VENTURE LENDING & LEASING, INC.


                             A Maryland Corporation


                                     BYLAWS


  September 29, 1993; as amended June 16, 1994, August 16, 1995 and August 21,
                                      1996
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                                     BYLAWS

                                       OF

                         VENTURE LENDING & LEASING, INC.

                            (A MARYLAND CORPORATION)

                                    ARTICLE I

                        NAME OF CORPORATION, LOCATION OF
                                OFFICES AND SEAL

Section 1. Name. The name of the corporation is Venture Lending & Leasing, Inc.

Section 2. Principal Offices. The principal office of the Corporation in the
State of Maryland shall be located in the City of Baltimore. The Corporation
may, in addition, establish and maintain such other offices and places of
business as the Board of Directors may, from time to time, determine.

Section 3. Seal. The corporate seal of the Corporation shall be circular in form
and shall bear the name of the Corporation, the year of its incorporation, and
the word "Maryland". The form of the seal shall be subject to alteration by the
Board of Directors and the seal may be used by causing it or a facsimile to be
impressed or affixed or printed or otherwise reproduced. Any officer or director
of the Corporation shall have authority to affix the corporate seal of the
Corporation to any document requiring the same.

                                   ARTICLE II

                                  SHAREHOLDERS

Section 1. Annual Meetings. An annual meeting of shareholders to elect directors
and transact any other business within the Corporation's powers will be held at
such time as is set by the Board of Directors during the month of October of
each calendar year.

Section 2. Special Meetings. Special meetings of shareholders may be called at
any time by the Chairman of the Board or President or by a majority of the Board
of Directors, and shall be held at such time and place as may be stated in the
notice of the meeting.

Special meetings of the shareholders may be called by the Secretary upon the
written request of the holders of shares entitled to vote not less than 25
percent of all the votes entitled to be cast at such meeting, provided that (1)
such request shall state the purposes of such meeting and the matters proposed
to be acted on, and (2) the shareholders requesting such meeting shall have paid
to the Corporation the reasonably estimated cost of preparing and mailing the
notice thereof, which the Secretary shall determine and specify to such
shareholders. No special meeting shall be called upon the request of
shareholders to consider any matter which is substantially the same as a matter
voted upon at any special meeting of the shareholders held during the preceding
twelve months, unless requested by the holders of a majority of all shares
entitled to be voted at such meeting.

Section 3. Notice of Meetings. The Secretary shall cause notice of the place,
date and hour, and, in the case of a special meeting, the purpose or purposes
for which the meeting is called, to be mailed, postage prepaid, not less than
ten nor more than ninety days before the date of the meeting, to each
shareholder entitled to vote at such meeting at his or her address as it appears
on the records of the Corporation at the time of such 


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mailing. Notice shall be deemed to be given when deposited in the United States
mail addressed to the shareholders as aforesaid. Notice of any shareholders'
meeting need not be given to any shareholder who shall sign a written waiver of
such notice whether before or after the time of such meeting, or to any
shareholder who is present at such meeting in person or by proxy. Notice of
adjournment of a shareholders' meeting to another time or place need not be
given if such time and place are announced at the meeting. Irregularities in the
notice of any meeting to, or the nonreceipt of any such notice by, any of the
shareholders shall not invalidate any action otherwise properly taken by or at
any such meeting.

Section 4. Quorum and Adjournment of Meetings. The presence at any shareholders'
meeting, in person or by proxy, of shareholders entitled to cast a majority of
the votes shall be necessary and sufficient to constitute a quorum for the
transaction of business. In the absence of a quorum, the holders of a majority
of shares entitled to vote at the meeting and present in person or by proxy, or,
if no shareholder entitled to vote is present in person or by proxy, any officer
present entitled to preside or act as secretary of such meeting may adjourn the
meeting without determining the date of the new meeting or from time to time
without further notice to a date not more than 120 days after the original
record date. Any business that might have been transacted at the meeting
originally called may be transacted at any such adjourned meeting at which a
quorum is present.

Section 5. Voting and Inspectors. Except as otherwise provided in the Articles
of Incorporation or by applicable law, at each shareholders' meeting each
shareholder shall be entitled to one vote for each share of stock of the
Corporation validly issued and outstanding and registered in his or her name on
the books of the Corporation on the record date fixed in accordance with Section
5 of Article VI hereof, either in person or by proxy appointed by instrument in
writing subscribed by such shareholder or his or her duly authorized attorney,
except that no shares held by the Corporation shall be entitled to a vote.

Except as otherwise provided in the Articles of Incorporation or these Bylaws or
as required by provisions of the Investment Company Act of 1940, as amended
("1940 Act"), all matters shall be decided by a vote of the majority of the
votes validly cast. The vote upon any question shall be by ballot whenever
requested by any person entitled to vote, but, unless such a request is made,
voting may be conducted in any way approved by the meeting.

At any meeting at which there is an election of Directors, the chairman of the
meeting may, and upon the request of the holders of ten percent of the stock
entitled to vote at such election shall, appoint two inspectors of election who
shall first subscribe an oath or affirmation to execute faithfully the duties of
inspectors at such election with strict impartiality and according to the best
of their ability, and shall, after the election, make a certificate of the
result of the vote taken. No candidate for the office of Director shall be
appointed as an inspector.

Section 6. Validity of Proxies. The right to vote by proxy shall exist only if
the instrument authorizing such proxy to act shall have been signed by the
shareholder or by his or her duly authorized attorney. Unless a proxy provides
otherwise, it shall not be valid more than eleven months after its date. All
proxies shall be delivered to the Secretary of the Corporation or to the person
acting as Secretary of the meeting before being voted, who shall decide all
questions concerning qualification of voters, the validity of proxies, and the
acceptance or rejection of votes. If inspectors of election have been appointed
by the chairman of the meeting, such inspectors shall decide all such questions.
A proxy with respect to stock held in the name of two or more persons shall be
valid if executed by one of them unless at or prior to exercise of such proxy
the Corporation receives a specific written notice to the contrary from any one
of them. A proxy purporting to be executed by or on behalf of a shareholder
shall be deemed valid unless challenged at or prior to its exercise.

Section 7. Stock Ledger and List of Shareholders. It shall be the duty of the
Secretary or Assistant Secretary of the Corporation to cause an original or
duplicate stock ledger to be maintained at the office of the Corporation's
transfer agent. Such stock ledger may be in written form or any other form
capable of 


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being converted into written form within a reasonable time for visual
inspection.

Any one or more persons, each of whom has been a shareholder of record of the
Corporation for more than six months next preceding such request, who owns in
the aggregate 5% or more of the outstanding capital stock of the Corporation,
may submit (unless the Corporation at the time of the request maintains a
duplicate stock ledger at its principal office in Maryland) a written request to
any officer of the Corporation or its resident agent in Maryland for a list of
the shareholders of the Corporation. Within 20 days after such a request, there
shall be prepared and filed at the Corporation's principal office in Maryland a
list containing the names and addresses of all shareholders of the Corporation
and the number of shares of each class held by each shareholder, certified as
correct by an officer of the Corporation, by its stock transfer agent, or by its
registrar.

Section 8. Action Without Meeting. Any action required or permitted to be taken
by shareholders at a meeting of shareholders may be taken without a meeting if
(1) all shareholders entitled to vote on the matter consent to the action in
writing, (2) all shareholders entitled to notice of the meeting but not entitled
to vote at it sign a written waiver of any right to dissent, and (3) the
consents and waivers are filed with the records of the meetings of shareholders.
Such consent shall be treated for all purposes as a vote at the meeting.

                                   ARTICLE III

                               BOARD OF DIRECTORS

Section 1. Powers. Except as otherwise provided by operation of law, by the
Articles of Incorporation, or by these Bylaws, the business and affairs of the
Corporation shall be managed under the direction of and all the powers of the
Corporation shall be exercised by or under authority of its Board of Directors.

Section 2. Number and Term of Directors. Except for the initial Board of
Directors, the Board of Directors shall consist of not fewer than three nor more
than fifteen Directors, as specified by a resolution of a majority of the entire
Board of Directors. Directors need not be shareholders of the Corporation. All
acts done at any meeting of the Directors or by any person acting as a Director,
so long as his or her successor shall not have been duly elected or appointed,
shall, notwithstanding that it be afterwards discovered that there was some
defect in the election of the Directors or of such person acting as a Director
or that they or any of them were disqualified, be as valid as if the Directors
or such other person, as the case may be, had been duly elected and were or was
qualified to be Directors or a Director of the Corporation. Each Director shall
hold office until his or her successor is elected and qualified or until his or
her earlier death, resignation or removal.

Section 3. Election. Unless otherwise required by the 1940 Act, at the each
annual meeting of shareholders, Directors shall be elected by vote of the
holders of a majority of the shares present in person or by proxy and entitled
to vote thereon. A plurality of all the votes cast at a meeting at which a
quorum is present is sufficient to elect a Director.

Section 4. Vacancies and Newly Created Directorships. If any vacancies shall
occur in the Board of Directors by reason of death, resignation, removal or
otherwise, or if the authorized number of Directors shall be increased, the
Directors then in office shall continue to act, and such vacancies (if not
previously filled by the shareholders) may be filled by a majority of the
Directors then in office, although less than a quorum, except that a newly
created Directorship may be filled only by a majority vote of the entire Board
of Directors; provided, however, that if, at any time that there are
shareholders of the Corporation, immediately after filling such vacancy at least
two-thirds (2/3) of the Directors then holding office shall have been elected to
such office by the shareholders of the Corporation. In the event that at any
time, other than the time preceding the first annual shareholders' meeting, less
than a majority of the Directors of the Corporation holding office at that time
were elected by the shareholders, a meeting of the shareholders shall 


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be held promptly and in any event within sixty days for the purpose of electing
Directors to fill any existing vacancies in the Board of Directors, unless the
Securities and Exchange Commission shall by order extend such period.

Section 5. Removal. At any shareholders' meeting duly called, provided a quorum
is present, the shareholders may remove any director from office (either with or
without cause) and may elect a successor or successors to fill any resulting
vacancies for the unexpired terms of the removed director or directors. A
majority of all the votes entitled to be cast for the election of directors is
sufficient to remove a Director.

Section 6. Annual and Regular Meetings. The annual meeting of the Board of
Directors for choosing officers and transacting other proper business shall be
held at such other time and place as the Board may determine. The Board of
Directors from time to time may provide by resolution for the holding of regular
meetings and fix their time and place within or outside the State of Maryland.
Except as otherwise provided in the 1940 Act, notice of such annual and regular
meetings need not be given, provided that notice of any change in the time or
place of such meetings shall be sent promptly to each Director not present at
the meeting at which such change was made, in the manner provided for notice of
special meetings. Except as otherwise provided under the 1940 Act, members of
the Board of Directors or any committee designated thereby may participate in a
meeting of such Board or committee by means of a conference telephone or similar
communications equipment that allows all persons participating in the meeting to
hear each other at the same time.

Section 7. Special Meetings. Special meetings of the Board of Directors shall be
held whenever called by the Chairman of the Board, the Vice Chairman, the
President (or, in the absence or disability of the President, by any Vice
President), the Treasurer or by two or more Directors, at the time and place
(within or without the State of Maryland) specified in the respective notice or
waivers of notice of such meetings. Notice of special meetings, stating the time
and place, shall be (1) mailed to each Director at his or her residence or
regular place of business at least three days before the day on which a special
meeting is to be held or (2) delivered to him or her personally or transmitted
to him or her by telegraph, telecopy, telex, cable or wireless at least one day
before the meeting.

Section 8. Waiver of Notice. No notice of any meeting need be given to any
Director who is present at the meeting or who waives notice of such meeting in
writing (which waiver shall be filed with the records of such meeting), either
before or after the time of the meeting.

Section 9. Quorum and Voting. At all meetings of the Board of Directors, the
presence of one half or more of the number of Directors then in office shall
constitute a quorum for the transaction of business, provided that, at any time
that there shall be more than one director, there shall be present at least two
directors. In the absence of a quorum, a majority of the Directors present may
adjourn the meeting, from time to time, until a quorum shall be present. The
action of a majority of the Directors present at a meeting at which a quorum is
present shall be the action of the Board of Directors, unless concurrence of a
greater proportion is required for such action by law, by the Articles of
Incorporation or by these Bylaws.

Section 10. Action Without a Meeting. Except as otherwise provided under the
1940 Act, 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 or of
such committee, as the case may be, and such written consent is filed with the
minutes of proceedings of the Board or committee.

Section 11. Compensation of Directors. Directors shall be entitled to receive
such compensation from the Corporation for their services as may from time to
time be determined by resolution of the Board of Directors.


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                                  ARTICLE IIIA

                               ADVISORY DIRECTORS

Section 1. Advisory Directors. The Board of Directors may elect one or more
persons (who may or may not be officers of the Corporation) to serve as Advisory
Directors of the Corporation. Advisory Directors shall attend meetings of the
Board of Directors, and provide advice and assistance to the Board of Directors
as requested. Advisory Directors will not be deemed members of the Board of
Directors, and will not vote on any matter requiring a vote of the Board of
Directors.

Section 2. Election, Removal, etc. The election, tenure, qualifications, removal
and resignation of Advisory Directors shall be governed by the provisions of
Article V of these By-Laws dealing with the election, tenure, qualifications,
removal and resignation of officers.

Section 3. Indemnification and Insurance. An Advisory Director shall be entitled
to the same Indemnification and Insurance provided under Article IX of these
By-Laws as that which would apply to an officer or director of the Corporation.

                                   ARTICLE IV
                                   COMMITTEES

Section 1. Organization. By resolution adopted by the Board of Directors, the
Board may designate one or more committees of the Board of Directors, including
an Executive Committee. The Chairmen of such committees shall be elected by the
Board of Directors. Each committee must be comprised of two or more members,
each of whom must be a Director and shall hold committee membership at the
pleasure of the Board. The Board of Directors shall have the power at any time
to change the members of such committees and to fill vacancies in the
committees. The Board may delegate to these committees any of its powers, except
the power to declare a dividend or distribution on stock, authorize the issuance
of stock, recommend to shareholders any action requiring shareholders' approval,
amend these Bylaws, approve any merger or share exchange which does not require
shareholder approval, approve or terminate any contract with an "investment
adviser" or "principal underwriter," as those terms are defined in the 1940 Act,
or to take any other action required by the 1940 Act to be taken by the Board of
Directors.

Section 2. Executive Committee. Unless otherwise provided by resolution of the
Board of Directors, when the Board of Directors is not in session, the Executive
Committee, if one is designated by the Board, shall have and may exercise all
powers of the Board of Directors in the management of the business and affairs
of the Corporation that may lawfully be exercised by an Executive Committee. The
President and Chairman shall automatically be members of the Executive
Committee.

Section 3. Proceedings and Quorum. In the absence of an appropriate resolution
of the Board of Directors, each committee may adopt such rules and regulations
governing its proceedings, quorum and manner of acting as it shall deem proper
and desirable. In the event any member of any committee is absent from any
meeting, the members thereof present at the meeting, whether or not they
constitute a quorum, may appoint a member of the Board of Directors to act in
the place of such absent member.

Section 4. Other Committees. The Board of Directors may appoint other
committees, each consisting of one or more persons, who need not be Directors.
Each such committee shall have such powers and perform such duties as may be
assigned to it from time to time by the Board of Directors, but shall not
exercise any power which may lawfully be exercised only by the Board of
Directors or a committee thereof.

                                    ARTICLE V


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                                    OFFICERS

Section 1. General. The officers of the Corporation shall be a Chairman, Vice
Chairman, President, a Secretary, and a Treasurer, and may include one or more
Vice Presidents, Assistant Secretaries or Assistant Treasurers, and such other
officers as may be appointed in accordance with the provisions of Section 11 of
this Article.

Section 2. Election, Tenure and Qualifications. The officers of the Corporation,
except those appointed as provided in Section 11 of this Article V, shall be
elected by the Board of Directors at its first meeting or such subsequent
meetings as shall be held prior to its first annual meeting, and thereafter
annually at its annual meeting. If any officers are not elected at any annual
meeting, such officers may be elected at any subsequent regular or special
meeting of the Board. Except as otherwise provided in this Article V, each
officer elected by the Board of Directors shall hold office until the next
annual meeting of the Board of Directors and until his or her successor shall
have been elected and qualified. Any person may hold one or more offices of the
Corporation except that no one person may serve concurrently as both President
and Vice President. A person who holds more than one office in the Corporation
may not act in more than one capacity to execute, acknowledge, or verify an
instrument required by law to be executed, acknowledged, or verified by more
than one officer. No officer, other than the Chairman or Vice Chairman, need be
a Director.

Section 3. Vacancies and Newly Created Officers. If any vacancy shall occur in
any office by reason of death, resignation, removal, disqualification or other
cause, or if any new office shall be created, such vacancies or newly created
offices may be filled by the Board of Directors at any regular or special
meeting or, in the case of any office created pursuant to Section 11 hereof, by
any officer upon whom such power shall have been conferred by the Board of
Directors.

Section 4. Removal and Resignation. Any officer may be removed from office by
the vote of a majority of the members of the Board of Directors given at a
regular meeting or any special meeting called for such purpose. Any officer may
resign from office at any time by delivering a written resignation to the Board
of Directors, the President, the Chairman, the Secretary, or any Assistant
Secretary. Unless otherwise specified therein, such resignation shall take
effect upon delivery.

Section 5. President. The President shall be the chief executive officer of the
Corporation and, in the absence of the Chairman and Vice Chairman, shall preside
at all shareholders' meetings and at all meetings of the Board of Directors.
Subject to the supervision of the Board of Directors, the President shall have
general charge of the business, affairs and property of the Corporation and
general supervision over its officers, employees and agents. Except as the Board
of Directors may otherwise order, the President may sign in the name and on
behalf of the Corporation all deeds, bonds, contracts, or agreements. The
President shall exercise such other powers and perform such other duties as from
time to time may be assigned by the Board of Directors.

Section 6. Chairman. The Chairman shall be an executive officer of the
Corporation and shall preside at all shareholders' meetings and at all meetings
of the Board of Directors, and may be ex officio a member of all committees of
the Board of Directors. Except as the Board of Directors may otherwise order,
the Chairman may sign in the name and on behalf of the Corporation all deeds,
bonds, contracts, or agreements. The Chairman shall exercise such other powers
and perform such other duties as from time to time may be assigned by the Board
of Directors.

Section 7. Vice Chairman. The Vice Chairman shall be the chief operating officer
of the Corporation and, in the absence of the Chairman, shall preside at all
shareholders' meetings and at all meetings of the Board of Directors. Except as
the Board of Directors may otherwise order, the Vice Chairman may sign in the
name and on behalf of the Corporation all deeds, bonds, contracts, or
agreements. The Vice Chairman shall exercise such other powers and perform such
other duties as from time to time may be assigned by the 


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Board of Directors.

Section 8. Vice President. The Board of Directors may from time to time elect
one or more Vice Presidents who shall have such powers and perform such duties
as from time to time may be assigned to them by the Board of Directors or the
President. The Board of Directors may establish titles among the Vice Presidents
denoting their relative seniority. At the request of, or in the absence or in
the event of the disability of, the President, the Vice President (or, if there
are two or more Vice Presidents, then the senior of the Vice Presidents present
and able to act) may perform all the duties of the President and, when so
acting, shall have all the powers of and be subject to all the restrictions upon
the President.

Section 9. Treasurer and Assistant Treasurers. The Treasurer shall be the
principal financial and accounting officer of the Corporation and shall have
general charge of the finances and books of account of the Corporation. Except
as otherwise provided by the Board of Directors, the Treasurer shall have
general supervision of the funds and property of the Corporation and of the
performance by the Custodian of its duties with respect thereto. The Treasurer
shall render to the Board of Directors, whenever directed by the Board, an
account of the financial condition of the Corporation and of all transactions as
Treasurer; and as soon as possible after the close of each financial year the
Treasurer shall make and submit to the Board of Directors a like report for such
financial year. The Treasurer shall perform all acts incidental to the office of
Treasurer, subject to the control of the Board of Directors.

Any Assistant Treasurer may perform such duties of the Treasurer as the
Treasurer or the Board of Directors may assign, and, in the absence of the
Treasurer, may perform all the duties of the Treasurer.

Section 10. Secretary and Assistant Secretaries. The Secretary shall attend to
the giving and serving of all notices of the Corporation and shall record all
proceedings of the meetings of the shareholders and Directors in books to be
kept for that purpose. The Secretary shall keep in safe custody the seal of the
Corporation, and shall have responsibility for the records of the Corporation,
including the stock books and such other books and papers as the Board of
Directors may direct and such books, reports, certificates and other documents
required by law to be kept, all of which shall at all reasonable times be open
to inspection by any Director. The Secretary shall perform such other duties
which appertain to this office or as may be required by the Board of Directors.

Any Assistant Secretary may perform such duties of the Secretary as the
Secretary or the Board of Directors may assign, and, in the absence of the
Secretary, may perform all the duties of the Secretary.

Section 11. Subordinate Officers. The Board of Directors from time to time may
appoint such other officers and agents as it may deem advisable, each of whom
shall have such title, hold office, for such period, have such authority and
perform such duties as the Board of Directors may determine. The Board of
Directors from time to time may delegate to one or more officers or agents the
power to appoint any such subordinate officers or agents and to prescribe their
respective rights, terms of office, authorities and duties. Any officer or agent
appointed in accordance with the provisions of this Section 11 may be removed,
either with or without cause, by any officer upon whom such power of removal
shall have been conferred by the Board of Directors.

Section 12. Remuneration. The salaries or other compensation, if any, of the
officers of the Corporation shall be fixed from time to time by resolution of
the Board of Directors in the manner provided by Section 9 of Article III,
except that the Board of Directors may by resolution delegate to any person or
group of persons the power to fix the salaries or other compensation of any
subordinate officers or agents appointed in accordance with the provisions of
Section 11 of this Article V.

Section 11 Surety Bond. The Board of Directors may require any officer or agent
of the Corporation to execute a bond (including, without limitation, any bond
required by the 1940 Act and the rules and 


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regulations of the Securities and Exchange Commission promulgated thereunder) to
the Corporation in such sum and with such surety or sureties as the Board of
Directors may determine, conditioned upon the faithful performance of his or her
duties to the Corporation, including responsibility for negligence and for the
accounting of any of the Corporation's property, funds or securities that may
come into his or her hands.

                                   ARTICLE VI

                                  CAPITAL STOCK

Section 1. Certificates of Stock. The interest of each shareholder of the
Corporation may be evidenced by certificates for shares of stock in such form as
the Board of Directors may from time to time authorize; provided, however, the
Board of Directors may, in its discretion, authorize the issuance of
non-certificated shares. No certificate shall be valid unless it is signed by
the Chairman, President or a Vice President and countersigned by the Secretary
or an Assistant Secretary or the Treasurer or an Assistant Treasurer of the
Corporation and sealed with the seal of the Corporation, or bears the facsimile
signatures of such officers and a facsimile of such seal. In case any officer
who shall have signed any such certificate, or whose facsimile signature has
been placed thereon, shall cease to be such an officer (because of death,
resignation or otherwise) before such certificate is issued, such certificate
may be issued and delivered by the Corporation with the same effect as if he or
she were such officer at the date of issue.

In the event that the Board of Directors authorizes the issuance of
non-certificated shares of stock, the Board of Directors may, in its discretion
and at any time, discontinue the issuance of share certificates and may, by
written notice to the registered owners of each certificated share, require the
surrender of share certificates to the Corporation for cancellation. Such
surrender and cancellation shall not affect the ownership of shares of the
Corporation.

Section 2. Transfer of Shares. Subject to the provisions of the next sentence of
this Section 2 of Article VI, Shares of the Corporation shall be transferable on
the books of the Corporation by the holder of record thereof in person or by his
or her duly authorized attorney or legal representative (i) upon surrender and
cancellation of any certificate or certificates for the same number of shares of
the same class, duly endorsed or accompanied by proper instruments of assignment
and transfer, with such proof of the authenticity of the signature as the
Corporation or its agents may reasonably require, or (ii) as otherwise
prescribed by the Board of Directors. The Board of Directors may, from time to
time, adopt limitations and rules and regulations with reference to the transfer
of the shares of stock of the Corporation to comply with the requirements of the
Securities Act of 1933, as amended, or other applicable laws. The Corporation
shall be entitled to treat the holder of record of any share of stock as the
absolute owner thereof for all purposes, and accordingly shall not be bound to
recognize any legal, equitable or other claim or interest in such share on the
part of any other person, whether or not it shall have express or other notice
thereof, except as otherwise expressly provided by law or the statutes of the
State of Maryland.

Section 3. Stock Ledgers. The stock ledgers of the Corporation, containing the
names and addresses of the shareholders and the number of shares held by them
respectively, shall be kept at the principal offices of the Corporation or, if
the Corporation employs a transfer agent, at the offices of the transfer agent
of the Corporation.

Section 4. Transfer Agents and Registrars. The Board of Directors may from time
to time appoint or remove transfer agents and registrars of transfers for shares
of stock of the Corporation, and it may appoint the same person as both transfer
agent and registrar. Upon any such appointment being made all certificates
representing shares of capital stock thereafter issued shall be countersigned by
one of such transfer agents or by one of such registrars or by both and shall
not be valid unless so countersigned. If the same person shall be both transfer
agent and registrar, only one countersignature by such person shall be required.


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Section 5. Fixing of Record Date. The Board of Directors may fix in advance a
date as a record date for the determination of the shareholders entitled to
notice of or to vote at any shareholders' meeting or any adjournment thereof, or
to express consent to corporate action in writing without a meeting, or to
receive payment of any dividend or other distribution or allotment of any
rights, or to exercise any rights in respect of any change, conversion or
exchange of stock, or for the purpose of any other lawful action, provided that
(1) such record date shall be within ninety days prior to the date on which the
particular action requiring such determination will be taken; (2) the transfer
books shall not be closed for a period longer than twenty days; and (3) in the
case of a meeting of shareholders, the record date shall be at least ten days
before the date of the meeting.

Section 6. Lost, Stolen or Destroyed Certificates. Before issuing a new
certificate for stock of the Corporation alleged to have been lost, stolen or
destroyed, the Board of Directors or any officer authorized by the Board may, in
its discretion, require the owner of the lost, stolen or destroyed certificate
(or his or her legal representative) to give the Corporation a bond or other
indemnity, in such form and in such amount as the Board or any such officer may
direct and with such surety or sureties as may be satisfactory to the Board or
any such officer, sufficient to indemnify the Corporation against any claim that
may be made against it on account of the alleged loss, theft or destruction of
any such certificate or the issuance of such new certificate.

                                   ARTICLE VII

                           FISCAL YEAR AND ACCOUNTANT

Section 1. Fiscal Year. The fiscal year of the Corporation shall, unless
otherwise ordered by the Board of Directors, be twelve calendar months ending on
the 31st day of December.

Section 2. Accountant.

A. The Corporation shall employ an independent public accountant or a firm of
independent public accountants as its Accountant to examine the accounts of the
Corporation and to sign and certify financial statements filed by the
Corporation. The Accountant's certificates and reports shall be addressed both
to the Board of Directors and to the shareholders. The employment of the
Accountant shall be conditioned upon the right of the Corporation to terminate
the employment forthwith without any penalty by vote of a majority of the
outstanding voting securities at any shareholders' meeting called for that
purpose.

B. A majority of the members of the Board of Directors who are not "interested
persons" (as defined in the 1940 Act) of the Corporation shall select the
Accountant at any meeting held within thirty days before or after the beginning
of the fiscal year of the Corporation or before the annual shareholders' meeting
in that year. The selection shall be submitted for ratification or rejection at
the next succeeding annual shareholders' meeting. If the selection is rejected
at that meeting, the Accountant shall be selected by majority vote of the
Corporation's outstanding voting securities, either at the meeting at which the
rejection occurred or at a subsequent meeting of shareholders called for the
purpose of selecting an Accountant.

C. Any vacancy  occurring  between annual  meetings due to the  resignation of
the  Accountant  may be filled by the vote of a majority of the members of the
Board of Directors who are not interested persons.

                                  ARTICLE VIII

                              CUSTODY OF SECURITIES

Section 1. Employment of a Custodian. The Corporation shall place and at all
times maintain in the custody of a Custodian (including any sub-custodian for
the Custodian) all funds, securities and similar investments owned by the
Corporation. The Custodian (and any sub-custodian) shall be a bank or trust
company of 


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good standing having an aggregate capital, surplus, and undivided profits not
less than fifty million dollars ($50,000,000) or such other financial
institution or other entity as shall be permitted by rule or order of the
Securities and Exchange Commission. The Custodian shall be appointed from time
to time by the Board of Directors, which shall fix its remuneration.

Section 2. Termination of Custodian Agreement. Upon termination of the agreement
for services with the Custodian or inability of the Custodian to continue to
serve, the Board of Directors shall promptly appoint a successor Custodian, but
in the event that no successor Custodian can be found who has the required
qualifications and is willing to serve, the Board of Directors shall call as
promptly as possible a special meeting of the shareholders to determine whether
the Corporation shall function without a Custodian or shall be liquidated. If so
directed by resolution of the Board of Directors or by vote of the holders of a
majority of the outstanding shares of stock of the Corporation, the Custodian
shall deliver and pay over all property of the Corporation held by it as
specified in such vote.

Section 3. Other Arrangements. The Corporation may make such other arrangements
for the custody of its assets (including deposit arrangements) as may be
required by any applicable law, rule or regulation.

                                   ARTICLE IX

                          INDEMNIFICATION AND INSURANCE

Section 1. Indemnification of Officers, Directors, Employees and Agents. The
Corporation shall indemnify its present and past directors, officers, employees
and agents (including any "investment adviser" or "principal underwriter," as
those terms are defined in the 1940 Act), and any persons who are serving or
have served at the request of the Corporation as a director, officer, employee
or agent of another corporation, partnership, joint venture, trust, or
enterprise, to the full extent provided and allowed by Section 2-418 of the
Annotated Corporations and Associations Code of Maryland concerning
corporations, as amended from time to time or any other applicable provisions of
law. Notwithstanding anything herein to the contrary, no director, officer,
investment adviser or principal underwriter of the Corporation shall be
indemnified in violation of Sections 17(h) and (i) of the 1940 Act. Expenses
incurred by any such person in defending any proceeding to which he or she is a
party by reason of service in the above-referenced capacities shall be paid in
advance or reimbursed by the Corporation to the full extent permitted by law,
including Sections 17(h) and (i) of the 1940 Act.

Section 2. Insurance of Officers, Directors, Employees and Agents. The
Corporation may purchase and maintain insurance on behalf of any person who is
or was a director, officer, employee or agent of the Corporation, or is or was
serving at the request of the Corporation as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust or other
enterprise, against any liability asserted against that person and incurred by
that person in or arising out of his or her position, whether or not the
Corporation would have the power to indemnify him or her against such liability.
Notwithstanding the foregoing, any such insurance so purchased will not protect
or purport to protect any officer or director against liabilities for willful
misfeasance, bad faith, gross negligence or reckless disregard of duty.

Section 3. Amendment. No amendment, alteration or repeal of this Article or the
adoption, alteration or amendment of any other provision of the Articles of
Incorporation or Bylaws inconsistent with this Article shall adversely affect
any right or protection of any person under this Article with respect to any act
or failure to act which occurred prior to such amendment, alteration, repeal or
adoption.

                                    ARTICLE X

                                   AMENDMENTS


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Section 1. General. Except as provided in Section 2 of this Article X, all
Bylaws of the Corporation, whether adopted by the Board of Directors or the
shareholders, shall be subject to amendment, alteration or repeal, and new
Bylaws may be made by the affirmative vote of a majority of either: (1) the
holders of record of the outstanding shares of stock of the Corporation entitled
to vote, at any annual or special meeting, the notice or waiver of notice of
which shall have specified or summarized the proposed amendment, alteration,
repeal or new Bylaw; or (2) the Directors, at any regular or special meeting the
notice or waiver of notice of which shall have specified or summarized the
proposed amendment, alteration, repeal or new Bylaw.

Section 2. By Shareholders Only. No amendment of any section of these Bylaws
shall be made except by the shareholders of the Corporation if the Bylaws
provide that such section may not be amended, altered or repealed except by the
shareholders. From and after the issue of any shares of the capital stock of the
Corporation, no amendment, alteration or repeal of this Article X shall be made
except by the affirmative vote of the holders of either: (a) more than
two-thirds of the Corporation's outstanding shares present at a meeting at which
the holders of more than fifty percent of the outstanding shares are present in
person or by proxy, or (b) more than fifty percent of the Corporation's
outstanding shares.