PREFERRED INCOME FUND INCORPORATED

                              ARTICLES OF AMENDMENT

                  PREFERRED INCOME FUND INCORPORATED, a Maryland corporation
having its principal Maryland office in the City of Baltimore (the
"Corporation"), certifies to the State Department of Assessments and Taxation of
Maryland that:

                  FIRST: The Articles Supplementary Creating and Fixing the
Rights of Money Market Cumulative Preferred Stock ("MMP(R)") of the Corporation
are hereby amended by deleting Article SECOND in its entirety and inserting in
lieu thereof the following:

                  SECOND: The preferences, voting powers, restrictions,
                  limitations as to dividends, qualifications, and terms and
                  conditions of redemption, of the shares of such series of
                  preferred stock are as follows:

PART I

    1.  Number of Shares; Ranking. (a) The number of authorized shares
constituting the MMP is 2,000. No fractional shares of MMP shall be issued. (b)
Any shares of MMP which at any time have been redeemed, purchased or otherwise
acquired by the Corporation shall, after such redemption, purchase or
acquisition, have the status of authorized but unissued shares of MMP. The
Corporation may not repurchase shares of MMP if, as a result of such purchases,
the number of shares of MMP outstanding would be fewer than 200.

     (c) The shares of MMP shall rank on a parity with shares of any other
series of Preferred Stock as to the payment of dividends, including any
Additional Distribution Rights,




and the distribution of assets upon dissolution,
liquidation or winding up of the affairs of the Corporation.

     (d) The Corporation shall not reissue any shares of MMP acquired by it
unless (i) on the Business Day on which such shares are reissued the Eligible
Asset Coverage is met giving effect to such reissuance and (ii) the Board of
Directors receives written confirmation from Moody's that such reissuance would
not impair the rating then assigned by Moody's to the shares of MMP.

  2.  Dividends. (a) The Holders of shares of MMP shall be entitled to
receive, when, as and if declared by the Board of Directors, out of funds
legally available therefor, cumulative cash dividends at the Applicable Rate per
annum thereof, determined as set forth in paragraph (c) of this Section 2, and
no more (except to the extent set forth in subparagraph (c)(i) and paragraph (d)
of this Section 2), payable on the respective dates (each a "Dividend Payment
Date") determined as set forth in paragraph (b) of this Section 2. Dividends on
shares of MMP shall accumulate at the Applicable Rate per annum from the Date of
Original Issue thereof.

     (b) (i) Dividends shall be payable, subject to subparagraphs (b)(ii)(A) and
(b)(ii)(C) of this Section 2, on shares of MMP, on Thursday, June 6, 1991, and
on each succeeding seventh Thursday following such date, provided that if the
Corporation, subject to the conditions set forth in Section 4 of this Part I,
designates any Subsequent Rate Period as a Special Rate Period that consists of:

     (A) 91 Rate Period Days, dividends shall be payable, subject to
   subparagraphs (b) (ii) (A) and (b) (ii) (C) of this Section 2, on shares of
   MMP on the thirteenth Thursday after the first day of such Special Rate
   Period;

                                       2


     (B) 182 Rate Period Days, dividends shall be payable, subject to
   subparagraphs (b) (ii) (A) and (b) (ii) (C) of this Section 2, on shares of
   MMP on each of the thirteenth and twenty-sixth Thursdays after the first day
   of such Special Rate Period;

     (C) four or more Dividend Periods, dividends shall be payable, subject to
   subparagraphs (b)(ii)(B) and (b)(ii)(C) of this Section 2, on shares of MMP,
   on the first day of the fourth month after the first day of such Special Rate
   Period and on the first day of each succeeding third month thereafter;
   provided, however, that if dividends for the last Dividend Period in any
   Special Rate Period would be payable as determined in this subparagraph
   (b)(i)(C) on a day that is not a Thursday, then dividends for such last
   Dividend Period shall be payable instead on the first Thursday preceding such
   day.

After any Special Rate Period, dividends on such shares of MMP shall be payable,
subject to subparagraphs (b)(ii)(A) and (b)(ii)(C) of this Section 2, on each
succeeding seventh Thursday, subject in each case to the option of the
Corporation to further designate from time to time any Subsequent Rate Period
thereof as a Special Rate Period.

     (ii) (A) In the case of dividends that would be payable on a Thursday, as
determined by subparagraph (b)(i) of this Section 2, including clause (A) or (B)
of the proviso thereto, if:

     (1) (x) the Securities Depository shall make available to its participants
   and members, in next-day funds in The City of New York, New York, on Dividend
   Payment Dates, the amount then due as dividends or shall make available to
   its participants and members, in funds immediately available in The City of
   New York, New York, on Dividend Payment Dates, such amount but shall not have
   so advised the Auction Agent of such availability, and (y) (I) such Thursday
   is not a Business Day or (II) the day

                                       3


   following such Thursday is not a Business Day, then dividends shall be
   payable on the first Business Day that falls prior to such Thursday and is
   immediately followed by a Business Day; or

     (2) (x) the Securities Depository shall make available to its participants
   and members, in funds immediately available in The City of New York, New
   York, on Dividend Payment Dates, the amount due as dividends on such Dividend
   Payment Dates and shall have advised the Auction Agent of such availability,
   and (y) such Thursday is not a Business Day, then dividends shall be payable
   on the first Business Day that falls after such Thursday.

     (B) In the case of dividends that would be payable on the first day of a
   month, as determined by clause (C) of the proviso to subparagraph (b)(i) of
   this Section 2, if: (1) (x) the Securities Depository shall make available to
   its participants and members, in next-day funds in The City of New York, New
   York, on Dividend Payment Dates, the amount then due as dividends or shall
   make available to its participants and members, in funds immediately
   available in The City of New York, New York, on Dividend Payment Dates, such
   amount but shall not have so advised the Auction Agent of such availability,
   and (y) (I) such first day of the month is not a Business Day or (II) the day
   following such first day is not a Business Day, then dividends shall be
   payable on the first Business Day that falls after such first day of the
   month and is immediately followed by a Business Day; or

     (2) (x) the Securities Depository shall make available to its participants
   and members, in funds immediately available in The City of New York, New
   York, on Dividend Payment Dates,

                                       5


     the amount due as dividends on such Dividend Payment Dates and shall have
     advised the Auction Agent of such availability, and (y) such first day of
     the month is not a Business Day, then dividends shall be payable on the
     first Business Day after such first day of the month.

     (C) If any date on which dividends would be payable for any shares of MMP
as determined above is a day that would result in the number of days between the
second Auction Date preceding such date and the date that would have been the
Auction Date next succeeding such second Auction Date (determined by including
such second preceding Auction Date and excluding the date that would have been
such next succeeding Auction Date) not being at least equal to the Minimum
Holding Period, then dividends on shares of MMP shall be payable, if clause (1)
of either subparagraph (b)(ii)(A) or (B) of this Section 2 is applicable to the
shares of MMP, on the first Business Day following such date on which dividends
would be so payable that is next succeeded by a Business Day or, if clause (2)
of either subparagraph (b)(ii)(A) or (B) of this Section 2 is applicable to the
shares of MMP, on the first Business Day following such date on which dividends
would be so payable, that in either case results in the number of days between
successive Auction Dates (determined as above) being at least equal to the
Minimum Holding Period; provided, however, that the Board of Directors, in the
event of any change in law changing the Minimum Holding Period, shall adjust the
period of time between Auction Dates for shares of MMP so as, subject to
subparagraphs (b) (ii) (A) and (b) (ii) (B) of this Section 2, and this
subparagraph (b)(ii)(C), to adjust uniformly the number of Rate Period Days in
Minimum Rate Periods commencing after the date of such change in law to equal or
exceed the Minimum Holding Period, provided that after such adjustment:

     (1) the rating on the shares of MMP is not adversely modified as a result
   of such adjustment;

                                       6


     (2) such number of Rate Period Days does not exceed the length of the
   then-current Minimum Holding Period by more than nine days and is not less
   than seven or more than 182 days; and

     (3) dividends continue to be payable for Minimum Rate Periods, subject to
   such subparagraphs (b)(ii)(A) and (b)(ii)(B) and this subparagraph
   (b)(ii)(C), on the successive Thursdays designated by the Board of Directors,
   in which event dividends shall be payable on shares of MMP, in lieu of the
   Thursdays specified in subparagraph (b)(i) of this Section 2, on the
   successive Thursdays so designated by the Board of Directors and, if there
   are more than 90 Rate Period Days in any such Subsequent Rate Period, on the
   Thursday that is the 91st day thereof (with respect to the Dividend Period
   ending on such 90th day), subject to such subparagraphs (b)(ii)(A) and
   (b)(ii)(B) and this subparagraph (b)(ii)(C). The Corporation shall notify
   Moody's at the earliest possible date of any proposed change in law known to
   the Corporation that would alter the Minimum Holding Period, in order that
   Moody's may analyze the Eligible Asset Coverage Amount and Dividend Coverage
   Amount in light of the altered number of Rate Period Days with a view toward
   maintaining its then-current rating of the shares of MMP (and the Corporation
   shall have been advised in writing by Moody's that its then-current rating on
   the shares of MMP will be maintained) in the event such proposed change in
   law is enacted, and the Corporation will use reasonable efforts to maintain
   the then-current rating of the shares of MMP not withstanding the enactment
   of the change in law. Upon any such change in the number of Rate Period Days
   as a result of a change in law, the Corporation shall mail or cause to be
   mailed notice of such change by first class mail, postage prepaid, to the
   Auction Agent, the MMP Paying Agent, each Broker-Dealer, each

                                       6


     Holder at such Holder's address as the same appears on the stock books of
     the Corporation and to Moody's.

     (iii) The Corporation shall pay or cause to be paid to the MMP Paying Agent
not later than 12:00 Noon, New York City time, on the Business Day next
preceding each such Dividend Payment Date for shares of MMP, an aggregate amount
of funds available on the next Business Day in The City of New York, New York,
equal to the dividends to be paid to all Holders on such Dividend Payment Date.
The Corporation may direct the MMP Paying Agent to invest any such funds in
Short-Term Money Market Instruments, provided that the proceeds of any such
investment will be available in The City of New York, New York at the opening of
business on such Dividend Payment Date.

     (iv) All moneys paid to the MMP Paying Agent for the payment of dividends
(or for the payment of any late charges pursuant to subparagraph (c)(i) of this
Section 2 or Additional Distributions) and any income or proceeds therefrom
shall be held in trust for the payment of such dividends (and any such late
charges or Additional Distributions) by the MMP Paying Agent for the benefit of
the Holders specified in subparagraph (b)(v) of this Section 2. Any moneys paid
to the MMP Paying Agent in accordance with the foregoing (and any income or
proceeds therefrom) but not applied by the MMP Paying Agent to the payment of
dividends (and any late charges or Additional Distributions) will, to the extent
permitted by law, be repaid to the Corporation no later than the end of 12
months from the date on which such moneys, income or proceeds were so to have
been applied.

     (v) Each dividend on shares of MMP shall be paid on the Dividend Payment
Date therefor to the Holders as their names appear on the stock books of the
Corporation on the Business Day next preceding such Dividend Payment Date.
Subject to paragraph (e) of this

                                       7


Section 2, dividends in arrears for any past Dividend Period may be declared and
paid at any time, without reference to any regular Dividend Payment Date, to the
Holders as their names appear on the stock books of the Corporation on such
date, not exceeding 15 days preceding the payment date thereof, as may be fixed
by the Board of Directors.

     (c) (i) The dividend rate on shares of MMP issued on April 17, 1991, during
the period from and after such Date of Original Issue to and including the last
day of the Initial Rate Period shall be equal to 4.90% per annum. For each
Subsequent Rate Period, the dividend rate on shares of MMP shall be equal to the
rate per annum that results from an Auction for such shares on the Auction Date
next preceding such Subsequent Rate Period; provided, however, that if an
Auction for any Subsequent Rate Period is not held for any reason or the shares
of MMP are no longer held in the form of a single global certificate by a
Securities Depository or if a Failure to Deposit has occurred that has not been
cured (in which cases an Auction shall not be held), then, subject to the next
succeeding proviso, the dividend rate on such shares for such Subsequent Rate
Period shall be the Maximum Rate on the Auction Date for such Subsequent Rate
Period; provided, further, however, that if:

     (A) any Failure to Deposit shall have occurred with respect to shares of
   MMP during any Rate Period thereof (other than any Special Rate Period
   consisting of four or more Dividend Periods or any Rate Period succeeding any
   Special Rate Period consisting of four or more Dividend Periods during which
   a Failure to Deposit occurred that has not been cured), and, prior to 12:00
   Noon, New York City time, on the third Business Day next succeeding the date
   on which such Failure to Deposit occurred, such Failure to Deposit shall not
   have been cured in accordance with the next succeeding sentence or the

                                       8


   Corporation shall not have paid to the MMP Paying Agent a late charge equal
   to the sum of:

          (1) if such Failure to Deposit consisted of the failure timely to pay
     to the MMP Paying Agent pursuant to subparagraph (c)(ii) of this Section 2
     the full amount of dividends with respect to any Dividend Period on such
     shares, an amount computed by multiplying (x) 225% of the "AA" Composite
     Commercial Paper Rate for the Rate Period during which such Failure to
     Deposit occurs on the Dividend Payment Date for such Dividend Period by (y)
     a fraction, the numerator of which shall be the number of days for which
     such Failure to Deposit has not been cured in accordance with the next
     succeeding sentence (including the day such Failure to Deposit occurs and
     excluding the day such Failure of Deposit is cured) and the denominator of
     which shall be 360, and applying the rate obtained against the product of
     $100,000 and the number of outstanding shares of MMP; and

          (2) if such Failure to Deposit consisted of the failure timely to pay
     to the MMP Paying Agent pursuant to paragraph (e) of Section 3 of this Part
     I the cash redemption price of the shares of MMP of such series, if any,
     for which Notice of Redemption has been given by the Corporation pursuant
     to paragraph (b) of Section 3 of this Part I, an amount computed by
     multiplying (x) 225% of the "AA" Composite Commercial Paper Rate for the
     Rate Period during which such Failure to Deposit occurs on the redemption
     date by (y) a fraction, the numerator of which shall be the number of days
     for which such Failure to Deposit is not cured in accordance with the next
     succeeding sentence (including the day

                                       9


     such Failure to Deposit occurs and excluding the day such Failure to
     Deposit is cured) and the denominator of which shall be 360, and applying
     the rate obtained against the aggregate cash redemption price of the shares
     of MMP to be redeemed; or

          (B) any Failure to Deposit shall have occurred with respect to shares
     of MMP during a Special Rate Period thereof consisting of four or more
     Dividend Periods, or during any Rate Period thereof succeeding any Special
     Rate Period consisting of four or more Dividend Periods during which a
     Failure to Deposit occurred that has not been cured, and such Failure to
     Deposit shall not have been cured in accordance with the next succeeding
     sentence during such Special Rate Period or such Rate Period, or the
     Corporation shall not have paid to the MMP Paying Agent a Late Charge
     calculated as set forth in subparagraph (c)(i)(A) of Section 2 above
     (except that for this purpose, the "AA" Composite Commercial Paper Rate
     shall be the "AA" Composite Commercial Paper Rate applicable to a Rate
     Period (x) consisting of 148 or more Rate Period Days but fewer than 182
     Rate Period Days and (y) commencing on the date on which the Rate Period
     during which the Failure to Deposit occurred commenced),

then the dividend rate for shares of MMP for each Subsequent Rate Period thereof
commencing after such failure to and including the later of (i) the Subsequent
Rate Period, if any, during which the applicable Late Charge is paid by the
Corporation to the MMP Paying Agent (provided that such Late Charge shall have
been paid no later than 12:00 Noon, New York City time, on the fourth Business
Day prior to the end of such Rate Period) and (ii) the Subsequent Rate Period,
if any, during which such Failure to Deposit is so cured shall be a rate per
annum equal to the Maximum Rate on the Auction Date for such Subsequent Rate
Period (but with the

                                       10


prevailing rating of such shares, for purposes of determining such Maximum Rate,
being deemed to be "Below `baa3'") (the rate per annum at which dividends are
payable on shares of MMP for any Rate Period for such shares being herein
referred to as the "Applicable Rate" for such shares). A Failure to Deposit with
respect to shares of MMP shall have been cured (if such Failure to Deposit is
not solely due to the willful failure of the Corporation to make required
payments to the MMP Paying Agent) with respect to any Rate Period if, not later
than 12:00 Noon, New York City time, on the fourth Business Day preceding any
Auction Date for the Rate Period subsequent to such Rate Period the Corporation
shall have paid to the MMP Paying Agent (A) all accumulated and unpaid dividends
on the shares of MMP and (B) without duplication, the redemption price due and
unpaid for the shares of MMP, if any, for which Notice of Redemption has been
given by the Corporation pursuant to paragraph (b) of Section 3 of this Part I.


     (ii) The amount of dividends per share payable on shares of MMP on any date
on which dividends shall be payable on such shares shall be computed by
multiplying the respective Applicable Rate in effect for such Dividend Period or
Dividend Periods or part thereof for which dividends have not been paid by a
fraction, the numerator of which shall be the number of days in such Dividend
Period or Dividend Periods or part thereof and the denominator of which shall be
360, and applying the rate obtained against $100,000. Any dividend payment made
on shares of MMP shall be credited against the earliest accumulated but unpaid
dividends due with respect to such shares of MMP.

     (d) Each Holder who is entitled to receive any dividend declared by the
Board of Directors on MMP shall also be entitled to receive an Additional
Distribution Right. The Additional Distribution Right will be issued on the
payment date for the related dividend to the person entitled to receive the
dividend as the holder of record of the MMP on the record date for

                                       11


the dividend and the Additional Distribution will be paid in the same manner as
provided in these Articles Supplementary with respect to cash dividends.

     (e) (i) Except as set forth in the next sentence, no dividends shall be
declared or paid or set apart for payment on the shares of any class or series
of stock ranking, as to the payment of dividends, on a parity with shares of MMP
for any period unless full cumulative dividends have been or contemporaneously
are declared and paid on the shares of MMP and any other parity stock through
the most recent respective Dividend Payment Date with respect thereto. When
dividends are not paid in full as aforesaid, upon the shares of MMP or any other
class or series of stock ranking on a parity as to the payment of dividends with
shares of MMP, all dividends declared upon shares of MMP and any other such
class or series of stock ranking on a parity as to the payment of dividends with
shares of MMP shall be declared pro rata so that the amount of dividends
declared per share on shares of MMP and such other class or series of stock
shall in all cases bear to each other the same ratio that accumulated dividends
per share on the shares of MMP and such other class or series of stock bear to
each other (for purposes of this sentence, the amount of dividends declared per
share shall be based on the Applicable Rate for such shares for the Dividend
Periods during which dividends were not paid in full). Holders of shares of MMP
shall not be entitled to any dividend, whether payable in cash, property or
stock, in excess of full cumulative dividends and Additional Distributions, as
herein provided, on shares of MMP. No interest, or sum of money in lieu of
interest, shall be payable in respect of any dividend payment or payments on
shares of MMP which may be in arrears, and, except to the extent set forth in
subparagraph (c)(i) of this Section 2, no additional sum of money shall be
payable in respect of any such arrearage.


                                       12


     (ii) For so long as any shares of MMP are outstanding, the Corporation
shall not declare, pay or set apart for payment any dividend or other
distribution in respect of the Common Stock or any other stock of the
Corporation ranking junior to the MMP as to dividends or upon liquidation
(except a dividend payable in shares of Common Stock or such shares ranking
junior to the MMP), or call for redemption, redeem, purchase or otherwise
acquire for consideration any Common Stock or any other shares of the
Corporation ranking junior to the MMP as to dividends or upon liquidation,
unless:

          (A) immediately thereafter, the 1940 Act Asset Coverage is met, the
     Eligible Asset Coverage is met and the Dividend Coverage is met;

          (B) full cumulative dividends on all shares of MMP for all past Rate
     Periods and any Additional Distributions then due have been paid or
     declared and a sum sufficient for the payment of such dividends and
     Additional Distributions set apart for payment; and

          (C) the Corporation has redeemed the full number of shares of MMP
     required to be redeemed by any provision for mandatory redemption contained
     in these Articles Supplementary (the number of shares subject to mandatory
     redemption to be determined without regard to the requirement that
     redemptions be made out of legally available funds).

The Certificate of 1940 Act Asset Coverage, the Certificate of Eligible Asset
Coverage and the Certificate of Dividend Coverage dated as of the applicable
evaluation date shall reflect any such transaction. An officer's certificate
shall be filed with the records of the Corporation maintained at its principal
executive office evidencing that (B) has been satisfied.

                                       13


     (iii) No dividend shall be declared, paid or set apart for payment on any
class of stock of the Corporation (except dividends payable in stock of the
Corporation), and no shares of any class of stock of the Corporation shall be
called for redemption, redeemed, repurchased or otherwise acquired for
consideration by the Corporation, unless the Corporation has paid or set apart
for payment all Additional Distributions then due pursuant to Additional
Distribution Rights issued by the Corporation in connection with payment of
dividends or redemption of shares of MMP. If the Corporation does not pay all
Additional Distributions then due, the amount paid shall be payable to each
holder of Additional Distribution Rights to which Additional Distributions are
due (regardless of the scheduled payment date) in the proportion that the
Additional Distributions then due to such holder bear to the aggregate
Additional Distributions due to all such holders.

     3. Redemption. (a)(i) Subject to the next succeeding sentence, the shares
of MMP may be redeemed, at the option of the Corporation, as a whole or from
time to time in part, on the second Business Day next preceding any Dividend
Payment Date therefor, at a redemption price per share equal to the sum of:

               (A) $100,000;

               (B) an amount equal to all dividends (whether or not earned or
          declared) accumulated thereon up to but not including the date fixed
          for redemption and unpaid, and an Additional Distribution Right with
          respect to such accumulated and unpaid dividends; and

               (C) if redeemed during any Rate Period consisting of four or more
          Dividend Periods, the applicable redemption premium, if any, specified
          in the next succeeding sentence; provided that shares of MMP may not
          be redeemed in part if after such partial

                                       14


          redemption fewer than 200 shares remain outstanding. The applicable
          redemption premium per share of MMP during any Rate Period consisting
          of four or more Dividend Periods that is redeemed pursuant to this
          subparagraph (a)(i) shall be equal to:

               (A) $1,000 if such share is redeemed on the second Business Day
          next preceding the second or third Dividend Payment Date in a Rate
          Period consisting of four Dividend Periods;

               (B) $3,000 if such share is redeemed on the second Business Day
          next preceding the second or third Dividend Payment Date in a Rate
          Period consisting of 12 Dividend Periods, $2,000 if such share is
          redeemed on the second Business Day next preceding the fourth, fifth,
          sixth and seventh Dividend Payment Date in a Rate Period consisting of
          12 Dividend Periods or $1,000 if such share is redeemed on the second
          Business Day next preceding the eighth, ninth, tenth or eleventh
          Dividend Payment Date in any such Rate Period; or

               (C) $3,000 if such share is redeemed on the second Business Day
          next preceding any Dividend Payment Date during the first seven
          Dividend Periods in a Rate Period consisting of 20 Dividends Periods,
          $2,000 if such share is redeemed on the second Business Day next
          preceding the eighth, ninth, tenth or eleventh Dividend Payment Date
          in any such Rate Period, $1,000 if such share is redeemed on the
          second Business Day next preceding the twelfth, thirteenth, fourteenth
          or fifteenth Dividend Payment Date in any such Rate Period or $0 if
          such share is redeemed on the second Business Day next preceding the
          sixteenth, seventeenth, eighteenth or nineteenth Dividend Payment Date
          in any such Rate Period.

                                       15


     (ii) The shares of MMP may be redeemed, at the option of the Corporation,
as a whole but not in part, on the first day following any Dividend Period
thereof included in a Rate Period consisting of four or more Dividend Periods
if, on the date of determination of the Applicable Rate for such Rate Period,
such Applicable Rate equaled or exceeded on such date of determination the
Treasury Rate for such Rate Period, at a redemption price per share equal to the
sum of $100,000 plus an amount equal to all dividends (whether or not earned or
declared) accumulated thereon up to but not including the date fixed for
redemption and unpaid, and an Additional Distribution Right with respect to such
accumulated and unpaid dividends.

     (iii) (A) If the 1940 Act Asset Coverage is not met as of the 1940 Act
Asset Coverage Cure Date as shown in a Certificate of 1940 Act Asset Coverage
and the related Accountants' Certificate delivered by the Corporation to the
Common Stock Paying Agent by the close of business on such 1940 Act Asset
Coverage Cure Date, then the Corporation shall, by the close of business on such
1940 Act Asset Coverage Cure Date, (1) notify the MMP Paying Agent of its
intention to redeem on the earliest practicable date following such 1940 Act
Asset Coverage Cure Date the number of shares of MMP set forth below and (2)
give a Notice of Redemption (which shall specify a mandatory redemption date
that is not fewer than 30 days nor more than 33 days after the date of such
notice) with respect to the redemption of MMP on such mandatory redemption date.
On such mandatory redemption date, the Corporation shall redeem, out of funds
legally available therefor, the number of shares of MMP equal to the minimum
number of shares the redemption of which, if such redemption had occurred
immediately prior to the opening of business on such 1940 Act Asset Coverage
Cure Date, would have resulted in the 1940 Act Asset Coverage having been met on
such 1940 Act Asset Coverage Cure Date or, if the 1940 Act Asset Coverage cannot
be so restored, all of the shares of MMP, at a redemption price

                                       16


equal to $100,000 per share plus an amount equal to all dividends (whether or
not earned or declared) accumulated thereon up to but not including such
mandatory redemption date and unpaid, and an Additional Distribution Right with
respect to such accumulated and unpaid dividends.

     (B) If the Eligible Asset Coverage is not met as of any Eligible Asset Cure
Date as shown in a Certificate of Eligible Asset Coverage and the related
Accountants' Certificate delivered by the Corporation to the MMP Paying Agent by
the close of business on the second Business Day following such Eligible Asset
Cure Date, then the Corporation shall, by the close of business on the second
Business Day following such Eligible Asset Cure Date, (1) notify the MMP Paying
Agent of its intention to redeem on the earliest practicable date following such
Eligible Asset Cure Date the number of shares of MMP determined as provided
below and (2) give a Notice of Redemption (which shall specify a mandatory
redemption date that is not fewer than 30 days nor more than 33 days after the
date of such notice) with respect to the redemption of shares of MMP on such
mandatory redemption date. The Corporation shall redeem, out of funds legally
available therefor, the number of shares of MMP equal to the minimum number of
shares the redemption of which, if such redemption had occurred immediately
prior to the opening of business on such Eligible Asset Cure Date, would have
resulted in the Eligible Asset Coverage having been met on such Eligible Asset
Cure Date or, if the Eligible Asset Coverage cannot be restored, all of the
shares of MMP, at a redemption price equal to $100,000 per share plus an amount
equal to all dividends (whether or not earned or declared) accumulated thereon
up to but not including such mandatory redemption date and unpaid, and an
Additional Distribution Right with respect to such accumulated and unpaid
dividends.

                                       17


     (C) In the event of a redemption in part of the shares of MMP pursuant to
this subparagraph (a)(iii), such redemption shall not be effected on either of
the two Business Days immediately preceding an Auction Date.

     (b) If the Corporation shall determine or be required to redeem shares of
MMP pursuant to paragraph (a) of this Section 3, it shall mail a Notice of
Redemption with respect to such redemption by first class mail, postage prepaid,
to each Holder of the shares to be redeemed, at such Holder's address as the
same appears on the stock books of the Corporation on the record date
established by the Board of Directors. Such Notice of Redemption shall be so
mailed no less than 30 nor more than 33 days prior to the date fixed for
redemption. Each such Notice of Redemption shall state: (i) the redemption date;
(ii) the number of shares of MMP to be redeemed; (iii) the CUSIP number of such
shares; (iv) the redemption price; (v) the place or places where the
certificate(s) for such shares (properly endorsed or assigned for transfer, if
the Board of Directors shall so require and the Notice of Redemption shall so
state) are to be surrendered for payment of the redemption price; (vi) that
dividends on the shares to be redeemed will cease to accrue on such redemption
date; (vii) the provisions of paragraph (a) of this Section 3 under which such
redemption is made; and (viii) if applicable, that the Holders of the shares of
MMP being called for redemption will not be entitled to participate, with
respect to such shares, in an Auction held subsequent to the date of such Notice
of Redemption. If fewer than all shares of MMP held by any Holder are to be
redeemed, the Notice of Redemption mailed to such Holder shall also specify the
number of shares to be redeemed from such Holder.


     (c) Notwithstanding the other provisions of this Section 3, the Corporation
shall not redeem, purchase or otherwise acquire for consideration shares of MMP
unless:

                                       18


          (i) all Additional Distributions due on or before the date of such
     redemption shall have been or are contemporaneously paid or a sum
     sufficient to pay such Additional Distributions set apart for payment;

          (ii) all accumulated and unpaid dividends on all outstanding shares of
     MMP for all applicable past Rate Periods shall have been or are
     contemporaneously paid or declared and a sum sufficient for the payment of
     such dividends set apart for payment; and

          (iii) other than in the case of mandatory redemptions pursuant to
     paragraph (a)(iii) of this Section 3 only, the 1940 Act Asset Coverage, the
     Eligible Asset Coverage and the Dividend Coverage would be met on the date
     of such redemption, purchase or other acquisition after giving effect
     thereto and, on or prior to such date, the Corporation provides to the
     Common Stock Paying Agent a Certificate of 1940 Act Asset Coverage and to
     the MMP Paying Agent a Certificate of Eligible Asset Coverage and a
     Certificate of Dividend Coverage, each together with a confirming
     Accountants' Certificate, showing compliance with this clause (iii) of this
     paragraph (c);

provided, however, that the Corporation may, without regard to the limitation
contained in clause (ii) of this paragraph (c), but subject to the requirements
of the 1940 Act, redeem, purchase or otherwise acquire shares of MMP (A) as a
whole, pursuant to a mandatory redemption, or (B) pursuant to a purchase or
exchange offer made on an equal basis for all of the outstanding shares of MMP
as permitted under the 1940 Act. In the event that shares of MMP are acquired
pursuant to an exchange offer, the securities exchanged for the MMP must have a
rating from Moody's equivalent to the then-current rating on the MMP. In the
event that fewer than all of the outstanding shares of MMP are to be redeemed
pursuant to either an optional redemption or a

                                       19


mandatory redemption, the shares to be redeemed shall otherwise be selected by
lot, or such other method as the Board of Directors shall deem fair and
equitable. An officer's certificate shall be filed with the records of the
Corporation maintained at its principal executive offices evidencing that (ii)
has been satisfied.

     (d) On or after the redemption date, each Holder of shares of MMP that were
called for redemption shall surrender the certificate evidencing such shares to
the Corporation at the place designated in the Notice of Redemption and shall
then be entitled to receive the cash redemption price, without interest, and the
Additional Distribution Right; provided, however, that if and so long as all
shares of MMP are held of record by a single person, such person shall not be
required to surrender the certificate representing such shares in connection
with a partial redemption of shares of MMP. If less than all of the shares
represented by the share certificate are to be redeemed and the share
certificate has been surrendered, the Corporation shall issue a new share
certificate for the shares not redeemed.

     (e) Not later than 12:00 Noon, New York City time, on the Business Day
immediately preceding the redemption date, the Corporation shall irrevocably
deposit with (or, in the case of a wire transfer, shall irrevocably instruct its
bank to transfer to) the MMP Paying Agent sufficient funds to pay the cash
redemption price of the shares of MMP to be redeemed and shall give the MMP
Paying Agent irrevocable instructions to apply such funds and, if applicable,
the income and proceeds therefrom, to the payment of the cash redemption price
for such shares upon surrender of the certificate therefor. The Corporation may
direct the MMP Paying Agent to invest any such available funds in Short-Term
Money Market Instruments, provided that the proceeds of any such investment will
be available in The City of New York, New York, at the opening of business on
such redemption date. All such funds (to the extent

                                       20


necessary to pay the full amount of the redemption price) shall be held in trust
for the benefit of the Holders.

(f)  If the Corporation shall have given or caused to be given a Notice of
Redemption as aforesaid, shall have irrevocably deposited with the MMP Paying
Agent a sum sufficient to pay the cash redemption price for the shares of MMP as
to which such Notice of Redemption was given and shall have given the MMP Paying
Agent irrevocable instructions and authority to pay the cash redemption price to
the Holders of such shares, then on the date of such deposit (or, if no such
deposit shall have been made, then on the date fixed for redemption, unless the
Corporation shall have defaulted in making payment of the redemption price), all
rights of the Holders of such shares by reason of their ownership of such
shares, except their right to receive the redemption price thereof (but without
interest) and any amount distributed pursuant to the Additional Distribution
Right distributed upon redemption or otherwise to the Holder, shall terminate,
and such shares shall no longer be deemed outstanding for any purpose,
including, without limitation, calculation of the Eligible Asset Coverage and
the Dividend Coverage and the right of the Holders of such shares to vote on any
matter or to participate in any subsequent Auction. The Corporation shall be
entitled to receive, from time to time, from the MMP Paying Agent the income, if
any, derived from the investment of moneys and/or other assets deposited with it
(to the extent that such income is not required to pay the cash redemption price
of the shares to be redeemed), and the Holders of shares to be redeemed shall
have no claim to any such income. In case the Holder of any shares called for
redemption shall not claim the redemption price for his shares within two years
after the redemption date, the MMP Paying Agent shall, upon demand, pay over to
the Corporation such amount remaining on deposit and the MMP Paying Agent shall
thereupon be relieved of all responsibility to the Holder with

                                       21


respect to such shares, and such Holder shall thereafter look only to the
Corporation for payment of the redemption price of such shares.


     (g) Except as set forth in this Section 3 with respect to redemptions and
subject to the provisions of paragraph (e) of Section 2 and paragraph (b) of
Section 1 of this Part I and paragraph (c) of this Section 3 and the 1940 Act,
nothing contained herein shall limit any legal right of the Corporation to
purchase or otherwise acquire any shares of MMP outside of an Auction at any
price, whether higher or lower than the redemption price, in privately
negotiated transactions or in the over-the-counter market or otherwise.

     (h) Solely for the purpose of determining the number of shares of MMP to be
stated in a Notice of Redemption as subject to a mandatory or optional
redemption, the amount of funds legally available for such redemption shall be
determined as of the date of such Notice of Redemption. The Corporation shall
not give a Notice of Redemption with respect to an optional redemption unless at
the time of giving such notice the Corporation shall have sufficient legally
available funds in the form of cash or U.S. Treasury Securities and Short-Term
Money Market Instruments maturing in 30 days or less to effect the redemption of
all of the shares of MMP to be redeemed pursuant to such notice. To the extent
that any redemption of which Notice of Redemption has been given is not made by
reason of the absence of legally available funds therefor, such redemption shall
be made as soon as practicable to the extent such funds become available.
Failure to redeem shares of MMP shall be deemed to exist at any time after the
date specified for redemption in the Notice of Redemption when the Corporation
shall have failed, for any reason whatsoever, to deposit in trust funds with the
MMP Paying Agent with respect to any shares for which such Notice of Redemption
has been given. Notwithstanding the fact that the Corporation may not have
redeemed shares of MMP for which a Notice of

                                       22


Redemption has been given, dividends may be declared and paid on shares of MMP
and shall include those shares of MMP for which a Notice of Redemption has been
given, subject to paragraph (f) above.

     (i) In the event that the Corporation shall have given a Notice of
Redemption with respect to any of the shares of MMP and the sale of any Eligible
Asset with a Discount Factor of greater than 1.000 shall be necessary to provide
sufficient moneys to redeem all such shares on the redemption date, the
Corporation shall sell or otherwise liquidate such asset as soon as reasonably
practicable following the date on which such Notice of Redemption is given and
shall take all reasonable steps to ensure that all such sales or other
liquidations are effected no later than 30 days after such date.

     (j) In effecting any redemption pursuant to this Section 3, the Corporation
shall use its best efforts to comply with all applicable procedural conditions
precedent to effecting such redemption under the 1940 Act and Maryland law, but
shall effect no redemption except in accordance with the 1940 Act and Maryland
law.

     (k) In the case of any redemption pursuant to this Section 3, only whole
shares of MMP shall be redeemed.

  4. Designation of Special Rate Periods. (a) The Corporation, at its option,
may designate any succeeding Subsequent Rate Period as a Special Rate Period;
provided, however, that such designation shall be effective only if:

     (i) notice thereof shall have been given in accordance with paragraph (b)
  and subparagraph (c)(i) of this Section 4;


                                       23


     (ii) any Failure to Deposit that shall have occurred with respect to shares
  of MMP during any Rate Period shall have been cured in accordance with the
  provisions of the third sentence of subparagraph (c)(i) of Section 2 of this
  Part I;

     (iii) Sufficient Clearing Bids (as defined in Section 1 of Part II hereof)
  shall have existed in the Auction held on the Auction Date immediately
  preceding the first day of such proposed Special Rate Period;

     (iv) if any Notice of Redemption shall have been mailed by the Corporation
  pursuant to paragraph (b) of Section 3 of this Part I with respect to any
  shares of MMP, the Redemption Price with respect to any such shares of MMP
  shall have been paid to the Holders of such shares or set apart for payment;

     (v) the length of such proposed Special Rate Period shall exceed the
  Minimum Holding Period; and

     (vi) Moody's shall have confirmed in writing to the Corporation that such
  designation shall not adversely affect its then-current rating of the MMP.


     (b) If the Corporation proposes to designate any succeeding Subsequent Rate
Period as a Special Rate Period pursuant to paragraph (a) of this Section 4, not
less than 20 nor more than 30 days prior to the date the Corporation proposes to
designate as the first day of such Special Rate Period (which shall be such day
that would otherwise be the first day of a Minimum Rate Period), notice shall
be:

     (i) published or caused to be published by the Corporation in a newspaper
  of general circulation to the financial community in The City of New York, New
  York, which carries financial news; and

                                       24


     (ii) mailed by the Corporation by first-class mail, postage prepaid, to the
  Holders of shares of MMP. Each such notice shall state (A) that the
  Corporation may exercise its option to designate a succeeding Subsequent Rate
  Period as a Special Rate Period, specifying the first day thereof and (B) that
  the Corporation will by 11:00 A.M., New York City time, on the second Business
  Day next preceding such date notify the Auction Agent of either (1) its
  determination, subject to certain conditions, to exercise such option, in
  which case the Corporation shall specify the Special Rate Period designated,
  or (2) its determination not to exercise such option.

     (c) Not later than 11:00 A.M., New York City time, on the second Business
Day next preceding the first day of any proposed Special Rate Period as to which
notice has been given as set forth in paragraph (b) of this Section 4, the
Corporation shall deliver to the Auction Agent either:

     (i) a notice stating (A) that the Corporation has determined to designate
  the next succeeding Rate Period as a Special Rate Period, specifying the same
  and the first day thereof, (B) the Auction Date immediately prior to the first
  day of such Special Rate Period, (C) that such Special Rate Period shall not
  commence if (1) on such Auction Date Sufficient Clearing Bids shall not exist
  unless all shares of MMP are subject to Hold Orders or (2) a Failure to
  Deposit shall have occurred prior to the first day of such Special Rate Period
  with respect to shares of MMP and (D) the scheduled Dividend Payment Dates
  during such Special Rate Period; such notice to be accompanied by a
  Certificate of Eligible Asset Coverage showing that, as of the third Business
  Day next preceding such proposed Special Rate Period, Eligible Assets were at
  least equal to Eligible Asset Coverage as of such Business Day (assuming for
  purposes of the foregoing


                                       25


  calculation that the Maximum Rate is the Maximum Rate on such Business Day as
  if such Business Day were the Auction Date for the proposed Special Rate
  Period) and written confirmation from Moody's that the designation of such
  Special Rate Period will not adversely affect Moody's then-current rating of
  the MMP; or

     (ii) a notice stating that the Corporation has determined not to exercise
  its option to designate a Special Rate Period of MMP and that the next
  succeeding Rate Period shall be a Minimum Rate Period.

If the Corporation fails to deliver either such notice (and, in the case of the
notice described in clause (i) above, a Certificate of Eligible Asset Coverage
and confirmation from Moody's to the effect set forth in clause (i)) with
respect to any designation of any proposed Special Rate Period to the Auction
Agent by 11:00 A.M., New York City time, on the second Business Day next
preceding the first day of such proposed Special Rate Period, the Corporation
shall be deemed to have delivered a notice to the Auction Agent with respect to
such Special Rate Period to the effect set forth in clause (ii) of the preceding
sentence.

5. Voting Rights. (a) Except as otherwise provided in the Articles or as
otherwise required by law, each Holder of shares of MMP shall be entitled to one
vote for each share of MMP held on each matter submitted to a vote of
shareholders of the Corporation, and the holders of outstanding shares of MMP
and shares of Common Stock shall vote together as a single class.

     (b) At any meeting of the shareholders of the Corporation held for the
election of directors, the holders of Preferred Stock, including MMP, shall be
entitled, voting as a single class to the exclusion of the holders of all other
securities and classes of capital stock of the Corporation, to elect two
directors of the Corporation. Subject to paragraph (c) of this Section 5,

                                       26


the holders of Common Stock of the Corporation, voting as a separate class,
shall elect the balance of the directors.

     (c) During any period in which any one or more of the conditions described
below shall exist (such period being referred to herein as a "Voting Period"),
the number of directors constituting the Board of Directors shall be
automatically increased by the smallest number that, when added to the two
directors elected exclusively by the holders of shares of Preferred Stock,
including shares of MMP, would constitute a majority of the Board of Directors
as so increased by such smallest number; and the holders of shares of Preferred
Stock, including MMP, shall be entitled, voting as a single class to the
exclusion of the holders of all other securities and classes of capital stock of
the Corporation, to elect such smallest number of additional directors, together
with the two directors that such holders are in any event entitled to elect. A
Voting Period shall commence:

     (i) if at any time dividends (whether or not earned or declared, and
   whether or not funds are then legally available in an amount sufficient
   therefor) on the outstanding shares of MMP equal to at least two full years'
   dividends shall be due and unpaid and sufficient cash or specified securities
   shall not have been deposited with the MMP Paying Agent for the payment of
   such dividends; or

     (ii) if at any time holders of any other shares of Preferred Stock are
   entitled to elect a majority of the directors of the Corporation.


Upon the termination of a Voting Period, the voting rights described in
paragraph (c) of this Section 5 shall cease, subject always, however, to the
revesting of such voting rights in the holders of Preferred Stock, including
MMP, upon the further occurrence of either of the events described in paragraph
(c) of this Section 5.

                                       28


     (d) (i) As soon as practicable after the accrual of any right of the
holders of shares of Preferred Stock, including MMP, to elect additional
directors as described in paragraph (c) of this Section 5, the Corporation shall
notify the MMP Paying Agent and the MMP Paying Agent shall call a special
meeting of such holders, by mailing a notice of such special meeting to such
holders, such meeting to be held not less than 10 or more than 30 days after the
date of mailing of such notice. If the Corporation fails to send such notice to
the MMP Paying Agent or if the MMP Paying Agent does not call such a special
meeting, it may be called by any such holder on like notice. The record date for
determining the holders entitled to notice of and to vote at such special
meeting shall be the close of business on the fifth Business Day preceding the
day on which such notice is mailed. At any such special meeting and at each
meeting held during a Voting Period, such holders, voting together as a single
class to the exclusion of the holders of all other securities and classes of
capital stock of the Corporation, shall be entitled to elect the number of
additional directors prescribed in paragraph (c) of this Section 5. At any such
meeting or adjournment thereof in the absence of a quorum, the holders present
in person or by proxy shall have the power to adjourn the meeting without
notice, other than by an announcement at the meeting, to a date not more than
120 days after the original record date.

(ii) For purposes of determining
any rights of the Holders to vote on any matter, whether such right is created
by these Articles Supplementary, by the other provisions of the Articles, by
statute or otherwise, no Holder shall be entitled to vote and no share of MMP
shall be deemed to be "outstanding" for the purpose of voting or determining the
number of shares required to constitute a quorum if, prior to or concurrently
with the time of determination of shares entitled to vote or shares deemed
outstanding for quorum purposes, as the case may be, the redemption price for
the redemption of such shares has been deposited in trust with the MMP

                                       28


Paying Agent for that purpose and the requisite Notice of Redemption with
respect to such shares has been given as provided in Section 3 of this Part I.
No share of MMP held by the Corporation or any Affiliate shall have any voting
rights or be deemed to be outstanding for voting or other purposes except that
shares held by any Affiliates shall be deemed to be outstanding for the purpose
of calculating the Eligible Asset Coverage Amount.

     (iii) Except as provided in the next succeeding sentence, the terms of
office of all persons who are directors of the Corporation at the time of a
special meeting of holders of Preferred Stock, including MMP, to elect directors
shall continue, notwithstanding the election at such meeting by such holders of
the number of directors that they are entitled to elect, and the persons so
elected by such holders, together with the two incumbent directors elected by
such holders and the remaining incumbent directors elected by the holders of the
Common Stock shall constitute the duly elected directors of the Corporation. If
the election of additional directors by the holders of Preferred Stock,
including MMP, would cause the number of directors to exceed 12, then the terms
of office of a number of directors elected by the holders of Common Stock shall
terminate at the time of the special meeting to elect such additional directors
such that the sum of the number of remaining directors and the number of
additional directors does not exceed 12 and the number of additional directors
and the two directors elected by the holders of Preferred Stock, including MMP,
constitute a majority of the entire Board of Directors.

     (iv) Simultaneously with the termination of a Voting Period, the terms of
office of the additional directors elected by the holders of Preferred Stock,
including MMP, pursuant to paragraph (c) of this Section 5 shall terminate, the
remaining directors shall constitute the directors of the Corporation and the
voting rights of such holders to elect

                                       29


additional directors pursuant to paragraph (c) of this Section 5 shall cease,
subject to the provisions of the last sentence of paragraph (c) of this Section
5.

     (v) If the right of the holders of Preferred Stock, including MMP, to elect
additional directors as described in paragraph (c) of this Section 5 accrues
during the period commencing one month prior to the Corporation's fiscal year
and ending at the end of the fourth month after the Corporation's fiscal year
end, the Corporation shall not be required to hold a separate meeting pursuant
to subparagraph (d)(i) of this Section 5 and may, instead, call an annual
meeting for such purpose if such meeting has not been held following such fiscal
year end. At any such annual meeting, such holders, voting as a single class,
shall be entitled to elect two directors pursuant to paragraph (b) of this
Section 5 and additional directors pursuant to paragraph (c) of this Section 5.
Upon expiration of the Voting Period, the term of office of the additional
directors elected pursuant to paragraph (c) of this Section 5 shall expire.

     (e) (i) In addition to all rights of holders of Preferred Stock set forth
in the Articles, so long as any shares of MMP are outstanding, the Corporation
shall not, without the affirmative vote of at least 80% of the votes entitled to
be cast by Holders of MMP:

     (A) authorize, create or issue any class or series of stock ranking prior
  to or on a parity with the MMP with respect to the payment of dividends or the
  distribution of assets upon dissolution, liquidation or winding up of the
  affairs of the Corporation (other than previously authorized and unissued
  shares of MMP, including any shares of MMP purchased or redeemed by the
  Corporation), or increase the authorized amount of MMP or any other Preferred
  Stock; or

     (B) amend, alter or repeal the provisions of the Articles, including these
  Articles Supplementary, whether by merger, consolidation or otherwise, so as
  to

                                       30


  adversely affect in any material respect any of the contract rights expressly
  set forth in the Articles, including these Articles Supplementary, of such
  shares of MMP or the Holders thereof.

     The affirmative vote of a majority of the votes entitled to be cast by
holders of MMP, voting as a separate class with holders of other Preferred Stock
entitled to vote on the matter, shall be required to approve any matter which,
under Article VI of the Articles of Incorporation, requires the approval of a
majority of the votes entitled to be cast by stockholders if also approved by
80% of the Continuing Directors (as therein defined) or certain other
requirements therein specified are met.

     The class votes of the shares of MMP described in these Articles will in
each case be in addition to any required separate vote of the requisite
percentage of shares of Common Stock and MMP, voting together as a single class,
necessary to authorize the action in question.

     (ii) The Board of Directors, without the vote or consent of the Holders,
may from time to time amend, alter or repeal any or all of the definitions of
the terms listed below, and any such amendment, alteration or repeal will not be
deemed to affect the contract rights of shares of MMP or the Holders thereof,
provided the Board of Directors receives written confirmation from Moody's that
any such amendment, alteration or repeal would not impair the ratings then
assigned by Moody's to the shares of MMP:

           Coverage Value

           Discount Factor

           Dividend Coverage Amount

           Dividend Coverage Assets

                                       31


           Dividend Coverage Cure Date Dividend Coverage Evaluation Date

           Dividend Coverage is met Eligible Asset Coverage Amount

           Eligible Asset Coverage is met Eligible Asset Cure Date

           Eligible Asset Evaluation Date Eligible Assets Market Value

           Net Coverage Value 1940 Act Asset Coverage 1940 Act Asset

           Coverage Cure Date 1940 Act Asset Coverage Evaluation Date

           1940 Act Asset Coverage is met Projected Dividend Amount

     (iii) To the extent permitted by applicable law, from time to time without
the vote or consent of the Holders, the Board of Directors may interpret or
adjust the provisions of these Articles Supplementary to resolve any
inconsistency or ambiguity or to remedy any formal defect.

     (f) Unless otherwise required by law, the Holders shall not have any
relative rights or preferences or other rights other than those specifically set
forth herein. The Holders shall have no preemptive rights or rights to
cumulative voting. In the event that the Corporation fails to pay any dividends
on the shares of MMP, the exclusive remedy of the Holders shall be the right to
vote for directors pursuant to the provisions of this Section 5.

                                       32


(g)  Unless a higher percentage is provided for in the Articles, the
affirmative vote of the Holders of a majority of the outstanding shares of MMP,
voting as a separate class, shall be required to approve any plan of
reorganization (as such term is used in the 1940 Act) adversely affecting such
shares or any action requiring a vote of security holders of the Corporation
under Section 13(a) of the 1940 Act, including a change in the Corporation's
subclassification from that of a closed-end investment company to that of an
open-end investment company. In the event a vote of Holders is required pursuant
to the provisions of Section 13(a) of the 1940 Act, the Corporation shall, not
later than ten Business Days prior to the date on which such vote is to be
taken, notify Moody's that such vote is to be taken and the nature of the action
with respect to which such vote is to be taken. The Corporation shall, in a
timely fashion after such vote is taken, notify Moody's of the result of such
vote.

     6. LIQUIDATION RIGHTS. (a) Upon the dissolution, liquidation or winding up
of the affairs of the Corporation, whether voluntary or involuntary, the Holders
shall be entitled to receive and to be paid out of the assets of the Corporation
available for distribution to its shareholders after satisfying claims of
creditors but before any payment or distribution shall be made on the Common
Stock or on any other class of stock of the Corporation ranking junior to the
MMP upon dissolution, liquidation or winding up, liquidating distributions per
share of $100,000 plus an amount equal to all dividends (whether or not earned
or declared) accumulated thereon up to but not including the date of such
distribution and unpaid, and an Additional Distribution Right with regard to
such accumulated and unpaid dividends.

(b)  Neither the sale, lease or exchange (for cash, stock, securities or
other consideration) of all or substantially all the property or business of the
Corporation, nor the merger or consolidation of the Corporation into or with any
other entity, nor the merger or

                                       33


consolidation of any other entity into or with the Corporation, nor any share
exchange between the Corporation and any other entity shall be deemed to be a
dissolution, liquidation or winding up, whether voluntary or involuntary, for
the purpose of this Section 6.

     (c) After the payment to the Holders of the full preferential amounts
provided in this Section 6, the Holders as such shall have no right or claim to
any of the remaining assets of the Corporation, except pursuant to the
Additional Distribution Right distributed pursuant to paragraph (a) of this
Section 6 or otherwise to the Holder.

     (d) In the event the assets of the Corporation available for distribution
to the Holders upon any dissolution, liquidation or winding up of the affairs of
the Corporation, whether voluntary or involuntary, shall be insufficient to pay
in full all amounts to which such Holders are entitled pursuant to paragraph (a)
of this Section 6, no such distribution shall be made on account of any shares
of any other class or series of Preferred Stock ranking on a parity with the
shares of MMP with respect to the distribution of assets upon such dissolution,
liquidation or winding up unless proportionate distributive amounts shall be
paid on account of the shares of MMP, ratably, in proportion to the full
distributable amounts to which such Holders and the holders of all such parity
shares are respectively entitled upon such dissolution, liquidation or winding
up.

     (e) Subject to the rights of holders of shares of any series or class or
classes of stock ranking on a parity with the shares of MMP with respect to the
distribution of assets upon dissolution, liquidation or winding up of the
affairs of the Corporation, after payment shall have been made in full to the
Holders as provided in paragraph (a) of this Section 6, but not prior thereto,
any other series or class or classes of stock ranking junior to the shares of
MMP with respect to the distribution of assets upon dissolution, liquidation or
winding up of the affairs of

                                       34


the Corporation shall, subject to the respective terms and provisions (if any)
applying thereto, be entitled to receive any and all assets remaining to be paid
or distributed, and the Holders shall not be entitled to share therein.

     7. 1940 ACT ASSET COVERAGE, ELIGIBLE ASSET COVERAGE AND DIVIDEND COVERAGE.
(a) (i) The Corporation shall determine whether the 1940 Act Asset Coverage is
met as of each 1940 Act Asset Coverage Evaluation Date. The calculation of the
asset coverage for the MMP on that date in accordance with the 1940 Act and
whether the 1940 Act Asset Coverage is met shall be set forth in a certificate
(a "Certificate of 1940 Act Asset Coverage") dated as of such 1940 Act Asset
Coverage Evaluation Date. In addition, as of each Eligible Asset Evaluation
Date, the Corporation shall determine:

          (A) the Coverage Value of each Eligible Asset owned by the Corporation
     on that date;

          (B) the Net Coverage Value of all such Eligible Assets;

          (C) the Eligible Asset Coverage Amount with respect to such Eligible
     Asset Evaluation Date; and

          (D) whether the Eligible Asset Coverage is met as of such date. The
calculation of the Coverage Value of each Eligible Asset, the Net Coverage Value
of all such Eligible Assets, the Eligible Asset Coverage Amount and whether the
Eligible Asset Coverage is met shall be set forth in a certificate (a
"Certificate of Eligible Asset Coverage") dated as of such Eligible Asset
Evaluation Date. As of each Dividend Coverage Evaluation Date, the Corporation
shall determine:

          (A) the aggregate Coverage Value of the Dividend Coverage Assets owned
     by the Corporation on that date for the shares of MMP;

                                       35


          (B) the Dividend Coverage Amount on that date; and

          (C) whether the Dividend Coverage is met as of such date.

The calculations of the aggregate Coverage Value of the Dividend Coverage
Assets, the Dividend Coverage Amount and whether the Dividend Coverage is met
shall be set forth in a certificate (a "Certificate of Dividend Coverage") dated
as of such Dividend Coverage Evaluation Date. The Corporation shall cause the
Certificate of 1940 Act Asset Coverage to be delivered to the Common Stock
Paying Agent not later than the close of business on the third Business Day
after the related 1940 Act Asset Coverage Evaluation Date. The Corporation shall
cause the Certificate of Eligible Asset Coverage and the Certificate of Dividend
Coverage to be delivered to the MMP Paying Agent not later than the close of
business on the third Business Day after the related evaluation date. In
addition, the Corporation shall cause the Certificate of Eligible Asset Coverage
to be delivered to Moody's quarterly, and not later than the close of business
on the third Business Day after (i) any Eligible Asset Evaluation Date
immediately preceding any approval by the Corporation's Board of Directors of
redemption of shares of the Corporation's Common Stock and (ii) any Eligible
Asset Evaluation Date on which the Net Coverage Value of Eligible Assets is less
than 25% greater than the Eligible Asset Coverage Amount. In the event that the
Eligible Asset Coverage is not met or is not met and is subsequently cured, the
Corporation shall cause the Certificate of Eligible Asset Coverage to be
delivered to Moody's not later than the close of business on the third Business
Day following such date of failure and/or on the second Business Day following
such date of cure.

     (ii) In the event that a Certificate of 1940 Act Asset Coverage, a
Certificate of Eligible Asset Coverage or a Certificate of Dividend Coverage is
not delivered to the Common Stock Paying Agent or the MMP Paying Agent, as the
case may be, when required, the 1940 Act

                                       36


Asset Coverage, the Eligible Asset Coverage or the Dividend Coverage, as the
case may be, will be deemed not to have been met as of the related evaluation
date.

     (b) With respect to (i) the Certificate of 1940 Act Asset Coverage relating
to any 1940 Act Asset Coverage Cure Date, (ii) the Certificate of Eligible Asset
Coverage (A) as of April 12, 1991, (B) relating to the last Eligible Asset
Evaluation Date in each fiscal quarter and relating to one other Eligible Asset
Evaluation Date during such fiscal quarter as selected by the Independent
Accountants, and (C) relating to any Eligible Asset Cure Date and (iii) the
Certificate of Dividend Coverage relating to any Dividend Coverage Cure Date,
the Corporation shall obtain from the Independent Accountants a written
communication confirming that:

          (1) with respect to the 1940 Act Asset Coverage, (a) the calculations
     set forth in the related Certificate of 1940 Act Asset Coverage are
     mathematically accurate and (b) the Independent Accountants have traced the
     prices used by the Corporation in valuing the Corporation's portfolio
     investments to the prices provided to the Corporation by the Corporation's
     administrator or other appropriate service provider for such purpose and
     verified that such information agrees; and

          (2) with respect to the Eligible Asset Coverage or the Dividend
     Coverage, (a) the calculations set forth in the related Certificate of
     Eligible Asset Coverage or Certificate of Dividend Coverage, as the case
     may be, are mathematically accurate, (b) the method used by the Corporation
     in determining whether the Eligible Asset Coverage or the Dividend
     Coverage, as the case may be, is met, is in accordance with the applicable
     requirements of these Articles Supplementary, (c) the Independent
     Accountants have traced the prices used by the Corporation in the
     determination of Market Values of the Eligible Assets or the Dividend
     Coverage Assets, as the case may

                                       37


     be, to the prices provided to the Corporation by the Corporation's
     administrator or other appropriate service provider for purposes of such
     determination and verified that such information agrees, (d) the
     Independent Accountants have calculated the liabilities and related assumed
     assets arising in connection with Section 8(b) of Part I, (e) the
     Corporation's positions in futures and options at such Eligible Asset
     Evaluation Date were in accordance with the provisions of Section 8(b) of
     Part I and (f) the assets listed as Eligible Assets or Dividend Coverage
     Assets, as the case may be, in the related certificate conform to the
     descriptions of Eligible Assets or Dividend Coverage Assets set forth in
     these Articles (such a written communication being referred to herein as an
     "Accountants' Certificate").

     The Corporation shall cause each Accountants' Certificate relating to any
1940 Act Asset Coverage Cure Date to be delivered, together with the related
Certificate of 1940 Act Asset Coverage, to the Common Stock Paying Agent by the
close of business on such 1940 Act Asset Coverage Cure Date. The Corporation
shall cause each Accountants' Certificate relating to the last Eligible Asset
Evaluation Date of each fiscal quarter and such other one Eligible Asset
Evaluation Date per quarter as selected by the Independent Accountants to be
delivered to the MMP Paying Agent not later than the close of business on the
seventh Business Day following the last day of the related fiscal quarter (such
seventh Business Day being referred to herein as a "Confirmation Date") and
shall cause each Accountants' Certificate relating to any Eligible Asset Cure
Date to be delivered to the MMP Paying Agent by the close of business on the
second Business Day following such Eligible Asset Cure Date. The Corporation
shall cause each Accountants' Certificate relating to any Dividend Coverage Cure
Date to be delivered to the MMP Paying Agent by the close of business on the
second Business Day following such

                                       38


Dividend Coverage Cure Date. The Corporation shall cause each Accountants'
Certificate delivered to the Common Stock Paying Agent or the MMP Paying Agent,
as the case may be, to be contemporaneously delivered to Moody's. In the event
of any difference between the Corporation's calculations as shown on a
Certificate of 1940 Act Asset Coverage, a Certificate of Eligible Asset Coverage
or a Certificate of Dividend Coverage and the Independent Accountants'
calculations as shown on an Accountants' Certificate, such calculations of the
Independent Accountants shall control. If the number of Rate Period Days in the
Minimum Rate Period is altered as provided for in the proviso to subparagraph
(b)(ii)(C) of Section 2 of this Part I, or the Corporation shall designate a
Special Rate Period pursuant to Section 4 of this Part I, the Corporation shall
provide for an Accountants' Certificate relating to a Certificate of Eligible
Asset Coverage to be furnished to the MMP Paying Agent at such additional times
as may be necessary to provide for such confirmations to be furnished at least
as frequently as provided prior to such alteration and as may be necessary to
maintain the then-current rating by Moody's of the shares of MMP.

     (c) If the 1940 Act Asset Coverage is not met as of any 1940 Act Asset
Coverage Evaluation Date as shown in a Certificate of 1940 Act Asset Coverage
delivered to the Common Stock Paying Agent by the close of business on the third
Business Day after such 1940 Act Asset Coverage Evaluation Date, then the
Corporation shall (if and to the extent necessary to enable it to meet the
requirements of paragraph (d) of this Section 7):

     (i) by the close of business on the 1940 Act Asset Coverage Cure Date
  relating to such 1940 Act Asset Coverage Evaluation Date, if the Corporation
  shall have funds legally available for the purchase of shares of MMP, purchase
  such shares outside

                                       39


  of an Auction in order that the 1940 Act Asset Coverage is met as of such 1940
  Act Asset Coverage Cure Date; and/or

     (ii) by the close of business on the applicable 1940 Act Asset Coverage
  Cure Date, notify the MMP Paying Agent of its intention to redeem, and give a
  Notice of Redemption as described in these Articles Supplementary with respect
  to the redemption of, shares of MMP.

     (d) If the 1940 Act Asset Coverage is not met as of any 1940 Act Asset
Coverage Evaluation Date as shown in a Certificate of 1940 Act Asset Coverage,
then the Corporation shall, by the close of business on the applicable 1940 Act
Asset Coverage Cure Date, deliver to the Common Stock Paying Agent a Certificate
of 1940 Act Asset Coverage together with an Accountants' Certificate showing
that the 1940 Act Asset Coverage is met (or, if clause (ii) of paragraph (c) of
this Section 7 is applicable, would have been met) as of such 1940 Act Asset
Coverage Cure Date after giving effect to (A) any purchase of the shares of MMP
outside of an Auction pursuant to clause (i) of paragraph (c) of this Section 7
and/or (B) any redemption of the shares of MMP pursuant to the Notice of
Redemption contemplated by such clause (ii) (as if such redemption had occurred
immediately prior to the opening of business on such 1940 Act Asset Coverage
Cure Date).

     (e) If (i) the Eligible Asset Coverage is not met as of any Eligible Asset
Evaluation Date as shown in a Certificate of Eligible Asset Coverage delivered
to the MMP Paying Agent by the close of business on the third Business Day after
such Eligible Asset Evaluation Date or (ii) the Corporation is required to
deliver to the MMP Paying Agent by the close of business on a Confirmation Date
an Accountants' Certificate confirming the Certificate of Eligible Asset
Coverage with respect to such Eligible Asset Evaluation Date, and the

                                       40


Corporation fails timely to deliver such Accountants' Certificate, then the
Corporation shall (if and to the extent necessary to enable it to meet the
requirements of paragraph (f) of this Section 7):

          (A) by the close of business on the Eligible Asset Cure Date relating
     to such Eligible Asset Evaluation Date or Confirmation Date, as the case
     may be, purchase or otherwise acquire additional Eligible Assets or, if the
     Corporation shall have funds legally available for the purchase of shares
     of MMP, purchase such shares outside of an Auction, or both, in order that
     the Eligible Asset Coverage is met as of such Eligible Asset Cure Date;
     and/or

          (B) by the close of business on the second Business Day after the
     applicable Eligible Asset Cure Date, notify the MMP Paying Agent of its
     intention to redeem, and give a Notice of Redemption with respect to the
     redemption of, shares of MMP as described herein.

          (f) If the Eligible Asset Coverage is not met as of any Eligible Asset
Evaluation Date as shown in a Certificate of Eligible Asset Coverage or if an
Accountants' Certificate confirming a Certificate of Eligible Asset Coverage is
not timely delivered as contemplated by subclause (i) or subclause (ii) of
paragraph (e) of this Section 7, then the Corporation shall, by the close of
business on the second Business Day following the applicable Eligible Asset Cure
Date, deliver to the MMP Paying Agent a Certificate of Eligible Asset Coverage
together with an Accountants' Certificate showing that the Eligible Asset
Coverage is met (or, if subclause (B) of such paragraph (e) is applicable, would
have been met) as of such Eligible Asset Cure Date after giving effect to:

                                       41


          (i) any purchase or other acquisition of Eligible Assets or any
     purchase of the shares of MMP outside of an Auction pursuant to clause (A)
     of paragraph (e) of this Section 7; and/or

          (ii) any redemption of the shares of MMP pursuant to the Notice of
     Redemption contemplated by clause (B) of such paragraph (e) (as if such
     redemption had occurred immediately prior to the opening of business on
     such Eligible Asset Cure Date).

          (g) If the Dividend Coverage is not met as of any Dividend Coverage
Evaluation Date as shown in a Certificate of Dividend Coverage delivered to the
MMP Paying Agent by the close of business on the third Business Day after such
Dividend Coverage Evaluation Date, then the Corporation shall, by the close of
business on the Dividend Coverage Cure Date relating to such Dividend Coverage
Evaluation Date, to the extent necessary so that the Dividend Coverage is met on
such Dividend Coverage Cure Date, purchase or otherwise acquire Dividend
Coverage Assets (with the proceeds from the liquidation of Eligible Assets or
otherwise). The Corporation shall, by the third Business Day following the
applicable Dividend Coverage Cure Date, deliver to the MMP Paying Agent a
Certificate of Dividend Coverage together with an Accountants' Certificate
showing that the Dividend Coverage is met as of such Dividend Coverage Cure Date
after giving effect to any purchase or other acquisition of Dividend Coverage
Assets.

          (h) For purposes of determining whether the 1940 Act Asset Coverage is
met, the Eligible Asset Coverage is met or the Dividend Coverage is met, no
share of the MMP shall be deemed to be "outstanding" for purposes of any
computation if, prior to or concurrently with such determination, (i) the
requisite funds for the redemption of such share shall have been deposited in
trust with the MMP Paying Agent for that purpose and the requisite Notice of

                                       42


Redemption shall have been given or (ii) such share shall have been redeemed,
purchased or otherwise acquired by the Corporation. In the case of clause (i) of
this paragraph (h), the funds deposited with the MMP Paying Agent (to the extent
necessary to pay the full redemption price for such shares) shall not be
included in determining whether the 1940 Act Asset Coverage, the Dividend
Coverage or the Eligible Asset Coverage are met.

     8. Certain Other Restrictions. (a) For so long as any shares of MMP are
outstanding and Moody's is rating such shares, the Corporation will not, unless
it has received written confirmation from Moody's that any such action would not
impair the rating then assigned by Moody's to shares of MMP:

          (i) enter into reverse repurchase agreements;

          (ii) enter into options and futures transactions except as set forth
     in paragraph

    (b) of this Section 8;

          (iii) make short sales of securities other than short sales "against
     the box";

          (iv) overdraw any bank account (except as may be necessary for the
     clearance of security transactions); or

          (v) borrow money or issue senior securities (as defined in the 1940
     Act) other than the shares of MMP.

(b) For so long as the shares of MMP are rated by Moody's, the Corporation
(i) may buy call or put option contracts on securities, (ii) may write only
covered call options on securities, (iii) may write put options on securities,
(iv) will only sell securities for future delivery which it owns, (v) will only
engage in futures transactions on an exchange where the exchange takes the
opposite side of the transaction, (vi) may buy call or put options on futures
contracts, (vii) may write put options on

                                       43


futures contracts and will only write call options on futures contracts if it
owns the futures contract subject to the option, (viii) to the extent an asset
is used to cover a particular option, futures contract or option on a futures
contract, will not be able to use such asset to cover any additional option,
futures contract or option on a futures contract, and (ix) will only engage in
index-based futures or options transactions if Moody's advises the Corporation
in writing that such transaction will not adversely affect its then-current
rating on the MMP.

     For so long as the shares of MMP are rated by Moody's, unless, in each
case, Moody's advises the Corporation in writing that such action or actions
will not adversely affect its then-current rating on the MMP, in determining the
Net Coverage Value of the Corporation's Eligible Assets, the Corporation shall
include as a liability (i) 10% of the exercise price of a written exchange
traded call option on a security, (ii) 25% of the exercise price of a written
call option on a security involving a cross-hedge, (iii) the exercise price of
any written put option on a security, (iv) 10% of the settlement price of assets
sold for future delivery, (v) the settlement price of purchased futures
contracts, (vi) the settlement price of the underlying futures contract if the
Corporation writes a put option on a futures contract, and (vii) 105% of the
market value of the underlying futures contract for written call options futures
where the Corporation does not own the underlying contract.

     Also, for so long as the shares of MMP are rated by Moody's, unless, in
each case, Moody's advises the Corporation in writing that such action or
actions will not adversely affect its then-current rating on the MMP, the
Corporation (i) will only engage in futures transactions and options thereon
relating to U.S. Treasury Securities, (ii) will not engage in options and
futures transactions for leveraging or speculative purposes, (iii) will not
enter into an options or futures transaction unless after giving effect to such
transaction the Eligible Asset

                                       44


Coverage is met, (iv) shall not include in Eligible Assets any assets in margin
accounts in connection with futures transactions, (v) for purposes of
determining the Coverage Value, where delivery may be made with any of a class
of securities, delivery of the security resulting in the lowest Coverage Value
shall be assumed, (vi) will not engage in forward contracts which settle more
than 56 days from the date of determination, and (vii) will engage only in
exchange traded futures contracts and options thereon on exchanges approved by
Moody's in writing.

     Also, for so long as the shares of MMP are rated by Moody's, unless, in
each case, Moody's advises the Corporation in writing that such action or
actions will not adversely affect its then-current rating on the MMP, the
Corporation shall provide Moody's with a quarterly report from an Independent
Accountant that the Corporation has been in compliance with the guidelines set
forth above for options and futures transactions in the previous quarter.

     (c) By resolution of the Board of Directors and without amending the
Articles or otherwise submitting such resolution for shareholder approval, the
restrictions and procedures set forth in this Section 8 may be adjusted,
modified, altered or changed and any such adjustment, modification, alteration
or change will not be deemed to affect the contract rights of shares of MMP or
the Holders thereof if Moody's has advised the Corporation in writing that such
adjustment, modification, alteration or change will not adversely affect its
then-current rating of the MMP and that any such action will be in accordance
with guidelines established by Moody's.

   9. Auction Agent and MMP Paying Agent. For so long as any shares of MMP are
outstanding, the Auction Agent (which shall act as agent of the Corporation in
connection with the implementation of the Auction Procedures) and the MMP Paying
Agent (which shall act as transfer agent, registrar, dividend disbursing agent
and redemption agent on behalf of the

                                       45


Corporation with respect to MMP), shall receive Certificates of Eligible Asset
Coverage, Certificates of Dividend Coverage, and related Accountants'
Certificates, shall each be a commercial bank, trust company or other financial
institution unaffiliated with the Corporation or any affiliate of the
Corporation (which, however, may engage or have engaged in business transactions
with the Corporation or any affiliate of the Corporation), and at no time shall
the Corporation or any affiliate of the Corporation act as the Auction Agent or
the MMP Paying Agent. If the Auction Agent or the MMP Paying Agent resigns or
for any reason either of their appointments are terminated during any period
that any of the shares of MMP are outstanding, the Board of Directors shall
promptly thereafter use its best efforts to appoint another qualified commercial
bank, trust company or financial institution to act as the Auction Agent or the
MMP Paying Agent, as the case may be, upon commercially reasonable terms. A
single qualified commercial bank, trust company or financial institution may act
as the Auction Agent and the MMP Paying Agent. The MMP Paying Agent shall
maintain an office or agency in The City of New York for purposes of making
payments on the shares of MMP.

     10. NOTICE. All notices or communications, unless otherwise specified in
the By-laws of the Corporation or these Articles Supplementary, shall be
sufficiently given if in writing and delivered in person, transmitted by
telecopy or mailed by first-class mail, postage prepaid. In the event notice is
delivered in person or transmitted by telecopy, notice shall be deemed given on
the date received. In the event notice is mailed, it shall be deemed given on
the earlier of the date received or the date seven days after which such notice
is mailed.

     11. DEFINITIONS. As used in Part I and II hereof, the following terms shall
have the following meanings (with terms defined in the singular having
comparable meanings when used in the plural and vice versa), unless the context
otherwise requires. Certain letter ratings may be

                                       46


modified by the addition of a plus or a minus sign or other modifier, which is
used to show relative standing within the rating category. References to a
particular letter rating by S&P are to the rating without regard to any
modifier.

          (a) "`AA' Composite Commercial Paper Rate," on any date for any Rate
     Period, shall mean (i)(A) in the case f any Rate Period with Rate Period
     Days of less than 46 days, the interest equivalent of the 30-day rate, (B)
     in the case of any Rate Period with Rate Period Days of 46 or more days but
     less than 70 days, the interest equivalent of the 60-day rate, (C) in the
     case of any Rate Period with Rate Period Days of 70 days or more but less
     than 85 days, the arithmetic average of the interest equivalent of the
     60-day and 90-day rates, (D) in the case of any Rate Period with Rate
     Period Days of 85 days or more but less than 120 days, the interest
     equivalent of the 90-day rate, (E) in the case of any Rate Period with Rate
     Period Days of 120 days or more but less than 148 days, the arithmetic
     average of the interest equivalent of the 90-day and 180-day rates and (F)
     in the case of any Rate Period with Rate Period Days of 148 days or more
     but 182 days or less, the interest equivalent of the 180-day rate, on
     commercial paper placed on behalf of issuers whose corporate bonds are
     rated "AA" by S&P or the equivalent of such rating by S&P or another rating
     agency, as made available on a discount basis or otherwise by the Federal
     Reserve Bank of New York for the Business Day immediately preceding such
     date; or (ii) in the event that the Federal Reserve Bank of New York does
     not make available any such rate, then the arithmetic average of such
     rates, as quoted on a discount basis or otherwise, by the Commercial Paper
     Dealers to the Auction Agent for the close of business on the Business Day
     next preceding such date. If any Commercial Paper Dealer does not quote a
     rate required to determine the "AA" Composite Commercial

                                       47


     Paper Rate, the "AA" Composite Commercial Paper Rate shall be determined on
     the basis of the quotation or quotations furnished by the remaining
     Commercial Paper Dealer or Commercial Paper Dealers and any Substitute
     Commercial Paper Dealer or Substitute Commercial Paper Dealers selected by
     the Corporation to provide such rate or rates not being supplied by any
     Commercial Paper Dealer or Commercial Paper Dealers, as the case may be,
     or, if the Corporation does not select any such Substitute Commercial Paper
     Dealer or Substitute Commercial Paper Dealers, by the remaining Commercial
     Paper Dealer or Commercial Paper Dealers. For purposes of this definition,
     the "interest equivalent" of a rate stated on a discount basis (a "discount
     rate") for commercial paper of a given days' maturity shall be equal to the
     quotient (rounded upwards to the next higher one-thousandth (.001) of 1%)
     of (A) the discount rate divided by (B) the difference between (x) 1.00 and
     (y) a fraction the numerator of which shall be the product of the discount
     rate times the number of days in which such commercial paper matures and
     the denominator of which shall be 360.

          (b) "ACCOUNTANTS' CERTIFICATE" shall have the meaning set forth in
     paragraph (b) of Section 7 of this Part I.


          (c) "ADDITIONAL DISTRIBUTION" shall mean payment to a Holder or prior
     Holder, as the case may be, of an amount which, when taken together with
     the Retroactive Taxable Allocation made to such Holder or prior Holder with
     respect to the taxable year in question, would cause the net return to such
     Holder or prior Holder (after Federal income tax consequences)

                                       48


     from the aggregate of both such Retroactive Taxable Allocation and the
     Additional Distribution to be equal to the net return that would have been
     realized by such Holder or prior Holder (after Federal income tax
     consequences) from such Retroactive Taxable Allocation if such amount had
     been eligible for the Dividends Received Deduction and the Additional
     Distribution had not been paid. Such Additional Distribution shall be
     calculated (i) without consideration being given to the time value of
     money; (ii) assuming that no Federal alternative minimum tax or similar tax
     is imposed with respect to dividends received from the Corporation; (iii)
     assuming that the Holder or prior Holder is taxable at all times at the
     Federal Income Tax Rate (as defined below) on the Retroactive Taxable
     Allocation and the Additional Distribution (to the extent that the
     Corporation does not designate the Additional Distribution as qualifying
     for the Dividends Received Deduction) and that the Holder or prior Holder
     is able to take full advantage of the Dividends Received Deduction with
     respect to dividends (including the Additional Distribution if designated
     as qualifying for the Dividends Received Deduction) received from the
     Corporation; (iv) assuming that the Holder or prior Holder disposed of such
     shares in a taxable transaction immediately after a distribution on a
     Dividend Payment Date with respect to which a Retroactive Taxable
     Allocation was made; and (v) assuming that the Holder or prior Holder sold
     such shares for $100,000 per share and had an adjusted tax basis in such
     shares equal to $100,000 less any amount distributed as a return of capital
     (as calculated for Federal income tax purposes) per share for the
     distribution with respect to which the Retroactive Taxable Allocation was
     made. "Federal Income Tax Rate" is the maximum marginal regular Federal
     income tax rate generally applicable to corporations (currently 34%) in
     effect on (a), in the case of a Retroactive Tax Allocation, the Auction
     Date related to a distribution on the shares of MMP for which a Retroactive
     Taxable Allocation has been made, and (b), in the case of an Additional
     Distribution, the date the Corporation notifies holders of

                                       49


     Additional Distribution Rights of the amount of any Retroactive Taxable
     Allocation with respect to which such an Additional Distribution shall be
     paid. With respect to assumption (iii) above, the Corporation will not
     designate the Additional Distribution as qualifying for the Dividends
     Received Deduction unless the Corporation receives an opinion of counsel to
     the effect that such designation would be given effect for Federal income
     tax purposes.

          The Corporation shall notify each holder of an Additional Distribution
     Right of the amount of each Retroactive Taxable Allocation allocated to
     such holder within 120 days after the end of the taxable year for which the
     Retroactive Taxable Allocation is made, and shall make any required
     Additional Distribution to such holder within 30 days after the date of
     such notice.

          (d) "ADDITIONAL DISTRIBUTION RIGHT" shall mean a right issued by the
     Corporation to a Holder at the time of payment of a dividend on, or
     redemption of, or liquidating distribution on shares of MMP entitling such
     Holder to receive an Additional Distribution if a Retroactive Taxable
     Allocation is made. An Additional Distribution shall be paid only if and to
     the extent that payment of a distribution to stockholders in such amount
     could then be made in accordance with Section 2-312 of the Maryland General
     Corporation Law. An Additional Distribution Right shall not be transferable
     except by operation of law.

          (e) "APPLICABLE RATE" shall have the meaning specified in subparagraph
     (c)(i) of Section 2 of this Part I.


          (f) "AUCTION" shall mean each periodic implementation of the Auction
     Procedures.


                                       50


          (g) "AUCTION AGENCY AGREEMENT" shall mean the agreement between the
     Corporation and the Auction Agent which provides, among other things, that
     the Auction Agent will follow the Auction Procedures for purposes of
     determining the Applicable Rate for the shares of MMP so long as the
     Applicable Rate is to be based on the results of an Auction.

          (h) "AUCTION AGENT" shall mean Manufacturers Hanover Trust Company,
     unless and until another bank or trust company has been appointed as
     Auction Agent by a resolution of the Board of Directors pursuant to Section
     9 of this Part I and thereafter such substitute bank or trust company.

          (i) "AUCTION DATE," with respect to any Rate Period, shall mean the
     Business Day next preceding the first day of such Rate Period.

          (j) "AUCTION PROCEDURES" shall mean the procedures for conducting
     Auctions set forth in Part II hereof.


          (k) "BOARD OF DIRECTORS" shall mean the Board of Directors of the
     Corporation or any duly authorized committee thereof.

          (l) "BUSINESS DAY" shall mean a day on which the New York Stock
     Exchange is open for trading and which is neither a Saturday, Sunday nor
     any other day on which banks in The City of New York, New York, are
     authorized by law to close.

          (m) "CERTIFICATE OF DIVIDEND COVERAGE" shall have the meaning set
     forth in subparagraph (a)(i) of Section 7 of this Part I.

          (n) "CERTIFICATE OF ELIGIBLE ASSET COVERAGE" shall have the meaning
     set forth in subparagraph (a)(i) of Section 7 of this Part I.

                                       51


          (o) "CERTIFICATE OF 1940 ACT ASSET COVERAGE" shall have the meaning
     set forth in subparagraph (a)(i) of Section 7 of this Part I.

          (p) "CODE" shall mean the Internal Revenue Code of 1986, as amended.


          (q) "COMMERCIAL PAPER DEALERS" shall mean Lehman Commercial Paper
     Incorporated, Goldman, Sachs & Co. and Merrill Lynch, Pierce, Fenner &
     Smith Incorporated or, in lieu of any thereof, their respective affiliates
     or successors, if such entity is a commercial paper dealer.

          (r) "COMMON STOCK" shall mean the Common Stock, par value one cent
     ($.01) per share, of the Corporation.


          (s) "COMMON STOCK PAYING AGENT" shall mean The Shareholder Services
     Group, Inc., unless and until another bank or trust company has been
     appointed a Common Stock Paying Agent by a resolution of the Board of
     Directors, and thereafter such substitute bank or trust company.

          (t) "CONFIRMATION DATE" shall have the meaning set forth in paragraph
     (b) of Section 7 of this Part I.

          (u) "CORPORATION" shall mean Preferred Income Fund Incorporated, a
     Maryland corporation which is the issuer of the shares of MMP.

          (v) "Coverage Value" of each Eligible Asset, and each Dividend
     Coverage Asset is computed as follows:

               (i) cash shall be valued (X) for Eligible Asset purposes at the
          amount obtained by dividing 100% of the face value thereof by the
          applicable Discount Factor and (Y) for Dividend Coverage Asset
          purposes at 100% of the face value thereof;

                                       53


               (ii) each demand and each repurchase obligation maturing in no
          more than one Business Day from the Eligible Asset Evaluation Date
          shall be valued (X) for Eligible Asset purposes at the amount obtained
          by dividing 100% of the face value thereof by the applicable Discount
          Factor plus accrued interest thereon, if any, to the date of
          determination and (Y) for Dividend Coverage Asset purposes at 100% of
          the face value thereof plus accrued interest thereon, if any, to the
          date of determination;

               (iii) each Short-Term Money Market Instrument (other than a
          demand deposit or repurchase obligation referred to in subclause (ii)
          above) shall be valued at the amount obtained by dividing the Market
          Value thereof by the applicable Discount Factor;

               (iv) commercial paper (other than commercial paper which is a
          Short-Term Money Market Instrument) having a rating of P-1 or P-2 from
          Moody's shall be valued at the amount obtained by dividing the Market
          Value thereof by the applicable Discount Factor;

               (v) each common stock shall be valued at the amount obtained by
          dividing the Market Value thereof by the applicable Discount Factor;

               (vi) each preferred stock shall be valued at the amount obtained
          by dividing the Market Value thereof by the applicable Discount
          Factor;

               (vii) each U.S. Treasury Security shall be valued at the amount
          obtained by dividing the Market Value thereof by the applicable
          Discount Factor; and

                                       53


               (viii) each corporate bond (including of bank and utility
          issuers) shall be valued at the amount obtained by dividing the Market
          Value thereof by the applicable Discount Factor;
          provided, however, that the Coverage Value of an Eligible Asset may
          not exceed its stated principal amount, if any.

     Eligible Assets and Dividend Coverage Assets against which the Corporation
     has written an option, or which serve as variation margin with respect to
     futures contracts purchased or sold by the Corporation, will be given no
     value for this purpose except as permitted (and confirmed in writing) by
     Moody's from time to time consistent with maintaining the Corporation's
     then-current rating of the MMP; provided, however, that Eligible Assets
     against which the Corporation has written a futures contract will be valued
     at the lower of the settlement price (treated as cash) of such futures
     contract or the Market Value of such asset divided by the applicable
     Discount Factor, unless such futures contract matures 56 or fewer days from
     the date Coverage Value is being determined, in which case the Coverage
     Value of such asset will be the settlement price (treated as cash) of such
     futures contract, and provided, further, however, if such option written
     expires on a date 93 or fewer days after the date of determination in the
     case of exchange traded options or on a date 56 or fewer days after the
     date of determination in the case of other options, such Eligible Assets
     and Dividend Coverage Assets will have a Coverage Value equal to the lesser
     of:

               (i) the Coverage Value thereof determined as if no such option
          had been outstanding; and

               (ii) the exerise price of the option.

                                       54



               The calculation of Coverage Value may be made on bases other than
          those set forth above if Moody's has advised the Corporation in
          writing that the revised calculation of Coverage Value would not
          adversely affect its then-current rating of the shares of MMP. If
          other assets become includible as Eligible Assets, the Coverage Values
          of such assets shall be determined in accordance with procedures
          established in consultation with Moody's with a view to maintaining
          its then-current rating of the shares of MMP.

               (w) "CURE DATE" shall mean the Eligible Asset Cure Date, the 1940
          Act Asset Coverage Cure Date, or the Dividend Coverage Cure Date, as
          the case may be.

               (x) "DATE OF ORIGINAL ISSUE" with respect to any share of MMP,
          shall mean the date on which the Corporation initially issued such
          share of MMP.

               (y) "DISCOUNT FACTOR" means, with respect to an Eligible Asset
          specified below, the following applicable number:




                                                                                    DISCOUNT
                      TYPE OF ELIGIBLE ASSET:                                        FACTOR:
                      -----------------------                                      ---------
                                                                                   
    Receivables for securities sold to a party whose senior
            debt securities are rated at least Baa3 by Moody's or a party
            approved by Moody's and payable within five Business Days and
            dividends receivable within
            56 days on Eligible Assets..........................................       1.13

    Short-Term Money Market Instruments (other than U.S. Treasury
            Securities set forth below) and other commercial paper:

    Demand or time deposits, certificates of deposit and
            bankers' acceptances includible in Short-Term
            Money Market Instruments............................................       1.13

    Commercial paper rated P-1 by Moody's maturing in 30 days
            or less.............................................................       1.13

    Commercial paper rated P-1 by Moody's maturing in more
            than 30 days but in 270 days or less................................       1.15

                                       55


    Commercial paper rated A-1+ by Standard & Poor's maturing
            in 270 days or less.................................................       1.25

    Commercial paper rated P-2 by Moody's maturing in 270 days
            or less.............................................................       1.30

    Repurchase obligations includible in Short-Term Money
            Market Instruments..................................................       1.15

    Preferred stocks:
    Auction rate preferred stocks which are not credit enhanced                        3.00
    Auction rate preferred stocks which are credit enhanced.....................       3.50
    Other preferred stocks issued by issuers in the banking
            and industrial industries...........................................       2.14
    Other preferred stocks issued by issuers in the utilities
            industry............................................................       1.53

    U.S. Treasury Securities:

          U.S. Treasury Securities with remaining terms to maturity of:
             1 year or less.....................................................       1.13
             2 years or less....................................................       1.20
             3 years or less....................................................       1.25
             4 years or less....................................................       1.31
             5 years or less....................................................       1.37
             7 years or less....................................................       1.46
             10 years or less...................................................       1.54
             15 years or less...................................................       1.60
             20 years or less...................................................       1.67
             30 years or less...................................................       1.68

          U.S. Treasury Strips with remaining terms to maturity of:

             1 year or less.....................................................       1.13
             2 years or less....................................................       1.20
             3 years or less....................................................       1.25
             4 years or less....................................................       1.31
             5 years or less....................................................       1.37
             7 years or less....................................................       1.46
             10 years or less...................................................       1.58
             15 years or less...................................................       1.83
             20 years or less...................................................       2.07
             30 years or less...................................................       2.31


                                       56




                                                                                  
    Corporate bonds:
          Corporate and utility bonds rated Aaa with remaining terms to maturity of:

             1 year or less.....................................................       1.12
             2 years or less....................................................       1.18
             3 years or less....................................................       1.23
             4 years or less....................................................       1.28
             5 years or less....................................................       1.33
             7 years or less....................................................       1.41
             10 years or less...................................................       1.48
             15 years or less...................................................       1.53
             20 years or less...................................................       1.59
             30 years or less...................................................       1.60

          Corporate and utility bonds rated Aa with remaining terms to maturity of:

             1 year or less.....................................................       1.18
             2 years or less....................................................       1.24
             3 years or less....................................................       1.29
             4 years or less....................................................       1.34
             5 years or less....................................................       1.40
             7 years or less....................................................       1.48
             10 years or less...................................................       1.55
             15 years or less...................................................       1.60
             20 years or less...................................................       1.67
             30 years or less...................................................       1.67

          Corporate and utility bonds rated A with remaining terms to maturity of:

             1 year or less.....................................................       1.23
             2 years or less....................................................       1.30
             3 years or less....................................................       1.35
             4 years or less....................................................       1.41
             5 years or less....................................................       1.46
             7 years or less....................................................       1.55
             10 years or less...................................................       1.62
             15 years or less...................................................       1.67
             20 years or less...................................................       1.74
             30 years or less...................................................       1.75


                                       57





          Corporate and utility bonds rated Baa with remaining terms to maturity of:

                                                                                    
             1 year or less.....................................................       1.28
             2 years or less....................................................       1.35
             3 years or less....................................................       1.40
             4 years or less....................................................       1.47
             5 years or less....................................................       1.52
             7 years or less....................................................       1.61
             10 years or less...................................................       1.69
             15 years or less...................................................       1.75
             20 years or less...................................................       1.82
             30 years or less...................................................       1.83

    Common stocks:

         Issued by utilities....................................................       1.65
         Issued by industrial companies.........................................       2.43
         Issued by financial companies..........................................       2.33
         Issued by transportation companies.....................................       3.07


         By resolution of the Board of Directors and without amending the
         Articles or otherwise submitting such resolution for stockholder
         approval, (i) Discount Factors may be changed from those set forth
         above and (ii) additional Discount Factors may be established for other
         Eligible Assets if, in each case, Moody's has advised the Corporation
         in writing that such change or addition would not adversely affect its
         then-current rating of the shares of MMP.

              (z) "DIVIDEND COVERAGE AMOUNT" for the shares of MMP as of any
         date of determination, means the sum of, for each share of MMP for
         which the next following Dividend Payment Date occurs within 30 days,
         that number which is the product of:

               (i) $100,000;

               (ii) the Applicable Rate in effect on such share; and

               (iii) a fraction, the numerator of which is the number of days in
               the Dividend Period ending on the next following Dividend Payment
               Date for such

                                       58


               share (determined by including the first day thereof but
               excluding the Dividend Payment Date) and the denominator of which
               is 360.

               (aa) "DIVIDEND COVERAGE ASSETS," for the shares of MMP as of any
          date of determination, means (i) cash (including, for this purpose,
          receivables for securities sold and dividends receivable on Eligible
          Assets, in each case not later than 12:00 Noon, New York City time, on
          the Business Day immediately preceding the next Dividend Payment
          Date), and (ii) Short-Term Money Market Instruments with maturity
          dates not later than 12:00 Noon, New York City time, on the Business
          Day immediately preceding the applicable Dividend Payment Date.

               (bb) "DIVIDEND COVERAGE CURE DATE" means the third Business Day
          following a Dividend Coverage Evaluation Date with respect to which
          the Dividend Coverage is not met.

               (cc) "DIVIDEND COVERAGE EVALUATION DATE" means (i) April 12, 1991
          and (ii) each thirtieth day preceding a Dividend Payment Date for the
          shares of MMP (or, if such day is not a Business Day, the first
          Business Day preceding such thirtieth day).

               (dd) "DIVIDEND COVERAGE IS MET" means, as of any date of
          determination, that the aggregate Coverage Value of the Dividend
          Coverage Assets owned by the Corporation as of such date of
          determination equals or exceeds the sum of (A) the Dividend Coverage
          Amount for the MMP and (B) the amount of all liabilities (including,
          without limitation, declared and unpaid dividends (and Additional
          Distributions then due, if any), interest expense and operating
          expenses payable and amounts payable to the Auction Agent, the MMP
          Paying Agent and the Common Stock Paying Agent) that would appear on
          the date of determination on the face of the Corporation's statement
          of

                                       59


          assets and liabilities and are payable on or prior to any Dividend
          Payment Date for the MMP occurring within 30 days.

               (ee) "DIVIDEND PAYMENT DATE" with respect to the shares of MMP,
          shall mean any date on which dividends are payable pursuant to the
          provisions of paragraph (b) of Section 2 of this Part I.

               (ff) "DIVIDEND PERIOD" with respect to the shares of MMP, shall
          mean the period from and including the Date of Original Issue to but
          excluding the initial Dividend Payment Date for such shares and any
          period thereafter from and including a Dividend Payment Date for such
          shares to but excluding the next succeeding Dividend Payment Date for
          such shares.

               (gg) "DIVIDENDS RECEIVED DEDUCTION" shall mean the dividends
          received deduction generally allowed to nonaffiliated corporate
          holders of certain stock under Section 243(a)(1) of the Code, or any
          successor thereto, with respect to dividends received on such stock.

               (hh) "ELIGIBLE ASSET COVERAGE AMOUNT," as of any date of
          determination, means the sum of:

                    (i) an amount equal to the product of (A) $100,000 times (B)
               the number of shares of MMP then outstanding;

                    (ii) accumulated and unpaid dividends on the shares of MMP
               to the date of determination (excluding any declared and unpaid
               dividends reflected in the determination of Net Coverage Value);

                    (iii) the Projected Dividend Amount; and

                                       60


                    (iv) an amount equal to the amount of any Additional
               Distribution (the "Current Additional Distribution Amount") that
               would be payable to the MMP holders assuming that the amount of
               any distributions ineligible for the Dividends Received Deduction
               as to which the notification provided in Section 6 of Part II of
               these Articles Supplementary has not been given to the Auction
               Agent (the "Non-DRD Qualifying Amount") would be the then-current
               amounts.

         For purposes of clause (iv) above, the Current Additional Distribution
         Amount shall be calculated as the product of:

                    (A) 0.27;

                    (B) the Non-DRD Qualifying Amount; and

                    (C) the quotient of (1) the amount of the distributions paid
               to the MMP Holders as dividends during (and that are attributable
               to) the current fiscal year to date ("Current MMP Dividends") and
               (2) the sum of (x) Current MMP Dividends and (y) the amount of
               the distributions paid to the holders of the Common Stock as
               dividends during the current fiscal year to date; PROVIDED,
               HOWEVER, that if either the percentage of dividends excluded from
               taxation pursuant to the Dividends Received Deduction or the
               maximum marginal Federal tax rate generally applicable to
               corporations changes, the method of calculating the amount of the
               Current Additional Distribution Amount shall be revised to
               reflect the effect of such changes on the amount that the
               Corporation would be obligated to pay as Additional
               Distributions; PROVIDED, FURTHER, that, in the event the amount
               of liabilities used in the calculation of the Net Coverage Value
               includes any redemption price payable with respect to the shares
               of MMP called for

                                       61


               redemption, the number of shares of MMP outstanding, for purposes
               of subclause (i)(B) above, shall not include the number of such
               shares called for redemption; and PROVIDED, FURTHER, that, in the
               case of a calculation in connection with a reissuance of shares
               of MMP, such computation shall give effect to such reissuance.

               (ii) "ELIGIBLE ASSET CURE DATE" means (i) the sixth Business Day
          following an Eligible Asset Evaluation Date as to which an
          Accountants' Certificate is not required to be delivered or (ii) the
          third Business Day following a Confirmation Date with respect to which
          the Corporation has not delivered to the MMP Paying Agent an
          Accountants' Certificate confirming the Certificate of Eligible Asset
          Coverage relating to the immediately preceding Eligible Asset
          Evaluation Date.

               (jj) "ELIGIBLE ASSET EVALUATION DATE" means (i) April 12, 1991,
          (ii) each succeeding Friday following the Date of Original Issue (or,
          if such date is not a Business Day, the first Business Day preceding
          or following such Friday, as the Corporation shall determine) and
          (iii) the Business Day preceding the day on which any notice is sent
          to Holders or prior Holders as to the payment of any Additional
          Distribution.

               (kk) "ELIGIBLE ASSET COVERAGE IS MET" means, as of any date of
          determination, that the aggregate Net Coverage Value of Eligible
          Assets owned by the Corporation as of the date of determination equals
          or exceeds the Eligible Asset Coverage Amount.

               (ll) "ELIGIBLE ASSETS" shall mean:

                    (i) cash (including, for this purpose, receivables for
               securities sold to a party whose senior debt securities are rated
               at least Baa3 by Moody's or a party

                                       63


               approved by Moody's and payable within five Business Days and
               dividends receivable within 56 days on Eligible Assets);

                    (ii) Short-Term Money Market Instruments (provided, however,
               that for purposes of this definition, commercial paper must
               mature within 56 days of the Eligible Asset Evaluation Date);

                    (iii) commercial paper that is not includible as a
               Short-Term Money Market Instrument having on the Eligible Asset
               Evaluation Date a rating from Moody's of P-1 or P-2 or a rating
               from S&P of A-1 and maturing within 270 days, provided that
               commercial paper must meet the diversification requirements set
               forth below relating to corporate bonds in clause (vii);

                    (iv) preferred stocks

                         (A) which either (1) are issued by issuers whose senior
                    debt securities are rated at least Baa1 by Moody's or (2)
                    are rated at least "baa" by Moody's (or in the event an
                    issuer's senior debt securities or preferred stock is not
                    rated by Moody's which either (1) are issued by an issuer
                    whose senior debt securities are rated at least A by S&P or
                    (2) are rated at least A by S&P and which for this purpose
                    have been assigned a Moody's equivalent rating of at least
                    "baa");

                         (B) which are listed on the New York Stock Exchange or
                    the American Stock Exchange or are preferred stocks of
                    issuers which have (or, in the case of issuers which are
                    special purpose corporations, whose parent companies have)
                    common stock listed on the New York Stock Exchange or the
                    American Stock Exchange;


                                       64


                         (C) which have a minimum issue size (when taken
                    together with other of the issuer's issues of similar tenor)
                    of $50,000,000;

                         (D) which have paid cash dividends consistently during
                    the preceding three-year period (or, in the case of new
                    issues without a dividend history, are rated at least "a1"
                    by Moody's or, if not rated by Moody's, are rated at least
                    AA by S&P, or are issued by an issuer who has paid cash
                    dividends consistently during the preceding three-year
                    period on its common stock or its issues of preferred
                    stock);

                         (E) which pay cumulative cash dividends in U.S.
                    dollars;

                         (F) which are not convertible into any other class of
                    stock and do not have warrants attached;

                         (G) which are not issued by issuers in the
                    transportation industry; and

                         (H) in the case of auction rate preferred stocks, which
                    are rated at least "aa" by Moody's, or if not ratedby
                    Moody's, AAA by S&P or are otherwise approved in writing by
                    Moody's, and which have dividend periods of less than or
                    equal to 49 days (or, in the case of a new issue of auction
                    rate preferred stock, 64 days for the initial dividend
                    period) and have never had a failed auction;

               PROVIDED, HOWEVER, that for this purpose the aggregate Market
               Value of the Corporation's holdings of (1) any issue of preferred
               stock which is not an auction rate preferred stock shall not be
               less than $300,000 nor more than $5,000,000 and (2) any issue of
               auction rate preferred stock shall not be more than $5,000,000;

                                       64


                    (v)  common stocks

                         (A) which are issued by issuers whose senior debt
                    securities are rated at least Baa by Moody's (or, in the
                    event an issuer's senior debt securities are not rated by
                    Moody's, which are issued by an issuer whose senior debt
                    securities are rated at least A by S&P and which for this
                    purpose have been assigned a Moody's equivalent rating of at
                    least Baa);

                         (B) which are traded on the New York Stock Exchange or
                    the American Stock Exchange;

                         (C) which have a market capitalization greater than
                    $500,000,000;

                         (D) which are currently paying cash dividends and have
                    paid cash dividends consistently during the preceding
                    three-year period; and

                         (E) which pay dividends in U.S. dollars;
                    PROVIDED, HOWEVER, that (1) the aggregate Market Value of
                    the Corporation's holdings of the common stock of any
                    eligible issuer (x) shall be less than 5% of the number of
                    outstanding shares times the Market Value of such common
                    stock and (y) shall not exceed 5% of the number of
                    outstanding shares (less the number of shares held by
                    insiders, as determined in accordance with standards
                    established by Moody's) multiplied by the Market Value of
                    such common stock and (2) the number of shares of common
                    stock of any eligible issuer held by the Corporation shall
                    not exceed the average weekly trading volume of such common
                    stock during the preceding month;

                    (vi)  U.S. Treasury Securities;

                                       65


                    (vii) bonds

                         (A) which are not privately placed, rated at least Baa
                    by Moody's (or, in the event the bond is not rated by
                    Moody's, the bond is rated at least A by S&P and which for
                    this purpose is assigned a Moody's equivalent rating of at
                    least Baa with such rating confirmed on each Eligible Asset
                    Evaluation Date);

                         (B) which have a minimum issue size (when taken
                    together with other of the issuer's issues of similar tenor)
                    of at least $100,000,000;

                         (C) which are U.S. dollar denominated and pay interest
                    in cash in U.S. dollars;

                         (D) which are not convertible or exchangeable into
                    equity of the issuing corporation and have a maturity of not
                    more than 30 years; and

                         (E) for which the aggregate Market Value of the
                    Corporation's holdings do not exceed 10% of the aggregate
                    Market Value of any individual issue of corporate bonds
                    calculated at the time of original issuance;

               PROVIDED, HOWEVER, that the Corporation's investments in
               preferred stocks described in clause (iv) above rated "baa" by
               Moody's or A by S&P shall be included in Eligible Assets only to
               the extent that the aggregate Market Value of all such preferred
               stocks of any single issuer does not exceed (x) 6% of the
               aggregate Market Value in the case of issuers in industries other
               than the utilities industry (utilizing Moody's industry
               categories), and (y) 4% of the aggregate Market Value in the case
               of issuers in the utilities industry (utilizing Moody's


                                       66


               industry and sub-industry categories) of all of the Corporation's
               investments meeting the criteria set forth in clauses (i) through
               (vii) above; and provided, however, that the Corporation's
               investments in preferred stocks, common stocks and bonds
               described in clauses (iv), (v) and (vii) above of any single
               issuer whose senior debt securities are rated Baa by Moody's or A
               by S&P shall be included in Eligible Assets only to the extent
               that all such stocks and bonds of such issuer do not exceed (x)
               6% of the aggregate Market Value in the case of issuers in
               industries other than the utilities industry (utilizing Moody's
               industry categories), and (y) 4% of the aggregate Market Value in
               the case of issuers in the utilities industry (utilizing Moody's
               industry and sub-industry categories) of all the Corporation's
               investments meeting the criteria set forth in clauses (i) through
               (vii) above less the aggregate Market Value of those investments
               excluded from Eligible Assets pursuant to the immediately
               preceding proviso; and provided, however, that the Corporation's
               investments in preferred stocks, common stocks and bonds
               described in clauses (iv), (v) and (vii) above of any single
               issuer whose senior debt securities are rated A by Moody's or AA
               by S&P or whose preferred stock is rated "a" by Moody's or AA by
               S&P shall be included in Eligible Assets only to the extent that
               all such stocks and bonds of such issuer do not exceed (x) 10% of
               the aggregate Market Value in the case of issuers in industries
               other than the utilities industry (utilizing Moody's industry
               categories), and (y) 8% of the aggregate Market Value in the case
               of issuers in the utilities industry (utilizing Moody's industry
               and sub-industry categories) of all the Corporation's investments
               meeting the criteria set forth in clauses (i) through (vii) above
               less the

                                       67


               aggregate Market Value of those investments excluded from
               Eligible Assets pursuant to the two immediately preceding
               provisos; and, provided, however, that the Corporation's
               investment in preferred stocks, common stocks and bonds described
               in clauses (iv), (v) and (vii) above of any single issuer whose
               senior debt securities are rated AA or higher by Moody's or AAA
               or higher by S&P or whose preferred stock is rated "aa" or higher
               by Moody's or AAA or higher by S&P shall be included in Eligible
               Assets only to the extent that all such stocks and bonds of such
               issuer do not exceed (x) 20% of the aggregate Market Value in the
               case of issuers in industries other than the utilities industry
               (utilizing Moody's industry categories), and (y) 10% of the
               aggregate Market Value in the case of issuers in the utilities
               industry (utilizing Moody's industry and sub-industry categories)
               of all the Corporation's investments meeting the criteria set
               forth in clauses (i) through (vii) above less the aggregate
               Market Value of those investments excluded from Eligible Assets
               pursuant to the three immediately preceding provisos; and
               provided, however, that the Corporation's investment in common
               stocks described in clause (v) above of any single issuer shall
               be included in Eligible Assets only to the extent that all such
               common stock of such issuer does not exceed (x) 6% of the
               aggregate Market Value in the case of issuers in industries other
               than the utilities industry (utilizing Moody's industry
               categories), and (y) 4% of the aggregate Market Value in the case
               of issuers in the utilities industry (utilizing Moody's industry
               and sub-industry categories) of all of the Corporation's
               investments meeting the criteria set forth in clauses (i) through
               (vii) above less the aggregate Market Value of those investments
               excluded from


                                       68


               Eligible Assets pursuant to the four immediately preceding
               provisos; and, provided, further, that the Corporation's
               investment in preferred stocks, common stocks and bonds described
               in clauses (iv), (v) and (vii) above issued by issuers in any one
               industry (other than each of the utilities and banking industries
               and utilizing Moody's industry categories) shall be included in
               Eligible Assets only to the extent that the aggregate Market
               Value of such stocks and bonds does not exceed 20% of the
               aggregate Market Value of all the Corporation's investments
               meeting the criteria set forth in clauses (i) through (vii) above
               less the aggregate Market Value of those investments excluded
               from Eligible Assets pursuant to the five immediately preceding
               provisos; and provided, further, that the Corporation's
               investment in common stocks described in clause (v) above issued
               by issuers in the utilities industry (utilizing Moody's industry
               and sub-industry categories) and the banking industry (utilizing
               Moody's industry categories) shall be included in Eligible Assets
               only to the extent that (I), in the case of issuers in the
               utilities industry, (x) the aggregate Market Value of such common
               stocks does not exceed 50%, and (y) the aggregate Market Value of
               such common stocks issued by issuers regulated by any one state
               does not exceed 7% (15% in the case of California and New York)
               and (II), in the case of issuers in the banking industry, the
               aggregate Market Value of such common stocks does not exceed 20%,
               of the aggregate Market Value of all the Corporation's
               investments meeting the criteria set forth in clauses (i) through
               (vii) above less the aggregate Market Value of those investments
               excluded from Eligible Assets pursuant to the six immediately
               preceding provisos; and provided, further, that the Corporation's
               investments in

                                       70


               preferred stocks, common stocks and bonds described in clauses
               (iv), (v) and (vii) above issued by issuers in the utilities
               industry (utilizing Moody's industry and sub-industry categories)
               shall be included in Eligible Assets only to the extent that the
               aggregate Market Value of such stocks and bonds does not exceed
               the percentages set forth below of the aggregate Market Value of
               all of the Corporation's investments meeting the criteria set
               forth in clauses (i) through (vii) above less the aggregate
               Market Value of those investments excluded from Eligible Assets
               pursuant to the seven immediately preceding provisos:




Moody's Rating or Equivalent Rating on           Maximum Utilities                       Maximum Issued
          Preferred Stock (1)             Sub-Industry Concentration (2)    By Issuers Regulated By Any One State (2)
--------------------------------------    ------------------------------    ----------------------------------------
                                                                                        
                 "aaa"                                 100%                                   100%
                 "aa"                                  100%                                    20%
                  "a"                                   60%                                  10%(3)
                 "baa"                                  50%                                   7%(3)


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

          (1)  The equivalent Moody's rating must be lowered one full rating
               category for preferred stocks rated by S&P but not Moody's.

          (2)  The referenced percentages represent maximum cumulative totals
               only for the related Moody's category and each lower Moody's
               rating category as well as limitations set forth in the
               immediately preceding proviso.

          (3)  Such percentage shall be 15% in the case of utilities regulated
               by California or New York. ; and provided, further, that the
               Corporation's investments in preferred stocks, common stocks and
               bonds described in clauses (iv), (v) and (vii) above issued by
               issuers in the banking industry (utilizing Moody's industry
               categories) shall be included in Eligible Assets only to the
               extent that the aggregate Market Value of such stocks and bonds
               does not exceed the percentages set forth below of the aggregate
               Market Value of all of the Corporation's investments meeting the
               criteria set forth in clauses (i) through (vii) above less the
               aggregate Market Value

                                       71


               of those investments excluded from Eligible Assets pursuant to
               the eight immediately preceding provisos:

                  Moody's Rating or
                Equivalent Rating on                  Maximum Banking
                 Preferred Stock (1)             Industry Concentration (2)
               -----------------------           --------------------------
                       "aaa"                                 100%
                       "aa"                                   60%
                       "a"                                    40%
                       "baa"                                  20%
         ---------------

          (1)  The equivalent Moody's rating must be lowered one full rating
               category for preferred stocks rated by S&P but not Moody's.

          (2)  The referenced percentages represent maximum cumulative totals
               only for the related Moody's category and each lower Moody's
               rating category as well as limitations set forth in the
               immediately preceding proviso.
               ; and provided, further, that the Corporation's investments in
               bonds described in clause (vii) above issued by issuers in the
               utility industry (utilizing Moody's industry categories) shall
               be included in Eligible Assets only to the extent that the
               aggregate Market Value of such bonds does not exceed the
               percentages set forth below of the aggregate Market Value of
               all of the Corporation's investments meeting the criteria set
               forth in clauses (i) through (vii) above less the aggregate
               Market Value of those investments excluded from Eligible
               Assets pursuant to the nine immediately preceding provisos:

                                       71


                     Moody's Rating or                       Maximum
                     Equivalent Rating                       Utility
                       on Bonds (1)                     Concentration (2)
                  ----------------------                -----------------
                         Aaa                                     100%
                         Aa                                       60%
                         A                                        40%
                         Baa                                      20%

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

          (1)  Refers to senior debt rating of collateral bonds. The equivalent
               Moody's rating must be lowered one full rating category for bonds
               rated by S&P but not Moody's.

          (2)  The referenced percentages represent maximum cumulative totals
               only for the related Moody's category and each lower Moody's
               rating category as well as limitations set forth in the
               immediately preceding proviso.

               ; and provided, further, that the Corporation's investments in
               auction rate preferred stocks described in clause (iv) above
               shall be included in the Eligible Assets only to the extent that
               the aggregate Market Value of such stocks does not exceed 10% of
               the aggregate Market Value of all of the Corporation's
               investments meeting the criteria set forth in clauses (i) through
               (vii) above less the aggregate Market Value of those investments
               excluded from the Eligible Assets pursuant to the ten immediately
               preceding provisos;

                    (viii) No assets which are subject to any lien may be
               includible in Eligible Assets, unless such lien is included as a
               liability in determining Net Coverage Value.

               By resolution of the Board of Directors and without amending the
               Articles or otherwise submitting such resolution for stockholder
               approval, other assets (including investments which either do not
               meet the criteria set forth in clauses (i) through (vii) above or
               meet such criteria but are excluded from Eligible Assets by the
               foregoing provisos) may be included in Eligible Assets and the
               descriptions of Eligible Assets set

                                       72


               forth in this definition may be adjusted, modified, altered or
               changed and any such adjustment, modification, alteration or
               change will not be deemed to affect the contract rights of shares
               of MMP or the Holders thereof if Moody's has advised the
               Corporation in writing that the inclusion of such assets in
               Eligible Assets or the adjustment, modification or change in such
               description of Eligible Assets would not adversely affect its
               then-current rating of the MMP.

                    (mm) "FAILURE TO DEPOSIT," with respect to any shares of
               MMP, shall mean a failure by the Corporation to pay to the
               Auction Agent, not later than 12:00 Noon, New York City time, (A)
               on the Business Day next preceding any Dividend Payment Date for
               such shares, in funds available on such Dividend Payment Date in
               The City of New York, New York, the full amount of any dividend
               (whether or not earned or declared) to be paid on such Dividend
               Payment Date on any such shares or (B) on the Business Day next
               preceding any redemption date in funds available on such
               redemption date for such shares in The City of New York, New
               York, the cash redemption price to be paid on such redemption
               date for any shares after Notice of Redemption is given pursuant
               to paragraph (b) of Section 3 of this Part I.

                    (nn) "HOLDER," with respect to any share of MMP, shall mean
               the registered holder of shares of MMP as the same appears on the
               stock books of the Corporation.

                    (oo) "INDEPENDENT ACCOUNTANTS" shall mean a nationally
               recognized firm of accountants, that is with respect to the
               Corporation a firm of independent public accountants under the
               Securities Act of 1933, as amended from time to time.


                                       73


                    (pp) "INITIAL RATE PERIOD," with respect to the initial
               issuance of MMP, shall mean the period from and including the
               Date of Original Issue thereof to but excluding the initial
               Dividend Payment Date therefor.

                    (qq) "MARKET VALUE" of any asset of the Corporation shall
               mean:

                         (i) with respect to an investment which is listed on an
                    exchange or traded over-the-counter and quoted on the NASDAQ
                    System, the last sale price on the day of valuation (using
                    prices as of the close of trading) or, if there has been no
                    sale that day, the last bid price reported on the day of
                    valuation; and

                         (ii) with respect to an investment which is not listed
                    on an exchange or quoted on the NASDAQ System, the lower of
                    the bid prices, as of the close of business on the Business
                    Day immediately preceding the date of determination, quoted
                    (at least one of such quotes being in writing) to the
                    Corporation by two or more nationally recognized securities
                    dealers making a market in such investment at the time. If
                    there is no sale or bid price for an investment as provided
                    in the preceding sentence, an investment shall be deemed to
                    have a Market Value of zero. By resolution of the Board of
                    Directors and without amending the Articles, the calculation
                    of Market Value may be made on bases other than those set
                    forth above if Moody's has advised the Corporation in
                    writing that the revised method of calculation of Market
                    Values would not adversely affect its then-current rating of
                    the shares of MMP, provided that the Corporation shall cause
                    to be made available a written statement setting forth such
                    revised method for inspection by the Holders at the
                    principal executive office of the Corporation.

                                       74


          (rr) "MASTER PURCHASER'S LETTER" has the meaning specified in Section
               1 of Part II hereof.

          (ss) "MINIMUM HOLDING PERIOD" shall mean the then-current minimum
               holding period (contained, as of the Date of Original Issuance,
               in Section 246(c) of the Code) required for corporate taxpayers
               generally to be entitled to the Dividends Received Deduction.

          (tt) "MINIMUM RATE PERIOD" shall mean any Rate Period consisting of 49
               Rate Period Days or such greater or lesser number of Rate Period
               Days as shall be established as the Minimum Rate Period by
               resolution of the Board of Directors of the Corporation pursuant
               to subparagraph (b)(ii)(C) of Section 2 of this Part I.

          (uu) "MMP(R)" means Money Market Cumulative Preferred(TM)Stock, par
               value $.01 per share.

          (vv) "MMP Paying Agent" shall mean Manufacturers Hanover Trust
               Company, unless and until another bank or trust company has been
               appointed as MMP Paying Agent by a resolution of the Board of
               Directors pursuant to Section 9 of this Part I and thereafter
               such substitute bank or trust company.

          (ww) "MOODY'S" shall mean Moody's Investors Service, Inc., a Delaware
               corporation, and its successors, and if Moody's no longer rates
               the shares of MMP, any nationally recognized statistical rating
               organization designated by the Corporation, subject to the
               approval of Shearson Lehman Brothers Inc.

          (xx) "NASDAQ SYSTEM" means the electronic inter-dealer quotation
               system operated by NASDAQ, Inc., a subsidiary of the National
               Association of Securities Dealers, Inc.

                                       75


          (yy) "NET COVERAGE VALUE" of the Corporation's Eligible Assets means
               the difference of (A) the aggregate Coverage Value, as determined
               pursuant to the definition thereof, of Eligible Assets minus (B)
               the amount of all liabilities (including, without limitation,
               declared and unpaid dividends (and any Additional Distributions),
               late charges, interest expense, operating expenses expected to
               accrue during the next three months, amounts payable to the
               Auction Agent, the MMP Paying Agent and the Common Stock Paying
               Agent, any liabilities in connection with repurchase agreements
               entered into by the Corporation and any liabilities resulting
               from the requirements set forth in paragraph (b) of Section 8 of
               this Part I) that would appear on the Eligible Asset Evaluation
               Date on the face of the Corporation's statement of assets and
               liabilities, provided that for purposes of this subclause (B),
               such operating expenses shall not be less than $200,000 and such
               liabilities shall also include the redemption price payable with
               respect to the shares of MMP, if any, that are covered by a
               Notice of Redemption sent prior to, or being set on the date of
               such determination.

          (zz) "1940 ACT" means the Investment Company Act of 1940, as amended.

          (aaa)"1940 ACT ASSET COVERAGE" and "1940 Act Asset Coverage is met"
               shall mean, as of any date of determination, that the ratio of
               the value of the Corporation's total assets, less all liabilities
               and indebtedness not representing senior securities (as defined
               in the 1940 Act), to the aggregate amount of senior securities
               representing indebtedness of the Corporation plus the aggregate
               of the liquidation preference of the shares of MMP, is at least
               200% (or such other asset coverage as may in the future be
               specified in or under the 1940 Act as the minimum asset coverage
               for senior securities which are stock of a


                                       76




               closed-end investment company as a condition of declaring
               dividends on its common stock).

          (bbb) "1940 ACT ASSET COVERAGE CURE DATE" shall mean the 1940 Act
               Asset Coverage Evaluation Date next following a 1940 Act Asset
               Coverage Evaluation Date with respect to which the 1940 Act Asset
               Coverage is not met.

          (ccc) "1940 ACT ASSET COVERAGE EVALUATION DATE" shall mean (i) the
               Business Day immediately preceding each dividend declaration date
               for the Common Stock and (ii) unless 1940 Act Asset Coverage has
               been determined in connection with a dividend declaration during
               such month, the last Business Day of each calendar month.

          (ddd) "NOTICE OF REDEMPTION" shall mean any notice with respect to the
               redemption of shares of MMP pursuant to Section 3 of this Part I.


          (eee) "PREFERRED STOCK" shall mean the preferred stock, par value $.01
               per share of the Corporation, and includes the MMP.

          (fff) "Projected Dividend Amount," for the MMP as of any Eligible
               Asset Evaluation Date, means the amount of cash dividends, based
               on the number of shares of MMP outstanding on such Eligible Asset
               Evaluation Date, projected to accumulate on such shares from such
               Eligible Asset Evaluation Date until the 56th day, as specified
               below, after such Eligible Asset Evaluation Date, at the
               following rates:

                    (i) for the period beginning on the Eligible Asset
               Evaluation Date and ending on the first following Dividend
               Payment Date for the MMP, the Applicable Rate in effect on such
               Eligible Asset Evaluation Date; and

                    (ii) for the period beginning on such first following
               Dividend Payment Date and ending on the 56th day following such
               Eligible Asset Evaluation Date,

                                       77


               the product of the Maximum Rate on the last occurring Auction
               Date (but with the prevailing rating of such shares, for purposes
               of determining such Maximum Rate, being deemed "Below `baa 3'" in
               the case of a Failure to Deposit that has not been cured) (or, if
               prior to the first Auction Date, 150% of the 60-day "AA"
               Composite Commercial Paper Rate on April 11, 1991) and 2.31.

         The number of days in each of the periods referred to above shall be
         determined by including the first day and excluding the last day of
         each such period. If the date of determination is not an Eligible Asset
         Evaluation Date, then the Projected Dividend Amount for the MMP as of
         such date of determination shall equal the Projected Dividend Amount on
         the immediately preceding Eligible Asset Evaluation Date, adjusted to
         reflect any decrease in the number of shares of MMP outstanding. The
         calculation of the Projected Dividend Amount may be made on bases other
         than those set forth above if Moody's has advised the Corporation in
         writing that the revised calculation of the Projected Dividend Amount
         would not adversely affect its then-current rating of the MMP. If the
         Board of Directors increases the length of Minimum Rate Periods
         pursuant to subparagraph (b)(ii)(C) of Section 2 of this Part I, or
         designates a Special Rate Period pursuant to Section 4 of this Part I,
         the Projected Dividend Amount shall be determined in accordance with
         procedures approved by Moody's.

               (ggg) "RATE PERIOD" shall mean the Initial Rate Period thereof
         and any Subsequent Rate Period, including any Special Rate Period, for
         the MMP.

               (hhh) "RATE PERIOD DAYS" for any Rate Period consisting of less
         than four Dividend Periods, shall mean the number of days (without
         giving effect to subparagraphs

                                       78


               (b)(ii)(A) and (b)(ii)(C) (excluding the provisos of such
               subparagraph (b)(ii)(C)) of Section 2 of this Part I) in such
               Rate Period.

               (iii) "RETROACTIVE TAXABLE ALLOCATION" shall mean, for any
         taxable year, the amount of dividends ineligible for the Dividends
         Received Deduction, or portion thereof, for which notice thereof had
         not been given to the Auction Agent as provided in Section 6 of Part II
         of these Articles Supplementary.

               (jjj) "S&P" shall mean Standard & Poor's Corporation, a New York
         corporation and its successors.

               (kkk) "SHORT-TERM MONEY MARKET INSTRUMENTS" shall mean the
         following types of instruments if, on the date of purchase or other
         acquisition thereof by the Corporation (or, in the case of an
         instrument specified by clauses (i) and (ii) below, on the Eligible
         Asset Evaluation Date), the remaining terms of maturity thereof are not
         in excess of 90 days.

               (i) U.S. Treasury Securities;

               (ii) commercial paper that is rated at the time of purchase or
         acquisition and the Eligible Asset Evaluation Date at least P-1 by
         Moody's and is issued by an issuer (or guaranteed or supported by a
         person or entity other than the issuer) whose long-term unsecured debt
         obligations are rated at least Aa by Moody's;

               (iii) demand or time deposits in, certificates of deposit of, or
         banker's acceptance issued by (A) a depository institution or trust
         company incorporated under the laws of the United States of America or
         any state thereof or the District of Columbia or (B) a United States
         branch office or agency of a foreign

                                       80


         depository institution (provided that such branch office or agency is
         subject to banking regulation under the laws of the United States, any
         state thereof or the District of Columbia) if, in each case, the
         commercial paper, if any, and the long-term unsecured debt obligations
         (other than such obligations the ratings of which are based on the
         credit of a person or entity other than such depository institution or
         trust company) of such depository institution or trust company at the
         time of purchase or acquisition and the Eligible Asset Evaluation Date,
         have (1) credit ratings from Moody's of at least P-1, in the case of
         commercial paper, and (2) credit ratings from Moody's of at least Aa,
         in the case of long-term unsecured debt obligations; provided, however,
         that in the case of any such investment thatmatures in no more than one
         Business Day from the date of purchase or other acquisition by the
         Corporation, all of the foregoing requirements shall be applicable
         except that the required long-term unsecured debt credit rating of such
         depository institution or trust company from Moody's shall be at least
         A; and provided, further, however, that the foregoing credit rating
         requirements shall be deemed to be met with respect to a depository
         institution or trust company if (1) such depository institution or
         trust company is the principal depository institution in a holding
         company system, (2) the commercial paper, if any, of such depository
         institution or trust company is not rated below P-1 by Moody's and (3)
         the holding company shall meet all of the foregoing credit rating
         requirements (including the preceding proviso in the case of
         investments that mature in no more than one Business Day from the date
         of purchase or other acquisition by the Corporation);

                                       80


               (iv) repurchase obligations with respect to any U.S. Treasury
         Security entered into with a depository institution, trust company or
         securities dealer (acting as principal) which meets the credit rating
         requirements for commercial paper and long-term unsecured debt
         obligations specified in clause (iii) above; and

               (v) Eurodollar demand or time deposits in, or certificates of
         deposit of, the head office or the London or Tokyo branch office of a
         depository institution or trust company meeting the credit rating
         requirements of commercial paper and long-term unsecured debt
         obligation specified in clause (iii) above, provided that the interest
         receivable by the Corporation shall be in U.S. dollars and shall not be
         subject to any withholding or similar taxes.

               (lll) "SPECIAL RATE PERIOD," with respect to the MMP, shall mean
         any Subsequent Rate Period commencing on the date designated by the
         Corporation in accordance with Section 4 of this Part I and ending on
         the last day of the last Dividend Period thereof which period consists
         of that number of consecutive Dividend Periods for such period set
         forth below:

                                                    Number of
             Special Rate Period                Dividend Periods
             -------------------                ----------------
         91 Rate Period Days                              1
         182 Rate Period Days                             2
         1 Year                                           4
         3 Years                                         12
         5 Years                                         20

               (mmm) "SUBSEQUENT RATE PERIOD" shall mean the period from and
         including the first day following the Initial Rate Period to but
         excluding the next Dividend Payment Date and any period thereafter from
         and including one Dividend

                                       82


         Payment Date to but excluding the next succeeding Dividend Payment
         Date; provided, however, that if any Subsequent Rate Period is also a
         Special Rate Period such term shall mean the period commencing on the
         first day of such Special Rate Period and ending on the last day of the
         last Dividend Period thereof.

               (nnn) "SUBSTITUTE COMMERCIAL PAPER DEALER" shall mean The First
         Boston Company or Morgan Stanley & Co. Incorporated or their respective
         affiliates or successors, if such entity is a commercial paper dealer;
         provided that none of such entities shall be a Commercial Paper Dealer.

               (ooo) "SUBSTITUTE U.S. GOVERNMENT SECURITIES DEALER" shall mean
         The First Boston Company and Merrill Lynch, Pierce, Fenner & Smith
         Incorporated or their respective affiliates or successors if such
         entity is a U.S. Government securities dealer; provided that none of
         such entities shall be a U.S. Government Securities Dealer.

               (ppp) "TREASURY RATE", on any date for any Rate Period shall mean
         (i) the yield on the most recently auctioned non-callable direct
         obligations of the U.S. Government (excluding "flower" bonds) with a
         remaining maturity closest to the duration of such Rate Period, as
         quoted in THE WALL STREET JOURNAL on such date for the Business Day
         next preceding such date or (ii) in the event that any such rate is not
         published by THE WALL STREET JOURNAL, then the arithmetic average of
         the yields (expressed as an interest equivalent in the case of a Rate
         Period consisting of four Dividend Periods and expressed as a bond
         equivalent in the case of any longer Rate Period) on the most recently
         auctioned non-callable direct obligations of the U.S. Government
         (excluding "flower" bonds) with a remaining maturity closest to the
         duration of such Rate Period as quoted on a discount basis or otherwise
         by the U.S. Government Securities Dealers to the

                                       82


         Auction Agent for the close of business on the Business Day immediately
         preceding such date. If any U.S. Government Securities Dealer does not
         quote a rate required to determine the Treasury Rate, the Treasury Rate
         shall be determined on the basis of the quotation or quotations
         furnished by the remaining U.S. Government Securities Dealer or U.S.
         Government Securities Dealers and any Substitute U.S. Government
         Securities Dealer selected by the Corporation to provide such rate or
         rates being supplied by any U.S. Government Securities Dealer or U.S.
         Government Securities Dealers as the case may be, or, if the
         Corporation does not select any such Substitute U.S. Government
         Securities Dealer or Substitute U.S. Government Securities Dealers, by
         the remaining U.S. Government Securities Dealer or U.S. Government
         Securities Dealers.

               (qqq) "U.S. GOVERNMENT SECURITIES DEALER" shall mean Shearson
         Lehman Government Securities Incorporated, Goldman Sachs & Co., Salomon
         Brothers Inc, and Morgan Guaranty Trust Company of New York or their
         respective affiliates or successors if such entity is a U.S. Government
         Securities Dealer.

               (rrr) "U.S. TREASURY SECURITIES" shall mean obligations issued
         by, and backed by the full faith and credit of, the United States of
         America which, other than Treasury bills, are not zero coupon
         securities.

               (sss) "VOTING PERIOD" shall have the meaning set forth in
         paragraph (b) of Section 5 of this Part I.

                                    PART II

         1. CERTAIN DEFINITIONS. Capitalized terms not defined in Section 1 of
this Part II shall have the respective meanings specified in Part I hereof. As
used in this Part II, the following terms shall have the followings meanings,
unless the context otherwise requires:

                                       83



         (a) "AFFILIATE" shall mean any Person known to the Auction Agent to be
controlled by, in control of or under common control with the Corporation;
provided that no Broker-Dealer controlled by, in control of or under common
control with the Corporation shall be an Affiliate nor shall any corporation or
any Person controlled by, in control of or under common control with such
corporation one of the directors or executive officers of which is also a
director of the Corporation be an Affiliate solely because such director or
executive officer is also a director of the Corporation.

         (b) "AGENT MEMBER" shall mean a member of or participant in the
Securities Depository that will act on behalf of a Bidder and is identified as
such in such Bidder's Master Purchaser's Letter.

         (c) "AVAILABLE MMP" shall have the meaning specified in paragraph (a)
of Section 4 of this Part II.

         (d) "BID" AND "BIDS" shall have the respective meanings specified in
paragraph (a) of Section 2 of this Part II.

         (e) "BIDDER" AND "BIDDERS" shall have the respective meanings specified
in paragraph (a) of Section 2 of this Part II.

         (f) "BROKER-DEALER" shall mean any broker-dealer, commercial bank or
other entity permitted by law to perform the functions required of a
Broker-Dealer in this Part II that is a member of, or a participant in, the
Securities Depository or is an affiliate of such member or participant, has been
selected by the Corporation, and has entered into a Broker-Dealer Agreement that
remains effective.

                                       84


         (g) "BROKER-DEALER AGREEMENT" shall mean an agreement among the
Corporation, the Auction Agent and a Broker-Dealer pursuant to which such
Broker-Dealer agrees to follow the procedures specified in this Part II.

         (h) "EXISTING HOLDER," when used with respect to shares of MMP, shall
mean a Person who has signed a Master Purchaser's Letter and is listed as the
beneficial owner of such shares of MMP in the records of the Auction Agent.

         (i) "HOLD ORDER" AND "HOLD ORDERS" shall have the respective meanings
specified in paragraph (a) of Section 2 of this Part II.

         (j) "MASTER PURCHASER'S LETTER" shall mean a letter, addressed to the
Corporation, the Auction Agent, a Broker-Dealer and an Agent Member in which a
Person agrees, among other things, to offer to purchase, to offer to sell and/or
to sell shares of MMP as set forth in this Part II.




         (k) "MAXIMUM RATE," for shares of MMP on any Auction Date, shall mean:


               (i) in the case of any Auction Date which is not the Auction Date
          immediately prior to the first day of any proposed Special Rate Period
          designated by the Corporation pursuant to Section 4 of Part I of these
          Articles Supplementary, the product of (A) the "AA" Composite
          Commercial Paper Rate on such Auction Date for the next Rate Period of
          such shares and (B) the Rate Multiple on such Auction Date, unless
          such shares have or had a Special Rate Period and an Auction at which
          Sufficient Clearing Bids existed has not yet occurred for a Minimum
          Rate Period of such shares after such Special Rate Period, in which
          case the higher of:

                                       85


               (A) the dividend rate on such shares for the then-ending Rate
          Period, and

               (B) the product of (1) the higher of (x) the "AA" Composite
          Commercial Paper Rate on such Auction Date for the then-ending Rate
          Period of such shares if such Rate Period consists of less than four
          Dividend Periods, or the Treasury Rate on such Auction Date for such
          Rate Period if such Rate Period consists of four or more Dividend
          Periods, and (y) the "AA" Composite Commercial Paper Rate on such
          Auction Date for such Special Rate Period of such shares if such
          Special Rate Period consists of less than four Dividend Periods, or
          the Treasury Rate on such Auction Date for such Special Rate Period if
          such Special Rate Period consists of four or more Dividend Periods
          and, (2) the Rate Multiple on such Auction Date; or

               (ii) in the case of any Auction Date which is the Auction Date
          immediately prior to the first day of any proposed Special Rate Period
          designated by the corporation pursuant to Section 4 of Part I of these
          Articles Supplementary, the product of (A) the highest of (1) the "AA"
          Composite Commercial Paper Rate on such Auction Date for the
          then-ending Rate Period of such shares if such Rate Period consists of
          less than four Dividend Periods, or the

                                       86


          Treasury Rate on such Auction Date for such Rate Period if such Rate
          Period consists of four or more Dividends Periods, (2) the "AA"
          Composite Commercial Paper Rate on such Auction Date for the Special
          Rate Period for which the Auction is being held if such Special Rate
          Period consists of less than four Dividend Periods, or the Treasury
          Rate on such Auction Date for the Special Rate Period for which the
          Auction is being held if such Special Rate Period consists of four or
          more Dividend Periods and (3) the "AA" Composite Commercial Paper Rate
          on such Auction Date for Minimum Rate Periods and (B) the Rate
          Multiple on such Auction Date.

               (l) "ORDER" and "ORDERS" shall have the respective meanings
          specified in paragraph (a) of Section 2 of this Part II.

               (m) "OUTSTANDING" shall mean, as of any Auction Date with respect
          to shares of MMP, the number of such shares theretofore issued by the
          Corporation except, without duplication, (i) any shares of MMP
          theretofore cancelled or delivered to the Auction Agent for
          cancellation or purchased or redeemed by the Corporation or as to
          which a notice of redemption shall have been given by the Corporation
          and funds shall have been deposited to pay the cash redemption price
          as provided herein, (ii) any shares of MMP as to which the Corporation
          or any Affiliate thereof shall be an Existing Holder and (iii) any
          shares of MMP represented by any certificate in lieu of which a new
          certificate has been executed and delivered by the Corporation.

               (n) "PERSON" shall mean and include an individual, a partnership,
          a corporation, a trust, an unincorporated association, a joint venture
          or other entity or a government or any agency or political subdivision
          thereof.

               (o) "POTENTIAL HOLDER", when used with respect to shares of MMP,
          shall mean any Person, including any Existing Holder of shares of MMP,
          (i) who shall have executed a Master Purchaser's Letter and (ii) who
          may be interested in acquiring shares of MMP (or, in the case of an
          Existing Holder of shares of MMP, additional shares of MMP).


                                       87


(p)      "RATE MULTIPLE," for shares of MMP on any Auction Date, shall
         mean the percentage, determined as set forth below, based on the
         prevailing rating of such shares in effect at the close of business on
         the Business Day next preceding such Auction Date:

                Prevailing Rating                                  Percentage
--------------------------------------------------            ------------------
"aa3" or higher...................................                    150%
"a3"..............................................                    175%
"baa3"............................................                    200%
Below "baa3"......................................                    225%

         provided, however, that if the Fund has notified the Auction Agent that
         it expects that any portion of the dividend to be paid on the shares of
         MMP will be ineligible for the Dividends Received Deduction in such
         Rate Period, or any portion of the dividend to be paid in such Rate
         Period on such shares will be characterized as constituting a return of
         capital, prior to the Auction establishing the Applicable Rate for such
         shares, the applicable percentage in the foregoing table with respect
         to such portion of the dividend shall be multiplied by (x) one minus
         the product of (i) one minus the Dividends Received Deduction rate and
         (ii) the maximum marginal regular Federal income tax rate generally
         applicable to corporations (currently 34%) and (y) divided by the
         quantity one minus the maximum marginal regular Federal income tax rate
         generally applicable to corporations.

                  For purposes of this definition, the "prevailing rating" of
         shares of MMP shall be (i) "aa3" or higher if such shares have a rating
         of "aa3" or better by Moody's or the equivalent of such rating by
         Moody's or a substitute rating agency selected as provided below, (ii)
         if not "aa3" or higher, then "a3" if such shares have a rating of "a3"
         or better by Moody's or the equivalent of such rating by Moody's or a
         substitute rating agency selected as provided below, (iii) if not "aa3"
         or higher or "a3", then "baa3" if such shares have a rating of "baa3"
         or better by Moody's or the equivalent of such rating by Moody's

                                       88


          or a substitute rating agency selected as provided below, and (iv) if
          not "aa3" or higher, "a3" or "baa3", then "Below `baa3'". The
          Corporation shall take all reasonable action necessary to enable
          Moody's to provide a rating for shares of MMP. If Moody's shall not
          make such a rating available, the Corporation, subject to the approval
          of Shearson Lehman Brothers Inc., shall select a nationally recognized
          statistical rating organization (as that term is used in the rules and
          regulations of the Securities and Exchange Commission under the
          Securities Exchange Act of 1934, as amended from time to time) to act
          as a substitute rating agency in respect of the MMP and the
          Corporation shall take all reasonable action to enable such rating
          agency to provide a rating for shares of MMP.

               (q) "SECURITIES DEPOSITORY" shall mean The Depository Trust
          Company and its successors and assigns or any other securities
          depository selected by the Corporation which agrees to follow the
          procedures required to be followed by such securities depository in
          connection with shares of MMP.

               (r) "SELL ORDER" and "SELL ORDERS" shall have the respective
          meanings specified in paragraph (a) of Section 2 of this Part II.

               (s) "SUBMISSION DEADLINE" shall mean 1:00 P.M., New York City
          time, on any Auction Date or such other time on any Auction Date by
          which Broker-Dealers are required to submit Orders to the Auction
          Agent as specified by the Auction Agent from time to time.

               (t) "SUBMITTED BID" and "Submitted Bids" shall have the
          respective meanings specified in paragraph (a) of Section 4 of this
          Part II.

               (u) "SUBMITTED HOLD ORDER" and "Submitted Hold Orders" shall have
          the respective meanings specified in paragraph (a) of Section 4 of
          this Part II.

               (v) "SUBMITTED ORDER" and "SUBMITTED ORDERS" shall have the
          respective meanings specified in paragraph (a) of Section 4 of this
          Part II.

               (w) "SUBMITTED SELL ORDER" and "Submitted Sell Orders" shall have
          the respective meanings specified in paragraph (a) of Section 4 of
          this Part I.

                                       89


               (x) "SUFFICIENT CLEARING BIDS" shall have the meaning specified
          in paragraph

(a) of Section 4 of this Part II.

               (y) "WINNING BID RATE" shall have the meaning specified in
          paragraph (a) of Section 4 of this Part II.

2. ORDERS BY EXISTING HOLDERS AND POTENTIAL HOLDERS. (a) Prior to the Submission

Deadline on each Auction Date:

               (i) each Existing Holder of shares of MMP may submit to a
          Broker-Dealer by telephone or otherwise information as to:

                    (A) the number of Outstanding shares, if any, of MMP held by
               such Existing Holder which such Existing Holder desires to
               continue to hold without regard to the Applicable Rate for such
               shares for the next succeeding Rate Period;

                    (B) the number of Outstanding shares, if any, of MMP held by
               such Existing Holder which such Existing Holder offers to sell if
               the Applicable Rate for such shares for the next succeeding Rate
               Period shall be less than the rate per annum specified by such
               Existing Holder; and/or

                    (C) the number of Outstanding shares, if any, of MMP held by
               such Existing Holder which such Existing Holder offers to sell
               without regard to the Applicable Rate for such shares for the
               next succeeding Rate Period; and

                                       91


               (ii) one or more Broker-Dealers, using lists of Potential
          Holders, shall in good faith for the purpose of conducting a
          competitive Auction in a commercially reasonable manner, contact
          Potential Holders (by telephone or otherwise), including Persons that
          are not Existing Holders, on such lists to determine the number of
          Outstanding shares, if any, of MMP which each such Potential Holder
          offers to purchase if the Applicable Rate for such shares for the next
          succeeding Rate Period shall not be less than the rate per annum
          specified by such Potential Holder.

For the purposes hereof, the communication to a Broker-Dealer of information
referred to in clause (i) (A) , (i) (B) , (i) (C) or (ii) of this paragraph (a)
is hereinafter referred to as an "Order" and collectively as "Orders" and each
Existing Holder and each Potential Holder placing an Order is hereinafter
referred to as a "Bidder" and collectively as "Bidders"; an Order containing the
information referred to in clause (i)(A) of this paragraph (a) is hereinafter
referred to as a "Hold Order" and collectively as "Hold Orders"; an order
containing the information referred to in clause (i)(B) or (ii) of this
paragraph (a) is hereinafter referred to as a "Bid" and collectively as "Bids";
and an Order containing the information referred to in clause (i)(C) of this
paragraph (a) is hereinafter referred to as a "Sell Order" and collectively as
"Sell Orders".

               (b)  (i) A Bid  by an  Existing  Holder  of  shares  of MMP on an
          Auction Date shall constitute an irrevocable offer to sell:

                    (A) the number of Outstanding shares of MMP specified in
               such Bid if the Applicable Rate for such shares of MMP determined
               on such Auction Date shall be less than the rate specified
               therein;

                    (B) such number or a lesser number of Outstanding shares of
               MMP to be determined as set forth in clause (iv) of paragraph (a)
               of Section 5 of this Part

                                       91


               II if the  Applicable  Rate for shares of MMP  determined on such
               Auction Date shall be equal to the rate specified therein; or

                    (C) such number or a lesser number of Outstanding shares of
               MMP to be determined as set forth in clause (iii) of paragraph
               (b) of Section 5 of this Part II if the rate specified therein
               shall be higher than the Maximum Rate for shares of MMP and
               Sufficient Clearing Bids do not exist.

                    (ii) A Sell Order by an Existing Holder of shares of MMP on
               an Auction Date shall constitute an irrevocable offer to sell:

                    (A) the number of Outstanding shares of MMP specified in
               such Sell Order; or

                    (B) such number or a lesser number of Outstanding shares of
               MMP as set forth in clause (iii) of paragraph (b) of Section 5 of
               this Part II if Sufficient Clearing Bids do not exist.

                    (iii) A Bid by a Potential Holder of shares of MMP on an
               Auction Date shall constitute an irrevocable offer to purchase:

                    (A) the number of Outstanding shares of MMP specified in
               such Bid if the Applicable Rate for shares of MMP determined on
               such Auction Date shall be higher than the rate specified
               therein; or

                    (B) such number or a lesser number of Outstanding shares of
               MMP as set forth in clause (v) of paragraph (a) of Section 5 of
               this Part II if the Applicable Rate for shares of MMP determined
               on such Auction Date shall be equal to the rate specified
               therein.

                                       92


                    (C) No Order for any  number  of  shares  of MMP other  than
               whole shares shall be valid.

     3.  SUBMISSION  OF ORDERS BY  BROKER-DEALERS  TO  AUCTION  AGENT.  (a) Each
Broker-Dealer  shall  submit  in  writing  to the  Auction  Agent  prior  to the
Submission  Deadline on each  Auction Date all Orders for shares of MMP obtained
by such  Broker-Dealer  and shall  specify  with  respect to each Order for such
shares:

               (i) the name of the bidder placing such Order;

               (ii) the aggregate number of Outstanding shares of MMP that are
          the subject of such Order;

               (iii) to the extent that such Bidder is an Existing Holder of
          shares of MMP:

                    (A) the number of Outstanding shares, if any, of MMP subject
               to any Hold Order placed by such Existing Holder;

                    (B) the number of Outstanding shares, if any, of MMP subject
               to any Bid placed by such Existing Holder and the rate specified
               in such Bid; and

                    (C) the number of Outstanding shares, if any, of MMP subject
               to any Sell Order placed by such Existing Holder; and

               (iv) to the extent such Bidder is a Potential Holder of shares of
          MMP, the rate and number of shares of MMP specified in such Potential
          Holder's Bid.

               (b) If any rate specified in any Bid contains more than three
     figures to the right of the decimal point, the Auction Agent shall round
     such rate up to the next highest one-thousandth (.001) of 1%.

               (c) If an Order or orders covering all of the Outstanding shares
     of MMP held by any Existing Holder is not submitted to the Auction Agent
     prior to the Submission Deadline,

                                       93


     the Auction Agent shall deem a Hold Order to have been  submitted on behalf
     of such Existing  Holder  covering the number of Outstanding  shares of MMP
     held by such  Existing  Holder and not subject to orders  submitted  to the
     Auction Agent.

               (d) If any Existing Holder submits through a Broker-Dealer to the
     Auction Agent one or more Orders covering in the aggregate more than the
     number of Outstanding shares of MMP held by such Existing Holder, such
     orders shall be considered valid in the following order of priority:

               (i) all Hold Orders for shares of MMP submitted on behalf of such
          Existing Holder shall be considered valid, but only up to and
          including in the aggregate the number of Outstanding shares of MMP
          held by such Existing Holder, and if the number of shares of MMP
          subject to such Hold Orders exceeds the number of Outstanding shares
          of MMP held by such Existing Holder, the number of shares subject to
          each such Hold Order shall be reduced pro rata to cover the number of
          Outstanding shares of MMP held by such Existing Holder;

               (ii) (A) any Bid for shares of MMP shall be considered valid up
          to and including the excess of the number of Outstanding shares of MMP
          held by such Existing Holder over the number of shares of MMP subject
          to any Hold Orders referred to in clause (i) above;

                    (B) subject to subclause (A), if more than one Bid for
               shares of MMP with the same rate is submitted on behalf of such
               Existing Holder and the number of Outstanding shares of MMP
               subject to such Bids is greater than such excess, such Bids shall
               be considered valid up to and including the amount of such
               excess, and the number of shares of MMP subject to each Bid with
               the same rate

                                       94


               shall be  reduced  pro rata to cover the  number of shares of MMP
               equal to such excess;

                    (C) subject to subclauses (A) and (B), if more than one Bid
               for shares of MMP with different rates is submitted on behalf of
               such Existing Holder, such Bids shall be considered valid in the
               ascending order of their respective rates up to and including the
               amount of such excess; and

                    (D) in any such event, the number, if any, of Outstanding
               shares of MMP subject to any portion of Bids considered not valid
               in whole or in part under this clause (ii) shall be treated as
               the subject of a Bid for shares of MMP by a Potential Holder at
               the rate therein specified; and

               (iii) all Sell Orders for shares of MMP shall be considered valid
          up to and including the excess of the number of Outstanding  shares of
          MMP held by such Existing Holder over the sum of shares of MMP subject
          to valid Hold Orders referred to in clause (i) above and valid Bids by
          such Existing Holder referred to in clause (ii) above.

               (e) If  more  than  one Bid  for  one or  more  shares  of MMP is
     submitted on behalf of any Potential Holder,  each such Bid submitted shall
     be a separate Bid with the rate and number of shares therein specified.

               (f) Any Order submitted by a Broker-Dealer to the Auction Agent
     prior to the Submission Deadline on any Auction Date shall be irrevocable.

          4.  DETERMINATION  OF  SUFFICIENT  CLEARING  BIDS WINNING BID RATE AND
     APPLICABLE  RATE.(a)  Not  earlier  than the  Submission  Deadline  on each
     Auction Date, the Auction Agent shall  assemble all valid orders  submitted
     or  deemed  submitted  to it by the  Broker-Dealers  (each  such  Order  as
     submitted or deemed submitted by a Broker-Dealer being hereinafter referred
     to

                                       95


     individually as a "Submitted Hold Order," a "Submitted Bid" or a "Submitted
     Sell Order," as the case may be, or as a "Submitted Order" and collectively
     as "Submitted Hold Orders," "Submitted Bids" or "Submitted Sell Orders," as
     the case may be, or as "Submitted  Orders") and shall, after the Submission
     Deadline on each Auction Date, determine:

                    (i) the excess of the number of Outstanding shares of MMP
               over the number of Outstanding shares of MMP subject to Submitted
               Hold Orders (such excess being hereinafter referred to as the
               "Available MMP");

               (ii) from the Submitted orders whether:

                    (A) the number of Outstanding shares of MMP subject to
               Submitted Bids by Potential Holders specifying one or more rates
               equal to or lower than the Maximum Rate for such shares;

         exceeds or is equal to the sum of:

                    (B) the number of Outstanding shares of MMP subject to
               Submitted Bids by Existing Holders specifying one or more rates
               higher than the Maximum Rate for such shares; and

                    (C) the number of Outstanding shares of MMP subject to
               Submitted Sell Orders


     (in the event such excess or such  equality  exists (other than because the
     number  of  shares  of MMP in  subclauses  (B) and (C)  above is each  zero
     because all of the Outstanding  shares of MMP are subject to Submitted Hold
     Orders),  such  Submitted  Bids in  subclause  (A) above being  hereinafter
     referred to collectively, as "Sufficient Clearing Bids"); and

               (iii) if Sufficient Clearing Bids exist, the lowest rate
          specified in such Submitted Bids (the "Winning Bid Rate") which if:

                                       96


               (A) (I) each such Submitted Bid from Existing Holders specifying
          such lowest rate and (II) all other such Submitted Bids from Existing
          Holders specifying lower rates were rejected, thus entitling such
          Existing Holders to continue to hold the shares of MMP that are
          subject to such Submitted Bids; and

               (B) (I) each such Submitted Bid from Potential Holders specifying
          such lowest rate and (II) all other such Submitted Bids from Potential
          Holders specifying lower rates were accepted, thus requiring such
          Potential Holders to purchase the shares of MMP that are the subject
          of such Submitted Bids;

     would result in such Existing Holders described in subclause (A) above
     continuing to hold an aggregate number of Outstanding shares of MMP
     which, when added to the number of Outstanding shares of MMP to be
     purchased by such Potential Holders described in subclause (B) above,
     would equal not less than the Available MMP.

          (b)  Promptly  after  the  Auction  Agent  has made the  determination
pursuant to paragraph  (a) of this Section 4, the Auction Agent shall advise the
Corporation  of the Maximum Rate for shares of MMP for which an Auction is being
held on the Auction Date and, based on such  determination,  the Applicable Rate
for such shares for the next succeeding Rate Period thereof as follows:

          (i) if Sufficient Clearing Bids for such shares exist, that the
     Applicable Rate for such shares for the next succeeding Rate Period thereof
     shall be equal to the Winning Bid Rate for such shares so determined;

          (ii) if Sufficient Clearing Bids for such shares do not exist (other
     than because all of the Outstanding shares of MMP are subject to Submitted
     Hold Orders), that the

                                       97


     Applicable Rate for such shares for the next succeeding Rate Period thereof
     shall be equal to the Maximum Rate for such shares; or

          (iii) if all of the Outstanding shares of MMP are subject to Submitted
     Hold Orders, that the Applicable Rate for such shares for the next
     succeeding Rate Period thereof shall be equal to (A) the product of (1)
     either (a) the "AA" Composite Commercial Paper Rate on such Auction Date
     for such Rate Period, if such Rate Period consists of less than four
     Dividend Periods, or (b) the Treasury Rate on such Auction Date for such
     Rate Period, if such Rate Period consists of four or more Dividend Periods,
     and (2) one minus the maximum marginal regular Federal income tax rate
     generally applicable to corporations (currently 34%), divided by (B) one
     minus the product of (1) one minus the Dividends Received Deduction rate
     and (2) the maximum marginal regular Federal income tax rate generally
     applicable to corporations (rounded up to the next highest one thousandth
     (.001) of 1%); provided, however, that if the Corporation has notified the
     Auction Agent that any portion of the dividend to be paid on the shares of
     MMP is expected to be ineligible for the Dividends Received Deduction in
     such Rate Period, or characterizes any portion of the dividend to be paid
     in such Rate Period on such shares as constituting a return of capital, the
     Applicable Rate in respect of that portion of the dividend on shares of MMP
     for such Rate Period that represents such ineligible amount shall be the
     rate described in the preceding clause (A)(1)(a) or (A)(1)(b) as
     applicable.

          5.  ACCEPTANCE  AND  RESECTION OF SUBMITTED  BIDS AND  SUBMITTED  SELL
ORDERS AND  ALLOCATION OF SHARES.  Existing  Holders shall  continue to hold the
shares of MMP that are  subject to  Submitted  Hold  Orders,  and,  based on the
determinations  made pursuant to paragraph (a) of

                                       99


Section 4 of this Part II, the Submitted Bids and Submitted Sell Orders shall be
accepted or rejected  and the Auction  Agent shall take such other action as set
forth below:  (a) If Sufficient  Clearing Bids for shares of MMP have been made,
all Submitted  Sell Orders shall be accepted and,  subject to the  provisions of
paragraphs  (d) and (e) of this Section 5,  Submitted  Bids shall be accepted or
rejected as follows in the following  order of priority and all other  Submitted
Bids for such shares shall be rejected:

               (i) Existing Holders' Submitted Bids for shares of MMP specifying
          any rate that is higher than the Winning Bid Rate for such shares
          shall be accepted, thus requiring each such Existing Holder to sell
          the Outstanding shares of MMP subject to such Submitted Bids;

               (ii) Existing Holders' Submitted Bids for shares of MMP
          specifying any rate that is lower than the Winning Bid Rate for such
          shares shall be rejected, thus entitling each such Existing Holder to
          continue to hold the Outstanding shares of MMP subject to such
          Submitted Bids;

               (iii) Potential Holders' Submitted Bids for shares of MMP
          specifying any rate that is lower than the Winning Bid Rate shall be
          accepted, thus requiring each such Potential Holder to purchase the
          Outstanding shares of MMP that are the subject of such Submitted Bids;

               (iv) Each Existing Holder's Submitted Bid for shares of MMP
          specifying a rate that is equal to the Winning Bid Rate shall be
          rejected, thus entitling such Existing Holder to continue to hold the
          Outstanding shares of MMP subject to such Submitted Bid, unless the
          number of Outstanding shares of MMP subject to all such Submitted Bids
          shall be greater than the number of shares of MMP ("remaining shares")
          in the excess of

                                       99


          the Available MMP over the number of shares of MMP subject to
          Submitted Bids described in clauses (ii) and (iii) of this paragraph
          (a), in which event such Submitted Bid of such Existing Holder shall
          be rejected in part, and such Existing Holder shall be entitled to
          continue to hold Outstanding shares of MMP subject to such Submitted
          Bid, but only in an amount equal to the number of Outstanding shares
          of MMP obtained by multiplying the number of remaining shares by a
          fraction, the numerator of which shall be the number of Outstanding
          shares of MMP held by such Existing Holder subject to such Submitted
          Bid and the denominator of which shall be the aggregate number of
          Outstanding shares of MMP subject to such Submitted Bids made by all
          such Existing Holders that specified a rate equal to the Winning Bid
          Rate; and

               (v) Each Potential Holder's Submitted Bid for shares of MMP
          specifying a rate that is equal to the Winning Bid Rate shall be
          accepted but only in an amount equal to the number of shares of MMP
          obtained by multiplying the number of Outstanding shares in the excess
          of the Available MMP over the number of shares of MMP subject to
          Submitted Bids described in clauses (ii) through (iv) of this
          paragraph (a) by a fraction, the numerator of which shall be the
          number of Outstanding shares of MMP subject to such Submitted Bid and
          the denominator of which shall be the aggregate number of Outstanding
          shares of MMP subject to such Submitted Bids made by all such
          Potential Holders that specified a rate equal to the Winning Bid Rate
          for such shares; and

               (b) If Sufficient Clearing Bids for shares of MMP have not been
made (other than because all of the Outstanding shares of MMP are subject to
Submitted Hold orders), subject to the provisions of paragraph (d) of this
Section 5, Submitted Orders for such shares

                                      100


shall be accepted or rejected as follows in the following  order of priority and
all other Submitted Bids for such shares shall be rejected:

               (i) Existing Holders' Submitted Bids for shares of MMP specifying
          any rate that is equal to or lower than the Maximum Rate for such
          shares shall be rejected, thus entitling such Existing Holders to
          continue to hold the shares of MMP subject to such Submitted Bids;

               (ii) Potential Holders' Submitted Bids for shares of MMP
          specifying any rate that is equal to or lower than the Maximum Rate
          for such shares shall be accepted, thus requiring the Potential Holder
          to purchase shares of MMP that are the subject of such Submitted Bids;

               (iii) Each Existing Holder's Submitted Bid for shares of MMP
          specifying any rate that is higher than the Maximum Rate of such
          shares and the Submitted Sell Orders for shares of MMP of each
          Existing Holder shall be accepted, thus requiring each Existing Holder
          that submitted any such Submitted Bid or Submitted Sell Order to sell
          the shares of MMP subject to such Submitted Bid or Submitted Sell
          Order, but in both cases only in an amount equal to the number of
          Outstanding shares of MMP obtained by multiplying the number of shares
          of MMP subject to Submitted Bids described in clause (ii) of this
          paragraph (b) by a fraction, the numerator of which shall be the
          number of Outstanding shares of MMP held by such Existing Holder
          subject to such Submitted Bid or Submitted Sell Order and the
          denominator of which shall be the aggregate number of Outstanding
          shares of MMP subject to all such Submitted Bids and Submitted Sell
          Orders.

                                      101


               (c) If all of the Outstanding shares of MMP are subject to
          Submitted Hold Orders, all Submitted Bids for such shares shall be
          rejected.

               (d) If, as a result of the procedures described in clause (iv) or
          (v) of paragraph (a) or clause (iii) of paragraph (b) of this Section
          5, any Existing Holder would be entitled or required to sell, or any
          Potential Holder would be entitled or required to purchase, a fraction
          of a share of MMP on any Auction Date, the Auction Agent shall, in
          such manner as it shall determine in its sole discretion, round up or
          down the number of shares of MMP to be purchased or sold by any
          Existing Holder or Potential Holder on such Auction Date as a result
          of such procedures so that the number of shares so purchased or sold
          by each Existing Holder or Potential Holder on such Auction Date shall
          be whole shares of MMP.

               (e) If, as a result of the procedures described in clause (v) of
          paragraph (a) of this Section 5, any Potential Holder would be
          entitled or required to purchase less than a whole share of MMP on any
          Auction Date, the Auction Agent shall, in such manner as it shall
          determine in its sole discretion, allocate shares of MMP for purchase
          among Potential Holders so that only whole shares of MMP are purchased
          on such Auction Date as a result of such procedures by any Potential
          Holder, even if such allocation results in one or more Potential
          Holders not purchasing shares of MMP on such Auction Date.

               (f) Based on the results of each Auction for shares of MMP, the
          Auction Agent shall determine the aggregate number of shares of MMP to
          be purchased and the aggregate number of shares of MMP to be sold by
          Potential Holders and Existing Holders on whose behalf each
          Broker-Dealer submitted Bids or Sell Orders and, with respect to each
          Broker-Dealer, to the extent that such aggregate number of shares to
          be purchased and such aggregate number of shares to be sold differ,
          determine to which other Broker-Dealer or Broker-Dealers

                                      102


          acting for one or more purchasers of shares of MMP such Broker-Dealer
          shall deliver, or from which other Broker-Dealer or Broker-Dealers
          acting for one or more sellers of shares of MMP such Broker-Dealer
          shall receive, as the case may be, shares of MMP.

          6. NOTIFICATION OF ALLOCATIONS. Whenever the Corporation expects to
allocate any net capital gains or other income ineligible for the Dividends
Received Deduction to any dividend on shares of MMP, or to characterize any
portion of the dividend to be paid on such shares as constituting a return of
capital, the Corporation may, but shall not be required to, notify the Auction
Agent of the amount estimated to be so allocated at least six Business Days
preceding the Auction Date on which the Applicable Rate for such dividend is to
be established. Whenever the Auction Agent receives such notice from the
Corporation, it will in turn notify each Broker-Dealer, who, on or prior to such
Auction Date, in accordance with its Broker-Dealer Agreement, will notify its
Existing Holders and Potential Holders believed to be interested in submitting
an Order in the Auction to be held on such Auction Date.

          7. MISCELLANEOUS. To the extent permitted by applicable law, the Board
of Directors may interpret or adjust the provisions of these Articles
Supplementary to resolve any inconsistency or ambiguity or to remedy any formal
defect.





          SECOND: The foregoing amendment of the Articles Supplementary of the
Corporation as herein set forth has been duly advised by the Board of Directors
and approved by the stockholders of the Corporation in the manner required by
law and the charter of the Corporation.

          THIRD: These Articles of Amendment shall become effective at the time
of filing on July 25, 1994

          IN WITNESS WHEREOF, PREFERRED INCOME FUND INCORPORATED has caused
these presents to be signed in its name and on its behalf by its President or a
Vice President, and its corporate seal to be hereunto affixed and attested by
its Secretary or Assistant Secretary, and the said officers of the Corporation
acknowledge said instrument to be the corporate act of the Corporation, and
state under penalties of perjury that to the best of their knowledge,
information and belief the matters and facts therein set forth with respect to
authorization and approval are true in all material respects, all on July 22,
1994.

                                       PREFERRED INCOME FUND
                                            INCORPORATED

                                       By       /s/ Robert T. Flaherty
                                       -------------------------------
                                                Robert T. Flaherty
                                                President

ATTEST:

/s/ Donald F. Crumrine
------------------------------------
                  Donald F. Crumrine
                       Secretary