<SEC-DOCUMENT>0001193125-23-253150.txt : 20240110
<SEC-HEADER>0001193125-23-253150.hdr.sgml : 20240110
<ACCEPTANCE-DATETIME>20231010084557
<PRIVATE-TO-PUBLIC>
ACCESSION NUMBER:		0001193125-23-253150
CONFORMED SUBMISSION TYPE:	CORRESP
PUBLIC DOCUMENT COUNT:		3
FILED AS OF DATE:		20231010

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			GLADSTONE CAPITAL CORP
		CENTRAL INDEX KEY:			0001143513
		ORGANIZATION NAME:           	
		IRS NUMBER:				542040781
		STATE OF INCORPORATION:			MD
		FISCAL YEAR END:			0930

	FILING VALUES:
		FORM TYPE:		CORRESP

	BUSINESS ADDRESS:	
		STREET 1:		1521 WESTBRANCH DRIVE
		STREET 2:		SUITE 100
		CITY:			MCLEAN
		STATE:			VA
		ZIP:			22102
		BUSINESS PHONE:		703-287-5800

	MAIL ADDRESS:	
		STREET 1:		1521 WESTBRANCH DRIVE
		STREET 2:		SUITE 100
		CITY:			MCLEAN
		STATE:			VA
		ZIP:			22102
</SEC-HEADER>
<DOCUMENT>
<TYPE>CORRESP
<SEQUENCE>1
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<TD VALIGN="middle" ALIGN="center"> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center">William J. Tuttle</P>
<P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center">To Call Writer Directly:</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center">+1 202 389
3350</P> <P STYLE="margin-top:0pt; margin-bottom:1pt; font-size:10pt; font-family:Times New Roman" ALIGN="center">william.tuttle@kirkland.com</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="middle"> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center">1301 Pennsylvania Avenue, N.W.</P>
<P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center">Washington, D.C. 20004</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center">United
States</P> <P STYLE="font-size:12pt; margin-top:0pt; margin-bottom:0pt" align="left">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center">+1 202 389 5000</P>
<P STYLE="font-size:12pt; margin-top:0pt; margin-bottom:0pt" align="left">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:1pt; font-size:10pt; font-family:Times New Roman" ALIGN="center">www.kirkland.com</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="middle" ALIGN="center"> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center">Facsimile:</P>
<P STYLE="margin-top:0pt; margin-bottom:1pt; font-size:10pt; font-family:Times New Roman" ALIGN="center">+1 202 389 5200</P></TD></TR>
</TABLE> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center">October&nbsp;10, 2023 </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">By EDGAR </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">United States Securities and Exchange Commission </P>
<P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Division of Investment Management </P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">100 F Street, N.E. </P>
<P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Washington, D.C. 20549 </P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Attn: Kimberly Browning </P>
<P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
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<TD WIDTH="5%" VALIGN="top" ALIGN="left">Re:</TD>
<TD ALIGN="left" VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman; " ALIGN="left">Gladstone Capital Corporation </P></TD></TR></TABLE>
<P STYLE="margin-top:0pt; margin-bottom:0pt; margin-left:9%; font-size:10pt; font-family:Times New Roman">Preliminary Proxy Statement on Schedule 14A </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Dear Ladies and Gentlemen: </P> <P STYLE="margin-top:6pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">On behalf of Gladstone Capital
Corporation, a Maryland corporation (the &#147;<U>Company</U>&#148;), we hereby respond to the comments raised by the staff (the &#147;<U>Staff</U>&#148;) of the Securities and Exchange Commission (the &#147;<U>Commission</U>&#148;) regarding
(1)&nbsp;the Company&#146;s Preliminary Proxy Statement on Schedule 14A, filed on August&nbsp;31, 2023 (File <FONT STYLE="white-space:nowrap">No.&nbsp;814-00237</FONT> and Accession
<FONT STYLE="white-space:nowrap"><FONT STYLE="white-space:nowrap">No.&nbsp;0001193125-23-226374),</FONT></FONT> and (2)&nbsp;the Company&#146;s response letter filed on September&nbsp;20, 2023 (Accession <FONT STYLE="white-space:nowrap"><FONT
STYLE="white-space:nowrap">No.&nbsp;0001193125-23-238530)</FONT></FONT> (the &#147;<U>Prior Letter</U>&#148;) in a telephone call on October&nbsp;5, 2023 between Kimberly Browning of the Staff and William J. Tuttle and Erin M. Lett of
Kirkland&nbsp;&amp; Ellis LLP, outside counsel to the Company. For your convenience, a transcription of the Staff&#146;s comments is included in this letter, with each comment followed by the Company&#146;s response. Except as provided in this
letter, terms used in this letter have the meanings given to them in the Preliminary Proxy Statement. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>1. The Staff notes Response #2 in the Prior
Letter. Please reconfirm that the proxy statement relating to a similar proposal filed by Gladstone Investment Corporation (&#147;<U>GAIN</U>&#148;) is and will be materially the same as the Company&#146;s proxy statement, except for (1)&nbsp;the
names of the registrants, (2)&nbsp;matters related to the respective dates and states of incorporation, (3)&nbsp;matters related to the dates of the respective annual stockholder meetings, (4)&nbsp;directors and officers, (5)&nbsp;fee waivers
granted by the Adviser to the Company, (6)&nbsp;the terms and rates of the fees payable under the applicable investment advisory agreements, (7)&nbsp;the applicable loan servicing arrangements of the Company and GAIN and (8)&nbsp;beneficial
ownership of shares. </B></P>
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<P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center">Austin&#8195;Bay&nbsp;Area&#8195;Beijing&#8195;Boston&#8195;Brussels&#8195;Chicago&#8195;Dallas&#8195;Hong&nbsp;Kong&#8195;Houston&#8195;London
&#8195;Los&nbsp;Angeles &#8195;Miami&#8195;Munich&#8195;New&nbsp;York&#8195;Paris&#8195;Salt&nbsp;Lake&nbsp;City&#8195;Shanghai </P>


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 </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">United States Securities and Exchange </P>
<P STYLE="margin-top:0pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">Commission </P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">October 10, 2023 </P>
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 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>Response:</B> The Company reconfirms that the Company&#146;s proxy statement and that of GAIN is and will
be materially the same except for (1)&nbsp;the items noted above and (2), due to the need to move the record date as a result of the Staff&#146;s lengthy review of the proxy statement, the Company will have shares of its 6.25% Series A Cumulative
Redeemable Preferred Stock outstanding as of the record date, which also results in certain changes to the proxy statement. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>2. With respect to the
effective date of the New Advisory Agreement: </B></P> <P STYLE="margin-top:6pt; margin-bottom:0pt; margin-left:4%; text-indent:4%; font-size:10pt; font-family:Times New Roman"><B>(a) What effective date did the Board review and approve when
recommending the New Advisory Agreement to the Company&#146;s stockholders?</B> </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>Response: </B>At its <FONT STYLE="white-space:nowrap">in-person</FONT>
meeting on August&nbsp;22, 2023, the Board was advised that entry into the New Advisory Agreement could occur as late as the Effective Date and approved entry into the New Advisory Agreement as late as the Effective Date. </P>
<P STYLE="margin-top:6pt; margin-bottom:0pt; margin-left:4%; text-indent:4%; font-size:10pt; font-family:Times New Roman"><B>(b) Please reconcile the potential discrepancy between the effective date for the New Advisory Agreement approved by the
Board and that provided in the draft proxy statement.</B> </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>Response:</B> The Company respectfully submits that there is no potential discrepancy
between the effective date for the New Advisory Agreement approved by the Board and that provided in the proxy statement. </P>
<P STYLE="margin-top:6pt; margin-bottom:0pt; margin-left:4%; text-indent:4%; font-size:10pt; font-family:Times New Roman"><B>(c) Please clarify and confirm the correct timing for the effective date of the New Advisory Agreement.</B> </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>Response: </B>The Company confirms that the effective date for the New Advisory Agreement will be the Effective Date and will review the proxy statement to
ensure that such date is properly reflected throughout. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>3. The Staff notes the stated concerns in the response to Comment #12(b) of the Prior Letter
regarding the Company&#146;s ability to comply with the timing requirements of Rule <FONT STYLE="white-space:nowrap">15a-4</FONT> given its particular facts and circumstances.&nbsp;The Staff also acknowledges the reference in footnote 3 to such
response to prior instances of preapproval in advance of a change of control.&nbsp;However, as counsel notes in footnote 1 to such response, others have sought <FONT STYLE="white-space:nowrap">no-action</FONT> relief in such
circumstances.&nbsp;Please provide a legal analysis as to why <FONT STYLE="white-space:nowrap">pre-approval</FONT> by stockholders is permissible without further relief from the Commission and/or the Staff.&nbsp;Please also include in such analysis
how the facts and circumstances of the Garrison Capital example are applicable in this instance.</B></P>

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 </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">United States Securities and Exchange </P>
<P STYLE="margin-top:0pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">Commission </P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">October 10, 2023 </P>
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 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>Response: </B>The Company restates its response from the response letter filed on September&nbsp;20, 2023
and the notes that the Staff has not indicated the existence of any guidance to the contrary. In addition, the Company and the Adviser strongly disagree with any assertion that the appropriate course of action for succession planning would be to
enter into a temporary investment advisory agreement in reliance on Rule <FONT STYLE="white-space:nowrap">15a-4</FONT> under the 1940 Act at the time of Mr.&nbsp;Gladstone&#146;s death and only then solicit stockholder holder approval of a new
investment advisory agreement. In fact, the proposing release for Rule <FONT STYLE="white-space:nowrap">15a-4</FONT> notes that the proposed rule &#147;would not provide an exemption from the requirements of section 15 where an investment adviser
intends to assign a contract under certain reasonably foreseeable circumstances.&#148; The adopting release further notes that &#147;when an assignment of the investment advisory contract is foreseeable, an investment adviser, pursuant to its
fiduciary responsibilities to the investment company, may well be obliged to continue to provide advisory services to the investment company until such shareholders&#146; approval is secured for the successor investment adviser&#146;s contract.
Therefore, the Commission stated its believe that it may be inappropriate for it to continue to grant exemptive orders from the shareholder voting requirement of section 15(a) of the [1940] Act under circumstances in which it was practicable for an
investment adviser to secure prior approval by the investment company shareholders of a successor advisory contract.&#148; </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">As disclosed in the proxy
statement, Mr.&nbsp;Gladstone, the sole indirect holder of the 100% of the voting interests in the Adviser, is 81 years old. Based on data from the Social Security Administration (available at: https://www.ssa.gov/OACT/TR/2023/lr5a4.html), a male
born in 1942 had an average life expectancy of 62.6 years and an additional life expectancy at age 65 of 12.4 years. Although Mr.&nbsp;Gladstone remains in excellent health and is actively engaged in the management of the Company and the Adviser,
the Company and the Adviser respectfully assert that, given his current age, the assignment of the investment advisory contract upon his death is foreseeable (or, at the very least, could be deemed to have been foreseeable by the Commission after
his death) and that it is practicable to secure prior approval by the Company&#146;s stockholders of a successor advisory contract. As noted in our prior letter, the proposal set forth in the proxy statement is the result of a series of extensive
discussions between the Company&#146;s independent directors and Mr.&nbsp;Gladstone regarding succession planning at the Adviser and the mutual desire to seek to ensure the seamless continuity of services provided to the Company in the event of the
death of Mr.&nbsp;Gladstone, which discussions were intended to result in an outcome that satisfies the fiduciary duties of both the Adviser and the Board and to address both the very likely prospect that the Commission would decline to grant
exemptive relief under Section&nbsp;15(a) and the prospect that the Staff would decline to grant <FONT STYLE="white-space:nowrap">no-action</FONT> relief under Rule <FONT STYLE="white-space:nowrap">15a-4</FONT> were a new investment advisory
agreement not to be approved within 150 days of Mr.&nbsp;Gladstone&#146;s death. </P>

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 </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">United States Securities and Exchange </P>
<P STYLE="margin-top:0pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">Commission </P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">October 10, 2023 </P>
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 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Based on the public disclosures by Garrison Capital Inc., the change of control of the investment adviser
took place on August&nbsp;5, 2016. Although certain attorneys at this firm were involved in that transaction, any further details surrounding the execution of the new investment advisory agreement are privileged. However, as previously noted, there
was a <FONT STYLE="white-space:nowrap">14-month</FONT> period between stockholder approval of the new investment advisory agreement and execution of such agreement. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Without conceding the merits of the Company&#146;s prior assertions, in an effort to resolve the Staff&#146;s inquiries without further delay and expense, the
Company and the Adviser have agreed to revise the definition of Effective Date in the proxy statement such that it shall occur no later than one year from the date the Voting Trust Agreement is entered into. </P>
<P STYLE="margin-top:18pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>4. Please provide a brief explanation of &#147;pass through charges&#148; when discussing the engagement of Alliance under &#147;Who is paying for this
proxy solicitation?&#148;. </B></P> <P STYLE="margin-top:6pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>Response: </B>As requested, the Company will revise the disclosure in the proxy statement to provide a brief explanation
of &#147;pass through charges.&#148; </P> <P STYLE="margin-top:18pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>5. In the draft disclosure added in response to Comment #10(e) of the Prior Letter, please change
&#147;fundamental policies&#148; to &#147;fundamental investment restrictions&#148; and &#147;risk profile&#148; to &#147;principal risks&#148;. </B></P>
<P STYLE="margin-top:6pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>Response: </B>As requested, the Company will revise the disclosure in the proxy statement to change &#147;fundamental policies&#148; to &#147;fundamental
investment restrictions&#148; and &#147;risk profile&#148; to &#147;principal risks.&#148; </P> <P STYLE="margin-top:18pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>6. The Staff reissues Comment #11 of the Prior Letter with
respect to anticipatory language. </B></P> <P STYLE="margin-top:6pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>Response: </B>As requested, the Company will revise the disclosure in the proxy statement to eliminate
anticipatory language (except where such language is used in connection with the continued relationship of the Adviser and certain personnel or where such language might otherwise be subject to uncertainty as of the date of the proxy statement).
</P>

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 </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">United States Securities and Exchange </P>
<P STYLE="margin-top:0pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">Commission </P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">October 10, 2023 </P>
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 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>7. Confirm the Adviser does not have any recoupment rights under the Original Advisory Agreement and will
not have any recoupment rights under the New Advisory Agreement. </B></P> <P STYLE="margin-top:6pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>Response: </B>The Company confirms that the Adviser does not have any recoupment
rights under the Original Advisory Agreement and will not have any recoupment rights under the New Advisory Agreement. </P> <P STYLE="margin-top:18pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>8. Confirm that the Adviser is
in compliance with Section&nbsp;36 of the 1940 Act and has not breached its fiduciary duties to the Company or its stockholders. </B></P> <P STYLE="margin-top:6pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>Response: </B>The
Company confirms that the Adviser is in compliance with Section&nbsp;36 of the 1940 act and has not breached its fiduciary duties to the Company or its stockholders. Please also see the Company&#146;s response to comment #3 above. </P>
<P STYLE="margin-top:18pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>9. Please clarify throughout the document whether the New Advisory Agreement was approved by a majority of the independent directors or was approved
unanimously. </B></P> <P STYLE="margin-top:6pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>Response: </B>As requested, the Company will clarify in the proxy statement that the New Advisory Agreement was approved unanimously.
</P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center">* * * * * * * </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">If you have any questions,
please feel free to contact the undersigned by telephone at 202.389.3350 (or by email at william.tuttle@kirkland.com) or Erin M. Lett by telephone at 202.389.3353 (or by email at erin.lett@kirkland.com). Thank you for your cooperation and attention
to this matter. </P> <P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P><DIV ALIGN="right">
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<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">Sincerely,</P></TD></TR>
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<TD HEIGHT="16"></TD></TR>
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<TD VALIGN="top" STYLE="BORDER-BOTTOM:1px solid #000000"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">/s/ William J. Tuttle</P></TD></TR>
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<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">William J. Tuttle</P></TD></TR>
</TABLE></DIV> <P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
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<TR style = "page-break-inside:avoid">
<TD WIDTH="4%" VALIGN="top" ALIGN="left">cc:</TD>
<TD ALIGN="left" VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman; " ALIGN="left">David Gladstone, Gladstone Capital Corporation </P></TD></TR></TABLE>
<P STYLE="margin-top:0pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">Michael LiCalsi, Gladstone Capital Corporation </P>
<P STYLE="margin-top:0pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">Nicole Schaltenbrand, Gladstone Capital Corporation </P>
<P STYLE="margin-top:0pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">Erin M. Lett, Kirkland&nbsp;&amp; Ellis LLP </P>
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