Exhibit 10.1


 


Amended
and RestateD INVESTMENT MANAGEMENT AGREEMENT


 


This Amended and Restated
Investment Management Agreement (“Agreement”) is made as of October 28, 2010 and amended effective July 1, 2014
by and between HORIZON TECHNOLOGY FINANCE CORPORATION a Delaware Corporation (the “Company”), and HORIZON TECHNOLOGY
FINANCE MANAGEMENT LLC, a Delaware limited liability company (the “Advisor”).


 


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


 


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


 


WHEREAS, the Advisor
and the Company are parties to a certain Investment Management Agreement dated as of October 28, 2010 whereby the Advisor furnished
investment advisory services to the Company on the terms and conditions set forth therein (the “Existing Agreement”);


 


WHEREAS, the Company
and Advisor wish to amend and restate certain terms of the Initial Agreement in order to better align the interests of the Advisor
and Company and for the benefit of the Company’s shareholders;


 


WHEREAS, the Company
desires to continue to retain the Advisor to furnish investment advisory services to the Company on the terms and conditions hereinafter
set forth, and the Advisor wishes to be retained to provide such services.


 


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


 


		1.	Duties of the Advisor.



 


(a)         The
Company hereby employs the Advisor to act as the investment adviser to the Company and to manage the investment and reinvestment
of the assets of the Company, subject to the supervision of the Board of Directors of the Company, for the period and upon the
terms herein set forth, (i) in accordance with the investment objective, policies and restrictions applicable to the Company as
set forth in the Company’s Post-Effective Amendment No. 9 to its Registration Statement on Form N-2, dated July 1, 2014 (File
No. 333-178516), which was declared effective July 2, 2014 (the “Registration Statement”), as amended from time to
time; (ii) during the term of this Agreement in accordance with all other applicable federal and state laws, rules and regulations,
and the Company’s charter and bylaws; and (iii) for so long as the Company elects to be regulated as a BDC under the Investment
Company Act, the Advisor will manage the assets of the Company in accordance with the Investment Company Act. Without limiting
the generality of the foregoing, the Advisor shall, during the term and subject to the provisions of this Agreement, (i) determine
the composition of the portfolio of the Company, the nature and timing of the changes therein and the manner of implementing such
changes; (ii) identify, evaluate and negotiate the structure of the investments made by the Company; (iii) close and monitor the
Company’s investments; (iv) determine the securities and other assets that the Company will purchase, retain, or sell; (v)
perform due diligence on prospective portfolio companies; and (vi) provide the Company with such other investment advisory, research
and related services as the Company may, from time to time, reasonably require for the investment of its funds. The Advisor shall
have the power and authority on behalf of the Company to effectuate its investment decisions for the Company, including the execution
and delivery of all documents relating to the Company’s investments and the placing of orders for other purchase or sale
transactions on behalf of the Company. In the event that the Company determines to acquire debt financing, the Advisor will arrange
for such financing on the Company’s behalf, subject to the oversight and approval of the Company’s Board of Directors.
If it is necessary for the Advisor to make investments on behalf of the Company through a special purpose vehicle, the Advisor
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 for so long as
the Company elects to be regulated as a BDC under the Investment Company Act).


 




    	 



    	 



    

 


(b)          The Advisor
hereby accepts such employment and agrees during the term hereof to render the services described herein for the compensation provided
herein.


 


(c)          The Advisor
is hereby authorized to enter into one or more sub-advisory agreements with other investment advisers (each, a “Sub-Advisor”)
pursuant to which the Advisor may obtain the services of the Sub-Advisor(s) to assist the Advisor in fulfilling its responsibilities
hereunder. Specifically, the Advisor may retain a Sub-Advisor to recommend specific securities or other investments based upon
the Company’s investment objective and policies, and work, along with the Advisor, in structuring, negotiating, arranging
or effecting the acquisition or disposition of such investments and monitoring investments on behalf of the Company, subject to
the oversight of the Advisor and the Company. The Company shall be responsible for any compensation payable to any Sub-Advisor.


 


For so long as the
Company elects to be regulated as a BDC under the Investment Company Act, any sub-advisory agreement entered into by the Advisor
shall be in accordance with the requirements of the Investment Company Act and other applicable federal and state law.


 


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


 


(e)          For so long
as the Company elects to be regulated as a BDC under the Investment Company Act, the Advisor shall keep and preserve for the period
required by the Investment Company Act any books and records relevant to the provision of its investment advisory services to the
Company and shall specifically maintain all books and records with respect to the Company’s portfolio transactions and shall
render to the Company’s Board of Directors such periodic and special reports as the Board may reasonably request. The Advisor
agrees that all records that it maintains for the Company are the property of the Company and will surrender promptly to the Company
any such records upon the Company’s request, provided that the Advisor may retain a copy of such records.


 


		2.	Company’s Responsibilities and Expenses Payable
by the Company.



 


All investment professionals
of the Advisor and their respective staffs, 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 Advisor and not by the Company. The Company will bear all other costs and expenses of its operations, administration
and transactions pursuant to that certain Administration Agreement, dated as of October 28, 2010, by and between the Company and
Horizon Technology Finance Management LLC, the Company’s Administrator.


 


		3.	Compensation of the Advisor.



 


The Company agrees
to pay, and the Advisor agrees to accept, as compensation for the services provided by the Advisor hereunder, a base management
fee (“Base Management Fee”) and an incentive fee (“Incentive Fee”) as hereinafter set forth.
The Company shall make any payments due hereunder to the Advisor or to the Advisor’s designee as the Advisor may otherwise
direct. To the extent permitted by applicable law, the Advisor may elect, or the Company may adopt a deferred compensation plan
pursuant to which the Advisor may elect to defer all or a portion of its fees hereunder for a specified period of time.


 


(a)         The Base Management
Fee through and including June 30, 2014 shall be calculated at an annual rate of 2.00% of the Company’s gross assets, including
any assets acquired with the proceeds of leverage, and shall be payable monthly in arrears. The Base Management Fee on and after
July 1, 2014 shall be calculated at an annual rate of 2.00% of (i) the Company’s gross assets, including any assets acquired
with the proceeds of leverage less (ii) assets consisting of cash and cash equivalents, and shall be payable monthly in arrears.
Base Management Fees for any partial month will be appropriately pro rated.


 




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(b)          The Incentive
Fee shall consist of two parts, as follows:


 


		(i)	One part, which is subject to the Incentive Fee Cap and Deferral Mechanism (as defined under Section
3(b)(ii) below), will be calculated and payable quarterly in arrears based on the pre-Incentive Fee net investment income for the
immediately preceding calendar quarter. For this purpose, pre-Incentive Fee net investment income means interest income, dividend
income and any other income (including any other fees (other than fees for providing managerial assistance), such as commitment,
origination, structuring, diligence and consulting fees or other fees that the Company receives from portfolio companies) accrued
by the Company during the calendar quarter, minus the Company’s operating expenses for the quarter (including the Base Management
Fee, expenses payable under the Administration Agreement to the Administrator, and any interest expense and dividends paid on any
issued and outstanding preferred stock, but excluding the Incentive Fee). Pre-Incentive Fee net investment income includes, in
the case of investments with a deferred interest feature (such as original issue discount, debt instruments with pay in kind interest
and zero coupon securities), accrued income that we have not yet received in cash. Pre-Incentive Fee net investment income does
not include any realized capital gains, realized capital losses or unrealized capital appreciation or depreciation.



 


Pre-Incentive
Fee net investment income, expressed as a rate of return on the value of the Company’s net assets at the end of the immediately
preceding calendar quarter, shall be compared to a “hurdle rate” of 1.75% per quarter (7.00% annualized). The Company’s
pre-Incentive Fee net investment income used to calculate this part of the Incentive Fee is also included in the amount of its
gross assets used to calculate the 2.00% Base Management Fee. The Company shall pay the Advisor an Incentive Fee with respect to
the Company’s pre-Incentive Fee net investment income in each calendar quarter as follows: (1) no Incentive Fee in any calendar
quarter in which the Company’s pre-Incentive Fee net investment income does not exceed the hurdle rate of 1.75%; (2) 100%
of the Company’s pre-Incentive Fee net investment income with respect to that portion of such pre-Incentive Fee net investment
income, if any, that exceeds the hurdle rate but is less than 2.1875% in any calendar quarter (8.75% annualized); the portion of
the Company’s pre-Incentive Fee net investment income (which exceeds the hurdle but is less than 2.1875%) is referred to
as the “catch-up.” The “catch-up” is meant to provide the Adviser with 20% of the Company’s pre-Incentive
Fee net investment income as if a hurdle did not apply if the Company’s pre-Incentive Fee net investment income exceeds 2.1875%
in any calendar quarter; and (3) 20% of the amount of the Company’s pre-Incentive Fee net investment income, if any, that
exceeds 2.1875% in any calendar quarter (8.75% annualized) payable to the Advisor (once the hurdle is reached and the catch-up
is achieved, 20% of all pre-Incentive Fee net investment income thereafter is allocated to the Advisor). These calculations shall
be appropriately pro rated for any period of less than three months and adjusted for any share issuances or repurchases during
the relevant quarter.


 




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		(ii)	Fee Cap and Deferral Mechanism. Commencing with the calendar quarter beginning July 1, 2014,
the Incentive Fee specified in Section 3(b)(i) above shall be subject to a fee cap and deferral mechanism which will be determined
based upon a look-back period of up to three years. For this purpose, the Incentive Fee look-back period (the “Incentive
Fee Look-back Period”) shall commence on July 1, 2014 and shall increase by one quarter in length at the end of each
of the 12 succeeding calendar quarters, after which time, the Incentive Fee Look-back period shall include the relevant calendar
quarter and the 11 full preceding calendar quarters. . Each quarterly Incentive Fee payable under Section 3(b)(i) is subject to
a cap (the “Incentive Fee Cap”) and a deferral mechanism through which the Advisor may recoup a portion of such
deferred Incentive Fee (collectively, the “Incentive Fee Cap and Deferral Mechanism”). The “Incentive
Fee Cap” is equal to (a) 20.0% of Cumulative Pre-Incentive Fee Net Return (as defined below) during the Incentive Fee
Look-back Period less (b) cumulative Incentive Fees of any kind paid to the Advisor during the Incentive Fee Look-back Period.
To the extent the Incentive Fee Cap is zero or a negative value in any calendar quarter, the Company shall pay no Incentive Fee
under Section 3(b)(i) to the Advisor in that quarter. To the extent that the payment of Incentive Fee under Section 3(b)(i) is
limited by the Incentive Fee Cap, the payment of such fees shall be deferred and paid in subsequent calendar quarters up to three
years after their date of deferment, subject to applicable limitations included herein. The Company shall only pay Incentive Fees
under Section 3(b)(i) to the extent allowed by the Incentive Fee Cap and Deferral Mechanism. “Cumulative Pre-Incentive
Fee Net Return” during any Incentive Fee Look-back Period means the sum of (a) pre-Incentive Fee net investment income
and the Base Management Fee for each calendar quarter during the Incentive Fee Look-back Period and (b) the sum of cumulative realized
capital gains and losses, cumulative unrealized capital appreciation and cumulative unrealized capital depreciation during the
applicable Incentive Fee Look-back Period.



 


		(iii)	The second part of the Incentive Fee (the “Capital Gains Fee”) shall be determined
and payable in arrears as of the end of each calendar year (or upon termination of this Agreement as set forth below), commencing
on December 31, 2010, and will equal 20.0% of the Company’s realized capital gains, if any, on a cumulative basis from the
date of the Company’s election to be a BDC through the end of each calendar year, computed net of all realized capital losses
and unrealized capital depreciation on a cumulative basis, less the amount of any previously paid capital gain Incentive Fees,
with respect to each of the investments in our portfolio; provided that the Incentive Fee determined as of December 31, 2010 shall
be calculated for a period of shorter than twelve calendar months to take into account any realized capital gains computed net
of all realized capital losses and unrealized capital depreciation from the date of the Company’s election to be a BDC. In
the event that this Agreement shall terminate as of a date that is not a calendar year end, the termination date shall be treated
as though it were a calendar year end for purposes of calculating and paying a Capital Gains Fee.



 


		4.	Covenants of the Advisor.



 


The Advisor covenants
that it is registered as an investment adviser under the Advisers Act. The Advisor 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.


 


		5.	Excess Brokerage Commissions.



 


The Advisor is hereby
authorized, to the fullest extent now or hereafter permitted by law, to cause the Company to pay a member of a national securities
exchange, broker or dealer an amount of commission for effecting a securities transaction in excess of the amount of commission
another member of such exchange, broker or dealer would have charged for effecting that transaction, if the Advisor determines
in good faith, 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 and skill in positioning blocks
of securities, that such amount of commission is reasonable in relation to the value of the brokerage and/or research services
provided by such member, broker or dealer, viewed in terms of either that particular transaction or its overall responsibilities
with respect to the Company’s portfolio, and constitutes the best net results for the Company.


 




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		6.	Limitations on the Employment of the Advisor.



 


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


 


		7.	Responsibility of Dual Directors, Officers and/or
Employees.



 


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


 


		8.	Limitation of Liability of the Advisor; Indemnification.



 


The Advisor (and its
officers, managers, partners, agents, employees, controlling persons, members and any other person or entity affiliated with the
Advisor) shall not be liable to the Company for any action taken or omitted to be taken by the Advisor in connection with the performance
of any of its duties or obligations under this Agreement or otherwise as an investment adviser of the Company (except to the extent
specified in Section 36(b) of the 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
for so long as the Company elects to be regulated as a BDC under the Investment Company
Act), and the Company shall indemnify, defend and protect the Advisor (and its officers, managers, partners, agents, employees,
controlling persons, members and any other person or entity affiliated with the Advisor, each of whom shall be deemed a third party
beneficiary hereof) (collectively, the “Indemnified Parties”) and hold them harmless from and against all damages,
liabilities, costs and expenses (including reasonable attorneys’ fees and amounts reasonably paid in settlement) incurred
by the Indemnified Parties in or by reason of any pending, threatened or completed action, suit, investigation or other proceeding
(including an action or suit by or in the right of the Company or its security holders) arising out of or otherwise based upon
the performance of any of the Advisor’s duties or obligations under this Agreement or otherwise as an investment adviser
of the Company. 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 Company or its security holders to which the Indemnified Parties would otherwise be subject
by reason of willful misfeasance, bad faith or gross negligence in the performance of the Advisor’s duties or by reason of
the reckless disregard of the Advisor’s duties and obligations under this Agreement (as the same shall be determined in accordance
with the Investment Company Act and any interpretations or guidance by the Securities and Exchange Commission or its staff thereunder
for so long as the Company elects to be regulated as a BDC under the Investment Company
Act).


 


		9.	Effectiveness, Duration and Termination of Agreement.



 


(a)          This Agreement
shall become effective as of the first date above written. This Agreement shall remain in effect for an indefinite period; provided,
however, for so long as the Company elects to be regulated as a BDC under the Investment Company Act, then this Agreement may be
terminated at any time, without the payment of any penalty, upon not more than 60 days’ written notice, by the vote of a
majority of the outstanding voting securities of the Company or by the vote of the Company’s Directors or by the Advisor.
The provisions of Section 8 of this Agreement shall remain in full force and effect, and the Advisor 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 Advisor shall be entitled to any amounts owed under Section 3 through the date of termination
or expiration and Section 8 shall continue in force and effect and apply to the Advisor and its representatives as and to the extent
applicable.


 




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(b)          For so long
as the Company elects to be regulated as a BDC under the Investment Company Act:


 


		(i)	This Agreement shall continue in effect for two years from the date hereof, or to the extent consistent
with the requirements of the Investment Company Act, from the date of the Company’s election to be regulated as a BDC under
the Investment Company Act, 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 Company’s Board of Directors, or by the vote of a majority
of the outstanding voting securities of the Company and (B) the vote of a majority of the Company’s Directors who are not
parties to this Agreement or “interested persons” (as such term is defined in Section 2(a)(19) of the Investment Company
Act) of any such party, in accordance with the requirements of the Investment Company Act;



 


		(ii)	The Agreement may be terminated at any time, without the payment of any penalty, upon not more
than 60 days’ written notice, by the vote of a majority of the outstanding voting securities of the Company, or by the vote
of the Company’s Directors or by the Advisor;



 


		(iii)	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).



 


(c)          The provisions
of Section 8 of this Agreement shall remain in full force and effect, and the Advisor 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 Advisor shall be entitled to any amounts owed under Section 3 through the date of termination or expiration and
Section 8 shall continue in force and effect and apply to the Advisor and its representatives as and to the extent applicable.


 


		10.	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.


 


		11.	Amendments.



 


This Agreement may
be amended by mutual consent. For so long as the Company elects to be regulated as a BDC under the Investment Company Act, the
consent of the Company must be obtained in conformity with the requirements of the Investment Company Act.


 


		12.	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 governed by and construed in accordance with the laws of the State of New York. For so long
as the Company elects to be regulated as a BDC under the Investment Company Act, this Agreement shall also be construed in accordance
with the applicable provisions of the Investment Company Act. In such case, to the extent the applicable laws of the State of New
York or any of the provisions herein, conflict with the provisions of the Investment Company Act, the latter shall control.


 


[Signature page immediately
follows.]




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


 


	 	HORIZON TECHNOLOGY FINANCE CORPORATION
	 	 	 
	 	By:	 
	 	 	Name:  Robert D. Pomeroy, Jr.
	 	 	Title: Chief Executive Officer
	 	 	 
	 	HORIZON TECHNOLOGY FINANCE MANAGEMENT LLC
	 	 	 
	 	By:	 
	 	 	Name:  Robert D. Pomeroy, Jr.
	 	 	Title: Chief Executive Officer


 


[Signature page to Investment Management
Agreement]