Exhibit 10.2

 

ADMINISTRATION AGREEMENT

 

THIS ADMINISTRATION AGREEMENT (this “Agreement”) is made as of June 22, 2005 by
and between Gladstone Investment Corporation, a Delaware corporation
(hereinafter referred to as the “Corporation”), and Gladstone Administration,
LLC, a Delaware limited liability company (hereinafter referred to as the
“Administrator”).

 

PREAMBLE

 

The Corporation is a newly organized closed-end management investment company
that has elected to be treated as a business development company under the
Investment Company Act of 1940 (hereinafter referred to as the “Investment
Company Act”). The Corporation desires to retain the Administrator to provide
administrative services to the Corporation in the manner and on the terms
hereinafter set forth. The Corporation’s investment adviser is the
Administrator’s sole member. The Administrator is willing to provide
administrative services to the Corporation on the terms and conditions hereafter
set forth.

 

AGREEMENT

 

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

 

1.              DUTIES OF THE ADMINISTRATOR.

 

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

 

(b) Services. The Administrator shall perform (or oversee, or arrange for, the
performance of) the administrative services necessary for the operation of the
Corporation. Without limiting the generality of the foregoing, the Administrator
shall provide the Corporation with office facilities, equipment, clerical,
bookkeeping and record keeping services at such facilities and such other
services as the Administrator, subject to review by the Board of Directors of
the Corporation, shall from time to time determine to be necessary or useful to
perform its obligations under this Agreement. The Administrator shall also, on
behalf of the Corporation, conduct relations with custodians, depositories,
transfer agents, dividend disbursing agents, other stockholder servicing agents,
accountants, attorneys, underwriters, brokers and dealers, corporate
fiduciaries, insurers, banks and such other persons in any such other capacity
deemed to be necessary or desirable. The Administrator shall make reports to the
Corporation’s Board of Directors of its performance of obligations hereunder and
furnish advice and recommendations with respect to such other aspects of the
business and affairs of the Corporation as it shall determine to be desirable;
provided that nothing herein shall be construed to require the Administrator to,
and the Administrator shall not, provide any advice or recommendation relating
to the securities and other assets that the Corporation should purchase, retain
or sell or any other investment advisory services to the Corporation. The
Administrator shall be responsible

 

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for the financial and other records that the Corporation is required to maintain
and shall prepare reports to stockholders, and reports and other materials filed
with the Securities and Exchange Commission (the “SEC”). The Administrator will
provide on the Corporation’s behalf significant managerial assistance to those
portfolio companies to which the Corporation is required to provide such
assistance under the Investment Company Act or other applicable law. In
addition, the Administrator will assist the Corporation in determining and
publishing the Corporation’s net asset value, overseeing the preparation and
filing of the Corporation’s tax returns, and the printing and dissemination of
reports to stockholders of the Corporation, and generally overseeing the payment
of the Corporation’s expenses and the performance of administrative and
professional services rendered to the Corporation by others.

 

(c) The Administrator is hereby authorized to enter into one or more
sub-administration agreements with other service providers (each a
“Sub-Administrator”) pursuant to which the Administrator may obtain the services
of the service providers in fulfilling its responsibilities hereunder. Any such
sub-administration agreements shall be in accordance with the requirements of
the Investment Company Act and other applicable federal and state law and shall
contain a provision requiring the Sub-Administrator to comply with Sections 2
and 3 below as if it were the Administrator.

 

2.              RECORDS.

 

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

 

3.              POLICIES AND PROCEDURES.

 

The Administrator has adopted and implemented written policies and procedures
reasonably designed to prevent violation of the Federal Securities laws by the
Administrator. The Administrator shall provide the Corporation, at such times as
the Corporation shall reasonably request, with a copy of such policies and
procedures and a report of such policies and procedures; such report shall be of
sufficient scope and in sufficient detail, as may reasonably be required to
comply with Rule 38a-1 under the Investment Company Act and to provide
reasonable assurance that any material inadequacies would be disclosed by such
examination, and, if there are no such inadequacies, the report shall so state.

 

4.              CONFIDENTIALITY.

 

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

 

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required to be disclosed by any regulatory authority, any authority or legal
counsel of the parties hereto, by judicial or administrative process or
otherwise by applicable law or regulation.

 

5.              COMPENSATION: ALLOCATION OF COSTS AND EXPENSES.

 

In full consideration of the provision of the services of the Administrator, the
Corporation shall reimburse the Administrator for the costs and expenses
incurred by the Administrator in performing its obligations and providing
personnel and facilities hereunder.

 

The Corporation will bear all costs and expenses that are incurred in its
operation and transactions that are not specifically assumed by the
Corporation’s investment adviser (the “Adviser”), pursuant to that certain
Investment Advisory Agreement, dated as of June 22,  2005 by and between the
Corporation and the Adviser. Costs and expenses to be borne by the Corporation
include, but are not limited to, 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 (such as
independent valuation firms, accountants and legal counsel), 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
Corporation’s investments; offerings of the Corporation’s common stock and other
securities; investment advisory and management fees; administration fees, if
any, payable under this Agreement; 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; 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; costs of any reports, 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 or the
Administrator in connection with administering the Corporation’s business,
including payments under this Agreement based upon the Corporation’s allocable
portion of the Administrator’s overhead in performing its obligations under this
Agreement, including rent, and the allocable portion of the salaries and
benefits expenses of the Corporation’s chief compliance officer, chief financial
officer and controller and their respective staffs.

 

6.              LIMITATION OF LIABILITY OF THE ADMINISTRATOR: INDEMNIFICATION.

 

The Administrator (and its officers, managers, partners, agents, employees,
controlling persons, members, and any other person or entity affiliated with the
Administrator, including without limitation its sole member, the Adviser) shall
not be liable to the Corporation for any action taken or omitted to be taken by
the Administrator in connection with the performance of any of its duties or
obligations under this Agreement or otherwise as administrator for the
Corporation, and the Corporation shall indemnify, defend and protect the
Administrator (and its officers, managers, partners, agents, employees,
controlling persons, members, and any other person or entity affiliated with the
Administrator, including without limitation the Adviser, each of whom shall be
deemed a third party beneficiary hereof) (collectively, the “Indemnified
Parties”) and hold them harmless from and against all damages, liabilities,
costs and expenses (including reasonable attorneys’ fees and amounts reasonably
paid in settlement) incurred by the Indemnified Parties in or by reason of any
pending, threatened or completed action, suit, investigation or other proceeding

 

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(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 any
of the Administrator’s duties or obligations under this Agreement or otherwise
as administrator for the Corporation. Notwithstanding the preceding sentence of
this Paragraph 6 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
negligence in the performance of the Administrator’s duties or by reason of the
reckless disregard of the Administrator’s duties and obligations under this
Agreement (to the extent applicable, as the same shall be determined in
accordance with the Investment Company Act and any interpretations or guidance
by the SEC or its staff thereunder).

 

7.              ACTIVITIES OF THE ADMINISTRATOR.

 

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

 

8.              DURATION AND TERMINATION OF THIS AGREEMENT.

 

This Agreement shall become effective as of the date hereof, and shall remain in
force with respect to the Corporation for two years thereafter, and thereafter
continue from year to year, but only so long as such continuance is specifically
approved at least annually by (i) the Board of Directors of the Corporation and
(ii) a majority of those Directors who are not parties to this Agreement or
“interested persons” (as defined in the Investment Company Act) of any such
party. This Agreement may be terminated at any time, without the payment of any
penalty, by vote of the Directors of the Corporation, or by the Administrator,
upon 60 days’ written notice to the other party. This Agreement may not be
assigned by a party without the consent of the other party.

 

9.              AMENDMENTS OF THIS AGREEMENT.

 

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

 

10.       GOVERNING LAW.

 

This Agreement shall be construed in accordance with laws of the State of
Delaware and the applicable provisions of the Investment Company Act, if any. To
the extent that the applicable laws of the State of Delaware, or any of the
provisions herein, conflict with the applicable provisions of the Investment
Company Act, if any, the latter shall control.

 

11.       ENTIRE AGREEMENT.

 

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

 

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12.       NOTICES.

 

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

 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

 

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

 

 

GLADSTONE INVESTMENT CORPORATION

 

By:

/s/ David Gladstone

 

 

David Gladstone

 

Chief Executive Officer

 

 

GLADSTONE ADMINISTRATION, LLC

 

By:

/s/ David Gladstone

 

 

David Gladstone, Manager

 

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