitled to any amounts owed under Section 4 through the date of termination or expiration, and Section 3 and Section 9 shall
continue in force and effect following such termination. This Agreement shall continue in effect for two years from the date hereof,
and thereafter shall continue automatically for successive annual periods, provided, that, such continuance is specifically
approved at least annually by:

 

(i) the
vote of the Board, or by the vote of a majority of the outstanding voting securities of the Company; and

 

(ii) the
vote of a majority of the members of the Company’s Board who are not parties to this Agreement or “interested persons”
(as such term is defined in Section 2(a)(19) of the Investment Company Act) of any such party, in accordance with the requirements
of the Investment Company Act.

 

(b) The
Agreement may be terminated at any time, without the payment of any penalty, upon 60 days’ written notice to the other party,
by the vote of a majority of the outstanding voting securities of the Company, or by the vote of the Board or by the Administrator.

 

(c) This
Agreement may not be assigned by a party without the consent of the other party; provided, however, that the rights
and obligations of the Company under this Agreement shall not be deemed to be assigned to a newly formed entity in the event of
the merger of the Company into, or conveyance of all of the assets of the Company to, such newly formed entity; provided further,
however, that the sole purpose of that merger or conveyance is to effect a mere change in the Company’s legal form
into another limited liability entity.

 

		8.	Amendments of this Agreement 

 

This Agreement may
be amended pursuant to a written instrument by mutual consent of the parties.

 

		9.	Governing Law

 

This Agreement shall be construed in accordance
with laws of the State of Maryland. For so long as the Company is regulated as a business development company under the Investment
Company Act, this Agreement shall also be construed in accordance with the applicable provisions of the Investment Company Act.
In such case, to the extent the applicable laws of the State of Maryland or any of the provisions herein conflict with the provisions
of the Investment Company Act, the latter shall control.

 

    6

     

    

 

		10.	Entire Agreement

 

This Agreement contains
the entire agreement of the parties and supersedes all prior agreements, understandings and arrangements with respect to the subject
matter hereof.

 

		11.	Notices

 

Any notice under this
Agreement shall be given in writing, addressed and delivered or mailed, postage prepaid, to the other party at its principal office.

 

		12.	Third Party Beneficiaries

 

Except for any Indemnified
Party (with respect to Section 5), the Indemnified Parties being intended beneficiaries of Section 5, this Agreement is for the
sole benefit of the parties hereto and their permitted assigns and nothing herein express or implied will give or be construed
to give any person, other than the parties hereto and such assigns, any legal or equitable rights hereunder.

 

[Remainder
of Page Intentionally Left Blank]

 

    7

     

    

 

IN
WITNESS WHEREOF, the parties hereto have executed and delivered this Agreement as of the date first above written.

 

	 	PALMER
    SQUARE CAPITAL BDC INC.
	 	 	 
	 	By:	
	 		Name: 
	 		Title: 
	 	 	 
	 	PALMER
    SQUARE BDC ADVISOR LLC
	 	 	 
	 	By:	
	 	 	Name:
	 	 	Title:

 

 

[Signature Page to Administration Agreement]

 

8

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