BYLAWS

 

                                       OF

 

                          GLADSTONE CAPITAL CORPORATION

 

                            (A MARYLAND CORPORATION)

 

 

 

                                   ARTICLE I

 

                                    OFFICES

 

       SECTION 1.  PRINCIPAL OFFICE.  The principal office shall be in the City

of Baltimore, State of Maryland.

 

       SECTION 2.  ADDITIONAL OFFICES.  The Corporation may also have offices at

such other places both within and without the State of Maryland as the Board of

Directors may from time to time determine or the business of the Corporation may

require.

 

                                   ARTICLE II

 

                            MEETINGS OF STOCKHOLDERS

 

       SECTION 3.  PLACE.  Unless the Articles of Incorporation provide

otherwise, meetings of stockholders shall be held at the office of the

Corporation in the Commonwealth of Virginia, or at any other place within the

United States as shall be designated from time to time by the Board of Directors

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

thereof.

 

       SECTION 4.  ANNUAL MEETING.

 

             (a)   The annual meeting of the stockholders of the Corporation,

for the purpose of election of directors and for such other business as may

lawfully come before it, shall be held on such date and at such time as may be

designated from time to time by the Board of Directors. Nominations of persons

for election to the Board of Directors and the proposal of business to be

considered by the stockholders may be made at an annual meeting of stockholders:

(i) pursuant to the Corporation's notice of meeting of stockholders; or (ii) by

or at the direction of the Board of Directors; or (iii) by any stockholder of

the Corporation who is a stockholder of record at the time of giving of notice

provided for in the following paragraph, who is entitled to vote at such meeting

and who complied with the notice procedures set forth in Section 4.

 

             (b)   At an annual meeting of the stockholders, only such business

shall be conducted as shall have been properly brought before the meeting. For

nominations or other business to be properly brought before an annual meeting by

a stockholder pursuant to clause (iii) of Section 4(a) of these Bylaws, (i) the

stockholder must have given timely notice thereof in writing to the Secretary of

the Corporation, (ii) such other business must be a proper matter for

 

 

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stockholder action under law, (iii) if the stockholder, or the beneficial owner

on whose behalf any such proposal or nomination is made, has provided the

Corporation with a Solicitation Notice (as defined in this Section 4(b)), such

stockholder or beneficial owner must, in the case of a proposal, have delivered

a proxy statement and form of proxy to holders of at least the percentage of the

Corporation's voting shares required under applicable law to carry any such

proposal, or, in the case of a nomination or nominations, have delivered a proxy

statement and form of proxy to holders of a percentage of the Corporation's

voting shares reasonably believed by such stockholder or beneficial owner to be

sufficient to elect the nominee or nominees proposed to be nominated by such

stockholder, and must, in either case, have included in such materials the

Solicitation Notice, and (iv) if no Solicitation Notice relating thereto has

been timely provided pursuant to this section, the stockholder or beneficial

owner proposing such business or nomination must not have solicited a number of

proxies sufficient to have required the delivery of such a Solicitation Notice

under this Section 4. To be timely, a stockholder's notice shall be delivered to

the Secretary at the principal executive offices of the Corporation not later

than the close of business on the sixtieth (60th) day nor earlier than the close

of business on the ninetieth (90th) day prior to the first anniversary of the

preceding year's annual meeting; provided, however, that in the event that the

date of the annual meeting is advanced more than thirty (30) days prior to or

delayed by more than thirty (30) days after the anniversary of the preceding

year's annual meeting, notice by the stockholder to be timely must be so

delivered not earlier than the close of business on the ninetieth (90th) day

prior to such annual meeting and not later than the close of business on the

later of the sixtieth (60th) day prior to such annual meeting or the tenth

(10th) day following the day on which public announcement of the date of such

meeting is first made. In no event shall the public announcement of an

adjournment of an annual meeting commence a new time period for the giving of a

stockholder's notice as described above. Such stockholder's notice shall set

forth: (A) as to each person whom the stockholder proposed to nominate for

election or reelection as a director all information relating to such person

that is required to be disclosed in solicitations of proxies for election of

directors in an election contest, or is otherwise required, in each case

pursuant to Regulation 14A under the Securities Exchange Act of 1934, as amended

(the "1934 Act") and Rule 14a-11 thereunder (including such person's written

consent to being named in the proxy statement as a nominee and to serving as a

director if elected); (B) as to any other business that the stockholder proposes

to bring before the meeting, a brief description of the business desired to be

brought before the meeting, the reasons for conducting such business at the

meeting and any material interest in such business of such stockholder and the

beneficial owner, if any, on whose behalf the proposal is made; and (C) as to

the stockholder giving the notice and the beneficial owner, if any, on whose

behalf the nomination or proposal is made (i) the name and address of such

stockholder, as they appear on the Corporation's books, and of such beneficial

owner, (ii) the class and number of shares of the Corporation which are owned

beneficially and of record by such stockholder and such beneficial owner, and

(iii) whether either such stockholder or beneficial owner intends to deliver a

proxy statement and form of proxy to holders of, in the case of the proposal, at

least the percentage of the Corporation's voting shares required under

applicable law to carry the proposal or, in the case of a nomination or

nominations, a sufficient number of holders of the Corporation's voting shares

to elect such nominee or nominees (an affirmative statement of such intent, a

"Solicitation Notice").

 

             (c)   Notwithstanding anything in the second sentence of

Section 4(b) of these Bylaws to the contrary, in the event that the number of

directors to be elected to the Board of

 

 

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Directors of the Corporation is increased and there is no public announcement

naming all of the nominees for director or specifying the size of the increased

Board of Directors made by the Corporation at least seventy (70) days prior to

the first anniversary of the preceding year's annual meeting, a stockholder's

notice required by this Section 4 shall also be considered timely, but only with

respect to nominees for any new positions created by such increase, if it shall

be delivered to the Secretary at the principal executive offices of the

Corporation not later than the close of business on the tenth (10th) day

following the day on which such public announcement is first made by the

Corporation.

 

             (d)   Only such persons who are nominated in accordance with the

procedures set forth in this Section 4 shall be eligible to serve as directors

and only such business shall be conducted at a meeting of stockholders as shall

have been brought before the meeting in accordance with the procedures set forth

in this Section 4. Except as otherwise provided by law, the Chairman of the

meeting shall have the power and duty to determine whether a nomination or any

business proposed to be brought before the meeting was made, or proposed, as the

case may be, in accordance with the procedures set forth in these Bylaws and, if

any proposed nomination or business is not in compliance with these Bylaws, to

declare that such defective proposal or nomination shall not be presented for

stockholder action at the meeting and shall be disregarded.

 

             (e)   Notwithstanding the foregoing provisions of this Section 4,

in order to include information with respect to a stockholder proposal in the

proxy statement and form of proxy for a stockholders' meeting, stockholders must

provide notice as required by the regulations promulgated under the 1934 Act.

Nothing in these Bylaws shall be deemed to affect any rights of stockholders to

request inclusion of proposals in the Corporation proxy statement pursuant to

Rule 14a-8 under the 1934 Act.

 

             (f)   For purposes of this Section 4, "public announcement" shall

mean disclosure in a press release reported by the Dow Jones News Service,

Associated Press or comparable national news service or in a document publicly

filed by the Corporation with the Securities and Exchange Commission pursuant to

Section 13, 14 or 15(d) of the 1934 Act.

 

       SECTION 5.  SPECIAL MEETINGS.

 

             (a)   Special meetings of the stockholders of the corporation may

be called, for any purpose or purposes, by (i) the Chairman of the Board of

Directors, (ii) the Chief Executive Officer or President, (iii) the Board of

Directors pursuant to a resolution adopted by a majority of the total number of

authorized directors (whether or not there exist any vacancies in previously

authorized directorships at the time any such resolution is presented to the

Board of Directors for adoption), or (iv) stockholders of the Corporation who

are stockholders of record at the time of giving of notice and who hold at least

the percentage of the voting securities of the Corporation required by Section

3-805 of the Maryland General Corporation Law.

 

             (b)   If a special meeting is properly called by any person or

persons other than the Board of Directors, the request shall be in writing,

specifying the general nature of the business proposed to be transacted, and

shall be delivered personally or sent by certified or registered mail, return

receipt requested, to the Chairman of the Board of Directors, the Chief

Executive Officer, the President or the Secretary of the Corporation. No

business may be

 

 

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transacted at such special meeting otherwise than specified in such notice. The

Board of Directors shall determine the time and place of such special meeting,

which shall be held not less than thirty-five (35) nor more than one hundred

twenty (120) days after the date of the receipt of the request. Upon

determination of the time and place of the meeting, the officer receiving the

request shall cause notice to be given to the stockholders entitled to vote, in

accordance with the provisions of Section 6 of these Bylaws. Nothing contained

in this paragraph (b) shall be construed as limiting, fixing, or affecting the

time when a meeting of stockholders called by action of the Board of Directors

may be held.

 

             (c)   Nominations of persons for election to the Board of Directors

may be made at a special meeting of stockholders at which directors are to be

elected pursuant to the Corporation's notice of meeting (i) by or at the

direction of the Board of Directors or (ii) by any stockholder of the

corporation who is a stockholder of record at the time of giving notice provided

for in these Bylaws who shall be entitled to vote at the meeting and who

complies with the notice procedures set forth in this Section 5(c). In the event

the corporation calls a special meeting of stockholders for the purpose of

electing one or more directors to the Board of Directors, any such stockholder

may nominate a person or persons (as the case may be), for election to such

position(s) as specified in the corporation's notice of meeting, if the

stockholder's notice required by Section 4(b) of these Bylaws shall be delivered

to the Secretary at the principal executive offices of the corporation not

earlier than the close of business on the ninetieth (90th) day prior to such

special meeting and not later than the close of business on the later of the

sixtieth (60th) day prior to such meeting or the tenth (10th) day following the

day on which public announcement is first made of the date of the special

meeting and of the nominees proposed by the Board of Directors to be elected at

such meeting. In no event shall the public announcement of an adjournment of a

special meeting commence a new time period for the giving of a stockholder's

notice as described above.

 

       SECTION 6.  NOTICE.  Except as otherwise provided herein or by law,

notice, given in writing or by electronic transmission, of each meeting of

stockholders shall be given not less than ten (10) nor more than ninety (90)

days before the date of the meeting to each stockholder entitled to vote at such

meeting, such notice to specify the place, if any, date and hour, in the case of

special meetings, the purpose or purposes of the meeting, and the means of

remote communications, if any, by which stockholders and proxy holders may be

deemed to be present in person and vote at any such meeting. If mailed, notice

is given when deposited in the United States mail, postage prepaid, directed to

the stockholder at such stockholder's address as it appears on the records of

the corporation. Notice of the time, place, if any, and purpose of any meeting

of stockholders may be waived in writing, signed by the person entitled to

notice thereof, or by electronic transmission by such person, either before or

after such meeting, and will be waived by any stockholder by his attendance

thereat in person, by remote communication, if applicable, or by proxy, except

when the stockholder attends a meeting for the express purpose of objecting, at

the beginning of the meeting, to the transaction of any business because the

meeting is not lawfully called or convened. Any stockholder so waiving notice of

such meeting shall be bound by the proceedings of any such meeting in all

respects as if due notice thereof had been given.

 

       SECTION 7.  PRESIDING OFFICER; STATEMENT OF AFFAIRS; ORDER OF BUSINESS.

 

 

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             (a)   Meetings of stockholders shall be presided over by the

Chairman of the Board of Directors, if any, or, if he is not present (or, if

there is none), by the Chief Executive Officer, or, if he is not present, by the

President, or, if he is not present, by a Vice President, or, if he is not

present, by such person as may have been chosen by the Board of Directors, or if

none of such persons is present, by a chairman to be chosen by the stockholders

owning a majority of the shares of capital stock of the Corporation issued and

outstanding and entitled to vote at the meeting and who are present in person or

represented by proxy. The Secretary of the Corporation, or, if he is not

present, an Assistant Secretary, or, if he is not present, such person as may be

chosen by the Board of Directors, or if none of such persons is present, then

such person as may be chosen by the stockholders owning a majority of the shares

of capital stock of the Corporation issued and outstanding and entitled to vote

at the meeting and who are present in person or represented by proxy shall act

as Secretary of the meeting.

 

             (b)   The following order of business, unless otherwise ordered at

the meeting, shall be observed as far as practicable and consistent with the

purposes of the meeting:

 

                   (1)   Call of the meeting to order.

 

                   (2)   Presentation of proof of mailing of the notice of the

meeting and, if the meeting is a special meeting, the call thereof.

 

                   (3)   Presentation of proxies.

 

                   (4)   Announcement that a quorum is present.

 

                   (5)   Reading and approval of the minutes of the previous

meeting.

 

                   (6)   Reports, if any, of officers.

 

                   (7)   Submission of statement of affairs by the Chief

Financial Officer or Treasurer, if the meeting is an annual meeting.

 

                   (8)   Election of directors, if the meeting is an annual

meeting or a meeting called for that purpose.

 

                   (9)   Miscellaneous business.

 

                   (10)  Adjournment.

 

       SECTION 8.  QUORUM; ADJOURNMENTS.  At any meeting of stockholders the

presence in person or by proxy of stockholders entitled to cast a majority of

all the votes entitled to be cast at the meeting shall constitute a quorum; but

this section shall not affect any requirement under law or under the Articles of

Incorporation for the vote necessary for the adoption of any measure. If,

however, such quorum shall not be present or represented at any meeting of the

stockholders, the stockholders entitled to vote thereat, present in person or

represented by proxy, shall have power to adjourn the meeting from time to time,

without notice other than announcement at the meeting, until a quorum shall be

present or represented. At such adjourned meeting at which a

 

 

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quorum shall be present or represented, any business may be transacted which

might have been transacted at the meeting as originally notified.

 

       SECTION 9.  VOTING.

 

              (a)   A majority of the votes cast at a meeting of stockholders,

duly called and at which a quorum is present, shall be sufficient to take or

authorize action upon any matter which may properly come before the meeting,

unless more than a majority of the votes cast is required by law, these Bylaws

or by the Articles of Incorporation.

 

              (b) If two or more classes of stock are entitled to vote

separately on any matter for which the law requires approval by two-thirds of

all the votes entitled to be cast, the matter shall be approved by two-thirds of

all the votes of each class, unless these Bylaws or the Articles of

Incorporation provide otherwise.

 

              (c) Unless the Articles of Incorporation provide otherwise, each

outstanding share of stock having voting power, regardless of class, shall be

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

stockholders; but no share shall be entitled to vote if any installment payable

on it is overdue and unpaid. A stockholder may vote the shares owned of record

by him either in person or by proxy executed in writing by the stockholder or by

his duly authorized attorney-in-fact. No proxy shall be valid after eleven

months from its date, unless otherwise provided in the proxy. At all meetings of

stockholders, unless the voting is conducted by inspectors, all questions

relating to the qualification of voters and the validity of proxies and the

acceptance or rejection of votes shall be decided by the chairman of the

meeting.

 

              (d) At all elections of directors of the Corporation each

stockholder having voting power shall not be entitled to exercise the right

of cumulative voting.

 

       SECTION 10. ACTION WITHOUT MEETING.

 

              (a)  Any action required or permitted to be taken at any meeting

of stockholders may be taken without a meeting, if a unanimous written consent

which sets forth the action is signed by each stockholder entitled to vote on

the matter is filed with the records of the of stockholders' meetings.

 

              (b)  Unless the Articles of Incorporation requires otherwise, the

holders of any class of stock other than common stock, entitled to vote

generally in the election of directors, may take action or consent to any action

by the written consent of the stockholders entitled to cast not less than the

minimum number of votes that would be necessary to authorize or take the action

at a stockholders' meeting if the Corporation gives notice of the action to each

stockholder not later than ten (10) days after the effective time of the action.

 

             (c)   Notwithstanding the foregoing, no such action by written

consent may be taken following the closing of the initial public offering

pursuant to an effective registration statement under the Securities Act of

1933, as amended (the "1933 Act"), covering the offer and sale of Common Stock

of the corporation to the public (the "Initial Public Offering").

 

 

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       SECTION 11. TELEPHONE MEETINGS. Stockholders may participate in a meeting

by means of a conference call or similar communications equipment by means of

which all persons participating can hear each other at the same time, and

participation in the meeting by such means shall conclusively be deemed to

constitute presence in person at such meeting.

 

                                   ARTICLE III

 

                                    DIRECTORS

 

       SECTION 12. POWERS. The business and affairs of the Corporation shall be

managed by its Board of Directors, which may exercise all of the powers of the

Corporation, except such as are by law or by the Articles of Incorporation or by

these Bylaws conferred upon or reserved to the stockholders.

 

       SECTION 13. NUMBER AND TERM.

 

              (a)  The number of directors of the Corporation shall initially be

two (2) until increased or decreased pursuant to the following provisions, but

shall never be greater than nine (9) or fewer than one (1). A majority of the

entire Board of Directors may, at any time and from time to time, increase or

decrease the number of directors of the Corporation as set forth in the Articles

of Incorporation or these Bylaws; provided, however, that the number of

directors shall not be increased by fifty percent (50%) or more in any twelve

(12) month period without the approval of two-thirds (2/3rds) of the members of

the Board of Directors then in office. The tenure of office of a director shall

not be affected by any decrease in the number of directors so made by the Board

of Directors. The directors shall be elected by a majority of all the votes cast

at the annual meeting of the stockholders, except as provided in Section 15 of

this Article.

 

             (b)  Following the closing of the Initial Public Offering, the

Corporation shall be subject to the provisions set forth in Title 3, Subtitle 8

of the Maryland General Corporation Law. Subject to the rights of the holders of

any series of Preferred Stock to elect additional directors under specified

circumstances, following the closing of the Initial Public Offering, the

directors shall be divided into three classes to be designated Class I, Class II

and Class III, respectively. The initial Class I directors shall hold office for

a term expiring at the annual meeting of the stockholders held in the first year

following the closing of the Initial Public Offering. The initial Class II

directors shall hold office for a term expiring at the annual meeting of the

stockholders held in the second year following the closing of the Initial Public

Offering. The initial Class III directors shall hold office for a term expiring

at the annual meeting of the stockholders held in the third year following the

closing of the Initial Public Offering.

 

             (c)  At each annual meeting of the stockholders commencing with the

first annual meeting after the closing of the Initial Public Offering, the

successor or successors of the class of directors whose term expires at that

meeting (other than directors elected by the holders of any series of preferred

stock) shall hold office for a term expiring at the annual meeting of the

stockholders held in the third year following the year of their election. The

directors elected to each class (other than directors elected by any series of

preferred stock) shall hold office until their successors are duly elected and

qualify or until their earlier resignation or removal. Directors need not be

stockholders.

 

 

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       SECTION 14.  MATTERS FOR WHICH ACTION OF THE ENTIRE BOARD IS REQUIRED.

Notwithstanding anything to the contrary in these Bylaws, the following actions

shall require the approval by the affirmative vote of a majority of the entire

Board of Directors:

 

              (a)   appointing any director to a committee of the Board of

Directors pursuant to Article IV of these Bylaws;

 

              (b)   appointing any employee, officer, or director of the

Corporation, or any person who is to become an employee, officer, or director of

the Corporation, to serve as an officer above the level of principal; and

 

              (c)   altering, amending or repealing these Bylaws or adopting new

bylaws.

 

       SECTION 15.  VACANCY.  Any vacancy occurring in the Board of Directors

for any cause, including by reason of an increase in the number of directors,

may be filled by a majority of the remaining members of the Board of Directors,

although such majority is less than a quorum. Notwithstanding the foregoing, if

the stockholders of any class or series are entitled separately to elect one or

more directors, a majority of the remaining directors elected by that class or

series or the sole remaining director elected by that class or series may fill

any vacancy among the number of directors elected by that class or series. A

director elected by the Board of Directors to fill a vacancy shall be elected to

hold office until the next annual meeting of stockholders or until his successor

is elected and qualifies.

 

       SECTION 16.  REMOVAL AND RESIGNATION.

 

              (a)   Unless otherwise provided by law or the Articles of

Incorporation, at any meeting of stockholders, duly called and at which a quorum

is present, the stockholders may, by the affirmative vote of the holders of

seventy-five percent (75%) of the votes generally entitled to be cast thereon,

remove any director or directors from office for cause, and may elect a

successor or successors to fill any resulting vacancies for the unexpired terms

of any removed director or directors. The stockholders may not remove a director

without cause.

 

              (b)   Any director may resign at any time by giving written notice

to the Board of Directors, the Chairman of the Board of Directors, the Chief

Executive Officer, the President or Secretary of the Corporation. Unless

otherwise specified in the written notice, the resignation shall take effect

upon delivery thereof to the Board of Directors or designated officer. It shall

not be necessary for a resignation to be accepted before it becomes effective.

 

       SECTION 17.  PLACE OF MEETINGS.  Meetings of the Board of Directors,

regular or special, may be held at any place in or out of the State of Maryland

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

 

       SECTION 18.  ANNUAL MEETING.  The annual meeting of the Board of

Directors shall be held immediately following the annual stockholders meeting,

and no notice of such meeting shall be necessary to the directors in order

legally to constitute the meeting, provided a quorum shall be present.

 

 

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       SECTION 19.  REGULAR MEETINGS.  Regular meetings of the Board of

Directors may be held without notice at such time and place as shall from time

to time be determined by the Board of Directors.

 

       SECTION 20.  SPECIAL MEETINGS.  Special meetings of the Board of

Directors may be called at any time by the Board of Directors or the executive

committee, if one be constituted, by vote at a meeting, or by the Chief

Executive Officer, the President or by a majority of the directors or a majority

of the members of the executive committee in writing with or without a meeting.

Special meetings may be held at such place or places within or without Maryland

as may be designated from time to time by the Board of Directors; in the absence

of such designation such meetings shall be held at such places as may be

designated in the call.

 

       SECTION 21.  NOTICE.  Notice of the place and time of every special

meeting of the Board of Directors shall be served on each director or sent to

him by mail, or by leaving the same at his residence or usual place of business

or by telecopy, facsimile transmission, electronic mail or any other electronic

means at least twenty-four (24) hours before the date of the meeting.

 

       SECTION 22.  QUORUM; ADJOURNMENTS.  At all meetings of the Board of

Directors, a majority of the entire Board of Directors shall constitute a quorum

for the transaction of business and the action of a majority of the directors

present at any meeting at which a quorum is present shall be the action of the

Board of Directors unless the concurrence of a greater proportion is required

for such action by statute, the Articles of Incorporation or these Bylaws. If a

quorum shall not be present at any meeting of directors, the directors present

thereat may by a majority vote adjourn the meeting from time to time, without

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

 

       SECTION 23.  TELEPHONE MEETINGS.  Members of the Board of Directors or

any committee thereof may participate in a meeting by means of a conference call

or similar communications equipment by means of which all directors

participating can hear each other at the same time, and participation in the

meeting by such means shall conclusively be deemed to constitute presence in

person at such meeting.

 

       SECTION 24.  ACTION WITHOUT MEETING.  Any action required or permitted

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

may be taken without a meeting, if a written consent to such action is signed by

all members of the Board of Directors or of such committee, as the case may be,

and such written consent is filed with the minutes of proceedings of the Board

of Directors or committee (except for those instances where the Investment

Company Act of 1940 (the "1940 ACT") requires action be taken by the

Corporation's Board of Directors in person, including without limitation the

selection of independent auditors and the approval of an Investment Agreement.

 

       SECTION 25.  COMPENSATION OF DIRECTORS.  Directors, as such, shall not

receive any stated salary for their services but, by resolution of the Board of

Directors, non-employed directors may be entitled to receive (a) an annual fee,

(b) a fixed cash sum, (c) a stock or stock option grant, or (d) a combination of

the above, along with the reimbursement of expenses of attendance, if any, for

attendance at each regular or special meeting of the Board of Directors, or

 

 

 

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of any committee thereof, but nothing herein contained shall be construed to

preclude any director from serving the Corporation in any other capacity and

receiving compensation therefor.

 

                                   ARTICLE IV

 

                                   COMMITTEES.

 

       SECTION 26.   EXECUTIVE COMMITTEE.  The Board of Directors may appoint

an Executive Committee consisting of not fewer than three members, one of whom

shall be designated as Chairman of the Executive Committee. The Chairman of the

Board of Directors and the President shall be elected members of the Executive

Committee. The Executive Committee shall have and may exercise those rights,

powers and authority of the Board of Directors as may from time to time be

granted to it by the Board of Directors subject to any limitations imposed by

law and may authorize the seal of the Corporation to be affixed to all papers

which may require the same.

 

       SECTION 27.  NOMINATING COMMITTEE.  The Board of Directors shall appoint

a Nominating Committee consisting of not fewer than three members, one of whom

shall be designated as Chairman of the Nominating Committee. A majority of

members of the Nominating Committee shall not be officers of the Corporation.

The Nominating Committee shall have and may exercise those rights, powers and

authority of the Board of Directors as may from time to time be granted to it by

the Board of Directors; PROVIDED, HOWEVER, that in addition to any such rights,

powers or authority, the Nominating Committee shall have the exclusive right to

recommend candidates for election as directors to the Board of Directors.

 

       SECTION 28.  COMPENSATION COMMITTEE.  The Board of Directors may appoint

from its membership a Compensation Committee consisting of not fewer than two

members, one of whom shall be designated as Chairman of the Compensation

Committee. None of the members of the Compensation Committee shall be officers

of the Corporation. The Compensation Committee shall have and may exercise those

rights, powers and authority of the Board of Directors as may from time to time

be granted to it by the Board of Directors.

 

       SECTION 29.  AUDIT COMMITTEE.  The Board of Directors may appoint from

its membership an Audit Committee consisting of not fewer than three members,

each of whom shall be independent directors, and free from any relationship

that, in the opinion of the Board of Directors, would interfere with their

exercise of independent judgment as a committee member, one of whom shall be

designated as Chairman of the Audit Committee. All members of the Audit

Committee shall have a working familiarity with basic finance and accounting

practices, and at least one member of the Audit Committee shall have accounting

or related financial management expertise. The Board of Directors shall adopt a

formal written charter for the Audit Committee that specifies (1) the scope of

the Audit Committee's responsibilities and the means by which the Audit

Committee carries out these responsibilities, (2) the outside auditor's

accountability to the Board of Directors and the Audit Committee and the Audit

Committee's ultimate authority to select, evaluate and, where appropriate,

replace the outside auditor, and (3) the Audit Committee's responsibility to

oversee the independence of the outside auditor through the receipt of a formal

written statement delineating all relationships between the auditor and the

corporation and active dialogue with the auditors.

 

 

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       SECTION 30. ADVISORY COMMITTEE.

 

              (a)  The Board of Directors may appoint individuals of its

selection to an Advisory Committee to assist the Board of Directors in the

conduct of its duties and responsibilities. The Advisory Committee may meet in

conjunction with meetings of the Board of Directors and shall serve as advisers

and counselors to the Board of Directors as the members thereof shall determine

best serves the Corporation's interests.

 

              (b)  The Board of Directors, by resolutions adopted by a majority

of the whole Board, may appoint an Advisory Committee complying with the terms

of Section 2(a)(1) of the 1940 Act and the regulations promulgated thereunder,

to provide advice and counsel in respect to investment and loan transactions

entered or contemplated by the Corporation or its subsidiaries. The Advisory

Committee may be composed of up to five persons, who shall not be directors,

officers, employees or agents of the Corporation or any subsidiary or investment

adviser thereof. Advisory Committee members shall be entitled to indemnification

under Article VII below. The Advisory Committee and its members will have no

voting power and no authority, as agent or otherwise, to act on behalf of the

Corporation, in respect of any matter; and directors shall be under no

obligation to accept or reject any particular item of advice or counsel provided

thereby. The Advisory Committee may be invited to hold meetings jointly with

meetings of directors. Any one or more members of the Advisory Committee may be

invited to attend meetings of the directors and may be offered access to the

same information and materials otherwise provided only to directors. The

Advisory Committee may render its advice in written or verbal form, and the same

may or may not be recorded.

 

       SECTION 31. OTHER COMMITTEES. The Board of Directors, by resolutions

adopted by a majority of the entire Board of Directors, may appoint a committee

or committees, as it shall deem advisable and impose upon such committee or

committees such functions and duties, and grant such rights, powers and

authority, as the Board of Directors shall prescribe (except the power to

declare dividends or distributions on stock, to issue stock except to the extent

permitted by law, to recommend to stockholders any action requiring

stockholders' approval, to amend these Bylaws or to approve any merger or share

exchange which does not require stockholders' approval).

 

       SECTION 32. PROCEDURE; NOTICE; MEETINGS. Each committee shall fix its own

rules of procedure and shall meet at such times and at such place or places as

may be provided by such rules or as the members of such committee shall provide.

Committee meetings may be called by the Chairman of the Board of Directors, the

Chief Executive Officer, the President, the Chairman of the Committee, if any,

or any two or more committee members on at least twenty-four (24) hours notice,

if such notice is mailed, delivered personally or sent by messenger, telecopy,

facsimile transmission, electronic mail or any other electronic means. Each

committee shall keep regular minutes of its meetings and deliver such minutes to

the Board of Directors. The Chairman of each committee, or, in his or her

absence, a member of such committee chosen by a majority of the members of such

committee present, shall preside at the meetings of such committee, and another

member thereof, or any other person, chosen by such committee shall act as

Secretary of such committee, or in the capacity of Secretary for purposes of

such meeting.

 

 

                                       11

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       SECTION 33. QUORUM; VOTE. With respect to each committee, a majority of

its members shall constitute a quorum for the transaction of business, and the

affirmative vote of a majority of the members thereof shall be required for any

action of such committee.

 

       SECTION 34. APPOINTMENTS; VACANCIES; CHANGES; DISCHARGES. The Board of

Directors shall have the exclusive power at any time, through the approval by

the affirmative vote of a majority of the entire Board of Directors, to appoint

directors to, fill vacancies in, change the membership of, or discharge any

committee.

 

       SECTION 35. TENURE. Each member of a committee shall continue as a member

thereof until the expiration of his or her term as a director, or his or her

earlier resignation as a member of such committee or as a director, unless

sooner removed as a member of such committee by a vote of a majority of the

entire Board of Directors or as a director in accordance with these Bylaws.

 

       SECTION 36. COMPENSATION. Members of any committee shall be entitled to

such compensation for their services as members of any such committee and to

such reimbursement for any reasonable expenses incurred in attending committee

meetings as may from time to time be fixed by the Board of Directors. The

compensation (if any) of members of any committee may be on such basis as is

determined by the Board of Directors. Any member may waive compensation for any

meeting. Any committee member receiving compensation under these provisions

shall not be barred from serving the Corporation in any other capacity and from

receiving compensation and reimbursement of reasonable expenses for such other

services.

 

       SECTION 37. ACTION BY CONSENT. Any action required or permitted to be

taken at any meeting of any committee of the Board of Directors may be taken

without a meeting if a written consent to such action is signed by all members

of the committee and such written consent is filed with the minutes of its

proceedings.

 

       SECTION 38. MEETINGS BY TELEPHONE OR SIMILAR COMMUNICATIONS. The members

of any committee which is designated by the Board of Directors may participate

in a meeting of such committee by means of a conference telephone or similar

communications equipment by means of which all members participating in the

meeting can hear each other at the same time, and participation by such means

shall be conclusively deemed to constitute presence in person at such meeting.

 

                                    ARTICLE V

 

                            NOTICES; WAIVER OF NOTICE

 

       SECTION 39. NOTICES. Notices to directors and stockholders shall be in

writing and delivered personally or mailed to the directors or stockholders at

their addresses appearing on the books of the Corporation. Notice by mail shall

be deemed to be given at the time when the same shall be mailed. In the case of

stockholders' meetings the notice may be left at the stockholders residence or

usual place of business or by transmitting it in the form of electronic mail to

any electronic mail address of the stockholder or by any other electronic means.

Notice to directors may also be given by telecopy, electronic mail or any other

electronic means.

 

 

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       SECTION 40. WAIVER OF NOTICE. Whenever any notice of the time, place or

purpose of any meeting of stockholders, directors or committee is required to be

given under the provisions of law or under the provisions of the Articles of

Incorporation or these Bylaws, a waiver thereof in writing, signed by the person

or persons entitled to such notice and filed with the records of the meeting,

whether before or after the holding thereof, or actual attendance at the meeting

of stockholders in person or by proxy, or at the meeting of directors or

committee in person, shall be deemed equivalent to the giving of such notice to

such persons.

 

                                   ARTICLE VI

 

                                    OFFICERS

 

       SECTION 41. DESIGNATIONS. The officers of the Corporation shall be chosen

by the Board of Directors and shall be a Chief Executive Officer, a President, a

Secretary, a Chief Financial Officer and a Treasurer. The Board of Directors may

also choose a Chairman of the Board of Directors, one or more Vice-Presidents,

one or more Principals, one or more Assistant Secretaries and Assistant

Treasurers and any other officers deemed necessary or appropriate by the Board

of Directors. Two or more offices, except those of President and Vice-President,

may be held by the same person but no officer shall execute, acknowledge or

verify any instrument in more than one capacity, if such instrument is required

by law, the Articles of Incorporation or these Bylaws to be executed,

acknowledged or verified by two or more officers.

 

       SECTION 42. TERM OF OFFICE; REMOVAL. At its annual meeting, the Board of

Directors shall elect a Chief Executive Officer, a President, a Secretary, a

Chief Financial Officer and a Treasurer. The Board of Directors may appoint such

other officers and agents as it shall deem 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. The officers of

the Corporation shall serve for one year and until their successors are chosen

and qualify. Any officer or agent may be removed by the Board of Directors

whenever, in its judgment, the best interests of the Corporation will be served

thereby, but such removal shall be without prejudice to the contractual rights,

if any, of the person so removed. If the office of any officer becomes vacant

for any reason, the vacancy shall be filled by the Board of Directors.

 

       SECTION 43. COMPENSATION. The salaries of all officers and agents of the

Corporation shall be fixed by the Board of Directors.

 

       SECTION 44. THE CHIEF EXECUTIVE OFFICER AND THE PRESIDENT.

 

              (a)  The Chief Executive Officer shall be the chief executive

officer of the Corporation and shall preside over all meeting of the Board of

Directors and stockholders. He shall be involved in the general management of

the business of the Corporation, and shall see that all orders and resolutions

of the Board of Directors are carried into effect. He shall execute in the

corporate name all authorized deeds, mortgages, bonds, contracts or other

instruments requiring a seal, under the seal of the Corporation, except in cases

in which the signing or execution thereof shall be expressly delegated by the

Board of Directors to some other officer or agent of the Corporation.

 

 

                                       13

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              (b)  The President shall be primarily responsible for the

implementation of policies of the Board of Directors. In addition, in the

absence or permanent incapacity of a Chief Executive Officer, the President

shall maintain the duties of the Chief Executive Officer. He shall have

authority over the operations of the Company and its divisions, if any, subject

only to the ultimate authority of the Chief Executive Officer and the Board of

Directors. He may sign and execute in the name of the Company certificates,

deeds, mortgages, bonds, contracts or other instruments except in cases where

the signing and the execution thereof shall be expressly delegated by the Board

of Directors or by this Agreement to some other officer or agent of the Company

or shall be required by law otherwise to be signed or executed. In addition, he

shall perform all duties incident to the office of the President and such other

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

 

       SECTION 45. VICE-PRESIDENTS AND PRINCIPALS. The Vice-President or

Principal, if any, or if there shall be more than one, the Vice-Presidents and

Principals, in the order determined by the Board of Directors, shall, in the

absence or disability of the Chief Executive Officer or President, perform the

duties and exercise the powers of the Chief Executive Officer or President, and

shall perform such other duties and have such other powers as the Board of

Directors may from time to time prescribe.

 

       SECTION 46. THE SECRETARY AND ASSISTANT SECRETARIES.

 

              (a)  The Secretary shall attend all meetings of the Board of

Directors and all meetings of the stockholders and record all the proceedings of

the meetings of the Corporation and of the Board of Directors 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 stockholders and special meetings of the Board of Directors, and shall

perform such other duties as may be prescribed by the Board of Directors, the

Chief Executive Officer or President, under whose supervision he shall be. 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 and, when

so affixed, it shall be attested by his signature or by the signature of an

Assistant Secretary.

 

             (b)  The Assistant Secretary, if any, or if there be more than one,

the Assistant Secretaries in the order 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 and shall perform such other duties and

have such other powers as the Board of Directors may from time to time

prescribe.

 

       SECTION 47. THE CHIEF FINANCIAL OFFICER, TREASURER AND ASSISTANT

                   TREASURERS.

 

              (a)  The Chief Financial Officer and the Treasurer shall have the

custody of the corporate funds and securities and 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. The Chief Financial Officer and Treasurer may be the same person.

 

 

                                       14

<PAGE>

 

 

              (b)  The Chief Financial Officer or the Treasurer 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 Chief Executive

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

when the Board of Directors so requires an account of transactions and of the

financial condition of the Corporation.

 

             (c)  If required by the Board of Directors, the Chief Financial

Officer or the Treasurer shall give the Corporation a bond 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 all books, papers, vouchers, money and

other property of whatever kind in his possession or under his control

belonging to the Corporation.

 

             (d)  The Assistant Treasurer, if any, or if there shall be more

than one, the Assistant Treasurers in the order 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 and shall perform such other

duties and have such other powers as the Board of Directors may from time to

time prescribe.

 

                                   ARTICLE VII

 

     INDEMNIFICATION OF DIRECTORS, OFFICERS, EMPLOYEES, AGENTS AND ADVISORS

 

       SECTION 48. GENERALLY. Reference is made to Section 2-418 (and any other

relevant provisions) of Maryland General Corporation Law. Particular reference

is made to the class of persons (hereinafter called "INDEMNITEES") who may be

indemnified by a Maryland corporation pursuant to the provisions of Section

2-418, namely, any entity (including the Corporation's investment adviser) or

person (or the heirs, executors or administrators of such person) who was or is

a party or is threatened to be made a party to any threatened, pending or

completed action, suit or proceeding, whether civil, criminal, administrative or

investigative, by reason of the fact that such person is or was a director,

officer, employee or agent of such corporation, or is or was serving at the

request of such corporation as a director, manager, partner, officer, trustee,

employee, agent or any similar title of another corporation, partnership, joint

venture, trust or other enterprise or employee benefit plan.

 

              (a)  The Corporation shall (and is hereby obligated to) indemnify

the Indemnitees, and each of them, in each and every situation where the

Corporation is obligated to make such indemnification pursuant to the aforesaid

statutory provisions or pursuant to the Articles of Incorporation.

 

              (b)  The Corporation shall indemnify the Indemnitees, and each of

them, in each and every situation where, under the aforesaid statutory

provisions, the Corporation is not obligated, but is nevertheless permitted or

empowered, to make such indemnification, if the Board of Directors determines

that such Indemnitee acted in good faith and in a manner such Indemnitee

reasonably believed to be in or not opposed to the best interests of the

Corporation,

 

 

                                       15

<PAGE>

 

 

and, in the case of any criminal action or proceeding, that such Indemnitee had

no reasonable cause to believe that such Indemnitee's conduct was unlawful.

 

       SECTION 49. LIMITATION FOR DISABLING CONDUCT.

 

              (a)  Notwithstanding anything to the contrary in Section 48

hereof, the Corporation may not indemnify any director or officer of the

Corporation against any liability, nor shall any director or officer of the

Corporation be exculpated from any liability, to the Corporation or its

stockholders to which such director or officer might otherwise be subject by

reason of "DISABLING CONDUCT," as hereinafter defined. Accordingly, each

determination with respect to the permissibility of indemnification of a

director or officer of the Corporation because such director or officer has met

the applicable standard of conduct shall include a determination that the

liability for which such indemnification is sought did not arise by reason of

such person's disabling conduct. The determination required by this subsection

may be based on:

 

                         (i)    a final decision on the merits by a court or

other body before whom the action, suit or proceeding was brought that the

person to be indemnified was not liable by reason of disabling conduct, or

 

                         (ii)   in the absence of such a decision, a reasonable

determination, based on a review of the facts, that the person to be indemnified

was not liable by reason of such person's disabling conduct by: (A) the vote of

a majority of a quorum of directors who are disinterested, non-party directors;

or (B) an independent legal counsel in a written opinion. In making such

determination, such disinterested, non-party directors or independent legal

counsel, as the case may be, may deem the dismissal for insufficiency of

evidence of any disabling conduct of either a court action or an administrative

proceeding against a person to be indemnified to provide reasonable assurance

that such person was not liable by reason of disabling conduct.

 

             (b)   For the purpose of this Section 49:

 

                         (i)    "DISABLING CONDUCT" of a director or officer

shall mean such person's willful misfeasance, bad faith, gross negligence or

reckless disregard of the duties involved in the conduct of the office or any

other conduct prohibited under Section 17(h) of the 1940 Act or any other

applicable securities laws;

 

                         (ii)   "DISINTERESTED, NON-PARTY DIRECTOR" shall mean

a director of the Corporation who is neither an "INTERESTED PERSON" of the

Corporation as defined in Section 2(a)(19) of the 1940 Act nor a party to the

action, suit or proceeding in connection with which indemnification is sought;

 

                         (iii)  "INDEPENDENT LEGAL COUNSEL" shall mean a member

of the Bar of the State of Maryland who is not, and for at least two (2) years

prior to his or her engagement to render the opinion in question has not been,

employed or retained by the Corporation, by any investment adviser to or

principal underwriter for the Corporation, or by any person affiliated with any

of the foregoing; and

 

 

                                       16

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                         (iv)   "THE CORPORATION" shall include, in addition to

the resulting Corporation, any constituent Corporation (including any

constituent of a constituent) absorbed in a consolidation or merger which, if

its separate existence had continued, would have had power and authority to

indemnify its directors, officers, employees or agents.

 

              (c)  The Corporation may purchase insurance to cover the payment

of costs incurred in performing the Corporation's obligations under Section 48

hereof, but it is understood that no insurance may be obtained for the purpose

of indemnifying any disabling conduct.

 

              (d)  The Corporation may advance legal fees and other expenses

pursuant to the indemnification rights set forth in Section 48 hereof so long

as, in addition to the other requirements therefor, the Corporation either:

 

                         (i)    obtains security for the advance from the

Indemnitee;

 

                         (ii)   obtains insurance against losses arising by

reason of lawful advances; or

 

                         (iii)  determines, pursuant to the means set forth in

Section 49(a)(ii) hereof, that there is reason to believe that the Indemnitee

ultimately will be found entitled to indemnification.

 

       SECTION 50. ADVISORY COMMITTEE MEMBERS. The Corporation shall indemnify

any person appointed to any Advisory Committee pursuant to Article IV, Section

30 hereof (or the heirs, executors, or administrators of such person) who was or

is a party or is threatened to be made a party to any threatened, pending, or

completed action, suit or proceeding, whether civil, criminal, administrative or

investigative, by reason of the fact that such person is or was a member of the

Advisory Committee of this Corporation, if the Board of Directors determines

that such person acted in good faith and in a manner such person reasonably

believed to be in or not opposed to the best interest of the Corporation, and in

the case of any criminal action or proceeding, that such person had no

reasonable cause to believe that such person's conduct was unlawful.

 

                                  ARTICLE VIII

 

                              CERTIFICATES OF STOCK

 

       SECTION 51. FORM OF SIGNATURES; STATEMENTS.

 

              (a)  Except as provided in Section 51(b), shares of the

Corporation's capital stock shall be issued without certificates. At the time of

issuance or transfer of such uncertificated shares, the Corporation shall send

the stockholder a written statement identifying: (1) the Corporation as the

issuer of the stock; (2) the name of the stockholder or other person to whom it

is issued; and (3) the class of stock and the number of shares represented by

such statement. If the Corporation has authority at the time of such issuance or

transfer to issue stock of more than one class, the written statement shall also

include a full statement or summary of: (1) the designations and any

preferences, conversion and other rights, voting powers, restrictions,

 

 

                                       17

<PAGE>

 

 

limitations as to dividends, qualifications, and terms and conditions of

redemption of the stock of each class which the Corporation is authorized to

issue; and (2) if the Corporation is authorized at the time of such issuance or

transfer to issue any preferred or special class in series, (i) the differences

in the relative rights and preferences between the shares of each series to the

extent they have been set, and (ii) the authority of the Board of Directors to

set the relative rights and preferences of subsequent series. Notwithstanding

the immediately preceding sentence, the written statement may, in lieu of

including the information referred to therein, state that the Corporation will

furnish a full statement of such information to any stockholder on request and

without charge. If the Corporation imposes a restriction on transferability of

such uncertificated shares, the written statement shall also: (1) contain a full

statement of the restriction; or (2) state that the Corporation will furnish

information about the restriction to the stockholder on request and without

charge.

 

              (b)  Notwithstanding Section 51(a), every stockholder in the

Corporation shall, upon request duly made to the Corporation or any transfer

agent of the Corporation, be entitled to have a certificate, signed by the

President, a Vice-President or Chairman of the Board of Directors and

countersigned by the Secretary, Assistant Secretary, Treasurer or Assistant

Treasurer or other such officers as provided in Section 2-212 of the Maryland

General Corporation Law, exhibiting the number and class (and series, if any) of

shares owned by him, her or it, and bearing the seal of the Corporation. Such

signatures and seal may be facsimile transmission. In case any officer who has

signed, or whose facsimile signature was placed on, a certificate shall have

ceased to be such officer before such certificate is issued, it may nevertheless

be issued by the Corporation with the same effect as if he or she were such

officer at the date of its issue.

 

              (c)  Every certificate representing stock issued by the

Corporation, if it is authorized to issue stock of more than one class, shall

set forth upon the face or back of the certificate, a full statement or summary

of the designations and any preferences, conversion and other rights, voting

powers, restrictions, limitations as to dividends, qualifications, and terms and

conditions of redemptions of the stock of each class which the Corporation is

authorized to issue and, if the Corporation is authorized to issue any preferred

or special class of stock in series, the differences in the relative rights and

preferences between the shares of each series to the extent they have been set

and the authority of the Board of Directors to set the relative rights and

preferences of subsequent series. In lieu of such full statement or summary,

there may be set forth upon the face or back of each certificate a statement

that the Corporation will furnish to the stockholder, upon request and without

charge, a full statement of such information.

 

       SECTION 52. REGISTRATION OF TRANSFER. Upon surrender to the Corporation

or any transfer agent of the Corporation of a certificate for shares duly

endorsed or accompanied by proper evidence of succession, assignment or

authority to transfer, or upon presentation to the Corporation or any transfer

agent of the Corporation of an instruction with a request to register transfer

of uncertificated shares, it shall be the duty of the Corporation or its

transfer agent, if it is satisfied that all terms and conditions of the Articles

of Incorporation, of the Bylaws and of applicable law regarding the transfer of

shares have been fulfilled, to record the transaction upon its books, to issue a

new certificate to the person entitled thereto upon request for such

certificate, and to cancel the old certificate, if any.

 

 

                                       18

<PAGE>

 

 

       SECTION 53. REGISTERED STOCKHOLDERS.

 

              (a)  Except as otherwise provided by law, the Corporation shall be

entitled to recognize the exclusive right of a person who is registered on its

books as the owner of shares of its capital stock to receive dividends or other

distributions, to vote as such owner, and to hold liable for calls and

assessments a person who is registered on its books as the owner of shares of

its capital stock. The Corporation shall not be bound to recognize any equitable

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

except that the Board of Directors may adopt by resolution a procedure by which

a stockholder may certify in writing to the Corporation that any shares of its

capital stock registered in the name of such stockholder are held for the

account of a specified person other than such stockholder are held for the

account of a specified person other than such stockholder.

 

              (b)  If a stockholder desires that notices and/or dividends shall

be sent to a name or address other than the name or address appearing on the

stock ledger maintained by the Corporation (or by the transfer agent or

registrar, if any), such stockholder shall have the duty to notify the

Corporation (or the transfer agent or registrar, if any), in writing, of such

desire. Such written notice shall specify the alternate name or address to be

used.

 

       SECTION 54. LOCATION OF STOCK LEDGER. A copy of the Corporation's stock

ledger containing (i) the name and address of each stockholder, and (ii) the

number and shares of stock of each class which the stockholder holds shall be

maintained at the Corporation's office located at its headquarters. Such stock

ledger may be in written form or any other form capable of being converted into

written form within a reasonable time for visual inspection.

 

       SECTION 55. RECORD DATE. In order that the Corporation may determine the

stockholders of record who are entitled to notice of or to vote at any meeting

of stockholders or any adjournment thereof, or entitled to receive payment of

any dividend or the allotment of any rights, or to make a determination with

respect to stockholders of record for any other proper purpose, the Board of

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

determination or meeting. Such date shall not be more than 90 nor less than 10

days before the date of any such meeting, nor more than 90 days prior to the

date any other determination is made with respect to stockholders. A

determination of stockholders of record entitled to notice of or to vote at a

meeting of stockholders shall apply to any adjournment of the meeting taken

pursuant to Section 8 of Article II; PROVIDED, HOWEVER, that the Board of

Directors may fix a new record date for the adjourned meeting.

 

       SECTION 56. LOST, STOLEN OR DESTROYED CERTIFICATES. The Board of

Directors may direct that a new certificate be issued in place of any

certificate theretofore issued by the Corporation which is claimed to have been

lost, stolen or destroyed, upon the making of an affidavit of that fact by the

person claiming the certificate to be lost, stolen or destroyed. When

authorizing such issuance of a new certificate, the Board of Directors may, in

its discretion and as a condition precedent to the issuance thereof, require the

owner of such lost, stolen or destroyed certificate to advertise the same in

such manner as it shall require and/or to give the Corporation a bond in such

sum or other security in such form, as it may direct as indemnity against any

claim that may be made against the Corporation with respect to the certificate

claimed to have been lost, stolen or destroyed.

 

 

                                       19

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                                   ARTICLE IX

 

                               GENERAL PROVISIONS

 

       SECTION 57. DIVIDENDS. Dividends upon the capital stock of the

Corporation, subject to the provisions of the Articles of Incorporation, if any,

may be declared by the Board of Directors at any regular or special meeting,

pursuant to law. Dividends may be paid in cash, in property, or in its own

shares, subject to the provisions of law and of the Articles of Incorporation.

 

       SECTION 58. RESERVES. Before payment of any dividend, there may be set

aside out of any funds of the Corporation available for dividends such sum or

sums as the directors from time to time, in their absolute discretion, think

proper as a reserve fund to meet contingencies, or for equalizing dividends, or

for repairing or maintaining any property of the Corporation, or for such other

purpose as the directors shall think conducive to the interests of the

Corporation, and the directors may modify or abolish any such reserve in the

manner in which it was created.

 

       SECTION 59. ANNUAL STATEMENT. The Chief Executive Officer, the President

or a Vice-President, the Chief Financial Officer or the Treasurer shall prepare

or cause to be prepared annually a full and correct statement of the affairs of

the Corporation, including a balance sheet and a financial statement of

operations for the preceding fiscal year, which shall be submitted at the annual

meeting and shall be filed within twenty days thereafter at the principal office

of the Corporation in the State of Maryland.

 

       SECTION 60. CHECKS. All checks, drafts, and orders for the payment of

money, notes and other evidences of indebtedness, issued in the name of the

Corporation shall be signed by such officer or officers as the Board of

Directors may from time to time designate.

 

       SECTION 61. FISCAL YEAR. The fiscal year of the Corporation shall be

fixed by resolution of the Board of Directors.

 

       SECTION 62. SEAL. The corporate seal shall have inscribed thereon the

name of the Corporation, the year of its organization and the words "CORPORATE

SEAL, MARYLAND." The seal may be used by causing it or a facsimile thereof to be

impressed or affixed or reproduced or otherwise.

 

                                   ARTICLE X

 

                                   AMENDMENTS

 

       SECTION 63. AMENDMENTS. These Bylaws may be amended, altered, restated or

repealed, or a provision waived as provided in the Articles of Incorporation and

these Bylaws.

 

 

                                       20

<PAGE>

 

 

         I, THE UNDERSIGNED, being the Secretary of Gladstone Capital

Corporation DO HEREBY CERTIFY the foregoing to be the bylaws of the Corporation,

as adopted by Written Consent of the Board of Directors in Lieu of an

Organizational Meeting, dated May 30, 2001.

 

 

 

                                                   /s/ DAVID GLADSTONE

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

                                                David Gladstone, Secretary

 

 

 

AMENDMENT TO BYLAWS
OF
GLADSTONE CAPITAL CORPORATION

                The following Amendment is hereby made to the Bylaws (the “Bylaws”) of Gladstone Capital Corporation, a Maryland corporation (the “Company”), as of December 12, 2003:

                1.             Article III, Section 15 of the Bylaws is hereby deleted in its entirety and replaced with the following:

                “Section 15.    Vacancy.    Any vacancy occurring in the Board of Directors for any cause, including by reason of an increase in the number of directors, may be filled by a majority of the remaining members of the Board of Directors, although such majority is less than a quorum. Notwithstanding the foregoing, if the stockholders of any class or series are entitled separately to elect one or more directors, a majority of the remaining directors elected by that class or series or the sole remaining director elected by that class or series may fill any vacancy among the number of directors elected by that class or series. If the Board of Directors is classified, any director elected to fill a vacancy shall hold office for the remainder of the full term of the class of directors in which the vacancy occurred, and until a successor is elected and qualifies.”

                2.             Article IV, Section 27 of the Bylaws is hereby deleted in its entirety and replaced with the following:

                “Section 27.    Ethics, Nominating and Corporate Governance Committee.    The Board of Directors shall appoint an Ethics, Nominating and Corporate Governance Committee consisting of not fewer than two members, one of whom shall be designated as Chairman of the Ethics, Nominating and Corporate Governance Committee, and all of whom shall be independent, as defined by NASD rules prevailing at the time. The Ethics, Nominating and Corporate Governance Committee shall have and may exercise those rights, powers and authority of the Board of Directors as may from time to time be granted to it by the Board of Directors; provided, however, that in addition to any such rights, powers or authority, the Ethics, Nominating and Corporate Governance Committee shall have the exclusive right to recommend candidates for election as director to the Board of Directors. The Board of Directors shall adopt a formal written charter for the Ethics, Nominating and Corporate Governance Committee that specifies the nominations process and such related matters as may be required under the federal securities laws.”

                3.             Article IV, Section 28 of the Bylaws is hereby deleted in its entirety and replaced with the following:

                “Section 28.    Compensation Committee.    The Board of Directors may appoint from its membership a Compensation Committee consisting of not fewer than two members, one of whom shall be designated as Chairman of the Compensation Committee, and all of whom shall be independent, as defined by NASD rules prevailing at the time. The Compensation Committee shall have and may exercise those rights, powers and authority of the Board of Directors as may from time to time be granted to it by the Board of Directors.

 

THIRD AMENDMENT TO BYLAWS

 

OF

 

GLADSTONE CAPITAL CORPORATION

 

 

The following Amendment is hereby made to the Bylaws (the “Bylaws”) of Gladstone Capital Corporation, (the “Corporation”), as of June 8, 2011:

 

Article XI, Section 64. of the Bylaws shall be added as follows:

 

Section 64.  Maryland Control Share Acquisition Act.  The acquisition of the capital stock of the Corporation by current or future stockholders of the Corporation, or their affiliates or associates, shall not be subject to the provisions of the Maryland Control Share Acquisition Act (Md. Code Ann., Corps. & Ass’ns §§ 3-701 et seq.).

 

[End]