- Current report filing (8-K)
10 July 2009 - 6:31AM
Edgar (US Regulatory)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington,
DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of the Securities Exchange Act of 1934
Date
of Report (Date of earliest event reported):
July 8, 2009
Gladstone
Investment Corporation
(Exact name of registrant as specified in its chapter)
Delaware
(State or other jurisdiction
of incorporation)
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814-00704
(Commission
File Number)
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83-0423116
(IRS Employer
Identification No.)
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1521 Westbranch Drive, Suite 200
McLean, Virginia
(Address of principal executive offices)
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22102
(Zip Code)
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Registrants
telephone number, including area code:
(703) 287-5800
Check the appropriate box below if the Form 8-K
filing is intended to simultaneously satisfy the filing obligation of the
registrant under any of the following provisions:
¨
Written communications
pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
¨
Soliciting material
pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
¨
Pre-commencement communications
pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
¨
Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c))
Item 1.01 Entry into a Material Definitive Agreement.
On July 8, 2009, the Board of Directors (the
Board
) of Gladstone
Investment Corporation (the
Company
)
approved the renewal of the Companys Investment Advisory and Management
Agreement (the
Advisory
Agreement
) with its external investment adviser, Gladstone
Management Corporation (the
Adviser
),
and its Administration Agreement (the
Administration
Agreement
) with Gladstone Administration, LLC, a wholly-owned
subsidiary of the Adviser (the
Administrator
),
through August 31, 2010.
The Board considered the investment advisory and
incentive fees under the Advisory Agreement and the administrative fees under
the Administration Agreement (the
Fees
),
and determined that the Fees were reasonable in relation to the services to be
provided by the Adviser and the Administrator. In its consideration of the
Advisory Agreement, the Board focused on information it had received relating
to, among other things: the nature, extent and quality of services provided by
the Adviser and Administrator; the investment performance of the Company and
the Adviser; the costs of the services to be provided and profits to be
realized by the Adviser and the Administrator from the relationship with the
Company; the extent to which economies of scale will be realized as the Company
grows, and whether the Fees reflect those economies of scale; the fee
structures of the advisory and administrative agreements of comparable
companies; indirect profits to the Adviser or Administrator created through
their relationships with the Company; and the overall fairness of the Fees to
the Company in light of the foregoing and other pertinent factors.
In recommending that the Company continue to use the
Adviser as its investment adviser under the terms of the Advisory and
Administration Agreements, the Board considered the conservative nature of the
Advisers investment committee and the resulting quality of the Companys
portfolio of investments, the prior experience of the Advisers personnel in
connection with the types of investments the Company makes; the size of the
staff of the Adviser and the Administrator; the Advisers ability to provide
managerial assistance to portfolio companies; the operations of the Adviser and
the Administrator; the organizational capabilities and financial condition of
the Adviser and the Administrator; and the quality and extensive level of
services provided to the Company and its affiliates, Gladstone Capital
Corporation and Gladstone Commercial Corporation. The Board also relied upon
comparisons of the services to be rendered and the amounts to be paid under the
Advisory and Administration Agreements with those under other investment
advisory and administrative contracts of unaffiliated comparable companies, and
concluded that the Fees were reasonable on a comparative basis. The Board also
considered comparisons to the services provided and amounts paid under the
Advisers contracts with Gladstone Capital Corporation and Gladstone Commercial
Corporation, which contain terms and conditions similar to those included in the
Companys Advisory and Administration Agreements.
The Board considered that the fees to be received by
the Adviser under the Advisory Agreement may exceed the Advisers costs of
providing services to the Company. However, the Board did not attempt to quantify
the Advisers level of profits (including those based on fees received from the
Companys portfolio companies) because of its satisfaction with the Advisers
performance advising the Company. The Advisory Agreement does not provide for
any
2
reduction in fees in the event that the Adviser
experiences any economies of scale in its provision of management services to
the Company. The Board also considered the fact that the Administrator
allocates the costs of providing administrative services to the Advisers
externally managed funds on a pro-rata basis and, therefore, to the extent the Administrator
recognizes economies of scale in providing administrative services to its
externally managed funds, those economies of scale will also be indirectly
recognized by the Company under the Administration Agreement. Thus, to the
extent that the Administrators costs decrease, those reductions will be passed
through indirectly to the Company in the form of a reduced administration fee.
Based on the information reviewed by, and the
ensuing discussions of, the Companys Board, the Board, including a majority of
the non-interested directors, concluded that the Fees under the Advisory and
Administration Agreements were reasonable in relation to the services to be
provided by the Adviser and the Administrator. Based on its review and
discussion, the Board approved the renewal of the Advisory and Administration
Agreements as being in the best interests of the Companys stockholders.
Item 9.01 Financial Statements and Exhibits.
(a)
Not applicable
(b)
Not applicable.
(c)
Not applicable.
(d)
Exhibit
10.1 Investment Advisory and Management Agreement between the Company and
Gladstone Management Corporation, dated June 22, 2005 and incorporated by
reference to Exhibit 10.1 to the Companys Annual Report on Form 10-K filed June
14, 2006.
Exhibit 10.2 Administration Agreement between the
Company and Gladstone Administration, LLC, dated June 22, 2005 and incorporated
by reference to Exhibit 10.2 to the Companys Annual Report on Form 10-K filed June
14, 2006.
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SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has
duly caused this report to be signed on its behalf by the undersigned hereunto
duly authorized.
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Gladstone
Investment Corporation
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(Registrant)
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July
9, 2009
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By:
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/s/
Mark Perrigo
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(Mark
Perrigo, Chief Financial Officer)
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