Item 1.01. Entry Into a Material Definitive Agreement
Dealer Manager Agreement
On May 22, 2020, Gladstone Investment Corporation, a Delaware corporation (the “Company”), entered into a dealer manager agreement (the “Dealer Manager Agreement”), with Gladstone Securities, LLC, a Connecticut limited liability company and affiliate of the Company (the “Dealer Manager”), whereby the Dealer Manager will serve as the Company’s exclusive dealer manager in connection with the Company’s offering (the “Offering”) of up to $350,000,000 aggregate principal amount of the Company’s 6.00% Notes due 2040 (the “Notes”) on a “reasonable best efforts” basis. However, the Company can only offer for sale up to $200 million aggregate principal amount of the Notes pursuant to a prospectus supplement dated May 22, 2020 and a base prospectus dated July 24, 2019 (collectively, the “Prospectus”) relating to the registration statement onForm N-2 (File No. 333- 232124) (as the same may be amended and/or supplemented, the “Registration Statement”) under the Securities Act of 1933, as amended. The Company intends to file a new shelf registration statement on FormN-2 and a related prospectus supplement by July 2022, in order to register and offer for sale the aggregate principal amount of Notes pursuant to the terms of the Dealer Manager Agreement that remains unsold at that time.
Under the Dealer Manager Agreement, the Dealer Manager will provide certain sales, promotional and marketing services to the Company in connection with the Offering, and the Company will pay the Dealer Manager (i) selling commissions of 6.0% of the gross proceeds from sales of the Notes in the Offering and (ii) a dealer manager fee of 3.0% of the gross proceeds from sales of the Notes in the Offering (the “Dealer Manager Fee”). The Dealer Manager may, in its sole discretion, reallow a portion of the Dealer Manager Fee to participating broker-dealers in support of the Offering.
The terms of the Dealer Manager Agreement were approved by the Company’s board of directors, including all of its independent directors.
Pursuant to the Dealer Manager Agreement, the Company has agreed to indemnify the Dealer Manager and participating broker-dealers, and the Dealer Manager has agreed to indemnify the Company, against certain losses, claims, damages and liabilities, including but not limited to those arising out of (i) any untrue statement or alleged untrue statement of a material fact contained in the Registration Statement or any post-effective amendment thereto or in the Prospectus, (ii) the omission or alleged omission to state in the Registration Statement (including the prospectus as a part thereof) or any post-effective amendment thereto a material fact required to be stated therein or necessary to make the statements therein not misleading, or (iii) any untrue statement or alleged untrue statement of a material fact contained in the Prospectus or the omission or alleged omission to state therein a material act required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading.
The foregoing description of the Dealer Manager Agreement is a summary and is qualified in its entirety by the terms of the Dealer Manager Agreement, a copy of which is filed as Exhibit 1.1 to this Current Report onForm 8-K and incorporated by reference herein.
This Current Report on Form8-K shall not constitute an offer to sell or a solicitation of an offer to buy any securities, nor shall there be any sale of these securities in any state or jurisdiction in which such an offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state or other jurisdiction.
On May 22, 2020, Proskauer Rose LLP delivered its legality opinion with respect to the Notes to be sold pursuant to the Prospectus, a copy of which is filed Exhibit 5.1 to this Current Report onForm 8-K.
Indenture and the Notes
On May 22, 2020, the Company and UMB Bank, National Association, as trustee (the “Trustee”), entered into an indenture (the “Base Indenture”) and a first supplemental indenture thereto (the “Supplemental Indenture” and collectively with the Base Indenture, the “Indenture”). The Supplemental Indenture relates to the Company’s issuance and sale of the Notes.
The Notes mature on November 1, 2040, unless previously redeemed or repurchased in accordance with their terms. The Notes bear interest at a rate of 6.00% per year payable monthly in arrears on the first day of each month, commencing on the first such date after issuance of such Note. The Notes are the Company’s direct unsecured obligations and will rank equal in right of payment with the Company’s existing and future unsecured, unsubordinated indebtedness, senior to any series of preferred stock currently outstanding or that the Company may issue in the future; senior to any of the Company’s future indebtedness that expressly provides it is subordinated to the Notes; effectively subordinated to all of the Company’s future secured indebtedness (including indebtedness that is initially unsecured to which the Company subsequently grants security), to the extent of the value of the assets securing such indebtedness; and structurally subordinated to all existing and future indebtedness and other obligations of any of the Company’s subsidiaries and any of its future subsidiaries, including borrowings under the Company’s revolving credit facility.
