**Exhibit10.2**

 

**ADMINISTRATIONAGREEMENT**

 

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

 

**PREAMBLE**

 

The Corporation is a newly organized closed-endmanagement investment company that has elected to be treated as a businessdevelopment company under the Investment Company Act of 1940 (hereinafterreferred to as the ***“InvestmentCompany Act”***). The Corporation desires to retain theAdministrator to provide administrative services to the Corporation in themanner and on the terms hereinafter set forth. The Corporation’s investmentadviser is the Administrator’s sole member. The Administrator is willing toprovide administrative services to the Corporation on the terms and conditionshereafter set forth.

 

**AGREEMENT**

 

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

 

**1.****             ****DUTIES OF THE ADMINISTRATOR**.

 

**(a) Employment ofAdministrator**. TheCorporation hereby employs the Administrator to act as administrator of theCorporation, and to furnish, or arrange for others to furnish, theadministrative services, personnel and facilities described below, subject toreview 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. TheAdministrator hereby accepts such employment and agrees during such period torender, or arrange for the rendering of, such services and to assume theobligations herein set forth subject to the reimbursement of costs and expensesprovided for below. The Administrator and such others shall for all purposesherein be deemed to be independent contractors and shall, unless otherwiseexpressly provided or authorized herein, have no authority to act for orrepresent the Corporation in any way or otherwise be deemed agents of theCorporation.

 

**(b) Services**.The Administrator shall perform (or oversee, or arrange for, the performanceof) the administrative services necessary for the operation of the Corporation.Without limiting the generality of the foregoing, the Administrator shallprovide the Corporation with office facilities, equipment, clerical,bookkeeping and record keeping services at such facilities and such otherservices as the Administrator, subject to review by the Board of Directors ofthe Corporation, shall from time to time determine to be necessary or useful toperform its obligations under this Agreement. The Administrator shall also, onbehalf of the Corporation, conduct relations with custodians, depositories,transfer agents, dividend disbursing agents, other stockholder servicingagents, accountants, attorneys, underwriters, brokers and dealers, corporatefiduciaries, insurers, banks and such other persons in any such other capacity deemed to be necessary or desirable. TheAdministrator shall make reports to the Corporation’s Board of Directors of itsperformance of obligations hereunder and furnish advice and recommendationswith respect to such other aspects of the business and affairs of theCorporation as it shall determine to be desirable; provided that nothing hereinshall be construed to require the Administrator to, and the Administrator shallnot, provide any advice or recommendation relating to the securities and otherassets that the Corporation should purchase, retain or sell or any otherinvestment advisory services to the Corporation. The Administrator shall be responsible

 

----

 

forthe financial and other records that the Corporation is required to maintainand shall prepare reports to stockholders, and reports and other materialsfiled with the Securities and Exchange Commission (the ***“SEC”***). TheAdministrator will provide on the Corporation’s behalf significant managerialassistance to those portfolio companies to which the Corporation is required toprovide such assistance under the Investment Company Act or other applicablelaw. In addition, the Administrator will assist the Corporation in determiningand publishing the Corporation’s net asset value, overseeing the preparationand filing of the Corporation’s tax returns, and the printing and disseminationof reports to stockholders of the Corporation, and generally overseeing thepayment of the Corporation’s expenses and the performance of administrative andprofessional services rendered to the Corporation by others.

 

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

 

**2.****             ****RECORDS**.

 

The Administrator agrees to maintain and keep allbooks, accounts and other records of the Corporation that relate to activitiesperformed by the administrator hereunder and, if required by the InvestmentCompany Act, will maintain and keep such books, accounts and records inaccordance with that Act. In compliance with the requirements ofRule 31a-3 under the Investment Company Act, the Administrator agrees thatall records which it maintains for the Corporation shall at all times remainthe property of the Corporation, shall be readily accessible during normalbusiness hours, and shall be promptly surrendered upon the termination of theAgreement or otherwise on written request. The Administrator further agreesthat all records which it maintains for the Corporation pursuant toRule 31a-1 under the Investment Company Act will be preserved for theperiods prescribed by Rule 31a-2 under the Investment Company Act unlessany such records are earlier surrendered as provided above. Records shall besurrendered in usable machine-readable form. The Administrator shall have theright to retain copies of such records subject to observance of itsconfidentiality obligations under this Agreement.

 

**3.****             ****POLICIES AND PROCEDURES.**

 

The Administrator has adopted and implementedwritten policies and procedures reasonably designed to prevent violation of theFederal Securities laws by the Administrator. The Administrator shallprovide the Corporation, at such times as the Corporation shall reasonablyrequest, with a copy of such policies and procedures and a report of suchpolicies and procedures; such report shall be of sufficient scope and insufficient detail, as may reasonably be required to comply with Rule 38a-1under the Investment Company Act and to provide reasonable assurance that anymaterial inadequacies would be disclosed by such examination, and, if there areno such inadequacies, the report shall so state.

 

**4.**              **CONFIDENTIALITY**.

 

The parties hereto agree that each shall treatconfidentially the terms and conditions of this Agreement and all informationprovided by each party to the other regarding its business and operations. Allconfidential information provided by a party hereto, including nonpublicpersonal 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 renderingservices pursuant to this Agreement and, except as may be required in carryingout this Agreement, shall not be disclosed to any third party, without theprior consent of such providing party. The foregoing shall not be applicable toany information that is publicly available when provided or thereafter becomespublicly available other than through a breach of this Agreement, or that is

 

----

 

requiredto be disclosed by any regulatory authority, any authority or legal counsel ofthe parties hereto, by judicial or administrative process or otherwise byapplicable law or regulation.

 

**5.****             ****COMPENSATION: ALLOCATION OF COSTS AND EXPENSES**.

 

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

 

The Corporation will bear all costs andexpenses that are incurred in its operation and transactions that are notspecifically assumed by the Corporation’s investment adviser (the ***“Adviser”***), pursuantto that certain Investment Advisory Agreement, dated as of June 22,  2005 by and between the Corporation and theAdviser. Costs and expenses to be borne by the Corporation include, but are notlimited to, those relating to: organization and offering; calculating theCorporation’s net asset value (including the cost and expenses of any independentvaluation firm); expenses incurred by the Adviser payable to third parties,including agents, consultants or other advisors (such as independent valuationfirms, accountants and legal counsel), in monitoring financial and legalaffairs for the Corporation and in monitoring the Corporation’s investments andperforming due diligence on its prospective portfolio companies; interestpayable on debt, if any, incurred to finance the Corporation’s investments;offerings of the Corporation’s common stock and other securities; investmentadvisory and management fees; administration fees, if any, payable under thisAgreement; fees payable to third parties, including agents, consultants orother advisors, relating to, or associated with, evaluating and making investments;transfer agent and custodial fees; federal and state registration fees; allcosts of registration and listing the Corporation’s shares on any securitiesexchange; federal, state and local taxes; independent directors’ fees andexpenses; costs of preparing and filing reports or other documents required bythe SEC; costs of any reports, proxy statements or other notices to stockholders,including printing costs; the Corporation’s allocable portion of the fidelitybond, directors and officers/errors and omissions liability insurance, and anyother insurance premiums; direct costs and expenses of administration,including printing, mailing, long distance telephone, copying, secretarial andother staff, independent auditors and outside legal costs; and all otherexpenses incurred by the Corporation or the Administrator in connection withadministering the Corporation’s business, including payments under thisAgreement based upon the Corporation’s allocable portion of the Administrator’soverhead in performing its obligations under this Agreement, including rent,and the allocable portion of the salaries and benefits expenses of theCorporation’s chief compliance officer, chief financial officer and controllerand 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 personor entity affiliated with the Administrator, including without limitation itssole member, the Adviser) shall not be liable to the Corporation for any actiontaken or omitted to be taken by the Administrator in connection with theperformance of any of its duties or obligations under this Agreement orotherwise as administrator for the Corporation, and the Corporation shallindemnify, defend and protect the Administrator (and its officers, managers,partners, agents, employees, controlling persons, members, and any other personor entity affiliated with the Administrator, including without limitation theAdviser, each of whom shall be deemed a third party beneficiary hereof)(collectively, the ***“IndemnifiedParties”***) and hold them harmless from and against all damages,liabilities, costs and expenses (including reasonable attorneys’ fees andamounts reasonably paid in settlement) incurred by the Indemnified Parties inor by reason of any pending, threatened or completed action, suit,investigation or other proceeding

 

----

 

(includingan action or suit by or in the right of the Corporation or its securityholders) arising out of or otherwise based upon the performance of any of theAdministrator’s duties or obligations under this Agreement or otherwise asadministrator for the Corporation. Notwithstanding the preceding sentence ofthis Paragraph 6 to the contrary, nothing contained herein shall protector be deemed to protect the Indemnified Parties against or entitle or be deemedto entitle the Indemnified Parties to indemnification in respect of, anyliability to the Corporation or its security holders to which the IndemnifiedParties would otherwise be subject by reason of willful misfeasance, bad faithor negligence in the performance of the Administrator’s duties or by reason ofthe reckless disregard of the Administrator’s duties and obligations under thisAgreement (to the extent applicable, as the same shall be determined inaccordance with the Investment Company Act and any interpretations or guidanceby the SEC or its staff thereunder).

 

**7.****             ****ACTIVITIES OF THE ADMINISTRATOR**.

 

The services of the Administrator to theCorporation are not to be deemed to be exclusive, and the Administrator andeach affiliate is free to render services to others. It is understood thatdirectors, officers, employees and stockholders of the Corporation are or maybecome 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 itsaffiliates are or may become similarly interested in the Corporation asstockholders or otherwise.

 

**8.****             ****DURATION AND TERMINATION OF THIS AGREEMENT**.

 

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

 

**9.****             ****AMENDMENTS OF THIS AGREEMENT**.

 

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

 

**10.****      ****GOVERNING LAW**.

 

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

 

**11.****      ****ENTIRE AGREEMENT**.

 

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

 

----

 

**12.****      ****NOTICES**.

 

Any notice under this Agreement shall be given inwriting, addressed and delivered or mailed, postage prepaid, to the other partyat its principal office.

 

[REMAINDER OF PAGEINTENTIONALLY LEFT BLANK]

 

**IN WITNESS WHEREOF,** the parties hereto have executed anddelivered 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 |

 

----