Document:

Exhibit
      10.2

    

    INVESTMENT
      ADVISORY MANAGEMENT AGREEMENT

    BETWEEN

    BLACKHAWK
      CAPITAL GROUP BDC, INC.

    AND

    BARAK
      ASSET MANAGEMENT, LLC

     

    Investment
      Advisory Management Agreement made this 31st
      day of
      October 2006, by and between BLACKHAWK CAPITAL GROUP BDC, INC., a Delaware
      corporation (the "Corporation"), and BARAK ASSET MANAGEMENT, LLC., a New York
      limited liability corporation (the "Adviser").

     

    WHEREAS,
      the Corporation is a business development company ("BDC") regulated under the
      Investment Company Act of 1940, as amended (the "Investment Company
      Act");

     

    WHEREAS,
      the Adviser is an investment adviser registered under the Investment Advisers
      Act of 1940, as amended (the "Advisers Act"); and

     

    WHEREAS,
      the Corporation desires to retain the Adviser to furnish investment services
      to
      the Corporation on the terms and conditions hereinafter set forth with respect
      to certain assets (the “Portfolio”), and the Adviser wishes to be retained to
      provide such services pursuant to and in compliance with the BDC provisions
      under the Investment Company Act, the other applicable provisions of the
      Investment Company Act and the Advisers Act.

     

    NOW,
      THEREFORE, in the consideration of the premises and for other good and valuable
      consideration, the parties hereby agree as follows:

     

    1.  Duties
      of the Adviser.
      

     

    
      	(a)  	
              The
                Corporation hereby employs the Adviser to act as an investment adviser
                to
                the Corporation, subject to the supervision of the Board of Directors
                of
                the Corporation, for the period and upon the terms herein set forth,
                (i)
                in accordance with the investment objectives, policies and restrictions
                that are set forth in the Corporation's Form 1-E and related Offering
                Circular, to be dated November __, 2006, to be filed with the Securities
                and Exchange Commission ("SEC"), and as the same shall be amended
                from
                time to time and provided to the Adviser (the "Blackhawk Investment
                Objectives and Policies"), (ii) in accordance with the Investment
                Company
                Act and (iii) during the term of this Agreement in accordance with
                all
                other applicable federal and state laws, rules and regulations, and
                [the
                Corporation's certificate of incorporation, as amended, and by-laws,
                in
                each case as provided to you from time to time]. 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
                of the Portfolio of the Corporation, the nature and timing of the
                changes
                therein and the manner of implementing such changes; (ii) identify,
                evaluate and negotiate the structure of investments made by the
                Corporation with respect to the Portfolio; (iii) close and monitor
                the
                Corporation's investments with respect to the Portfolio; (iv) determine
                the securities and other assets that the Corporation will purchase,
                retain, or sell in the Portfolio; (v) perform due diligence on prospective
                portfolio companies; and (vi) provide the Corporation with such other
                investment advisory, research and related services as the Corporation
                may,
                from time to time, reasonably require for the investment of the Portfolio.
                The Adviser acknowledges that it is one of the investment advisers
                retained or to be retained by the Corporation and that Adviser's
                retention
                by the Corporation is not exclusive. The Adviser shall have the power
                and
                authority on behalf of the Corporation to effectuate its investment
                decisions for the Corporation’s Portfolio, including the execution and
                delivery of all documents relating to the Corporation's investments
                within
                the Portfolio. In the event that the Corporation determines to acquire
                debt financing, the Adviser will arrange for such financing on the
                Corporation's behalf, subject to the oversight and approval of the
                Corporation's Board of Directors. Subject to the approval of the
                Board of
                Directors of the Corporation, if it is necessary for the Adviser
                to make
                investments on behalf of the Corporation through a special purpose
                vehicle, the Adviser shall have authority to create or arrange for
                the
                creation of such special purpose vehicle and to make such investments
                through such special purpose vehicle in accordance with the Investment
                Company Act. The Adviser shall invest and reinvest the assets in
                such
                stocks, bonds, or other property of any kind, as it deems in the
                best
                interest of the Corporation to achieve the investment objectives
                designated by the Corporation on the Corporation and consistent with
                the
                Blackhawk Investment Objectives and
                Policies.

            

    

     

    
      
        
        

      

      
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      	(b)  	
              Valuation
                of Account.
                The Adviser shall determine the fair market value of assets held
                in the
                Portfolio at least quarterly, based primarily on the periodic statements
                issued by the custodial broker dealer and other information supplied
                by
                the issuer(s) of the securities in the accounts in which the Portfolio
                is
                held. 

            

    

     

    
      	(c)  	
              Disbursement
                of Account.
                The Corporation may advise the Adviser that the Corporation intends
                to
                withdraw monies from its accounts on a regular basis as designated
                on the
                Client Instruction Form. If the Corporation elects to withdraw monies
                at
                any other time, the Corporation agrees to provide written notice
                to the
                Adviser pursuant to Section 11.

            

    

     

    
      	(d)  	
              Adviser
                Acceptance.
                The Adviser hereby accepts such engagement and agrees during the
                term
                hereof to render the services described herein for the compensation
                provided herein. 

            

    

     

    
      
        
        

      

      
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      	(e)  	
              Sub-Adviser.
                Subject to the requirements of the Investment Company Act and the
                approval
                of the Board of Directors of the Corporation, the Adviser is hereby
                authorized 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 Corporation's investment objective and policies set
                forth
                in the Blackhawk Investment Objectives and Policies, and work, along
                the
                Adviser, in structuring, negotiating, arranging or effecting the
                acquisition or disposition of such investments and monitoring investments
                on behalf of the Corporation, subject to the compensation payable
                to any
                Sub-Adviser. Any sub-advisory agreement entered in by the Adviser
                shall be
                in accordance with the requirements of the Investment Company Act
                and
                other applicable federal and state law and approved by the Corporation.
                

            

    

     

    
      	(f)  	
              Independent
                Contractor.
                The Adviser shall for all purposes herein provided be deemed to be
                an
                independent contractor and, expect 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)  	
              Books
                and Records.
                The Adviser shall keep and preserve for the period required by the
                Advisers Act any books and records relevant to the provision of its
                investments advisory services to the Corporation and shall specifically
                maintain all books and records 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 Board may reasonably request.
                The
                Adviser 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 Adviser may retain a copy of such
                records.

            

    

     

    2.  Corporation's
      Responsibilities and Expenses Payable by the Corporation.
      All
      investment professionals of the Adviser and its staff, when and to the extent
      engaged in providing investment advisory and management services hereunder,
      and
      the compensation and routine overhead expenses of such personnel allocable
      to
      such services, will be provided and paid for by the Adviser and not by the
      Corporation. The Corporation will bear all other costs and expenses of its
      operations and transactions, including (without limitation) those relating
      to:
      organization and offering; calculating the Corporation's net asset value
      (including the cost and expenses of any independent valuation firm); expenses
      incurred by the Adviser payable to third parties, including agents, consultants
      or other advisors, in monitoring financial and legal affairs for the Corporation
      and in monitoring the Corporation's investments and performing due diligence
      on
      its prospective portfolio companies; interest payable on debt, if any, incurred
      to finance the management fees; administration fees, if any; fees payable to
      third parties, including agents, consultants or other advisors, relating to,
      or
      associated with, evaluating and making investments; transfer agent and custodial
      fees; federal and state registration fees; if applicable, 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 or other documents required by the SEC; cost
      of
      any report, proxy statements or other notices to stockholders, including
      printing costs; 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, including
      printing, mailing, long distance telephone, copying, secretarial and other
      staff, independent auditors and outside legal costs; and all other expenses
      incurred by the Corporation in connection with administering the Corporation's
      business. 

     

    
      
        
        

      

      
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    3.  Accounts.
      The
      parties hereto agree as follows:

     

    
      	(a)  	
              Establishment
                of Accounts.
                The Adviser shall establish such accounts in the name of the Corporation
                with a custodian, as are necessary to account for the Portfolio’s assets
                and any additions, income, receipts and disbursements in connection
                therewith. The accounts will be established upon receipt of proper
                notice
                from the custodian that cash and securities are ready to be deposited
                by
                the Corporation in an account designated by the custodian as a custodial
                account to be managed by the Adviser and the duties of the Adviser
                shall
                commence upon receipt of such
                assets.

            

    

     

    
      	(b)  	
              Executive
                Services.
                The Corporation agrees that the Adviser shall have full authority
                and
                discretion to select any broker or dealer, including affiliates of
                the
                Adviser, to act as broker in effecting any transaction in respect
                of the
                account. If the Adviser’s affiliate acts as the broker-dealer, the
                affiliate shall charge a brokerage commission similar to the full
                service
                commission schedule as published and in effect. If the affiliated
                broker-dealer executes transactions for this account as principal
                any
                mark-up or markdown will be in accordance with the NASD Rules of
                Fair
                Practice. These commissions shall be in addition to the advisory
                fees
                charged by the Adviser pursuant to this Agreement. The Adviser shall
                instruct the carrying brokerage firm to forward to the Corporation
                and to
                any designated interested parties copies of all brokerage confirmations
                promptly after execution of
                transactions.

            

    

     

    
      	(c)  	
              Custodian
                Services.
                The Adviser shall not act as custodian for the account or take or
                have
                possession of any assets of the Corporation. The custodian for the
                account
                may be a brokerage firm designated by the Adviser or a third party
                selected by the Corporation.

            

    

     

    4.  Compensation
      of the Adviser.
      The
      Corporation agrees to pay, and the Adviser agrees to accept, as a compensation
      for the services provided by the Adviser hereunder, a base management fee ("Base
      Management Fee") as hereinafter-set forth in Exhibit
      1 Investment Advisory Fee Schedule,
      attached hereto. 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, including, without limitation, the BDC
      provisions of the Investment Company Act, subject to the written agreement
      between the Corporation and the Adviser, the Adviser may elect or the
      Corporation may adopt a deferred compensation plan pursuant to which the Adviser
      may elect to defer all or a portion of its fees hereunder for a specified period
      of time. Until paid, the fees and expenses of the Adviser shall constitute
      a
      lien upon the assets of the Portfolio’s accounts.

     

    
      
        
        

      

      
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    5.  Covenants
      of the Adviser.
      The
      Adviser covenants that it is registered as an investment adviser under the
      Advisers Act. The Adviser agrees that its activities will at all times be in
      compliance in all material respects with all applicable federal and state laws
      governing its operations and investments. The Adviser further covenants that
      it
      will strictly comply with the BDC provisions of the Investment Company Act.
      

     

    6.  Excess
      Brokerage Commissions.
      The
      Adviser is hereby authorized, in its absolute discretion, to the fullest extent
      now or hereafter permitted by law, to cause the Corporation 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 of
      another member of such exchange, broker or dealer (hereinafter the firm) would
      have charged for effecting that transaction, if the Adviser determines in her
      sole discretion that taking into account such factors as 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 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 Corporation's
      portfolio, and in the Adviser’s sole discretion, constitutes the best net
      results for the Corporation and is fair and in the best interests of the
      Corporation. 

     

    7.  Limitations
      of the Employment of the Adviser.
      The
      services of the Adviser to the Corporation are not exclusive, and the Adviser
      may engage in any other business or render similar or different services to
      others including, without limitation, the direct and indirect sponsorship or
      management of other investment based accounts or commingled pools of capital,
      however structured, so long as its services to the Corporation hereunder are
      not
      impaired thereby. Nothing in this Agreement shall limit or restrict the right
      of
      any manager, partner, member, officer or employee of the Adviser to engage
      on
      any other business or to devote his or her time and attention in part to any
      other business, whether or 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
      Corporation's portfolio companies, subject to the applicable law). The Adviser
      assumes no responsibility under this Agreement other than to render the services
      called for hereunder. 

     

    
      
        
        

      

      
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    8.  Limitation
      of Liability of the Adviser; Indemnification.
      The
      Adviser (and its officers, managers, members, partners, agents, employees,
      controlling persons, members and any other person or entity affiliated with
      the
      Adviser), shall not be liable to the Corporation for any action taken or omitted
      to the 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 Corporation, except to the extent specified in Section 36(b) of the
      Investment Company 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 Corporation shall indemnify,
      defend and protect the Adviser (and its officers, managers, partners, agents,
      employees, 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, cost and expenses (including
      reasonable attorney's 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 Corporation or its security holders) arising
      out of or otherwise based upon the performance of the Adviser's duties or
      obligations under this Agreement or otherwise as an investment adviser of the
      Corporation. Notwithstanding the preceding sentence of this Section 8 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 Corporation
      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 reckless disregard of the
      Adviser's duties and obligations under this Agreement (as the same shall be
      determined in accordance with the Investment Company Act and interpretive of
      guidance by the SEC or its staff thereunder). The corporation’s obligation to
      defend shall not be affected by an allegation of willful misfeasance, bad faith
      or reckless disregard, unless and until such allegations have been reduced
      to a
      final judgment by a court of competent jurisdiction form which no appeal has
      been timely taken..

     

    9.  Representations
      by Corporation.
      The
      Corporation represents that the terms hereof do not violate any obligation
      by
      which the Corporation is bound, whether arising by contract, operation of law
      or
      otherwise, and that, if required (i) this contract has been duly authorized
      by
      appropriate action and is binding upon the Corporation in accordance with its
      terms, and (ii) the Corporation will deliver to the Adviser such evidence of
      such authority as it may reasonably require, whether by way of a certified
      resolution, trust agreement, or otherwise. 

     

    10.  Effectiveness,
      Duration and Termination of Agreement.
      

     

    
      	(a)  	
              This
                Agreement shall become effective as if the first date above written.
                This
                Agreement shall remain in effect for one year, and thereafter shall
                continue automatically for successive annual periods, provided that
                such
                continuance is specifically approved at least annually by (a) the
                vote of
                the Corporation's Board of Directors, or by the vote of a majority
                of the
                outstanding voting securities of the Corporation and (b) the vote
                of a
                majority of the Corporation's directors who are independent directors,
                are
                not interested parties of 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; provided
                that the failure of such bodies to so approve such continuation shall
                be
                promptly communicated to the Adviser. This Agreement may be terminated
                at
                any time, without the payment of any penalty, upon 60 days' written
                notice, by the vote of a majority of the outstanding voting securities
                of
                the Corporation, or by the vote of the Corporation's Board of Directors
                or
                by the Adviser. This Agreement will automatically terminate in the
                event
                of its "assignment" (as such term is defined for purposes of Section
                15(a)(4) of the Investment Company Act). The provisions of Section
                8 of
                this Agreement 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 under Section 4 through the date of termination
                or
                expiration and Section 8 shall continue in force and effect and apply
                to
                the Adviser and it representatives as and to the extent
                applicable.

            

    

     

    
      
        
        

      

      
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      	(b)  	
              Upon
                termination, the Adviser will liquidate the Portfolio unless the
                Corporation provides written instructions to the contrary. The Adviser
                agrees to use its commercially reasonable efforts to liquidate the
                Portfolio (i) upon receipt of proper written notice on the business
                day on
                which such termination shall become effective, if such notice is
                received
                on or before 12:00 noon and (ii) as of the following business day,
                if such
                notice is received after 12:00 noon.

            

    

     

    
      	(c)  	
              Termination
                of this Agreement shall not affect any liability resulting from sales
                or
                exchanges initiated prior to written notice of such revocation or
                resulting from the winding down and liquidation of the accounts.
                

            

    

     

    
      	(d)  	
              Upon
                termination, the Corporation shall receive a refund of the portion
                of the
                prepaid management fee, if any, which is not utilized.
                

            

    

     

    
      	(e)  	
              The
                Adviser will not accept instructions to terminate this Agreement
                unless
                the Corporation provides written notice
                thereof.

            

    

     

    11.  Notice.
      All
      written notices required hereunder shall be deemed effective when received
      by
      the Adviser at its office at 1230 Avenue of the Americas, 7th Floor, New York,
      New York 10020 or by fax at 646-756-2999 or by the Corporation at the address
      shown on the Client Instruction Form. Each party shall be entitled to presume
      the correctness of such addresses until notified in writing to the contrary.
      Receipt of a telegram or facsimile transmission by either party will constitute
      receipt of proper written notice hereunder. The Corporation agrees to indemnify
      and hold harmless the Adviser against claims, losses, expenses, or damages,
      including reasonable fees of investigation and counsel, in connection with
      any
      action taken by the Adviser upon receipt of a telegram or facsimile transmission
      in Corporation's name.

     

    
      
        
        

      

      
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    12.  Disclosure/Acknowledgement
      of Receipt of Form ADV Part II.
      By
      execution of this Agreement, the Corporation hereby acknowledges that the
      Adviser has informed the Corporation of the following: the Adviser is an
      Investment Adviser registered with the SEC; the Corporation has received and
      had
      an opportunity to read the Adviser’s Form ADV Part II, as required by Rule 204-3
      of the Advisers Act. 

     

    13.  Amendments.
      This
      Agreement may be amended by mutual written consent, but the consent of the
      Corporation must be obtained in conformity with the requirements of the
      Investment Company Act.

     

    14.  Assignment.
      This
      Agreement may not be assigned by either party except with the written consent
      of
      the other party.

     

    15.  Severability.
      It is
      understood by the parties hereto that if any term, provision, duty obligation,
      or undertaking herein contained is held by the courts to be unenforceable or
      illegal or in conflict with the applicable state law, the validity of the
      remaining portions shall not be affected, and the rights and obligation of
      the
      parties shall be construed and enforced as if such invalid or unenforceable
      provision was not contained herein unless in so doing the consideration for
      services to be rendered herein is reduced or the responsibilities are increased
      by the deletion involved. 

     

    16.  Entire
      Agreement; Governing Law.
      This
      Agreement contains the entire agreement of the parties and supersedes all prior
      agreements, understandings and arrangements with respect to the subject matter
      hereof. This Agreement shall be construed and interpreted in accordance with
      the
      laws of the State of New York. This Agreement is also intended to conform to
      the
      requirements of the Employee Retirement Income Security Act of 1974 when
      applicable and shall in all events be construed and interpreted in accordance
      therewith. To the extent any of the provisions herein conflict with the
      provisions of the Investment Company Act, the latter shall control.

     

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

     

    
      	 	 	 
	 	
              BLACKHAWK
                CAPITAL GROUP BDC, INC.

            
	 
 	 
 	 
 
	
            	By:  	/s/
              Craig A. Zabala
	 	
              

              Name: Dr.
                Craig A. Zabala

              Title: President
                and Chief Executive Officer

            

    

    
       

      
        	 	 	 
	 	
                BARAK
                  ASSET MANAGEMENT, LLC

              
	 
 	 
 	 
 
	
              	By:  	/s/
                Sharon D. Highland
	 	
                

                
                  Name: Sharon
                    D. Highland

                  Title: President

                

              

      

       

      
        
          
          

        

        
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    EXHIBIT
      1

     

    INVESTMENT
      ADVISORY FEE SCHEDULE

     

    INVESTMENT
      ADVISORY FEES:

     

    The
      Adviser shall receive fees calculated based upon the average cash value of
      assets at the end of each quarter including the value of any withdrawals from
      the assets made during that quarter:

     

    (1) Equities
      including common stocks, convertible preferred and convertible
      bonds:

    

    1.8%
      or
      180 basis points on assets equal to $50,000 to $200,000

    1.55%
      or
      155 basis points on assets equal to $200,001 to 500,000

    1.20%
      or
      120 basis points on assets equal to $500,001 to $1,500,000

    0.95%
      or
      95 basis points on assets equal to $1,500,001 to $3,500,000

    0.70%
      or
      70 basis points on assets equal to $3,500,001 to $7,500,000

    0.55%
      or
      55 basis points on assets equal to or greater than $7,500,001

    

    (2) Bonds
      including taxable or tax-exempt (municipal bonds):

    

    0.50%
      or
      50 basis points on assets equal to $50,000 to $200,000

    0.40%
      or
      40 basis points on assets equal to $200,001 to $500,000

    0.30%
      or
      30 basis points on assets equal to $500,001 to $1,500,000

    0.20%
      or
      20 basis points on assets greater than or equal to $1,500,001

    

    (3) Open-end,
      closed-end, and Exchange Traded Funds

    

    1.75%
      or
      175 basis points on assets equal to $50,000 to $200,000

    1.50%
      or
      150 basis points on assets equal to $200,001 to 500,000

    1.25%
      or
      125 basis points on assets equal to $500,001 to $1,500,000

    1.00%
      or
      100 basis points on assets equal to $1,500,001 to $3,500,000

    0.75%
      or
      75 basis points on assets equal to $3,500,001 to $7,500,000

    0.50%
      or
      50 basis points on assets equal to or greater than $7,500,001 

    

    Any
      fees
      and expenses charged by any fund pursuant to their prospectuses are in addition
      to the Adviser’s investment advisory fee and shall treated as an expense against
      the value of assets in the calculation of the Adviser’s fee. Brokerage
      commissions are to be paid in addition to investment advisory services.

     

    If
      any of
      the above listed securities do not trade on any exchange, NASD, OTC Bulletin
      Board or Pink Sheets, the following shall apply as to how to value such
      securities: Securities will be valued at cost according to generally accepted
      accounting principals (GAAP).

     

    
      
        
        

      

      
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    PAYMENT
      OF FEES:

     

    Investment
      Advisory Fees shall be billed and payable quarterly (or a prorated period,
      when
      applicable).

     

    Fee
      amounts shall be debited from the Corporation's accounts on the date on which
      the Adviser dispatches a Quarterly Statement setting forth the basis for these
      charges.

     

    Upon
      termination and liquidation the Adviser shall calculate the fee based upon
      the
      cash value of assets realized and the fee earned will be prorated based on
      the
      time elapsed since the prior quarterly fee payment through that liquidation
      of
      the accounts is complete or the accounts or assets are transferred to the
      Corporation's control or to another manager.

     

    
      
        
        

      

      
        11Exhibit
      10.3

     

    

     

    
      527
        Madison Avenue

      15th
        Floor

      New
        York,
        NY 10022

      Telephone:
        (212) 508-4021

      Fax:
        (212) 593-6150

       

    

    CONFIDENTIAL

    

    October
      31, 2006

    

    Dr.
      Craig
      A Zabala

    Chairman
      of the Board, President & Chief Executive Officer

    Blackhawk
      Capital Group BDC, Inc.

    14
      Wall
      Street

    New
      York,
      NY 10005

    

    Dear
      Dr.
      Zabala,

    

    This
      letter (the “Agreement”) will confirm the engagement of Sanders Morris Harris
      Inc., a Texas corporation (“SMH”), by Blackhawk
      Capital Group BDC, Inc., a Delaware corporation and a business development
      company registered under the Investment Company Act of 1940, as amended
(the
      “Company”), as financial adviser and placement agent in connection with the
      Company’s proposed Private Placement of a maximum $5 million in common stock
      (“Securities”) to accredited investors (the “Offering”). There will be a minimum
      of $3.5 million in Securities to be raised in the Offering. Included in both
      amounts will be $100,000 in Blackhawk debt to be converted by The Concorde
      Group, Inc. into 100,000 shares of Blackhawk common stock. 

    

    
      	1.  	
              Scope
                of SMH’s Services.
                SMH will assist the Company in placing the Securities with terms
                substantially like those described in the Term Sheet (Exhibit A).
                To that
                extent, SMH will distribute Offering Materials (as hereinafter defined)
                to
                potential investors, report the status of the Offering to the Company,
                and
                assist in consummating the Offering, including, but not limited
                to:

            

    

     

    
      
        	a.  	
                familiarizing
                  itself to the extent it deems appropriate and feasible with the
                  business
                  operations, properties, financial condition, and prospects of the
                  Company,

              

      

    

     

    
      
        
        

      

      
        1

        
          

        

      

      
        
        

      

    

    

    
      	b.  	
              assisting
                the Company in preparing Offering Materials for distribution by SMH
                to
                potential investors selected by SMH and the
                Company,

            

    

    

    
      	c.  	
              screening
                and contacting prospective
                investors,

            

    

    

    
      	d.  	
              assisting
                in negotiations with prospective investors,
                and

            

    

    

    
      	e.  	
              advising
                and assisting the Company in structuring and pricing the
                Offering.

            

    

    

    The
      Offering will be conducted pursuant to the terms and conditions of a customary
      placement agent agreement acceptable to SMH, the Company and their respective
      counsel. The Company shall retain control of the Offering and shall have the
      right to determine (a) whether to close the sale of the Securities to a specific
      investor, (b) whether to close or terminate the Offering, and (c) the content
      of
      the Offering Materials. It is understood by both parties that SMH intends to
      solicit interest from a limited number of potential investors and on a
“best-efforts” only basis. SMH will, in its sole discretion, determine the
      reasonableness of its efforts and is under no obligation to perform at any
      level
      other than what it deems reasonable.

    

    
      	2.  	
              Fees
                and Exclusivity.
                In
                return for SMH’s services in the placement of Securities, the Company will
                pay SMH a cash fee equal to 9.00% of
                the gross proceeds of any Securities placed by SMH (consisting of
                a 2.0%
                advisory fee and 7.00% placement agent
                fee).

            

    

    

    Any
      fee
      contemplated in the above sentence herein will be referred to as the “Financing
      Fees”. Any Financing Fees payable to SMH will be due at the closing date of the
      Offering and shall be payable to SMH by the Company. 

    

    Upon
      the
      closing of the Offering, SMH shall act as exclusive placement agent for the
      Company during the remainder of the term and Residual Period (if the Company
      and
      SMH have agreed on a Residual Period) (as described in Section 4), and during
      this period SMH shall receive the fees set forth in this Section 2 if securities
      are sold by the Company through a private placement to investors contacted
      by
      SMH. 

    

    
      	3.  	
              Expenses.
                In
                addition to the foregoing, the Company will, upon request, reimburse
                SMH
                for all reasonable out of pocket costs and expenses incurred by SMH
                in
                performing its obligations under this Agreement, which costs and
                expenses
                shall include, but not be limited to, travel expenses, expenses incurred
                in performing due diligence in connection with transactions, legal
                expenses, and all other expenses reasonably incurred by SMH in performing
                its obligations under this Agreement; provided, however, that SMH
                shall
                obtain the prior approval of the Company for any single expenditure
                in
                excess of $10,000. In seeking reimbursement for expenses, SMH shall
                provide to the Company a written statement or statements detailing
                expenses for which reimbursement is sought and, upon request by the
                Company, shall provide copies of invoices and other documentation
                supporting such expenses. Reimbursable expenses shall be payable
                by the
                Company within 10 days of receipt by the Company of such written
                statement
                or, if requested by the Company, copies of supporting
                documentation.

            

    

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

    
 

    
      	4.  	
              Term.
                The term of this Agreement shall begin on the date hereof and shall
                terminate 12 months thereafter. At the end of the 12 months, SMH
                and the
                Company may agree in writing to extend the 12 month period on an
                annual
                basis ("Residual Period"). SMH reserves the right to terminate its
                engagement on 30 days notice in writing during the initial 12 months
                and
                Residual Period, but will not terminate its engagement if such termination
                would jeopardize the closing of the
                Offering.

            

    

    

    
      	5.  	
              Company
                Information.
                The Company will furnish SMH such information concerning the Company
                as
                SMH reasonable determines to be appropriate with respect to the Offering
                (“Information”). The Company shall afford SMH and its counsel and
                representatives full and complete access to its books and records
                and will
                use commercially reasonable efforts to afford SMH will full and complete
                cooperation of management to gather the Information. The Company
                recognizes and confirms that SMH (a) will use and rely on the Information
                in performing the services contemplated by this Agreement, without
                independently verifying the accuracy and completeness of the same,
                (b)
                does not assume responsibility for the accuracy or completeness of
                the
                Information, and (c) will not make an appraisal of any assets or
                liability
                of the Company.

            

    

    

    The
      Company hereby represents to SMH that all solicitation materials prepared by
      the
      Company and used in connection with the Offering (the “Offering Materials”) will
      not, as of the date of any offer or sale in connection with the Offering,
      contain any untrue statement of a material fact or omit a material fact
      necessary to make the statements contained therein, not misleading, in light
      of
      the circumstances under which they were made. If at any time an event occurs
      as
      a result of which the Offering Materials, as then amended or supplemented,
      would
      include an untrue statement of a material fact or omit to state any material
      fact necessary to make the statements therein, in light of the circumstances
      under which they were made when such Offering Materials are delivered to a
      prospective purchaser pursuant hereto, not misleading, the Company will promptly
      notify SMH to suspend solicitation of prospective purchasers in connection
      with
      the Offering; and if the Company decides to amend or supplement the Offering
      Materials, it will promptly advise SMH by telephone (with confirmation in
      writing) and will promptly prepare an amendment or supplement that will correct
      such statement or omission.

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

    SMH
      will
      not violate, or cause the Company to violate, any applicable federal and state
      securities laws in connection with the Offering.

    

    
      	6.  	
              Confidentiality.
                In
                connection with this engagement, it is contemplated that SMH will
                receive
                from the Company certain information (including certain business
                planning,
                product, marketing, technical, financial, and other information and
                materials) the Company considers confidential. SMH shall use this
                confidential information solely for the purpose of providing services
                to
                the Company and will not disclose to any party (other than SMH’s officers,
                directors, employees, affiliates, and counsel who have a need to
                know such
                information, herein “Representatives”) any such confidential information,
                except with the prior written approval of the Company; provided,
                however,
                that the foregoing restrictions shall not apply to any information
                that:
                (a) is included in the Offering Materials and disclosed pursuant
                to the
                distribution of the Offering Materials as permitted by the Company,
                (b)
                the Company consents to having disclosed in connection with the Offering,
                (c) is publicly available when provided or thereafter becomes publicly
                available other than through disclosure by SMH or its Representatives,
                or
                (d) is required to be disclosed by SMH by judicial or administrative
                process in connection with any action, suit, proceeding, or investigation;
                and provided, further, however, that SMH shall give the Company notice
                of
                any such requirement immediately upon the becoming aware of same
                and shall
                not disclose such information except only to the extent required
                after the
                maximum time permitted. Information shall be deemed “publicly available”
                if it becomes a matter of public knowledge or is contained in materials
                available to the public or is obtained by SMH from any source other
                than
                the Company or its representatives, provided that such source was
                not to
                SMH’s actual knowledge subject to a confidentiality agreement with the
                Company. SMH will take reasonable steps to assure that the Offering
                Materials are not distributed to any persons not permitted to receive
                them
                pursuant to the terms hereof. Prospective investors in the Offering
                must
                execute a confidentiality agreement before being provided Offering
                materials. 

            

    

    

    
      	7.  	
              Indemnification.
                The Company acknowledges that SMH will be acting on behalf of the
                Company
                and will require indemnification by the Company. The Company further
                acknowledges that SMH’s indemnification provisions attached hereto as
                Exhibit B are incorporated by reference herein or are made a part
                hereof
                for all purposes as though set forth entirely
                herein.

            

    

    

    
      	8.  	
              Miscellaneous.
                The Offering will be completed in accordance with Regulation E under
                the
                Securities Act of 1933, as amended, which is the private placement
                offering exemption applicable to business development companies registered
                under the Investment Company Act of 1940, as amended ("Investment
                Company
                Act"), and all applicable state or other jurisdictional securities
                laws
                (i.e. “blue sky” laws). All investors in the Transaction will be persons
                who qualify as accredited investors under all applicable federal
                and state
                securities laws.

            

    

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

    The
      Company shall have the right to identify investors with which it has
      affiliations who would be suitable accredited investors for the Offering
      ("Company-Introduced Investors"), and introduce these investors to SMH for
      the
      Offering. In the event that SMH and the Company decide that these investors
      are
      suitable for the Offering and purchase Securities in the Offering, fees shall
      be
      due to SMH respecting Securities purchased by Company-Introduced Investors
      pursuant to Section 2 above. I 

    

    The
      parties agree that their relationship under this Agreement is an advisory
      relationship only, and nothing herein shall cause SMH to be partners, agents
      or
      fiduciaries of, or joint venture partners with, the Company or with each
      other.

    

    The
      Company agrees that, following the closing of the Offering, SMH shall have
      the
      right to place advertisements in financial and other newspapers and journals
      at
      its own expense describing its services to the Company hereunder, provided
      that
      SMH will submit a copy of any such advertisement to the Company for its
      approval, which approval shall not be unreasonably withheld or delayed. In
      addition, before SMH provides the offering circular and offering documents
      to a
      prospective investor, it will have the investor execute a confidentiality
      agreement.

    

    This
      Agreement may not be amended or modified except in writing and shall be governed
      by, and construed in accordance with the laws of the State of New
      York.

    

    If
      this
      Agreement reflects our mutual understanding, please execute two copies in the
      space indicated below and return one to us. 

    

    Very
      truly yours,

    

    SANDERS
      MORRIS HARRIS INC.

    

    /s/
      Richard J. Kelly

    
      
        
          

        

      

    

    Richard
      J. Kelly

    Managing
      Director—Financial Services

     

    Accepted
      and agreed to as of October  31,
      2006:

    

    BLACKHAWK
      CAPITAL GROUP BDC, INC.

    

    /s/
      Craig
      A. Zabala 

    
      
Dr.
      Craig A Zabala

    Chairman
      of the Board, President & Chief Executive Officer

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

    Exhibit
      A

     

    Blackhawk
      Capital Group BDC, Inc.

    $5.0
      Million Private Equity Placement

    October
      25, 2006

    

    
      	
              Issuer

            	 	
              Blackhawk
                Capital Group BDC, Inc. (the “Company”).

            
	 	 	 
	
              Use
                of Proceeds

            	 	
              General
                corporate purposes and potential acquisitions of similar companies
                in the
                United States.

            
	 	 	 
	
              Amount

            	 	
              $5,000,000
                (Minimum at $3,500,000)

            
	 	 	 
	
              Securities

            	 	
              5,000,000
                shares of common stock (minimum at 3,500,000 shares) of the Company
                (the
                “Securities”), which will be unregistered upon issuance but will be
                subsequently registered by the Company.

            
	 	 	 
	
              Purchase
                Price

            	 	
              The
                purchase price of the Securities per share will be
                $1.00.

            
	 	 	 
	
              Funding
                / Registration

            	 	
              Upon
                execution of purchase agreements and related documentation, the Investors
                will fund into escrow. Share certificates will be subsequently delivered
                to the Investors; however the Securities would not yet be registered.
                The
                Company will commit to file a registration statement for the Securities
                with the SEC within 90 days of the closing.

            
	 	 	 
	
              Exclusive
                Placement Agent

            	 	
              Sanders
                Morris Harris, Inc. (“SMH”).

            
	 	 	 
	
              Plan
                of Distribution

            	 	
              SMH
                will market the Securities into both the institutional investment
                community as well as high net-worth accredited investors. In addition,
                SMH
                will market the Securities within its own managed investment management
                operations.

            

    

    

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

     

    Exhibit
      B

    

    Indemnification

    

    Blackhawk
      Capital Group BDC, Inc., a Delaware corporation
      (the “Company”) agrees to indemnify and hold harmless Sanders Morris Harris
      Inc., a Texas corporation (“SMH”), together with its affiliates, directors,
      officers, agents, and employees (SMH and each such entity or person, an
“Indemnified Person”), from and against any and all losses, claims, damages,
      judgments, and liabilities, expenses, or costs (and all actions in respect
      thereof and any legal or other expenses in giving testimony or furnishing
      documents in response to a subpoena or otherwise), including the cost of
      investigating, preparing for, or defending any such action or claim, whether
      or
      not in connection with litigation in which an Indemnified Person is a party,
      as
      and when incurred, directly or indirectly caused by, relating to, based upon,
      or
      arising out of SMH’s performance of its engagement by the Company under the
      letter agreement dated as of October 25, 2006, as it may be amended from time
      to
      time (the “Agreement”), or otherwise arising out of or in connection with advice
      or services provided or to be provided by Indemnified Persons pursuant to the
      Agreement, the transactions contemplated thereby, or any Indemnified Person’s
      actions or inactions in connection with any such advice, services, or
      transactions, including any indemnified person’s sole or contributory
      negligence, if such activities were performed (i) in good faith and (ii) in
      such
      manner reasonably believed by such Indemnified Person to be within the scope
      of
      the authority conferred by the Agreement or by law and to be on behalf of the
      Company or in furtherance of the performance of SMH’s services under the
      Agreement; provided, however, such indemnity agreement shall not apply to any
      such loss, claim, damage, liability, or cost incurred by any Indemnified Person
      to the extent it is found in a final judgment by a court of competent
      jurisdiction (not subject to further appeal) to have resulted primarily and
      directly from the gross negligence or willful misconduct or bad faith of such
      Indemnified Person. The Company also agrees that no Indemnified Person shall
      have any liability (whether direct or indirect, in contract or tort or
      otherwise) to the Company for or in connection with the any advice or services
      provided by any Indemnified Persons in connection with the Agreement, the
      transactions contemplated by the Agreement, or any Indemnified Persons’ actions
      or inactions in connection with any such advice, services, or transactions
      except for any such liability for losses, claims, damages, liabilities, or
      costs
      found in a final judgment by a court of competent jurisdiction (not subject
      to
      further appeal) to have resulted primarily and directly from such Indemnified
      Person’s gross negligence or willful misconduct or bad faith in connection with
      such advice, actions, inactions, or services.

    

    These
      Indemnification Provisions shall be in addition to any liability that the
      Company may otherwise have to any Indemnified Person and shall extend to the
      following: SMH, its affiliated entities, directors, officers, employees, agents,
      legal counsel and controlling persons of SMH within the meaning of the federal
      securities laws, and the respective successors, assigns, heirs, beneficiaries,
      and legal representatives of each of the foregoing indemnified persons or
      entities. All references to SMH or Indemnified Persons in these Indemnification
      Provisions shall be understood to include any and all of the foregoing
      indemnified persons or entities.

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

     

    If
      any
      action, proceeding, or investigation is commenced, as to which an Indemnified
      Person proposes to demand such indemnification, it will notify the Company
      with
      reasonable promptness; provided, however, that any failure by an Indemnified
      Person to notify the Company will not relieve the Company from its obligations
      hereunder except if and only to the extent that the Company’s defense of such
      action, proceeding or investigation is actually prejudiced by the Indemnified
      Person’s failure so to notify the Company. SMH will have the right to retain
      counsel of its own choice to represent it; however, such firm shall be
      acceptable to the Company, which acceptance shall not be unreasonably withheld,
      and unless the Company assumes SMH’s defense as provided below, the Company will
      pay the reasonable fees and expenses of such counsel, and such counsel shall
      to
      the fullest extent consistent with its professional responsibilities cooperate
      with the Company and any counsel designated by it. The Company will be entitled
      to participate at its own expense in the defense, or if it so elects, to assume
      and control the defense of any action, proceeding, or investigation, but, if
      the
      Company elects to assume the defense, such defense shall be conducted by counsel
      reasonably acceptable to SMH. Any Indemnified Person may retain additional
      counsel of its own choice to represent it but shall bear the fees and expenses
      of such counsel unless the Company shall have specifically authorized the
      retaining of such counsel. The Company will not be liable for any settlement
      of
      any claim against an Indemnified Person made without its written consent.

    

    In
      order
      to provide for just and equitable contribution, if a claim for indemnification
      pursuant to these Indemnification Provisions is made but it is found in a final
      judgment by a court of competent jurisdiction (not subject to further appeal)
      that such indemnification may not be enforced in such case, even though the
      express provisions hereof provide for indemnification in such case, then the
      Company, on the one hand, and any Indemnified Person, on the other hand, shall
      contribute to the losses, claims, damages, liabilities, or costs to which the
      Indemnified Persons may be subject in accordance with the relative benefits
      received by the Company, on the one hand, and SMH, on the other hand, and also
      the relative fault of the Company, on the one hand, and SMH, on the other hand,
      in connection with the statements, acts or omissions that resulted in such
      losses, claims, damages, liabilities, or costs, and the relevant equitable
      considerations shall also be considered. No person found liable for a fraudulent
      misrepresentation shall be entitled to contribution from any person who is not
      also found liable for such misrepresentation. Notwithstanding the foregoing,
      SMH
      shall not be obligated to contribute any amount hereunder that exceeds the
      amount of fees received by SMH pursuant to the Agreement.

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

     

    Neither
      termination nor completion of the engagement of SMH or any Indemnified Person
      under the Agreement shall affect the provisions of these Indemnification
      Provisions, which shall then remain operative and in full force and
      effect.

    

    If
      any
      provision contained in this Exhibit B is held by a court of competent
      jurisdiction or other authority to be invalid, void, unenforceable, or against
      its regulatory policy, the remainder of the provisions contained in this Exhibit
      B shall remain in full force and effect and shall in no way be affected,
      impaired, or invalidated. These Indemnification Provisions may not be amended
      or
      modified in any way, except by subsequent agreement executed in
      writing.

    

    
      
        
        

      

      
        9

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