AMENDED AND RESTATED BYLAWS

                                       OF

                          CAPITAL SOUTHWEST CORPORATION

 

 

 

 

 

 

                                TABLE OF CONTENTS

 

                           AMENDED AND RESTATED BYLAWS

 

                                       OF

 

                          CAPITAL SOUTHWEST CORPORATION

 

 

                                                                            Page

 

ARTICLE I           OFFICES....................................................1

         1.01       Registered Office..........................................1

         1.02       Other Offices..............................................1

 

ARTICLE II          MEETINGS OF THE SHAREHOLDERS...............................1

         2.01       Place of Meetings..........................................1

         2.02       Annual Meeting.............................................1

         2.03       Special Meetings...........................................1

         2.04       Notice of Annual or Special Meeting........................1

         2.05       Notice by Electronic Transmission..........................2

         2.06       Business at Special Meeting................................2

         2.07       Quorum of Shareholders.....................................2

         2.08       Act of Shareholders' Meeting...............................3

         2.09       Voting of Shares...........................................3

         2.10       Proxies....................................................3

         2.11       Voting List................................................4

         2.12       Action by Written Consent Without a Meeting................4

         2.13       Presence at Meeting........................................4

 

ARTICLE III         BOARD OF DIRECTORS.........................................4

         3.01       Powers.....................................................4

         3.02       Number of Directors........................................5

         3.03       Election and Term..........................................5

         3.04       Vacancies..................................................5

         3.05       Resignation and Removal....................................5

         3.06       Compensation of Directors..................................5

         3.07       Chairman of the Board......................................5

 

ARTICLE IV          MEETINGS OF THE BOARD......................................6

         4.01       First Meeting..............................................6

         4.02       Regular Meetings...........................................6

         4.03       Special Meetings...........................................6

         4.04       Written Notice.............................................6

         4.05       Notice by Electronic Transmission..........................6

         4.06       Waiver of Notice...........................................6

         4.07       Attendance as Waiver.......................................7

 

 

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                                                                     Exhibit 3.2

 

 

         4.08       Business at Regular or Special Meeting.....................7

         4.09       Quorum of Directors........................................7

         4.10       Interested Directors.......................................7

         4.11       Act of Directors' Meeting..................................8

         4.12       Action by Written Consent Without a Meeting................8

         4.13       Presence at Meeting........................................8

 

ARTICLE V           COMMITTEES.................................................8

         5.01       Designation of Committees..................................8

         5.02       Authority and Proceedings of Committees....................8

         5.03       Employee Director..........................................8

         5.04       Regular Meetings...........................................9

         5.05       Special Meetings...........................................9

         5.06       Quorum; Majority Vote......................................9

         5.07       Minutes....................................................9

         5.08       Compensation...............................................9

         5.09       Responsibility.............................................9

 

ARTICLE VI          MEETING BY USE OF CONFERENCE TELEPHONE

                    OR SIMILAR COMMUNICATIONS EQUIPMENT........................9

 

ARTICLE VII         OFFICERS..................................................10

         7.01       Executive Officers........................................10

         7.02       Election and Qualification................................10

         7.03       Compensation..............................................10

         7.04       Term, Removal, and Vacancies..............................10

         7.05       Chief Executive Officer...................................10

         7.06       President.................................................10

         7.07       Vice Presidents...........................................11

         7.08       Secretary.................................................11

         7.09       Assistant Secretary.......................................11

         7.10       Treasurer.................................................11

         7.11       Assistant Treasurer.......................................11

         7.12       Officer's Bond............................................11

 

ARTICLE VIII        CERTIFICATES FOR SHARES...................................12

         8.01       Certificates Representing Shares..........................12

         8.02       Restriction on Transfer of Shares.........................12

         8.03       Voting and Shareholder Agreements.........................12

         8.04       Transfer of Shares........................................13

         8.05       Lost, Stolen or Destroyed Certificates....................13

         8.06       Closing of Transfer Books and Record Date.................13

         8.07       Registered Shareholders...................................14

 

ARTICLE IX          GENERAL PROVISIONS........................................14

         9.01       Dividends.................................................14

         9.02       Reserves..................................................14

 

                                       ii

 

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                                                                     Exhibit 3.2

 

 

         9.03       Negotiable Instruments....................................14

         9.04       Fiscal Year...............................................14

         9.05       Seal......................................................14

         9.06       Books and Records.........................................14

 

ARTICLE X           AMENDMENTS................................................15

 

 

 

 

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                           AMENDED AND RESTATED BYLAWS

 

                                       OF

 

                          CAPITAL SOUTHWEST CORPORATION

 

 

 

                                   ARTICLE I

 

                                     OFFICES

 

     1.01 Registered Office.  The registered office,  until changed by action of

the Board of  Directors,  shall be at 12900  Preston  Road,  Suite 700,  City of

Dallas, County of Dallas, State of Texas.

 

     1.02 Other  Offices.  The  corporation  also may have offices at such other

places both within and without the State of Texas as the Board of Directors  may

from time to time determine or as the business of the corporation may require.

 

                                   ARTICLE II

 

                          MEETINGS OF THE SHAREHOLDERS

 

     2.01 Place of  Meetings.  Meetings  of  shareholders  for the  election  of

directors or for any other proper  purpose shall be held at such place within or

without  the  State of Texas as the  Board of  Directors  may from  time to time

designate.  At the discretion of the Board of Directors,  or as agreed to by all

persons entitled to notice of the meeting,  meetings of shareholders may also be

held or  shareholders  may  participate in meetings of  shareholders by means of

remote communication  authorized under the Texas Business  Organizations Code as

stated  in the  notice  of such  meeting  or a duly  executed  waiver  of notice

thereof.

 

     2.02 Annual  Meeting.  An annual meeting of  shareholders  shall be held at

such time and date as the Board of Directors may determine.  At such meeting the

shareholders  entitled to vote thereat  shall elect a Board of Directors and may

transact such other business as may properly be brought before the meeting.

 

     2.03 Special  Meetings.  Special  meetings of shareholders may be called by

the Chairman of the Board of Directors,  the President,  the Board of Directors,

or the  holders  of at  least  10% of all  the  shares  entitled  to vote at the

proposed  special  meeting.  If not  otherwise  fixed in  accordance  with these

Bylaws, the record date for determining  shareholders entitled to call a special

meeting is the date the first shareholder signs the notice of such meeting.

 

     2.04 Notice of Annual or Special Meeting. Written or printed notice stating

the  place,  if any,  day and  hour of the  meeting,  the  means  of any  remote

communications by which  shareholders may be considered  present and may vote at

the meeting and the means of accessing the remote communications system, and, in

the case of a special meeting,  the purpose or purposes for which the meeting is

 

 

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called shall be delivered not less than 10 nor more than 60 days before the date

of the meeting,  personally,  by electronic transmission,  or by mail, or by any

other  method  permitted  by  applicable  law,  by or at  the  direction  of the

President,  the Secretary, or the officer or person calling the meeting, to each

shareholder entitled to vote at such meeting except as otherwise provided in the

Texas  Business  Organizations  Code.  If the meeting is held by means of remote

communications, the notice of meeting shall include information on how to access

the list of  shareholders  entitled to vote at the  meeting  required by Section

2.11. If mailed,  such notice shall be deemed to be delivered  when deposited in

the United  States  mail,  addressed  to the  shareholder  at his  address as it

appears on the share transfer records of the  corporation,  with postage thereon

prepaid.  Whenever any notice is required to be given to any  shareholder  under

the  provisions of any law, the Articles of  Incorporation,  or these Bylaws,  a

waiver  thereof in writing  signed by the  person or  persons  entitled  to such

notice, or a waiver by electronic transmission by the person or persons entitled

to notice,  whether  before or after the time  stated  therein,  shall be deemed

equivalent to the giving of such notice.

 

     2.05 Notice by Electronic Transmission. On consent of a shareholder, notice

from the corporation under any applicable law, the Articles of Incorporation, or

these Bylaws may be given to the  shareholder  by electronic  transmission.  The

shareholder  may  specify  the  form of  electronic  transmission  to be used to

communicate notice. The shareholder may revoke this consent by written notice to

the  corporation.  The consent of a  shareholder  is  considered  revoked if the

corporation  is unable to deliver by  electronic  transmission  two  consecutive

notices,  and the  secretary,  assistant  secretary  or  transfer  agent  of the

corporation,  or another person  responsible for delivering  notice on behalf of

the corporation,  knows that delivery of these two electronic  transmissions was

unsuccessful.  Inadvertent failure to treat the unsuccessful  transmissions as a

revocation  of the  shareholder's  consent  does not  affect the  validity  of a

meeting or other action. Notice by electronic transmission shall be deemed given

when the  notice is: (1)  transmitted  to a  facsimile  number  provided  by the

shareholder  for  the  purpose  of  receiving  notice;  (2)  transmitted  to  an

electronic mail address provided by the shareholder for the purpose of receiving

notice;  (3)  posted  on an  electronic  network  and a  message  is sent to the

shareholder  at the  address  provided  by the  shareholder  for the  purpose of

alerting the shareholder of a posting; or (4) communicated to the shareholder by

any other form of electronic transmission consented to by the shareholder.

 

     2.06 Business at Special  Meeting.  The business  transacted at any special

meeting of  shareholders  shall be limited to the purposes  stated in the notice

thereof.

 

     2.07 Quorum of Shareholders.  Unless otherwise  provided in the Articles of

Incorporation,  the  holders of a majority  of the shares  entitled to vote at a

meeting of shareholders,  represented in person or by proxy,  shall constitute a

quorum for any matter to be presented at that  meeting.  If,  however,  a quorum

shall not be present or represented at any meeting of the  shareholders,  unless

otherwise  provided in the Articles of Incorporation,  the holders of a majority

of the shares  represented  in person or by proxy at the meeting  shall have the

power to  adjourn  the  meeting  until such time and to such place as they shall

determine,  without  notice  other than  announcement  at the  meeting.  At such

adjourned  meeting  at  which a quorum  shall be  present  or  represented,  any

business may be  transacted  that might have been  transacted  at the meeting as

originally notified. Unless otherwise provided in the Articles of Incorporation,

the  shareholders  present at a duly organized  meeting may continue to transact

 

 

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business until adjournment,  and the subsequent withdrawal of any shareholder or

the refusal of any shareholder to vote shall not affect the presence of a quorum

at the meeting.

 

     2.08 Act of Shareholders'  Meeting.  With respect to any matter, other than

the election of directors,  a vote on a  "fundamental  action" as defined in the

Texas  Business  Organizations  Code  (a  "Fundamental  Action"),  a  vote  on a

"fundamental business transaction" as defined in the Texas Business Organization

Code (a  "Fundamental  Business  Transaction"),  or another matter for which the

affirmative vote of the holders of a specified portion of the shares entitled to

vote is required by law or the Articles of  Incorporation,  the affirmative vote

of the holders of a majority  of the shares  entitled to vote on, and that voted

for or against or expressly  abstained with respect to, that matter at a meeting

of shareholders  at which a quorum is present shall be the act of  shareholders.

Unless otherwise  provided in the Articles of Incorporation,  directors shall be

elected by a plurality  of the votes cast by the  holders of shares  entitled to

vote in the election of directors at a meeting of shareholders at which a quorum

is present.  Unless otherwise provided in the Texas Business  Organizations Code

or  the  Articles  of  Incorporation,  the  vote  required  for  approval  of  a

Fundamental Action or a Fundamental  Business Transaction by the shareholders is

the  affirmative  vote of the holders of at least  two-thirds of the outstanding

shares  entitled  to vote on the  Fundamental  Action  or  Fundamental  Business

Transaction.

 

     2.09 Voting of Shares.  Each outstanding share,  regardless of class, shall

be  entitled  to one vote on each  matter  submitted  to a vote at a meeting  of

shareholders,  except to the extent otherwise provided by law or the Articles of

Incorporation.  At each election for directors,  every  shareholder  entitled to

vote at such election shall have the right to vote the number of shares owned by

him for as many  persons  as there are  directors  to be  elected  and for whose

election he has the right to vote. Unless expressly permitted by the Articles of

Incorporation,  no shareholder shall be entitled to cumulate his votes by giving

one  candidate  as many  votes as the  number of such  directors  to be  elected

multiplied by the number of shares owned by such  shareholder or by distributing

such votes on the same principle among any number of such candidates.

 

     2.10 Proxies.  At any meeting of the shareholders,  each shareholder having

the  right to vote  shall be  entitled  to vote  either  in  person  or by proxy

executed in writing by the shareholder.  A telegram,  telex, cablegram, or other

form  of  electronic  transmission,  including  telephone  transmission,  by the

shareholder, or a photographic,  photostatic, facsimile, or similar reproduction

of a writing  executed by the  shareholder,  shall be treated as an execution in

writing for purposes of this section.  Any electronic  transmission must contain

or be  accompanied  by  information  from  which it can be  determined  that the

transmission was authorized by the shareholder. No proxy shall be valid after 11

months from the date of its execution  unless  otherwise  provided in the proxy.

Each proxy shall be revocable  unless the proxy form  conspicuously  states that

the  proxy  is  irrevocable  and the  proxy  is  coupled  with an  interest.  An

irrevocable  proxy, if noted  conspicuously on the certificate  representing the

shares  that  are  subject  to the  irrevocable  proxy,  shall  be  specifically

enforceable against the holder of those shares or any successor or transferee of

the holder.  Unless noted  conspicuously  on the  certificate  representing  the

shares that are subject to the  irrevocable  proxy, an irrevocable  proxy,  even

though  otherwise  enforceable,  is  ineffective  against a transferee for value

without actual  knowledge of the existence of the irrevocable  proxy at the time

of the transfer or against any subsequent transferee (whether or not for value),

but such an  irrevocable  proxy shall be  specifically  enforceable  against any

 

 

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other person who is not a transferee  for value from and after the time that the

person acquires actual knowledge of the existence of the irrevocable proxy.

 

     2.11 Voting List.  The officer or agent having charge of the share transfer

records for shares of the  corporation  shall make,  not later than the 11th day

before  the  date  of each  meeting  of  shareholders,  a  complete  list of the

shareholders  entitled  to vote  at such  meeting  or any  adjournment  thereof,

arranged  in  alphabetical  order,  with the  address  of and number and type of

shares held by each  shareholder,  which list, for a period of ten days prior to

such  meeting,  shall  be kept on file at the  registered  office  or  principal

executive  office of the  corporation  and shall be subject to inspection by any

shareholder  at any time during usual  business  hours.  Such list also shall be

produced and kept open at the time and place of the meeting and shall be subject

to the inspection of any shareholder  during the whole time of the meeting.  The

original share transfer records shall be prima-facie  evidence as to who are the

shareholders entitled to examine such list or transfer records or to vote at any

such  meeting of  shareholders.  Instead of being kept on file,  the list may be

kept on a reasonably  accessible  electronic network if the information required

to gain access to the list is provided  with notice of the meeting.  If the list

is  made  available  on  an  electronic  network,  the  corporation  shall  take

reasonable  measures to ensure the information is available only to shareholders

of the  corporation.  If a meeting  of  shareholders  is held by means of remote

communication,  the list must be open to inspection by a shareholder  during the

meeting on a reasonably accessible electronic network.

 

     2.12 Action by Written  Consent  Without a Meeting.  Any action required or

permitted to be taken at any annual or special meeting of the  shareholders  may

be taken  without a meeting,  without  prior  notice,  and without a vote,  if a

consent or consents in writing,  setting forth the action so taken, is signed by

the holder or holders of all the  shares  entitled  to vote with  respect to the

action  that is the  subject of the  consent or  consents.  A  telegram,  telex,

cablegram,  or other electronic  transmission by a shareholder  consenting to an

action  to be taken is  considered  to be  written,  signed,  and  dated for the

purposes of this section if the  transmission  sets forth or is  delivered  with

information  from which the corporation can determine that the  transmission was

transmitted by the shareholder and the date on which the shareholder transmitted

the  transmission.  Any  photographic,   photostatic,  facsimile,  or  similarly

reliable  reproduction  of a consent in writing  signed by a shareholder  may be

substituted  or used instead of the  original  writing for any purpose for which

the  original  writing  could  be  used,  if  the  reproduction  is  a  complete

reproduction of the entire original writing.

 

     2.13  Presence  at Meeting.  Participation  in a meeting  shall  constitute

presence in person at such meeting,  except where a person  participates  in the

meeting for the express  purpose of objecting to the transaction of any business

on the ground that the meeting is not lawfully called or convened.

 

                                  ARTICLE III

 

                               BOARD OF DIRECTORS

 

     3.01 Powers.  The powers of the corporation  shall be exercised by or under

the  authority  of, and the  business  and affairs of the  corporation  shall be

 

 

 

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managed under the  direction of, the Board of Directors,  which may exercise all

such powers of the corporation and do all such lawful acts and things as are not

by law, the Articles of  Incorporation,  or these Bylaws directed or required to

be exercised and done by the shareholders.

 

     3.02 Number of  Directors.  The Board of Directors  shall consist of one or

more directors. The initial Board of Directors shall be fixed by the Articles of

Incorporation;  thereafter,  the  number of  directors  shall be  determined  by

resolution of the Board of Directors, but no decrease in the number of directors

shall have the effect of shortening the term of any incumbent director.

 

     3.03  Election and Term.  The  directors,  other than the initial  Board of

Directors,  shall be elected at each annual meeting of the shareholders,  except

as provided in Section 3.04 of this  Article,  and each  director  elected shall

hold office until the next succeeding  annual meeting and until his successor is

elected and qualified or until his death, resignation,  or removal in accordance

with these  Bylaws.  Directors  need not be  residents  of the State of Texas or

shareholders of the corporation.

 

     3.04  Vacancies.  Any vacancy  occurring in the Board of  Directors  may be

filled by an election at an annual or special meeting of the shareholders called

for that  purpose  or by the  affirmative  vote of a majority  of the  remaining

directors  though  less  than a quorum  of the Board of  Directors.  A  director

elected  to fill a  vacancy  shall  be  elected  for the  unexpired  term of his

predecessor in office. Any directorship to be filled by reason of an increase in

the  number  of  directors  may be filled by  election  at an annual or  special

meeting  of the  shareholders  called  for that  purpose or may be filled by the

Board of Directors for a term of office  continuing only until the next election

of one or more  directors  by the  shareholders;  provided  that  the  Board  of

Directors  may not fill  more  than two such  directorships  during  the  period

between any two successive annual meetings of shareholders.

 

     3.05 Resignation and Removal. Any director may resign at any time by giving

notice in writing  or by  electronic  transmission  to the  corporation.  At any

meeting of shareholders  called expressly for the purpose of removing a director

or directors, any director or the entire Board of Directors may be removed, with

or without  cause,  by a vote of the  holders of a majority  of the shares  then

entitled to vote at an election of directors.

 

     3.06  Compensation of Directors.  As  specifically  prescribed from time to

time by resolution of the Board of Directors,  the directors of the  corporation

may be paid their expenses of attendance at each meeting of the Board and may be

paid a fixed sum for  attendance at each meeting of the Board or a stated salary

in their capacity as directors.  This provision  shall not preclude any director

from serving the  corporation in any other  capacity and receiving  compensation

therefor.  Members  of  special  or  standing  committees  may be  allowed  like

compensation for service on any such committee.

 

     3.07 Chairman of the Board.  The Board of  Directors,  at its first meeting

after each annual meeting of shareholders, may elect one of its members Chairman

of the Board.  Subject to the authority of the Board of Directors,  the Chairman

of the Board shall  preside at all meetings of the Board of Directors  and shall

have such other powers and duties as usually  pertain to such position or as may

be delegated by the Board of Directors.

 

 

 

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                                   ARTICLE IV

 

                              MEETINGS OF THE BOARD

 

     4.01  First  Meeting.  The first  meeting of each  newly  elected  Board of

Directors shall be held without notice  immediately  following the shareholders'

annual meeting at which such  directors were elected,  at the same place as such

shareholders'  meeting or at such other time and place either  within or without

the State of Texas as shall be  designated  by the  Secretary  upon the  written

request of a majority of the directors then elected.

 

     4.02 Regular  Meetings.  Regular  meetings of the Board of Directors may be

held with or  without  notice at such time and at such  place  either  within or

without  the  State  of  Texas  as from  time to time  shall  be  prescribed  by

resolution of the Board of Directors.

 

     4.03 Special  Meetings.  Special  meetings of the Board of Directors may be

called by the Chairman of the Board of Directors or the President,  and shall be

called  by the  Chairman  of the  Board  of  Directors,  the  President,  or the

Secretary on the written request of two directors. Notice of special meetings of

the Board of Directors,  either in writing or by electronic transmission,  shall

be given to each director at least 24 hours prior to the time of the meeting.

 

     4.04  Written  Notice.  Whenever  any notice is required to be given to any

director  under the  provisions  of any law, the Articles of  Incorporation,  or

these  Bylaws,  and the  director  has not  consented  to notice  by  electronic

transmission,  it shall be given in writing and delivered  personally or mailed,

or  delivered  by any other  method  permitted  under  applicable  law,  to such

director at such address as appears on the records of the  corporation,  and, if

mailed,  such notice  shall be deemed to be  delivered at the time when the same

shall be deposited in the United  States mail with  sufficient  postage  thereon

prepaid.

 

     4.05 Notice by Electronic Transmission. On consent of a director, notice of

the date,  time,  place, or purpose of a regular or special meeting of the Board

of  Directors  may be given to the  director  by  electronic  transmission.  The

director  may  specify  the  form  of  electronic  transmission  to be  used  to

communicate notice. Notice by electronic transmission shall be deemed given when

the notice is: (1)  transmitted to a facsimile  number  provided by the director

for the purpose of receiving  notice;  (2)  transmitted  to an  electronic  mail

address provided by the director for the purpose of receiving notice; (3) posted

on an  electronic  network and a message is sent to the  director at the address

provided by the  director for the purpose of alerting the director of a posting;

or (4) communicated to the director by any other form of electronic transmission

consented  to by the  director.  The director may revoke this consent by written

notice  to the  corporation.  The  director's  consent  under  this  Section  is

considered  revoked  if the  corporation  is unable  to  deliver  by  electronic

transmission two consecutive notices, and the secretary, assistant secretary, or

transfer agent of the corporation,  or another person responsible for delivering

notice on behalf of the corporation, knows that delivery of those two electronic

transmissions  was unsuccessful.  Inadvertent  failure to treat the unsuccessful

transmissions  as a  revocation  of the  director's  consent does not affect the

validity of a meeting or other action.

 

     4.06 Waiver of Notice.  Whenever  any notice is required to be given to any

director  under the  provisions  of any law, the Articles of  Incorporation,  or

these Bylaws,  a waiver  thereof in writing  signed by the director or directors

 

 

 

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entitled to such notice, or a waiver by electronic  transmission by the director

or  directors  entitled  to  notice,  whether  before or after  the time  stated

therein, shall be deemed equivalent to the giving of such notice.

 

     4.07  Attendance  as Waiver.  Attendance  of a director at a meeting of the

Board of Directors or a committee thereof shall constitute a waiver of notice of

such meeting,  except when a director  attends a meeting for the express purpose

of objecting to the  transaction  of any business on the ground that the meeting

is not lawfully called or convened.

 

     4.08  Business at Regular or Special  Meeting.  Neither the  business to be

transacted  at, nor the purpose of, any regular or special  meeting of the Board

of Directors  need be specified in the notice,  or waiver of notice,  whether in

writing or by electronic transmission, of such meeting.

 

     4.09  Quorum of  Directors.  A  majority  of the Board of  Directors  shall

constitute a quorum for the  transaction  of business.  If a quorum shall not be

participating  at  any  meeting  of  the  Board  of  Directors,   the  directors

participating  thereat may adjourn the meeting from time to time, without notice

other than announcement at the meeting, until a quorum shall be participating.

 

     4.10  Interested  Directors.  An otherwise  valid  contract or  transaction

between the corporation and one or more of its directors or officers, or between

the corporation  and any other  corporation or other entity in which one or more

of its  directors  or  officers  are  directors,  officers  or other  managerial

officials or have a financial interest,  shall be valid notwithstanding that the

director or officer is present at or participates in the meeting of the Board of

Directors or committee thereof that authorizes the contract or transaction,  and

notwithstanding whether his or their votes are counted for such purpose, if:

 

(a)  The  material  facts  as to  his  relationship  or  interest  and as to the

     contract  or  transaction  are  disclosed  to or are  known by the Board of

     Directors or the committee, and the Board of Directors or committee in good

     faith  authorizes the contract or transaction by the affirmative  vote of a

     majority of the disinterested  directors or committee members,  even though

     the disinterested directors be less than a quorum; or

 

(b)  The  material  facts  as to  his  relationship  or  interest  and as to the

     contract or transaction  are disclosed to or are known by the  shareholders

     entitled to vote thereon,  and the contract or transaction is  specifically

     approved in good faith by vote of the shareholders; or

 

(c)  The contract or transaction is fair as to the corporation as of the time it

     is authorized, approved, or ratified by the Board of Directors, a committee

     thereof, or the shareholders.

 

Common or interested  directors may be counted in determining  the presence of a

quorum at a meeting of the Board of Directors or of a committee that  authorizes

the contract or transaction.

 

 

 

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     4.11 Act of  Directors'  Meeting.  The act of a majority  of the  directors

present at a meeting at which a quorum is present  shall be the act of the Board

of Directors  unless the act of a greater  number is required by the Articles of

Incorporation, by these Bylaws or by law.

 

     4.12 Action by Written  Consent  Without a Meeting.  Any action required or

permitted to be taken at a meeting of the Board of  Directors  or any  committee

thereof may be taken  without a meeting if a consent in writing,  setting  forth

the  action so taken,  is signed by all  members  of the Board of  Directors  or

committee, as the case may be. A telegram, telex, cablegram, or other electronic

transmission  by a director is  considered  written,  signed,  and dated for the

purposes of this section if the  transmission  sets forth or is  delivered  with

information  from which the corporation can determine that the  transmission was

transmitted by the director and the date on which the director  transmitted  the

transmission. Such consent shall be filed with the minutes of the proceedings of

the Board of Directors or committee, as the case may be. Such consent shall have

the same force and effect as a unanimous vote at a meeting.

 

     4.13  Presence  at Meeting.  Participation  in a meeting  shall  constitute

presence in person at such meeting,  except where a person  participates  in the

meeting for the express  purpose of objecting to the transaction of any business

on the ground that the meeting is not lawfully called or convened.

 

                                   ARTICLE V

 

                                   COMMITTEES

 

     5.01 Designation of Committees.  The Board of Directors, by resolution, may

designate from among its members one or more committees;  provided, however, the

Board of Directors shall establish all committees required by the Securities and

Exchange   Commission  or  the  principal   securities  exchange  on  which  the

corporation's  securities are listed for trading. No director who is employed by

the corporation may serve on the audit,  nominating or compensation  committees.

Each committee  shall be comprised of one or more  directors,  and the Board may

designate one or more of its members as alternate members of any committee,  who

may,  subject  to any  limitations  imposed by the Board of  Directors,  replace

absent or disqualified  members at any meeting of that  committee.  The Board of

Directors may remove a member of a committee appointed by the Board if the Board

determines the removal is in the best interests of the corporation.  The removal

shall be  without  prejudice  to any  contract  rights  of the  person  removed.

Appointment of a committee member shall not of itself create contract rights.

 

     5.02 Authority and Proceedings of Committees.  Any such  committee,  to the

extent provided in the resolution of the Board of Directors,  shall have and may

exercise  all of the  authority  of  the  Board  of  Directors,  subject  to the

limitations imposed by applicable law. Each committee shall keep regular minutes

of its  proceedings and report the same to the Board of Directors when required.

To the extent applicable, the provisions of Article IV of these Bylaws governing

the meetings of the Board of Directors shall likewise govern the meetings of any

committee thereof.

 

     5.03 Employee Director. No director who is also employed by the corporation

shall serve on any audit, nominating or compensation committee.

 

 

 

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     5.04  Regular  Meetings.  Regular  meetings  of any  committee  may be held

without notice at such time and place as may be designated  from time to time by

the committee and communicated to all members thereof.

 

     5.05  Special  Meetings.  Special  meetings  of any  committee  may be held

whenever  called by any  committee  member.  The  committee  member  calling any

special meeting shall cause notice of such special  meeting,  including  therein

the time and place of such special meeting, to be given to each committee member

at least two days  before  such  special  meeting.  Neither  the  business to be

transacted at, nor the purpose of, any special  meeting of any committee need be

specified in the notice or waiver of notice of any special meeting.

 

     5.06 Quorum; Majority Vote. At meetings of any committee, a majority of the

number of members designated by the Board of Directors shall constitute a quorum

for the transaction of business.  If a quorum is not present at a meeting of any

committee,  a majority of the members  present may adjourn the meeting from time

to time,  without  notice other than an  announcement  at the  meeting,  until a

quorum is present.  The act of a majority of the members  present at any meeting

at which a quorum is in attendance  shall be the act of a committee,  unless the

act of a greater  number is required by law, the Articles of  Incorporation,  or

these  Bylaws.  If any committee  shall consist of two members,  the presence of

both  directors  shall be necessary to  constitute a quorum,  and the consent of

both members shall be necessary to approve any action.

 

     5.07 Minutes.  Each committee  shall cause minutes of its proceedings to be

prepared and shall report the same to the Board of Directors upon the request of

the Board of Directors.  The minutes of the  proceedings of each committee shall

be delivered to the  Secretary of the  Corporation  for  placement in the minute

books of the corporation.

 

     5.08  Compensation.  Committee  members may, by  resolution of the Board of

Directors,  be  allowed a fixed sum and  expenses  of  attendance,  if any,  for

attending any committee meetings or a stated salary.

 

     5.09 Responsibility. The designation of any committee and the delegation of

authority  to it shall not  operate to  relieve  the Board of  Directors  or any

director of any responsibility imposed upon it or such director by law.

 

                                   ARTICLE VI

 

                     MEETING BY USE OF CONFERENCE TELEPHONE

                       OR SIMILAR COMMUNICATIONS EQUIPMENT

 

     The  shareholders,  members  of the Board of  Directors,  or members of any

committee  designated  by the Board of Directors may  participate  in and hold a

meeting of such  shareholders,  Board of  Directors,  or  committee  by means of

conference  telephone or similar  communications  equipment or another  suitable

electronic communications system, including videoconferencing  technology or the

Internet,  or any  combination  if the  telephone  or other  equipment or system

permits each person  participating  in the meeting to communicate with all other

persons  participating  in the  meeting  and,  if voting is to take place at the

meeting,  to vote.  If voting is to take place at the meeting,  the  corporation

must  implement  reasonable  measures to verify  that each person  voting at the

 

 

 

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<PAGE>

 

meeting  by  means of  remote  communications  is  sufficiently  identified  and

entitled to vote and must keep a record of any vote or other action taken.

 

                                  ARTICLE VII

 

                                    OFFICERS

 

     7.01 Executive Officers. The officers of the corporation shall consist of a

President and a Secretary,  and may also include one or more Vice Presidents,  a

Treasurer,  and such other  officers as are provided for in this  Article.  Each

officer  of the  corporation  shall be  elected  by the  Board of  Directors  as

provided in Section 7.02 of this Article. Any two or more offices may be held by

the same person.

 

     7.02  Election  and  Qualification.  The Board of  Directors,  at its first

meeting after each annual meeting of shareholders, shall elect a President and a

Secretary.  The Board of Directors also may elect one or more Vice Presidents, a

Treasurer, and such other officers,  including assistant officers and agents, as

may be deemed  necessary,  who shall hold their offices for such terms and shall

exercise such powers and perform such duties as shall be determined from time to

time by the Board of Directors.

 

     7.03  Compensation.  The  compensation  of all  officers  and agents of the

corporation  shall be determined  by or determined in a manner  specified by the

Board of Directors.

 

     7.04 Term,  Removal,  and Vacancies.  Each officer of the corporation shall

hold office  until his  successor  is chosen and  qualified  or until his death,

resignation,  or removal. Any officer may resign at any time upon giving written

notice to the corporation,  but such resignation  shall be without  prejudice to

the contract  rights,  if any, of the  corporation.  Any officer or agent may be

removed by the Board of Directors for or without cause  whenever in its judgment

the best interests of the corporation  will be served thereby,  but such removal

shall be without  prejudice  to the  contract  rights,  if any, of the person so

removed.  Election  or  appointment  of an  officer  shall not of itself  create

contract  rights.  Any vacancy  occurring  in any office of the  corporation  by

death,  resignation,  removal,  or  otherwise  shall be  filled  by the Board of

Directors.

 

     7.05 Chief  Executive  Officer.  Unless the Board of  Directors  designates

otherwise,   the  President  shall  be  the  chief  executive   officer  of  the

corporation.  The Chief  Executive  Officer shall preside at all meetings of the

shareholders.  The Chief  Executive  Officer  shall have such  other  powers and

duties as usually  pertain to such office or as may be delegated by the Board of

Directors.

 

     7.06 President. Unless the Board of Directors shall otherwise delegate such

duties, the President shall have general powers of oversight,  supervision,  and

management  of the business and affairs of the  corporation,  and shall see that

all orders and  resolutions  of the Board of Directors  are carried into effect.

The  President  shall have such  powers  and  duties as usually  pertain to such

office,  except as the same may be modified by the Board of Directors.  He shall

execute  bonds,  mortgages,   instruments,   contracts,  agreements,  and  other

documentation,  except when the signing and execution thereof shall be expressly

delegated  by the  Board of  Directors  to some  other  officer  or agent of the

corporation.

 

 

 

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<PAGE>

 

 

     7.07  Vice  Presidents.   Unless  otherwise  determined  by  the  Board  of

Directors, the Vice Presidents in order of their seniority as such seniority may

from time to time be  designated  by the Board of  Directors,  shall perform the

duties and exercise the powers of the  President in absence or disability of the

President.  They shall  perform  such other duties and have such other powers as

the Board of Directors may from time to time prescribe.

 

     7.08  Secretary.  The  Secretary  shall attend all meetings of the Board of

Directors and of the shareholders, record all the proceedings of the meetings of

the Board of  Directors  and of the  shareholders  in a book to be kept for that

purpose,  and  shall  perform  like  duties  for the  standing  committees  when

required.  He shall give,  or cause to be given,  notice of all  meetings of the

shareholders and special meetings of the Board of Directors as may be prescribed

by the Board of  Directors or the  President.  He shall keep in safe custody the

seal of the corporation,  and, when authorized by the Board of Directors,  affix

the same to any  instrument  requiring  it. When so affixed,  such seal shall be

attested by his  signature or by the  signature of the Treasurer or an Assistant

Secretary.  He shall perform all duties  incident to the office of the Secretary

and such other  duties as may from time to time be  assigned to him by the Board

of Directors.

 

     7.09  Assistant  Secretary.   An  Assistant  Secretary,   unless  otherwise

determined by the Board of Directors, shall, in the absence or disability of the

Secretary,  perform  the duties and  exercise  the powers of the  Secretary.  An

Assistant  Secretary  shall perform such other duties and have such other powers

as the Board of Directors may from time to time prescribe.

 

     7.10 Treasurer. The Treasurer shall have the custody of the corporate funds

and  securities,   shall  keep  full  and  accurate  accounts  of  receipts  and

disbursements  in books  belonging  to the  corporation,  and shall  deposit all

moneys  and  other  valuable  effects  in the  name  and to  the  credit  of the

corporation in such depositories as may be designated by the Board of Directors.

He shall disburse the funds of the corporation as may be ordered by the Board of

Directors,  taking proper vouchers for such  disbursements,  and shall render to

the  President and the Board of Directors at its regular  meetings,  or when the

Board of Directors so requires, an account of all his transactions as Treasurer,

and of the financial  condition of the corporation.  The Treasurer shall perform

all the duties incident to the office of Treasurer and such other duties as from

time to time may be assigned to him by the Board of Directors.

 

     7.11  Assistant  Treasurer.   An  Assistant  Treasurer,   unless  otherwise

determined by the Board of Directors, shall, in the absence or disability of the

Treasurer,  perform  the duties and  exercise  the powers of the  Treasurer.  An

Assistant  Treasurer  shall perform such other duties and have such other powers

as the Board of Directors may from time to time prescribe.

 

     7.12 Officer's Bond. If required by the Board of Directors,  any officer so

required shall give the  corporation a bond (which shall be renewed as the Board

of Directors  may require) in such sum and with such surety or sureties as shall

be  satisfactory  to the Board of Directors for the faithful  performance of the

duties of his office and for the restoration to the corporation,  in case of his

death,  resignation,  retirement,  or removal from office, of any and all books,

papers,  vouchers,  money, and other property of whatever kind in his possession

or under his control belonging to the corporation.

 

 

 

                                       11

<PAGE>

 

 

                                  ARTICLE VIII

 

                             CERTIFICATES FOR SHARES

 

     8.01  Certificates  Representing  Shares.  The  corporation  shall  deliver

certificates  representing  shares to which shareholders are entitled,  provided

that the Board of Directors  may provide by  resolution  that some or all of any

class or series of the  corporation's  stock may be uncertificated  shares.  Any

such  resolution  shall not apply to shares  represented by a certificate  until

such  certificate is surrendered  to the  corporation  (or the transfer agent or

registrar, as the case may be).  Notwithstanding the adoption of such resolution

by the Board of Directors,  every holder of stock  represented  by  certificates

and, upon request, a holder of uncertificated shares shall be entitled to have a

certificate  signed in the name of the corporation by the Chairman of the Board,

if  any,  or the  President  or a Vice  President  and  by the  Treasurer  or an

Assistant Treasurer or the Secretary or any Assistant Secretary,  certifying the

number of shares and the class or series of shares of the  corporation  owned by

the  stockholder.  Any  or  all of the  signatures  on  the  certificate  may be

facsimile.  In case any officer,  transfer  agent or registrar who has signed or

whose facsimile  signature has been placed upon a certificate  shall have ceased

to be such  officer,  transfer  agent or registrar  before such  certificate  is

issued,  it may be issued  by the  corporation  with the same  effect as if such

person were an officer,  transfer agent or registrar at the date of issue.  If a

holder of  uncertificated  shares elects to receive a certificate  for shares of

the corporation's stock, the corporation (or the transfer agent or registrar, as

the case may be) shall (to the extent  permitted under applicable law and rules,

regulations  and listing  requirements  of any stock exchange or stock market on

which the  corporation's  shares are listed or traded),  cease providing  annual

statements indicating such holder's holdings of shares in the corporation.. Such

certificates  shall  be  numbered  and  shall  be  entered  in the  books of the

corporation as they are issued, and shall be signed by the President or any Vice

President  and the  Treasurer or an Assistant  Treasurer or the  Secretary or an

Assistant  Secretary of the corporation,  and may be sealed with the seal of the

corporation  or a facsimile  thereof.  The  signatures  of such  officers upon a

certificate  may be  facsimiles.  In case any  officer  who has  signed or whose

facsimile  signature has been placed upon such certificate  shall have ceased to

be such  officer  before  such  certificate  is issued,  it may be issued by the

corporation  with the same effect as if he were such  officer at the date of its

issuance.  Each certificate  representing shares issued by the corporation shall

conspicuously  set forth such provisions as are required by applicable law. Each

certificate  representing  shares  shall  state upon the face  thereof  that the

corporation is organized  under the laws of the State of Texas,  the name of the

person to whom issued, the number and class of shares and the designation of the

series, if any, that such certificate represents and the par value of each share

represented  by such  certificate or a statement that the shares are without par

value. No certificate shall be issued for any share until the full amount of the

consideration therefor, fixed as provided by law, has been paid or delivered.

 

     8.02 Restriction on Transfer of Shares. Any restriction on the transfer, or

registration  of the transfer,  of shares shall be noted  conspicuously  on each

certificate   representing  shares  that  are  subject  to  the  restriction  in

accordance with applicable law.

 

     8.03 Voting and Shareholder Agreements. Any voting or shareholder agreement

shall be noted  conspicuously on each  certificate  representing the shares that

are subject to the agreement in accordance with applicable law.

 

 

 

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<PAGE>

 

 

     8.04 Transfer of Shares.  Upon surrender to the corporation or the transfer

agent  of  the  corporation  of  a  certificate  for  shares  duly  endorsed  or

accompanied  by proper  evidence of  succession,  assignment,  or  authority  to

transfer,  it shall be the duty of the corporation to issue a new certificate to

the  person  entitled  thereto,  cancel  the old  certificate,  and  record  the

transaction upon its books.

 

     8.05 Lost,  Stolen or Destroyed  Certificates.  The Board of Directors,  or

such officer or officers of the  corporation  as the Board of Directors may from

time to time  designate,  may direct a new  certificate  or  certificates  to be

issued in place of any  certificate or  certificates  theretofore  issued by the

corporation  alleged to have been lost,  stolen, or destroyed upon the making of

an affidavit of that fact by the person claiming the certificate or certificates

of stock to be lost,  stolen,  or destroyed.  When authorizing the issuance of a

new  certificate  or  certificates,  the Board of Directors,  or such officer or

officers,  in its or his discretion and as a condition precedent to the issuance

thereof, may require the owner of such lost, stolen, or destroyed certificate or

certificates, or his legal representative,  to advertise the same in such manner

as it or he shall  require or to give the  corporation  a bond in such form,  in

such sum,  and with such surety or sureties as it or he may direct as  indemnity

against  any claim that may be made  against the  corporation  on account of the

certificate or certificates  alleged to have been lost,  stolen, or destroyed or

the issuance of the new certificate or certificates.

 

     8.06  Closing  of  Transfer  Books and  Record  Date.  For the  purpose  of

determining  shareholders  entitled  to notice of or to vote at any  meeting  of

shareholders or any adjournment  thereof,  or entitled to receive a distribution

by the corporation (other than a distribution involving a purchase or redemption

by the  corporation  of any of its own  shares)  (a  "Distribution")  or a share

dividend,  or in order to make a  determination  of  shareholders  for any other

proper  purpose  (other  than  determining  shareholders  entitled to consent to

action taken by  shareholders  that is proposed to be taken without a meeting of

shareholders),  the Board of  Directors  may  provide  that the  share  transfer

records shall be closed for a stated  period but not to exceed,  in any case, 60

days.  If the  share  transfer  records  shall  be  closed  for the  purpose  of

determining  shareholders  entitled  to  notice  of or to vote at a  meeting  of

shareholders,  such  records  shall be closed  for at least 10 days  immediately

preceding such meeting. In lieu of closing the share transfer records, the Board

of  Directors  may  fix in  advance  a date as the  record  date  for  any  such

determination of shareholders, such date in any case to be not more than 60 days

and, in case of a meeting of  shareholders,  not less than 10 days, prior to the

date on which the particular action requiring such determination of shareholders

is to be taken. If the share transfer  records are not closed and no record date

is fixed for the determination of shareholders  entitled to notice of or to vote

at a meeting of shareholders, or shareholders entitled to receive a Distribution

or a share  dividend,  the date on which  notice of the meeting is mailed or the

date  on  which  the  resolution  of  the  Board  of  Directors  declaring  such

Distribution  or share  dividend  is adopted,  as the case may be,  shall be the

record date for such  determination  of  shareholders.  When a determination  of

shareholders  entitled to vote at any meeting of  shareholders  has been made as

provided in this Section 9.06, such determination shall apply to any adjournment

thereof,  except when the determination has been made through the closing of the

share  transfer  records and the stated period of closing has expired.  Unless a

record  date shall have  previously  been fixed or  determined  pursuant to this

Section 9.06, whenever action by shareholders is proposed to be taken by consent

in writing without a meeting of  shareholders,  the Board of Directors may fix a

record date for the purpose of determining  shareholders  entitled to consent to

 

 

 

                                       13

<PAGE>

 

that action, which record date shall not precede, and shall not be more than ten

days after, the date upon which the resolution fixing the record date is adopted

by the  Board of  Directors.  If no record  date has been  fixed by the Board of

Directors and the prior action of the Board of Directors is not required by law,

the record date for  determining  shareholders  entitled to consent to action in

writing  without a meeting  shall be the  first  date on which a signed  written

consent  setting  forth the action taken or proposed to be taken is delivered to

the  corporation.  If no  record  date  shall  have  been  fixed by the Board of

Directors  and prior  action of the Board of  Directors  is required by law, the

record  date for  determining  shareholders  entitled  to  consent  to action in

writing without a meeting shall be at the close of business on the date on which

the Board of Directors adopts a resolution taking such prior action.

 

     8.07 Registered  Shareholders.  The corporation  shall be entitled to treat

the  holder of  record  of any  share or  shares of stock as the  holder in fact

thereof and, accordingly, shall not be bound to recognize any equitable or other

claim to or  interest  in such share or shares on the part of any other  person,

whether  or not it  shall  have  express  or other  notice  thereof,  except  as

otherwise provided by law.

 

                                   ARTICLE IX

 

                               GENERAL PROVISIONS

 

     9.01 Dividends.  The Board of Directors from time to time may authorize and

declare,  and the corporation may pay,  dividends or other  distributions on its

outstanding  shares in cash,  property,  or its own shares  pursuant  to law and

subject to the provisions of the Articles of Incorporation and these Bylaws.

 

     9.02 Reserves. The Board of Directors may by resolution create a reserve or

reserves out of surplus for any proper purpose or purposes,  and may abolish any

such reserve in the same manner.

 

     9.03 Negotiable Instruments. All bills, notes, checks, or other instruments

for the payment of money  shall be signed or  countersigned  by such  officer or

officers or such other person or persons and in such manner as are  permitted by

these Bylaws or in such manner as the Board of  Directors  from time to time may

designate.

 

     9.04  Fiscal  Year.  The fiscal year of the  corporation  shall be fixed by

resolution of the Board of Directors.

 

     9.05 Seal. The  corporation  may have a corporate seal and, if the Board of

Directors  adopts a corporate  seal,  the  corporate  seal shall have  inscribed

thereon the name of the corporation and may be used by causing it or a facsimile

thereof to be impressed or affixed or in any other manner reproduced.

 

     9.06 Books and  Records.  The  corporation  shall keep books and records of

account and shall keep minutes of the proceedings of the shareholders, the Board

of  Directors,  and each  committee of the Board of Directors.  The  corporation

shall keep at its registered  office or principal  place of business,  or at the

 

 

 

                                       14

<PAGE>

 

office of its transfer agent or registrar,  a record of the original issuance of

shares issued by the  corporation  and a record of each transfer of those shares

that have been presented to the corporation for  registration of transfer.  Such

records  shall  contain  the  names  and  addresses  of  all  past  and  current

shareholders  of the  corporation  and the  number and class or series of shares

issued by the corporation held by each of them. Any books, records, minutes, and

share  transfer  records may be in written  form or in any other form capable of

being converted into written paper form within a reasonable time.

 

                                   ARTICLE X

 

                                   AMENDMENTS

 

     These Bylaws may be amended or repealed or new Bylaws may be adopted by the

Board of  Directors at any regular or special  meeting of the Board,  unless the

Articles of  Incorporation  or applicable law reserves the power  exclusively to

the shareholders in whole or part or the shareholders in amending,  repealing or

adopting a particular  bylaw  expressly  provide that the Board may not amend or

repeal that bylaw. In addition,  unless the Articles of Incorporation or a Bylaw

adopted  by the  shareholders  provides  otherwise  as to  all or a part  of the

corporation's  Bylaws,  the shareholders  may amend or repeal the  corporation's

Bylaws.

 

 

 

 

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<PAGE>

 

 

 

                            CERTIFICATE OF SECRETARY

 

 

     The  undersigned  does hereby  certify that (i) she is the duly elected and

qualified  Secretary of Capital Southwest  Corporation,  a Texas corporation and

(ii) the  foregoing is a true and correct copy of the Bylaws of the  corporation

as of April __, 2007.

 

 

 

                                            ------------------------------------

                                            _________________________, Secretary

 

[As Filed: 03/31/2007]