Document:

Exhibit
10.1

 

FORM
OF INVESTMENT ADVISORY AGREEMENT

 

BETWEEN

 

PHAROS
CAPITAL BDC, INC.

 

AND

 

PHAROS
CAPITAL GROUP, LLC

 

AGREEMENT,
dated as of March 7, 2018, between Pharos Capital BDC, Inc., a Maryland corporation (the “Corporation”),
and Pharos Capital Group, LLC (the “Advisor”), a Delaware limited liability company.

 

WHEREAS,
the Advisor has agreed to furnish investment advisory services to the Corporation, which intends to elect to operate as a business
development company under the Investment Company Act of 1940, as amended (the “1940 Act”);

 

WHEREAS,
the Advisor is an investment adviser that is registered under the Investment Advisers Act of 1940 (the “Advisers Act”);

 

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

 

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

 

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

 

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

 

		a)	Subject
                                         to the succeeding provisions of this paragraph and subject to the direction and control
                                         of the Corporation’s board of directors (the “Board of Directors”),
                                         the Advisor shall (i) act as investment advisor for and supervise and manage the
                                         investment and reinvestment of the Corporation’s assets and in connection therewith
                                         have complete discretion in purchasing and selling securities and other assets for the
                                         Corporation and in voting, exercising consents and exercising all other rights appertaining
                                         to such securities and other assets on behalf of the Corporation; (ii) supervise
                                         continuously the investment program of the Corporation and the composition of its investment
                                         portfolio; (iii) arrange, subject to the provisions of Section 2(e) hereof,
                                         for the purchase and sale of securities and other assets held in the investment portfolio
                                         of the Corporation; and (iv) subject to the approval of the Corporation’s board
                                         of directors as necessary or appropriate, arrange for and/or facilitate the raising of
                                         equity or debt capital including credit facilities with senior lenders. Nothing contained
                                         herein shall be construed to restrict the Corporation’s right to hire its own employees
                                         or to contract for administrative services to be performed by third parties, including
                                         but not limited to, the calculation of the net asset value of the Corporation’s
                                         shares.

 

     

     

    

 

		b)	In
                                         the performance of its duties under this Agreement, the Advisor shall at all times use
                                         all reasonable efforts to conform to, and act in accordance with, any requirements imposed
                                         by (i) the provisions of the 1940 Act, and of any rules or regulations in force
                                         thereunder, subject to the terms of any exemptive order applicable to the Corporation;
                                         (ii) any other applicable provision of law; (iii) the provisions of the Certificate
                                         of Incorporation and the Bylaws of the Corporation, as such documents are amended from
                                         time to time; (iv) the investment objectives, policies and restrictions applicable
                                         to the Corporation as set forth in the Corporation’s Registration Statement on
                                         Form 10, dated January 19, 2018 (the “Registration Statement”),
                                         as they may be amended from time to time by the Board of Directors or shareholders of
                                         the Corporation; and (v) any policies and determinations of the Board of Directors
                                         of the Corporation and provided in writing to the Advisor.

 

		c)	The
                                         Advisor will seek to provide qualified personnel to fulfill its duties hereunder and,
                                         except as set forth in the following sentence, will bear all costs and expenses incurred
                                         in connection with its investment advisory duties thereunder. The Corporation shall reimburse
                                         the Advisor for all direct and indirect costs and expenses incurred by the Advisor for
                                         office space rental, office equipment, utilities and other non-compensation related overhead
                                         allocable to performance of investment advisory services hereunder by the Advisor, including
                                         the costs and expenses of due diligence of potential investments, monitoring performance
                                         of the Corporation’s investments, serving as directors and officers of portfolio
                                         companies, providing managerial assistance to portfolio companies, enforcing the Corporation’s
                                         rights in respect of its investments and disposing of investments. All allocations made
                                         pursuant to this paragraph (c) shall be made pursuant to allocation guidelines approved
                                         from time to time by the Board of Directors. The Corporation shall also be responsible
                                         for the payment of all the Corporation’s other expenses, including payment of the
                                         fees payable to the Advisor under Section 5 hereof; organizational and offering
                                         expenses; expenses incurred in valuing the Corporation’s assets and computing its
                                         net asset value per share (including the cost and expenses of any independent valuation
                                         firm); expenses incurred by the Advisor or payable to third parties, including agents,
                                         consultants or other advisors and travel expense, in monitoring financial and legal affairs
                                         for the Corporation and in monitoring the Corporation’s investments and enforcing
                                         the Corporation’s rights in respect of such investments; performing due diligence
                                         on the Corporation’s prospective portfolio companies; interest and any fees payable
                                         on debt, if any, incurred to finance the Corporation’s investments; distributions
                                         on shares; offerings of the Corporation’s common stock and other securities; investment
                                         advisory and management fees payable under this Agreement; administration fees; transfer
                                         agent and custody fees and expenses; the allocated costs of providing managerial assistance
                                         to those portfolio companies that require it; fees, including legal fees, payable to
                                         third parties, including agents, consultants or other advisors, relating to, or associated
                                         with, evaluating, making, documenting and disposing of investments; brokerage or placement
                                         agent fees and commissions; the Corporation’s dues, fees and charges of any trade
                                         association of which the Corporation is a member; federal, state and foreign registration
                                         and license fees; all costs of registration and listing the Corporation’s shares
                                         on any securities exchange; federal, state and local taxes; independent directors’
                                         fees and expenses; costs of preparing and filing reports, registration statements, prospectuses
                                         or other documents required by the SEC, including printing and mailing costs; costs of
                                         any reports, proxy statements or other notices to stockholders, including printing and
                                         mailing costs; the expenses of holding shareholder meetings; the Corporation’s
                                         allocable portion of the fidelity bond, directors and officers/errors and omissions liability
                                         insurance, and any other insurance premiums; direct costs and expenses of administration
                                         and operation, including printing, mailing, communication costs, copying, secretarial
                                         and administrative staff, independent auditors and outside legal costs; litigation and
                                         indemnification and other extraordinary or non-recurring expenses; costs of winding up,
                                         costs incurred in connection with the formation or maintenance of entities or vehicles
                                         to hold the Corporation’s assets or for other purposes; costs associated with reporting
                                         and compliance obligations under the 1940 Act and applicable federal and state securities
                                         laws; and all other non-investment advisory expenses of the Corporation reasonably incurred
                                         by the Corporation or the Advisor in connection with administering the Corporation’s
                                         business, such as the allocable portion of overhead under its administration agreement,
                                         including rent and other allocable portions of the cost of certain of the Corporation’s
                                         officers, including but not limited to the Chief Financial Officer and the Chief Compliance
                                         Officer, and their respective staffs.

 

    2

     

    

 

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

 

		e)	The
                                         Advisor will place orders either directly with the issuer or with any broker or dealer.
                                         Subject to the other provisions of this paragraph, in placing orders with brokers and
                                         dealers, the Advisor will attempt to obtain the best price and the most favorable execution
                                         of its orders. In placing orders, the Advisor will consider the experience and skill
                                         of the firm’s securities traders as well as the firm’s financial responsibility
                                         and administrative efficiency. Consistent with this obligation, the Advisor may select
                                         brokers on the basis of the research, statistical and pricing services they provide to
                                         the Corporation and other clients of the Advisor. Information and research received from
                                         such brokers will be in addition to, and not in lieu of, the services required to be
                                         performed by the Advisor hereunder. A commission paid to such brokers may be higher than
                                         that which another qualified broker would have charged for effecting the same transaction,
                                         provided that the Advisor determines in good faith that such commission is reasonable
                                         in terms either of the transaction or the overall responsibility of the Advisor to the
                                         Corporation and its other clients and that the total commissions paid by the Corporation
                                         will be reasonable in relation to the benefits to the Corporation over the long term,
                                         subject to review by the Board of Directors of the Corporation from time to time with
                                         respect to the extent and continuation of such practice to determine whether the Corporation
                                         benefits, directly or indirectly, from such practice. In addition, the Advisor is authorized
                                         to take into account the sale of shares of the Corporation in allocating purchase and
                                         sale orders for portfolio securities to brokers or dealers (including brokers and dealers
                                         that are affiliated with the Advisor), provided that the Advisor believes that the quality
                                         of the transaction and the commission are comparable to what they would be with other
                                         qualified firms.

 

    3

     

    

 

		f)	The
                                         Advisor 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 Corporation in any way or otherwise be deemed an agent of the Corporation.

 

		g)	The
                                         Advisor shall keep and preserve for the period required by the Investment Company Act
                                         any books and records relevant to the provision of its investment advisory services to
                                         the Corporation and shall specifically maintain all books and records in accordance with
                                         Section 31(a) of the 1940 Act with respect to the Corporation’s portfolio transactions
                                         and shall render to the Corporation’s Board of Directors such periodic and special
                                         reports as the Corporation’s Board of Directors may reasonably request. The Advisor
                                         agrees that all records that it maintains for the Corporation are the property of the
                                         Corporation and will surrender promptly to the Corporation any such records upon the
                                         Corporation’s request, provided that the Advisor may retain a copy of such records.

 

		h)	The
                                         Advisor has a fiduciary responsibility and duty to the Corporation and the Corporation’s
                                         stockholders for the safekeeping and use of all the funds and assets of the Corporation,
                                         whether or not in the Advisor’s immediate possession or control.

 

		3)	Services
                                         Not Exclusive. Nothing in this Agreement shall prevent the Advisor or any officer,
                                         employee or other affiliate thereof from acting as investment advisor for any other person,
                                         firm or corporation, or from engaging in any other lawful activity, and shall not in
                                         any way limit or restrict the Advisor or any of its officers, employees or agents from
                                         buying, selling or trading any securities for its or their own accounts or for the accounts
                                         of others for whom it or they may be acting; provided, however, that the
                                         Advisor will not undertake, and will cause its employees not to undertake, activities
                                         which, in its judgment, will adversely affect the performance of the Advisor’s
                                         obligations under this Agreement.

 

		4)	Expenses.
                                         During the term of this Agreement, the Advisor will bear all compensation expense (including
                                         health insurance, pension benefits, payroll taxes and other compensation related matters)
                                         of its employees and shall bear the costs of any salaries or Directors’ fees of
                                         any officers or Directors of the Corporation who are affiliated persons (as defined in
                                         the 1940 Act) of the Advisor.

 

    4

     

    

 

		5)	Compensation
                                         of the Advisor.

 

		a)	The
                                         Advisor, for its services to the Corporation, will be entitled to receive a management
                                         fee (the “Base Management Fee”) from the Corporation determined
                                         in accordance with U.S. generally accepted accounting principles. The Base Management
                                         Fee will be payable at the beginning of each calendar quarter and will be calculated
                                         at an annual rate of 1.50% of total assets as of the end of the most recently completed
                                         calendar quarter and of all uncalled capital committed to the Corporation by investors
                                         as of the end of the most recently completed calendar quarter. The Base Management Fee
                                         for any partial month or quarter will be appropriately prorated.

 

		b)	For
                                         purposes of this Agreement, the gross assets and net assets of the Corporation shall
                                         be calculated pursuant to the procedures adopted by the Board of Directors of the Corporation
                                         for calculating the value of the Corporation’s assets.

 

		c)	The
                                         Advisor will also be entitled to receive an incentive fee, which consists of two parts,
                                         as follows:

 

		i)	Under
                                         the investment income component, the Corporation will pay the Advisor each quarter an
                                         incentive fee with respect to the Corporation’s pre-incentive fee net investment
                                         income. The investment income component will be calculated and payable quarterly in arrears
                                         based on the pre-incentive fee net investment income for the immediately preceding fiscal
                                         quarter. Payments based on pre-incentive fee net investment income will be based on the
                                         pre-incentive fee net investment income earned for the quarter. For this purpose, “pre-incentive
                                         fee net investment income” means interest income, dividend income and any other
                                         income (including any other fees, such as commitment, origination, structuring, diligence,
                                         managerial and consulting fees or other fees the Corporation receives from portfolio
                                         companies) the Corporation accrues during the fiscal quarter, minus the Corporation’s
                                         operating expenses for the quarter, including the base management fee, expenses payable
                                         under the administration agreement (the “Administration Agreement”)
                                         entered into between us and U.S. Bank, and any interest expense and dividends paid on
                                         any issued and outstanding preferred stock, but excluding the incentive fee; provided
                                         however, that pre-incentive fee net investment income shall be reduced by multiplying
                                         the pre-incentive fee net investment income earned for the quarter by a fraction, the
                                         numerator of which is the Corporation’s total assets (as of quarter-end) minus
                                         average daily borrowings for the immediately preceding fiscal quarter, and the denominator
                                         of which is the Corporation’s total assets (as of quarter-end) for the immediately
                                         preceding fiscal quarter. Pre-incentive fee net investment income includes, in the case
                                         of investments with a deferred interest feature (such as original issue discount, debt
                                         instruments with pay in kind interest and zero coupon securities), accrued income that
                                         the Corporation has not yet received in cash; provided, however, that the portion of
                                         the incentive fee attributable to deferred interest features shall be paid, only if and
                                         to the extent received in cash, and any accrual thereof shall be reversed if and to the
                                         extent such interest is reversed in connection with any write off or similar treatment
                                         of the investment giving rise to any deferred interest accrual, applied in each case
                                         in the order such interest was accrued. Such subsequent payments in respect of previously
                                         accrued income shall not reduce the amounts payable for any quarter pursuant to the calculation
                                         of the investment income component described above. Pre-incentive fee net investment
                                         income does not include any realized capital gains, realized capital losses or unrealized
                                         capital appreciation or depreciation.

 

    5

     

    

 

		ii)	Pre-incentive
                                         fee net investment income, expressed as a rate of return on the value of the Corporation’s
                                         net assets (defined as the average daily amount of funded capital commitments from investors
                                         during the immediately preceding fiscal quarter), will be compared to a “hurdle
                                         rate” of 2.0% per quarter (8.0% annualized). The Corporation shall pay the Advisor
                                         an incentive fee with respect to the Corporation’s pre-incentive fee net investment
                                         income in each calendar quarter as follows:

 

		(1)	No
                                         incentive fee in any calendar quarter in which the Corporation’s pre-incentive
                                         fee net investment income does not exceed the hurdle rate of 2.0%;

 

		(2)	100%
                                         of the Corporation’s pre-incentive fee net investment income with respect to that
                                         portion of such pre-incentive fee net investment income, if any, that exceeds the hurdle
                                         rate but is less than 2.5% in any calendar quarter (10.0% annualized) (the portion of
                                         the Corporation’s pre-incentive fee net investment income that exceeds the hurdle
                                         but is less than 2.5% is referred to as the “catch-up”; the “catch-up”
                                         is meant to provide the Advisor with 20.0% of the Corporation’s pre-incentive fee
                                         net investment income as if a hurdle did not apply if the Corporation’s pre-incentive
                                         fee net investment income exceeds 2.5% in any calendar quarter); and

 

		(3)	20.0%
                                         of the amount of the Corporation’s pre-incentive fee net investment income, if
                                         any, that exceeds 2.5% in any calendar quarter (10.0% annualized) payable to the Advisor
                                         (once the hurdle is reached and the catch-up is achieved, 20.0% of all pre-incentive
                                         fee net investment income thereafter is allocated to the Advisor).

 

		iii)	Under
                                         the capital gains component of the incentive fee, the Corporation will pay the Advisor
                                         at the end of each calendar year 20.0% of the Corporation’s aggregate cumulative
                                         realized capital gains from the date of its election to be regulated as a business development
                                         company through the end of that year, computed net of all aggregate cumulative realized
                                         capital losses and aggregate cumulative unrealized depreciation through the end of such
                                         year, less the aggregate amount of any previously paid capital gain incentive fees. For
                                         the foregoing purpose, the Corporation’s “aggregate cumulative realized capital
                                         gains” will not include any unrealized appreciation. The Corporation will accrue
                                         an incentive fee for accounting purposes taking into account any unrealized appreciation
                                         in accordance with the Generally Accepted Accounting Principles (“GAAP”).
                                         The capital gains component of the incentive fee is not subject to any minimum return
                                         to shareholders. If that amount is negative, then no capital gains incentive fee will
                                         be payable for such year. If the Investment Advisory Agreement is terminated as of a
                                         date that is not a calendar year end, the termination date will be treated as though
                                         it were a calendar year end for purposes of calculating and paying the capital gains
                                         incentive fee.

 

    6

     

    

 

		6)	Indemnification.

 

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

 

		b)	The
                                         Corporation may make advance payments in connection with the expenses of defending any
                                         action with respect to which indemnification might be sought hereunder if the Corporation
                                         receives a written affirmation of the Indemnitee’s good faith belief that the standard
                                         of conduct necessary for indemnification has been met and a written undertaking to reimburse
                                         the Corporation unless it is subsequently determined that such Indemnitee is entitled
                                         to such indemnification and if the Directors of the Corporation determine that the facts
                                         then known to them would not preclude indemnification. In addition, at least one of the
                                         following conditions must be met: (i) the Indemnitee shall provide security for
                                         such undertaking; (ii) the Corporation shall be insured against losses arising by
                                         reason of any unlawful advance; or (iii) a majority of a quorum consisting of Directors
                                         of the Corporation who are neither “interested persons” of the Corporation
                                         (as defined in Section 2(a)(19) of the 1940 Act) nor parties to the proceeding (“Disinterested
                                         Non-Party Directors”) or an independent legal counsel in a writing, shall
                                         determine, based on a review of readily available facts (as opposed to a full trial-type
                                         inquiry), that there is reason to believe that the Indemnitee ultimately will be found
                                         entitled to indemnification.

 

    7

     

    

 

		c)	All
                                         determinations with respect to the standards for indemnification hereunder shall be made
                                         (i) by a final decision on the merits by a court or other body before whom the proceeding
                                         was brought that such Indemnitee is not liable or is not liable by reason of disabling
                                         conduct; or (ii) in the absence of such a decision, by (A) a majority vote
                                         of a quorum of the Disinterested Non-Party Directors of the Corporation or (B) if
                                         such a quorum is not obtainable or, even if obtainable, if a majority vote of such quorum
                                         so directs, independent legal counsel in a writing. All determinations that advance payments
                                         in connection with the expense of defending any proceeding shall be authorized and shall
                                         be made in accordance with the immediately preceding clause (ii) above.

 

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

 

		7)	Duration
                                         and Termination. This Agreement shall become effective as of the first date above
                                         written and, unless sooner terminated with respect to the Corporation as provided herein,
                                         shall continue in effect for a period of two years. Thereafter, if not terminated, this
                                         Agreement shall continue in effect with respect to the Corporation for successive annual
                                         periods, provided such continuance is specifically approved at least annually by both
                                         (a) the vote of a majority of the Corporation’s Board of Directors or the
                                         vote of a majority of the outstanding voting securities of the Corporation at the time
                                         outstanding and entitled to vote, and (b) by the vote of a majority of the Directors
                                         who are not parties to this Agreement or interested persons of any party to this Agreement,
                                         cast in person at a meeting called for the purpose of voting on such approval. Notwithstanding
                                         the foregoing, this Agreement may be terminated by the Corporation at any time, without
                                         the payment of any penalty, upon giving the Advisor not less than 60 days’ notice
                                         (which notice may be waived in whole or in part by the Advisor), provided that such termination
                                         by the Corporation shall be directed or approved by the vote of a majority of the Directors
                                         of the Corporation in office at the time or by the vote of the holders of a majority
                                         of the voting securities of the Corporation at the time outstanding and entitled to vote,
                                         or by the Advisor on not less than 60 days’ written notice (which notice may be
                                         waived in whole or in part by the Corporation). This Agreement will also immediately
                                         terminate in the event of its assignment. (As used in this Agreement, the terms “majority
                                         of the outstanding voting securities,” “interested person” and “assignment”
                                         shall have the same meanings of such terms in the 1940 Act and the regulations thereunder.)

 

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

 

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

 

		10)	Governing
                                         Law. This Agreement shall be governed by and construed in accordance with the laws
                                         of the State of Delaware for contracts to be performed entirely therein without reference
                                         to choice of law principles thereof and in accordance with the applicable provisions
                                         of the 1940 Act and the Advisers Act, and any rules and regulations promulgated thereunder.

 

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

 

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

 

    8

     

    

 

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

 

	 	PHAROS CAPITAL BDC, INC.
	 	 
	 	By:	 
	 	Name: 	Kneeland Youngblood
	 	Title:	Chairman and
    CEO
	 	 
	 	PHAROS CAPITAL GROUP, LLC
	 	 
	 	By:	 
	 	Name:	Kneeland Youngblood
	 	Title:	Chairman and
    Founding PartnerExhibit
10.2

 

FORM
OF ADMINISTRATION SERVICING AGREEMENT

 

THIS
AGREEMENT is made and entered into as of this 1st day of March, 2018, by and between PHAROS CAPITAL BDC, INC., a Maryland
corporation (the “Fund”), and U.S. BANCORP FUND SERVICES, LLC, a Wisconsin limited liability company (“USBFS”).

 

WHEREAS,
the Fund is a closed-end management investment company that has elected to be regulated as a business development company under
the Investment Company Act of 1940 (the “1940 Act”);

 

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

 

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

 

NOW,
THEREFORE, in consideration of the promises and mutual covenants herein contained, and other good and valuable consideration,
the receipt of which is hereby acknowledged, the parties hereto, intending to be legally bound, do hereby agree as follows:

 

		1.	Engagement
                                         of USBFS as Administrator

 

The
Fund hereby engages USBFS to act as administrator of the Fund on the terms and conditions set forth in this Agreement, and USBFS
hereby accepts such engagement and agrees to perform the services and duties set forth in this Agreement.

 

		2.	Services
                                         and Duties of USBFS

 

USBFS
shall provide the following fund administration services to the Fund:

 

		A.	General
Fund Management:

 

		(1)	Act
as liaison among all Fund service providers, including, but not limited to, custodians, transfer agents and dividend reinvestment
plan administrators.

 

		(2)	Coordinate
the Fund’s Board of Directors’ (the “Board of Directors” or the “Directors”) communication:

 

		a.	Print
                                         reports for the Board of Directors based on financial and administrative data provided
                                         by the Fund.

 

		b.	Prepare
                                         and distribute to appropriate parties notices announcing declaration of dividends and
                                         other distributions to shareholders.

 

		(3)	Audits:

 

		a.	Prepare
appropriate schedules and assist independent auditors.

 

		b.	Provide
office facilities, if necessary, in connection with such audits.

 

     

     

    

 

		(4)	Monitor
arrangements under shareholder services or similar plan.

 

		(5)	Monitor
and communicate activity under share repurchase or tender offer plans.

 

		B.	Compliance:

 

		(1)	Regulatory
and Internal Revenue Service (the “IRS”) Compliance:

 

		a.	Monitor
compliance with the 1940 Act requirements applicable to business development companies and the Fund’s status as a regulated
investment company under Subchapter M, including:

 

		(i)	Maintenance
of books and records under Rule 31a-3 of the 1940 Act.

 

		(ii)	IRC
Section 851 - 90% Qualifying income

 

		(iii)	IRC
Section 851 – Annual Distribution Requirement

 

		(iv)	IRC
Section 851 - Fund Diversification

 

		(v)	Section
12(d)(1)(A) of the 1940 Act - Diversification Requirement

 

		(vi)	Section
55(a) of the 1940 Act - 70% Eligible Assets Requirment

 

		(vii)	Section
18 of the 1940 Act, as modified by Section 61 of the 1940 Act – 200% Asset Coverage Requirement

 

		b.	Maintain
                                         awareness of applicable regulatory and operational service issues.

 

		(2)	SEC
Reporting:

 

		a.	Prepare
                                         financial statements for inclusion in Form 10-Q, Form 10-K and Form 8-K filings, as applicable.

 

		b.	Prepare
                                         and file fidelity bond under Rule 17g-1 of the 1940 Act.

 

		c.	Prepare
                                         and file reports and other documents required by U.S. stock exchanges on which the Fund’s
                                         shares are listed.

 

C. SEC
Inspections:

 

		(1)	Assist
                                         in producing materials requested by the SEC.

 

		(2)	Maintain
                                         records of all materials produced as requested by the SEC.

 

    2

     

    

 

D. Financial
Reporting:

 

		(1)	Provide
                                         financial data for inclusion in the prospectus (the “Prospectus”) included
                                         in the Fund’s registration statements filed under the Securities Act of 1933.

 

		(2)	Supervise
                                         the maintenance of the Fund’s general ledger and the preparation of the Fund’s
                                         financial statements, including oversight of expense payments, of the determination of
                                         net asset value of the Fund’s shares, and of the declaration and payment of dividends
                                         and other distributions to shareholders.

 

		(3)	Compute
                                         the total return and expense ratio of the Fund and the Fund’s portfolio turnover
                                         rate.

 

		(4)	Prepare
                                         quarterly and annual financial statements, which include without limitation the following
                                         items:

 

		a.	Schedule
of Investments.

 

		b.	Consolidated
Balance Sheet.

 

		c.	Statement
of Operations.

 

		d.	Statement
of Changes in Net Assets.

 

		e.	Statement
of Cash Flows.

 

		f.	Notes
to the quarterly and annual financial statements.

 

		(5)	Coordinate
certification requirements pursuant to the Sarbanes-Oxley Act of 2002 (the “SOX Act”).

 

		(6)	Compute
Total return calculations for market and net asset value.

 

		(7)	Assist
the Fund’s Chief Executive Officer and Chief Financial Officer in connection with establishing and maintaining internal
control over financial reporting (as defined in Rules 13a-15(f) and 15-d(f) under the Securities Exchange Act of 1934 (the “1934
Act”)) for the Fund.

 

		E.	Tax
Reporting:

 

		(1)	File
                                         Form 1099 Miscellaneous for payments to Directors and other service providers.

 

		(2)	Prepare
                                         tax schedules, which include without limitation the following items:

 

		a.	Fiscal
Distribution Schedule (including recorded ROSCOP journal entry to general ledger).

 

		b.	Excise
Distribution Schedule.

 

		3.	Compensation

 

USBFS
shall be compensated for providing the services set forth in this Agreement in accordance with the fee schedule set forth on Exhibit
A hereto (as amended from time to time). The Fund shall pay all fees and reimbursable expenses within thirty (30) calendar
days following receipt of the billing notice, except for any fee or expense subject to a good faith dispute. The Fund shall notify
USBFS in writing within thirty (30) calendar days following receipt of each invoice if the Fund is disputing any amounts in good
faith. The Fund shall settle such disputed amounts within ten (10) calendar days of the day on which the parties agree to the
amount to be paid.

 

    3

     

    

 

		4.	Representations
                                         and Warranties

 

		A.	The
                                         Fund hereby represents and warrants to USBFS, which representations and warranties shall
                                         be deemed to be continuing throughout the term of this Agreement, that:

 

		(1)	It
                                         is duly organized and existing under the laws of the jurisdiction of its organization,
                                         with full power to carry on its business as now conducted, to enter into this Agreement
                                         and to perform its respective obligations hereunder;

 

		(2)	This
                                         Agreement has been duly authorized, executed and delivered by the Fund in accordance
                                         with all requisite action and constitutes a valid and legally binding obligation of the
                                         Fund, enforceable in accordance with its terms, subject to bankruptcy, insolvency, reorganization,
                                         moratorium and other laws of general application affecting the rights and remedies of
                                         creditors and secured parties; and

 

		(3)	It
                                         is conducting its business in compliance in all material respects with all applicable
                                         laws and regulations, both state and federal, and has obtained all regulatory approvals
                                         necessary to carry on its business as now conducted; there is no statute, rule, regulation,
                                         order or judgment binding on it and no provision of its organizational documents or any
                                         contract binding it or affecting its property which would prohibit its execution or performance
                                         of this Agreement.

 

		B.	USBFS
                                         hereby represents and warrants to the Fund, which representations and warranties shall
                                         be deemed to be continuing throughout the term of this Agreement, that:

 

		(1)	It
                                         is duly organized and existing under the laws of the jurisdiction of its organization,
                                         with full power to carry on its business as now conducted, to enter into this Agreement
                                         and to perform its obligations hereunder;

 

		(2)	This
                                         Agreement has been duly authorized, executed and delivered by USBFS in accordance with
                                         all requisite action and constitutes a valid and legally binding obligation of USBFS,
                                         enforceable in accordance with its terms, subject to bankruptcy, insolvency, reorganization,
                                         moratorium and other laws of general application affecting the rights and remedies of
                                         creditors and secured parties; and

 

		(3)	It
                                         is conducting its business in compliance in all material respects with all applicable
                                         laws and regulations, both state and federal, and has obtained all regulatory approvals
                                         necessary to carry on its business as now conducted; there is no statute, rule, regulation,
                                         order or judgment binding on it and no provision of its organizational documents or any
                                         contract binding it or affecting its property which would prohibit its execution or performance
                                         of this Agreement.

 

    4

     

    

 

5.
Standard of Care; Indemnification; Limitation of Liability

 

		A.	USBFS
                                         shall exercise reasonable care in the performance of its duties under this Agreement.
                                         USBFS shall not be liable for any error of judgment or mistake of law or for any loss
                                         suffered by the Fund in connection with its duties under this Agreement, including losses
                                         resulting from mechanical breakdowns or the failure of communication or power supplies
                                         beyond USBFS’ control, except a loss arising out of or relating to USBFS’
                                         refusal or failure to comply with the terms of this Agreement or from its bad faith,
                                         gross negligence, or willful misconduct in the performance of its duties under this Agreement.
                                         Notwithstanding any other provision of this Agreement, if USBFS has exercised reasonable
                                         care in the performance of its duties under this Agreement, the Fund shall indemnify
                                         and hold harmless USBFS from and against any and all claims, demands, losses, expenses,
                                         and liabilities of any and every nature (including reasonable and documented attorneys’
                                         fees) that USBFS may sustain or incur or that may be asserted against USBFS by any person
                                         arising out of any action taken or omitted to be taken by it in performing the services
                                         hereunder (i) in accordance with the foregoing standards, or (ii) in reliance upon any
                                         written or oral instruction provided to USBFS by the Fund’s investment adviser
                                         or by any duly authorized officer of the the Fund, as approved by the Board of Directors
                                         of the Fund, except for any and all claims, demands, losses, expenses, and liabilities
                                         arising out of or relating to USBFS’ refusal or failure to comply with the terms
                                         of this Agreement or from its bad faith, gross negligence or willful misconduct in the
                                         performance of its duties under this Agreement. This indemnity shall be a continuing
                                         obligation of the the Fund, its successors and assigns, notwithstanding the termination
                                         of this Agreement. As used in this paragraph, the term “USBFS” shall include
                                         USBFS’ directors, officers and employees.

 

USBFS
shall indemnify and hold the Fund harmless from and against any and all claims, demands, losses, expenses, and liabilities of
any and every nature (including reasonable attorneys’ fees) that the Fund may sustain or incur or that may be asserted against
the Fund by any person arising out of any action taken or omitted to be taken by USBFS as a result of USBFS’ refusal or
failure to comply with the terms of this Agreement, or from its bad faith, gross negligence, or willful misconduct in the performance
of its duties under this Agreement. This indemnity shall be a continuing obligation of USBFS, its successors and assigns, notwithstanding
the termination of this Agreement. As used in this paragraph, the term the “Fund” shall include its directors, officers
and employees.

 

    5

     

    

 

Neither
party to this Agreement shall be liable to the other party for consequential, special or punitive damages under any provision
of this Agreement.

 

In
the event of a mechanical breakdown or failure of communication or power supplies beyond its control, USBFS shall take all reasonable
steps to minimize service interruptions for any period that such interruption continues. USBFS will make every reasonable effort
to restore any lost or damaged data and correct any errors resulting from such a breakdown at the expense of USBFS. USBFS agrees
that it shall, at all times, have reasonable contingency plans with appropriate parties, making reasonable provision for emergency
use of electrical data processing equipment to the extent appropriate equipment is available. Representatives of the Fund shall
be entitled to inspect USBFS’ premises and operating capabilities at any time during regular business hours of USBFS, upon
reasonable notice to USBFS. Moreover, USBFS shall obtain and provide the Fund, at such times as they may reasonably require, copies
of reports rendered by independent accountants on the internal controls and procedures of USBFS relating to the services provided
by USBFS under this Agreement.

 

Notwithstanding
the above, USBFS reserves the right to reprocess and correct administrative errors at its own expense.

 

		B.	In
                                         order that the indemnification provisions contained in this section shall apply, it is
                                         understood that if in any case the indemnitor may be asked to indemnify or hold the indemnitee
                                         harmless, the indemnitor shall be fully and promptly advised of all pertinent facts concerning
                                         the situation in question, and it is further understood that the indemnitee will use
                                         all reasonable care to notify the indemnitor promptly concerning any situation that presents
                                         or appears likely to present the probability of a claim for indemnification. The indemnitor
                                         shall have the option to defend the indemnitee against any claim that may be the subject
                                         of this indemnification. In the event that the indemnitor so elects, it will so notify
                                         the indemnitee and thereupon the indemnitor shall take over complete defense of the claim,
                                         and the indemnitee shall in such situation initiate no further legal or other expenses
                                         for which it shall seek indemnification under this section. The indemnitee shall in no
                                         case confess any claim or make any compromise in any case in which the indemnitor will
                                         be asked to indemnify the indemnitee except with the indemnitor’s prior written
                                         consent.

 

		C.	The
                                         indemnity and defense provisions set forth in this Section 5 shall indefinitely survive
                                         the termination and/or assignment of this Agreement.

 

		D.	If
                                         USBFS is acting in another capacity for the Fund pursuant to a separate agreement, nothing
                                         herein shall be deemed to relieve USBFS of any of its obligations in such other capacity.

 

    6

     

    

 

		6.	Proprietary
and Confidential Information

 

USBFS
agrees on behalf of itself and its directors, officers, and employees to treat confidentially and as proprietary information of
the Fund all records and other information relative to the Fund and prior, present, or potential shareholders of the Fund (and
clients of said shareholders) including all shareholder trading information, and not to use such records and information for any
purpose other than the performance of its responsibilities and duties hereunder, except after prior notification to and approval
in writing by the Fund, which approval shall not be unreasonably withheld and may not be withheld where USBFS may be exposed to
civil or criminal contempt proceedings for failure to comply, when requested to divulge such information by duly constituted authorities,
or when so requested by the Fund. USBFS acknowledges that it may come into possession of material nonpublic information with respect
to the Fund and confirms that it has in place effective procedures to prevent the use of such information in violation of applicable
insider trading laws.

 

Further,
USBFS will adhere to the privacy policies adopted by the Fund pursuant to Title V of the Gramm-Leach-Bliley Act, as may be
modified from time to time (the “Act”). Notwithstanding the foregoing, USBFS will not share any nonpublic personal
information concerning any of the Fund’s shareholders to any third party unless specifically directed by the Fund or allowed
under one of the exceptions noted under the Act.

 

		7.	Term
of Agreement; Amendment

 

This
Agreement shall become effective as of the date first written above and will continue in effect for a period of three (3) years.
However, this Agreement may be terminated by either party upon giving ninety (90) days prior written notice to the other party
or such shorter period as is mutually agreed upon by the parties. Notwithstanding the foregoing, this Agreement may be terminated
by any party upon the breach of the other party of any material term of this Agreement if such breach is not cured within fifteen
(15) days of notice of such breach to the breaching party. This Agreement may not be amended or modified in any manner except
by written agreement executed by the parties.

 

		8.	Records

 

USBFS
shall keep records relating to the services to be performed hereunder in the form and manner, and for such period, as it may deem
advisable and is agreeable to the Fund, but not inconsistent with the rules and regulations of appropriate government authorities,
in particular, Section 31 of the 1940 Act and the rules thereunder. USBFS agrees that all such records prepared or maintained
by USBFS relating to the services to be performed by USBFS hereunder are the property of the Fund and will be preserved, maintained,
and made available in accordance with such applicable sections and rules of the 1940 Act and will be promptly surrendered to the
Fund on and in accordance with its request. USBFS agrees to provide any records necessary to the Fund to comply with the Fund’s
disclosure controls and procedures and internal control over financial reporting adopted in accordance with the SOX Act. Without
limiting the generality of the foregoing, USBFS shall cooperate with the Fund and assist the Fund, as necessary, by providing
information to enable the appropriate officers of the Fund to (i) execute any required certifications and (ii) provide a report
of management on the Fund’s internal control over financial reporing (as defined in Sections 13a-15(f) or 15a-15(f) of the
1934 Act).

 

    7

     

    

 

		9.	Governing
Law

 

This
Agreement shall be construed in accordance with the laws of the State of New York, without regard to conflicts of law principles.
To the extent that the applicable laws of the State of New York, or any of the provisions herein, conflict with the applicable
provisions of the 1940 Act, the latter shall control, and nothing herein shall be construed in a manner inconsistent with the
1940 Act or any rule or order of the SEC thereunder.

 

		10.	Duties
in the Event of Termination

 

In
the event that, in connection with termination, a successor to any of USBFS’ duties or responsibilities hereunder is designated
by the Fund by written notice to USBFS, USBFS will promptly, upon such termination and at the expense of the Fund, transfer to
such successor all relevant books, records, correspondence, and other data established or maintained by USBFS under this Agreement
in a form reasonably acceptable to the Fund (if such form differs from the form in which USBFS has maintained the same, the Fund
shall pay any expenses associated with transferring the data to such form), and will cooperate in the transfer of such duties
and responsibilities, including provision for assistance from USBFS’ personnel in the establishment of books, records, and
other data by such successor. If no such successor is designated, then such books, records and other data shall be returned to
the Fund.

 

		11.	No
Agency Relationship

 

USBFS
shall for all purposes herein be deemed to be an independent contractor and shall, unless otherwise expressly provided or authorized
herein, have no authority to act for or represent the Fund in any way or otherwise be deemed an agent of the Fund, or conduct
business in the name, or for the account, of the Fund.

 

		12.	Data
Necessary to Perform Services

 

The
Fund or its agents shall furnish to USBFS the data necessary to perform the services described herein at such times and in such
form as mutually agreed upon. If USBFS is also acting in another capacity for the Fund, nothing herein shall be deemed to relieve
USBFS of any of its obligations in such capacity.

 

    8

     

    

 

		13.	Assignment

 

This
Agreement may not be assigned by either party without the prior written consent of the other party.

 

		14.	Compliance
with Laws

 

The
Fund has and retains primary responsibility for all compliance matters relating to the Fund, including but not limited to compliance
with the 1940 Act, the Internal Revenue Code of 1986, as amended, the SOX Act, the Uniting and Strengthening America by Providing
Appropriate Tools Required to Intercept and Obstruct Terrorism of 2001 and the policies and limitations of the Fund related to
its portfolio investments as set forth in its Prospectus. USBFS’ services hereunder shall not relieve the Fund of its responsibilities
for assuring such compliance or the Board of Directors’ oversight responsibility with respect thereto.

 

		15.	Legal-Related
Services

 

Nothing
in this Agreement shall be deemed to appoint USBFS and its officers, directors and employees as the Fund’ attorneys, form
attorney-client relationships or require the provision of legal advice. The Fund acknowledges that in-house USBFS attorneys exclusively
represent USBFS and rely on outside counsel retained by the Fund to review all services provided by in-house USBFS attorneys and
to provide independent judgment on the Fund’s behalf. Because no attorney-client relationship exists between in-house USBFS
attorneys and the Fund, any information provided to USBFS attorneys may not be privileged and may be subject to compulsory disclosure
under certain circumstances. USBFS represents that it will maintain the confidentiality of information disclosed to its in-house
attorneys on a best efforts basis.

 

		16.	Notices

 

Any
notice required or permitted to be given by either party to the other shall be in writing and shall be deemed to have been given
on the date delivered personally or by courier service, upon delivery after sent by registered or certified mail, postage prepaid,
return receipt requested, or on the date sent and confirmed received by facsimile transmission to the other party’s address
set forth below:

 

Notice
to USBFS shall be sent to:

 

U.S.
Bancorp Fund Services, LLC

777
East Wisconsin Avenue

MK-WI-J1S

Milwaukee,
WI 53202

 

and
notice to the Fund shall be sent to:

 

 

 

 

 

 

 

 

		17.	Entire
Agreement

 

This
Agreement constitutes the entire agreement of the parties with respect to the subject matter hereof and supersedes all prior agreements,
arrangements and understandings, whether written or oral.

 

    9

     

    

 

IN
WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by a duly authorized officer on one or more counterparts
as of the date first above written.

 

	PHAROS CAPITAL BDC, INC.	 	u.s. bancorp fund services, llc
	 	 	 	 	 
	By:	       	 	By:	         
	 	 	 	 	 
	Title: 	 	 	Title: 	 

 

    10

     

    

 

Exhibit
A

Fund
Administration & Fund Accounting Services Fee Schedule

 

Fund
Administration & Fund Accounting Fee Based Upon Gross Assets Per Fund*

 

6.0
basis points on the first $250 million

4.0
basis points on the next $250 million

3.0
basis points on the balance above $500 million

Minimum
annual fee: $60,000 per entity portfolio

 

NOTE:
Conversion, multiple classes, master/feeder and multiple manager funds, and extraordinary services quoted separately.

 

Miscellaneous
Expenses

 

All
other miscellaneous fees and expenses, including but not limited to the following, will be separately billed as incurred: brokerage
fees, telephone toll-free lines, inbound calls, mailing, sorting and postage, stationery, envelopes, service/data conversion,
AML verification services, programming and special reports, record retention, lost shareholder search, disaster recovery charges,
Fed wire charges, shareholder/dealer print out (daily confirms, investor confirms, tax, checks, and commissions), voice response
(VRU) maintenance and development, data communication and implementation charges, return mail processing, travel, FATCA and other
compliance mailings, security pricing services (ICD, Boomberg, LoanX, etc.), federal and state regulatory filing fees and expenses,
participation in client meetings, wash sales reporting (GainsKeeper), tax e-filing, and auditing and legal expenses.

 

In
addition to the fees described above, additional fees may be charged to the extent that changes to applicable laws, rules or regulations
require additional work or expenses related to services provided (e.g., compliance with new liquidity risk management and reporting
requirements).

 

*Subject
to annual CPI increase - All Urban Consumers - U.S. City Average.

Fees
are calculated pro rata and billed monthly.

 

 

11

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00293-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00293-of-00352.parquet"}]]