<DOCUMENT>
<TYPE>EX-99.A10
<SEQUENCE>4
<FILENAME>rvt_63005-exa10.txt
<DESCRIPTION>FORM OF ARTICLES SUPPLEMENTARY
<TEXT>










                                 EXHIBIT (a)(10)

                         FORM OF ARTICLES SUPPLEMENTARY
<PAGE>



                                                                 Exhibit (a)(10)


                             ROYCE VALUE TRUST, INC.
                             -----------------------

                             ARTICLES SUPPLEMENTARY
                          % CUMULATIVE PREFERRED STOCK

         ROYCE VALUE TRUST, INC., a Maryland corporation, having its principal
office in Baltimore City, Maryland (hereinafter called the "Corporation"),
hereby certifies to the State Department of Assessments and Taxation of
Maryland that:

         FIRST: Under a power contained in Article V of the Charter of the
Corporation (the "Charter"), the Board of Directors by duly adopted resolutions
classified and designated 8,800,000 shares of authorized but unissued Preferred
Stock (as defined in the Charter) as    % Cumulative Preferred Stock (the
"Cumulative Preferred Stock"), with the following preferences, voting powers,
rights, restrictions, limitations as to dividends and other distributions,
qualifications, and terms and conditions of redemption, which, upon any
restatement of the Charter, shall become part of Article V of the Charter, with
any necessary or appropriate renumbering or relettering of the sections or
subsections hereof:

                            % CUMULATIVE PREFERRED STOCK
                         -------------------------------

                                   ARTICLE I.

                                   DEFINITIONS

         1.       Definitions.
                  ------------

         Unless the context or use indicates another or different meaning or
intent, the following terms when used in these terms of the Cumulative Preferred
Stock shall have the meanings set forth below, whether such terms are used in
the singular or plural and regardless of their tense:

         "Accountant's Confirmation"* means a letter from an Independent
Accountant delivered to Moody's with respect to certain Basic Maintenance
Reports as specified by Moody's herein or by separate written notice
substantially to the effect that:

                  (i)    the Independent Accountant has read the Basic
                  Maintenance Report prepared by the Corporation as of the last
                  Quarterly Valuation Date of the Corporation's fiscal year (the
                  "Report");

                  (ii)   with respect to the issue size compliance, issuer
                  diversification and industry diversification calculations,
                  such calculations and the resulting Market Value of Moody's
                  Eligible Assets and Portfolio Calculation are numerically
                  correct;

                  (iii)  with respect to the calculation of the Basic
                  Maintenance Amount, such calculation has been compared with
                  the definition of Basic Maintenance Amount


<PAGE>

                  in these terms of the Cumulative Preferred Stock and is
                  calculated in accordance with such definition and the results
                  of such calculation have been recalculated and are numerically
                  correct;

                  (iv)   with respect to the excess or deficiency of the
                  Portfolio Calculation when compared to the Basic Maintenance
                  Amount calculated for Moody's, the results of the calculation
                  set forth in the Report have been recalculated and are
                  numerically correct;

                  (v)    with respect to the lower of two bid prices (or
                  alternative permissible factors used in calculating the Market
                  Value as provided by these terms of the Cumulative Preferred
                  Stock) provided by the custodian of the Corporation's assets
                  for purposes of valuing securities in the portfolio, the
                  Independent Accountant has traced the price used in the Report
                  to the lower of the two bid prices listed in the report
                  provided by such custodian and verified that such information
                  agrees (in the event such information does not agree, the
                  Independent Accountant will provide a listing in its letter of
                  such differences); and

                  (vi)   with respect to the description of each security
                  included in the Report, the description of Moody's Eligible
                  Assets has been compared to the definition of Moody's Eligible
                  Assets contained in these terms of the Cumulative Preferred
                  Stock, and the description as appearing in the Report agrees
                  with the definition of Moody's Eligible Assets as described in
                  these terms of the Cumulative Preferred Stock.

         Each such letter may state: such Independent Accountant has made no
independent verification of the accuracy of the description of the investment
securities listed in the Report or the Market Value of those securities nor have
they performed any procedures other than those specifically outlined above for
the purposes of issuing such letter; unless otherwise stated in the letter, the
procedures specified therein were limited to a comparison of numbers or a
verification of specified computations applicable to numbers appearing in the
Report and the schedule(s) thereto; the foregoing procedures do not constitute
an examination in accordance with generally accepted auditing standards and the
Report discussed in the letter do not extend to any of the Corporation's
financial statements taken as a whole; such Independent Accountant does not
express an opinion as to whether such procedures would enable such Independent
Accountant to determine that the methods followed in the preparation of the
Report would correctly determine the Market Value or Discounted Value of the
investment portfolio; accordingly, such Independent Accountant expresses no
opinion as to the information set forth in the Report or in the schedule(s)
thereto and make no representation as to the sufficiency of the procedures
performed for the purposes of these terms of the Cumulative Preferred Stock.

         Such letter shall also state that the Independent Accountant is a
"independent accountant" with respect to the Corporation within the meaning of
the Securities Act of 1933, as amended, and the related published rules and
regulations thereunder.

         "Adviser" means Royce & Associates, LLC, a Delaware limited liability
company.

                                       2
<PAGE>

         "Asset Coverage" means asset coverage, as defined in Section 18(h) of
the 1940 Act, of at least 200%, or such higher percentage as may be required
under the 1940 Act, with respect to all outstanding senior securities of the
Corporation which are stock, including all outstanding shares of Cumulative
Preferred Stock.

         "Asset Coverage Cure Date" means, with respect to the failure by the
Corporation to maintain the Asset Coverage (as required by paragraph 5(a)(i) of
Article II hereof) as of the last Business Day of each March, June, September
and December of each year, 60 calendar days following such Business Day.

         "Basic Maintenance Amount"* means, as of any Valuation Date, the dollar
amount equal to (i) the sum of (A) the product of the number of shares of
Cumulative Preferred Stock outstanding on such Valuation Date multiplied by the
Liquidation Preference; (B) to the extent not included in (A), the aggregate
amount of cash dividends (whether or not earned or declared) that will have
accumulated for each outstanding share of Cumulative Preferred Stock from the
most recent Dividend Payment Date to which dividends have been paid or duly
provided for (or, in the event the Basic Maintenance Amount is calculated on a
date prior to the initial Dividend Payment Date with respect to the Cumulative
Preferred Stock, then from the Date of Original Issue) through the Valuation
Date plus all dividends to accumulate on the Cumulative Preferred Stock then
outstanding during the 70 days following such Valuation Date; (C) the
Corporation's other liabilities due and payable as of such Valuation Date
(except that dividends and other distributions payable by the Corporation by the
issuance of Common Stock shall not be included as a liability) and such
liabilities projected to become due and payable by the Corporation during the 90
days following such Valuation Date (excluding liabilities for investments to be
purchased and for dividends and other distributions not declared as of such
Valuation Date); (D) any current liabilities of the Corporation as of such
Valuation Date to the extent not reflected in any of (i)(A) through (i)(C)
(including, without limitation, and immediately upon determination, any amounts
due and payable by the Corporation pursuant to reverse repurchase agreements and
any payables for assets purchased as of such Valuation Date) less (ii) (A) the
Discounted Value of any of the Corporation's assets and/or (B) the face value of
any of the Corporation's assets if, in the case of both (ii)(A) and (ii)(B),
such assets are either cash or securities which mature prior to or on the date
of redemption or repurchase of Cumulative Preferred Stock or payment of another
liability and are either U.S. Government Obligations or securities which have a
rating assigned by Moody's of at least Aaa, P-1, VMIG-1 or MIG-1 or by S&P of at
least AAA, SP-1+ or A-1+, in both cases irrevocably held by the Corporation's
custodian bank in a segregated account or deposited by the Corporation with the
Paying Agent for the payment of the amounts needed to redeem or repurchase
Cumulative Preferred Stock or, without duplication, any of (i)(B) through (i)(D)
and provided that in the event the Corporation has repurchased Cumulative
Preferred Stock at a price of less than the Liquidation Preference thereof and
irrevocably segregated or deposited assets as described above with its custodian
bank or the Paying Agent for the payment of the repurchase price the Corporation
may deduct 100% of the Liquidation Preference of such Cumulative Preferred Stock
to be repurchased from (i) above.

         "Basic Maintenance Amount Cure Date"* means 14 calendar days following
a Valuation Date, such date being the last day upon which the Corporation's
failure to comply with paragraph 5(a)(ii)(A) of Article II hereof could be
cured.

                                       3
<PAGE>

         "Basic Maintenance Report"* means a report signed by the President, the
Treasurer or any Vice President of the Corporation which sets forth, as of the
related Valuation Date, the assets of the Corporation, the Market Value and
Discounted Value thereof (seriatim and in the aggregate), and the Basic
Maintenance Amount.

         "Board of Directors" means the Board of Directors of the Corporation.

         "Business Day" means a day on which the New York Stock Exchange is open
for trading and that is neither a Saturday, Sunday nor any other day on which
banks in the City of New York are authorized by law to close.

         "Charter" means the Articles of Incorporation, as amended and
supplemented (including these terms of the Cumulative Preferred Stock), of the
Corporation on file in the State Department of Assessments and Taxation of
Maryland.

         "Common Stock" means the Common Stock, par value $.001 per share, of
the Corporation.

         "Corporation" shall mean Royce Value Trust, Inc., a Maryland
corporation.

         "Cumulative Preferred Stock" means the     % Cumulative Preferred
Stock, par value $.001 per share, of the Corporation.

         "Date of Original Issue" shall have the meaning set forth in paragraph
1(a) of Article II hereof.

         "Deposit Securities" means cash, Short-Term Money Market Instruments
and U.S. Government Obligations. Except for determining whether the Corporation
has a Portfolio Calculation equal to or greater than the Basic Maintenance
Amount, each Deposit Security shall be deemed to have a value equal to its
principal or face amount payable at maturity plus any interest payable thereon
after delivery of such Deposit Security but only if payable on or prior to the
applicable payment date in advance of which the relevant deposit is made.

         "Discounted Value"* means, with respect to a Moody's Eligible Asset,
the quotient of (A) in the case of non-convertible fixed income securities, the
lower of the principal amount and the Market Value thereof, or (B) in the case
of any other Moody's Eligible Assets, the Market Value thereof, divided by the
applicable Moody's Discount Factor.

         "Dividend Payment Date" with respect to the Cumulative Preferred Stock,
means any date on which dividends are payable thereon pursuant to the provisions
of paragraph 1(a) of Article II hereof.

         "Dividend Period" shall have the meaning set forth in paragraph 1(a) of
Article II hereof.

         "Fitch" means Fitch Ratings, or its successor.

                                       4
<PAGE>

         "Independent Accountant"* means a nationally recognized accountant, or
firm of accountants, that is with respect to the Corporation an independent
public accountant or firm of independent public accountants under the Securities
Act of 1933, as amended.

         "Lien"* means any material lien, mortgage, pledge, security interest or
security agreement of any kind.

         "Liquidation Preference" shall have the meaning set forth in paragraph
2(a) of Article II hereof with respect to the Cumulative Preferred Stock.

         "Market Value"* means the amount determined by State Street Bank and
Trust Company (so long as prices are provided to it by Reuters or another
pricing service and Moody's has received written notice about the use of
such other pricing service), or, if Moody's agrees in writing, the then-current
bank custodian of the Corporation's assets or such other party approved by
Moody's in writing, with respect to specific Moody's Eligible Assets of the
Corporation, as follows: Securities listed on a U.S. or non-U.S. exchange or by
Nasdaq, and securities traded on Nasdaq's Electronic Bulletin Board, shall be
valued on the basis of their last reported sale price or Nasdaq official closing
price on the Valuation Date or, if no sale is reported for such Valuation Date,
then at their bid price for such Valuation Date. Quotations shall be taken from
the market where the security is primarily traded. All other over-the-counter
securities for which market quotations are readily available shall be valued at
their highest bid price. Bonds and other fixed income securities may be valued
by reference to other securities with comparable ratings, interest rates and
maturities, using established independent pricing services.

         Notwithstanding the foregoing, "Market Value" may, at the option of the
Corporation, mean the amount determined with respect to specific Moody's
Eligible Assets of the Corporation in the manner set forth below:

         (a)   as to any corporate bond or convertible corporate bond which is a
Moody's Eligible Asset, (i) the product of (A) the unpaid principal balance of
such bond as of the Valuation Date and (B)(1) if the bond is traded on a
national securities exchange or quoted on the Nasdaq System, the last sales
price reported on the Valuation Date or (2) if there was no reported sales price
on the Valuation Date or if the bond is not traded on a national securities
exchange or quoted on the Nasdaq System, the lower of two bid prices for such
bond provided by two recognized securities dealers with a minimum capitalization
of $25,000,000 (or otherwise approved for such purpose by Moody's) or by one
such securities dealer and any other source (provided that the utilization of
such source would not adversely affect Moody's then-current rating of the
Cumulative Preferred Stock) to the custodian of the Corporation's assets, at
least one of which shall be provided in writing or by telecopy, telex, other
electronic transcription, computer obtained quotation reducible to written form
or similar means, and in turn provided to the Corporation by any such means by
such custodian, plus (ii) accrued interest on such bond or, if two bid prices
cannot be obtained, such Moody's Eligible Asset shall have a Market Value of
zero;

         (b)   as to any common or preferred stock which is a Moody's Eligible
Asset, (i) if the stock is traded on a national securities exchange or quoted on
the NASDAQ System, the last sales price reported on the Valuation Date or (ii)
if there was no reported sales price on the

                                       5
<PAGE>

Valuation Date, the lower of two bid prices for such stock provided by two
recognized securities dealers with a minimum capitalization of $25,000,000 (or
otherwise approved for such purpose by Moody's) or by one such securities dealer
and any other source (provided that the utilization of such source would not
adversely affect Moody's then-current rating of the Cumulative Preferred Stock)
to the custodian of the Corporation's assets, at least one of which shall be
provided in writing or by telecopy, telex, other electronic transcription,
computer obtained quotation reducible to written form or similar means, and in
turn provided to the Corporation by any such means by such custodian, or, if two
bid prices cannot be obtained, such Moody's Eligible Asset shall have a Market
Value of zero;

         (c)   the product of (i) as to U.S. Government Obligations, Short Term
Money Market Instruments (other than demand deposits, federal funds, bankers'
acceptances and next Business Day's repurchase agreements) and other commercial
paper, the face amount or aggregate principal amount of such U.S. Government
Obligations, Short Term Money Market Instruments or other commercial paper, as
the case may be, and (ii) the lower of the bid prices for the same kind of
securities or instruments, as the case may be, having, as nearly as practicable,
comparable interest rates and maturities provided by two recognized securities
dealers having minimum capitalization of $25,000,000 (or otherwise approved for
such purpose by Moody's) or by one such securities dealer and any other source
(provided that the utilization of such source would not adversely affect Moody's
then-current rating of the Cumulative Preferred Stock) to the custodian of the
Corporation's assets, at least one of which shall be provided in writing or by
telecopy, telex, other electronic transcription, computer obtained quotation
reducible to written form or similar means, and in turn provided to the
Corporation by any such means by such custodian, or, if two bid prices cannot be
obtained, such Moody's Eligible Asset will have a Market Value of zero;

         (d)   as to cash, demand deposits, federal funds, bankers' acceptances
and next Business Day's repurchase agreements included in Short Term Money
Market Instruments, the face value thereof.

         "Moody's" means Moody's Investors Service, Inc., or its successor.

         "Moody's Discount Factor"* means, for purposes of determining the
Discounted Value of any Moody's Eligible Asset, the percentage determined as
follows:

                  (i)    Preferred securities (non-convertible): The percentage
                  determined by reference to the rating on such asset with
                  reference to whether such asset pays cumulative or
                  non-cumulative dividends, in accordance with the table set
                  forth below.

Rating Category (1)
-------------------

                                               Cumulative       Non-Cumulative
                                               ----------       --------------
Aaa                                               150%               165%
Aa                                                155%               171%
A                                                 160%               176%
Baa                                               165%               182%


                                       6
<PAGE>

Ba                                                196%               216%
B                                                 216%               238%
Below B and Unrated                               250%               275%

------------
(1) Unless conclusions regarding liquidity risk as well as estimates of both the
probability and severity of default for the Corporation's assets can be derived
from other sources as well as combined with a number of sources as presented by
the Corporation to Moody's, securities rated below B3 by Moody's and unrated
securities, which are securities rated by neither Moody's, S&P nor Fitch, are
limited to 10% of Moody's Eligible Assets. If a non-convertible preferred
security is unrated by Moody's, S&P or Fitch, the Corporation will use the
percentage set forth opposite "Below B and Unrated" in this table. Ratings
assigned by S&P or Fitch are generally accepted by Moody's at face value.
However, adjustments to face value may be made by Moody's to particular
categories of credits for which the S&P and/or Fitch rating does not seem to
approximate a Moody's rating equivalent. Split rated securities assigned by S&P
and Fitch will be accepted by Moody's at the lower of the two ratings.

The Moody's Discount Factor applied to non-convertible preferred securities that
are Rule 144A Securities will equal the sum of the Moody's Discount Factor which
would apply if such securities were registered under the Securities Act plus
20%.

                  (ii)   Corporate debt securities (non-convertible): The
                  percentage determined by reference to the rating on such asset
                  with reference to the remaining term to maturity of such
                  asset, in accordance with the table set forth below.


<TABLE>
<CAPTION>
               Terms To Maturity of                                  Rating Category(1)                    Below B
             Corporate Debt Security                 --------------------------------------------------      and
             -----------------------                  Aaa      Aa        A       Baa      Ba        B      Unrated
                                                      ---      --        -       ---      --        -      -------
<C>                                                   <C>      <C>      <C>       <C>    <C>       <C>       <C>
1 year or less.................................       109%     112%     115%      118%   137%      150%      250%
2 years or less (but longer than 1 year).......       115      118      122       125    146       160       250%
3 years or less (but longer than 2 years)......       120      123      127       131    153       168       250%
4 years or less (but longer than 3 years)......       126      129      133       138    161       176       250%
5 years or less (but longer than 4 years)......       132      135      139       144    168       185       250%
7 years or less (but longer than 5 years)......       139      143      147       152    179       197       250%
10 years or less (but longer than 7 years).....       145      150      155       160    189       208       250%
15 years or less (but longer than 10 years)....       150      155      160       165    196       216       250%
20 years or less (but longer than 15 years)....       150      155      160       165    196       228       250%
30 years or less (but longer than 20 years)....       150      155      160       165    196       229       250%
Greater than 30 years..........................       165      173      181       189    205       240       250%
</TABLE>

--------------------------
(1) Unless conclusions regarding liquidity risk as well as estimates of both the
probability and severity of default for the Corporation's assets can be derived
from other sources as well as combined with a number of sources as presented by
the Corporation to Moody's, securities rated below B3 by Moody's and unrated
securities, which are securities rated by neither Moody's, S&P nor Fitch, are
limited to 10% of Moody's Eligible Assets. If a corporate debt security is
unrated by Moody's, S&P or Fitch, the Corporation will use the percentage set
forth under "Below B and Unrated" in this table. Ratings assigned by S&P or
Fitch are generally accepted by Moody's at face value. However, adjustments to
face value may be made by Moody's to particular categories of credits for which
the S&P and/or Fitch rating does not seem to approximate a Moody's rating
equivalent. Split rated securities assigned by S&P and Fitch will be accepted by
Moody's at the lower of the two ratings.

         The Moody's Discount Factors presented in the immediately preceding
table will also apply to corporate debt securities that do not pay interest in
U.S. dollars or euros, provided that the Moody's Discount Factor determined from
the table shall be multiplied by a factor of 120% for purposes of calculating
the Discounted Value of such securities.

                                       7
<PAGE>

                  (iii)  U.S. Government Obligations and U.S. Treasury Strips:

<TABLE>
<CAPTION>
                                                               U.S. Government Obligations      U.S. Treasury Strips
               Remaining Term To Maturity                           Discount Factor               Discount Factor
----------------------------------------------------------   -------------------------------   ----------------------
<C>                                                                        <C>                          <C>
1 year or less........................................                     107%                         107%
2 years or less (but longer than 1 year)..............                     113                          115
3 years or less (but longer than 2 years).............                     118                          121
4 years or less (but longer than 3 years).............                     123                          128
5 years or less (but longer than 4 years).............                     128                          135
7 years or less (but longer than 5 years).............                     135                          147
10 years or less (but longer than 7 years)............                     141                          163
15 years or less (but longer than 10 years)...........                     146                          191
20 years or less (but longer than 15 years)...........                     154                          218
30 years or less (but longer than 20 years)...........                     154                          244
</TABLE>

                  (iv)   Short term instruments and cash: The Moody's Discount
                  Factor applied to short term portfolio securities, including
                  without limitation short term corporate debt securities, Short
                  Term Money Market Instruments and short term municipal debt
                  obligations, will be (A) 100%, so long as such portfolio
                  securities mature or have a demand feature at par exercisable
                  within the Moody's Exposure Period; (B) 115%, so long as such
                  portfolio securities mature or have a demand feature at par
                  not exercisable within the Moody's Exposure Period; (C) 125%,
                  if such securities are not rated by Moody's, so long as such
                  portfolio securities are rated at least A-1+/AA or SP-1+/AA by
                  S&P and mature or have a demand feature at par exercisable
                  within the Moody's Exposure Period; and (D) 148%, if such
                  securities are not rated by Moody's, so long as such portfolio
                  securities are rated at least A-1+/AA or SP-1+/AA by S&P and
                  mature or have a demand feature at par exercisable greater
                  than the Moody's Exposure Period. A Moody's Discount Factor of
                  100% will be applied to cash. A Moody's Discount Factor of
                  100% will also apply to money market funds rated by a NRSRO
                  that comply with Rule 2a-7 under the 1940 Act.

                  (v) Rule 144A Securities: Except as set forth in clause (i)
                  above with respect to non-convertible preferred securities,
                  the Moody's Discount Factor applied to Rule 144A Securities
                  will be 130% of the Moody's Discount Factor which would apply
                  if the securities were registered under the Securities Act.

                  (vi) Convertible securities (including convertible preferred
                  securities):

<TABLE>
<CAPTION>
                                                                  Rating Category(1)
                                  --------------------------------------------------------------------------------
                                                                                                      Below B and
Industry Category                  Aaa        Aa          A        Baa         Ba          B            Unrated
---------------------------        ---        --          -        ---         --          -            -------
<S>                                <C>        <C>        <C>       <C>       <C>         <C>             <C>
Utility                            162%       167%       172%      188%      195%        199%            300%
Industrial                         256%       261%       266%      282%      290%        293%            300%
Financial                          233%       238%       243%      259%      265%        270%            300%
Transportation                     250%       265%       275%      285%      290%        295%            300%
</TABLE>

                                       8
<PAGE>

(1) Unless conclusions regarding liquidity risk as well as estimates of both the
probability and severity of default for the Corporation's assets can be derived
from other sources as well as combined with a number of sources as presented by
the Corporation to Moody's, securities rated below B3 by Moody's and unrated
securities, which are securities rated by neither Moody's, S&P nor Fitch, are
limited to 10% of Moody's Eligible Assets. If a convertible security is unrated
by Moody's, S&P or Fitch, the Corporation will use the percentage set forth
under "Below B and Unrated" in this table. Ratings assigned by S&P or Fitch are
generally accepted by Moody's at face value. However, adjustments to face value
may be made by Moody's to particular categories of credits for which the S&P
and/or Fitch rating does not seem to approximate a Moody's rating equivalent.
Split rated securities assigned by S&P and Fitch will be accepted by Moody's at
the lower of the two ratings.


                  (vii)  U.S. Common Stock and Common Stock of foreign issuers
                  for which ADRs are traded.

         Utility.........................................................  170%
         Industrial......................................................  264%
         Financial.......................................................  241%
         Other...........................................................  300%


                  (viii) The Moody's Discount Factor applied to Common Stock of
                  foreign issuers (in existence for at least five years) for
                  which no ADRs are traded will be 400%.

         The Moody's Discount Factor for any Moody's Eligible Asset other than
the securities set forth above will be the percentage provided in writing by
Moody's.

For purposes of this definition, ratings assigned by S&P or Fitch are generally
accepted by Moody's at face value. However, adjustments to face value may be
made by Moody's to particular categories of credits for which the S&P and/or
Fitch rating does not seem to approximate a Moody's rating equivalent. Split
rated securities assigned by S&P and Fitch will be accepted by Moody's at the
lower of the two ratings.


         "Moody's Eligible Assets"* means:
          -----------------------

                  (i)    Cash (including interest and dividends due on assets
                  rated (A) Baa3 or higher by Moody's if the payment date is
                  within five Business Days of the Valuation Date, (B) A2 or
                  higher if the payment date is within thirty days of the
                  Valuation Date, and (C) A1 or higher if the payment date is
                  within the Moody's Exposure Period) and receivables for assets
                  sold if the receivable is due within five Business Days of the
                  Valuation Date, and if the trades which generated such
                  receivables are (A) settled through clearing house firms with
                  respect to which the Corporation has received prior written
                  authorization from Moody's or (B)(1) with counterparties
                  having a Moody's long term debt rating of at least Baa3 or the
                  equivalent from S&P or Fitch or (2) with counterparties having
                  a Moody's Short Term Money Market Instrument rating of at
                  least P-1 or the equivalent from S&P or Fitch.

                                       9
<PAGE>

                  (ii)   Short Term Money Market Instruments, so long as (A)
                  such securities are rated at least P-1 or if not rated by
                  Moody's, rated at least A-1+/AA or SP-1+/AA by S&P or the
                  equivalent by Fitch, (B) in the case of demand deposits, time
                  deposits and overnight funds, the supporting entity is rated
                  at least A2 by Moody's or the equivalent by S&P or Fitch, or
                  (C) in all other cases, the supporting entity (1) is rated A2
                  by Moody's or the equivalent by S&P or Fitch and the security
                  matures within one month, (2) is rated A1 by Moody's or the
                  equivalent by S&P or Fitch and the security matures within
                  three months or (3) is rated at least Aa3 by Moody's or the
                  equivalent by S&P or Fitch and the security matures within six
                  months. In addition, money market funds that comply with Rule
                  2a-7 under the 1940 Act are Moody's Eligible Assets;

                  (iii)  U.S. Government Obligations and U.S. Treasury Strips;

                  (iv)   Rule 144A Securities;

                  (v)    Corporate debt securities, except as noted below, if
                  (A)(1) such securities are rated B3 or higher by Moody's or
                  the equivalent by S&P or Fitch; (2) for securities, which
                  provide for conversion or exchange at the option of the issuer
                  into equity capital at some time over their lives, the issuer
                  must be rated at least B3 by Moody's or the equivalent by S&P
                  or Fitch; or (3) for debt securities rated Ba1 and below by
                  Moody's or the equivalent by S&P or Fitch, no more than 10% of
                  the original amount of such issue may constitute Moody's
                  Eligible Assets; (B) such securities provide for the periodic
                  payment of interest in cash in U.S. dollars or euros, except
                  that such securities that do not pay interest in U.S. dollars
                  or euros shall be considered Moody's Eligible Assets if they
                  are rated by Moody's, S&P or Fitch; and (C) such securities
                  have been registered under the Securities Act or are
                  restricted as to resale under federal securities laws but are
                  eligible for resale pursuant to Rule 144A under the Securities
                  Act, except that such securities that are not subject to U.S.
                  federal securities laws shall be considered Moody's Eligible
                  Assets if they are publicly traded.

                  In order to merit consideration as Moody's Eligible Asset,
                  debt securities are issued by entities which have not filed
                  for bankruptcy within the past three years, are current on all
                  principal and interest in their fixed income obligations, are
                  current on all preferred security dividends and possess a
                  current, unqualified auditor's report without qualified,
                  explanatory language.

                  Corporate debt securities not rated at least B3 by Moody's or
                  the equivalent by S&P or Fitch or not rated by Moody's, S&P or
                  Fitch shall be considered to be Moody's Eligible Assets only
                  to the extent the Market Value of such corporate debt
                  securities does not exceed 10% of the aggregate Market Value
                  of all Moody's Eligible Assets.

                  (vi)   Preferred securities if (A) such preferred securities
                  pay cumulative or non-cumulative dividends, (B) such
                  securities provide for the periodic payment of dividends
                  thereon in cash in U.S. dollars or euros, (C) the issuer or
                  the parent

                                       10
<PAGE>

                  company of the issuer of such a preferred security has common
                  stock listed on either the New York Stock Exchange, the
                  American Stock Exchange or Nasdaq or is a U.S. Government
                  Agency, (D) the issuer or the parent company of the issuer of
                  such a preferred security has a senior debt rating or a
                  preferred security rating from Moody's of Baa3 or higher or
                  the equivalent from S&P or Fitch and (E) such preferred
                  security has paid consistent cash dividends in U.S. dollars or
                  euros over the last three years or has a minimum rating of A1
                  from Moody's or the equivalent from S&P or Fitch (if the
                  issuer of such preferred security or the parent company of the
                  issuer has other preferred issues outstanding that have been
                  paying dividends consistently for the last three years, then a
                  preferred security without such a dividend history would also
                  be eligible). In addition, the preferred securities must have
                  the diversification requirements set forth in the table below
                  and the preferred securities issue must be greater than $50
                  million.

         Diversification Table:
         ----------------------

         The table below establishes maximum limits for inclusion as Moody's
Eligible Assets (other than common stock as set forth below) prior to applying
Moody's Discount Factors to Moody's Eligible Assets.

<TABLE>
<CAPTION>
                                 Minimum               Maximum              Maximum          Maximum Single
                               Issue Size              Single          Single Industry         Industry
Ratings(1)                  ($ in Million)(2)       Issuer (3)(4)     Non-Utility (4)(5)     Utility(4)(5)
----------                  -----------------       -------------     ------------------     -------------
<S>                               <C>                   <C>                  <C>                  <C>
Aaa..................             $100                  100%                 100%                 100%
Aa...................              100                   20                   60                   30
A....................              100                   10                   40                   25
Baa..................              100                    6                   20                   20
Ba...................               50(6)                 4                   12                   12
B1-B2................               50(6)                 3                    8                    8
B3 or below..........               50(6)                 2                    5                    5
</TABLE>

-----------
(1) Refers to the preferred security and senior debt rating of the portfolio
    holding.
(2) Except for preferred security, which has a minimum issue size of
    $50 million.
(3) Companies subject to common ownership of 25% or more are considered as one
    issuer.
(4) Percentages represent a portion of the aggregate Market Value of the
    Corporation's total assets.
(5) Industries are determined according to Moody's Industry Classifications, as
    defined herein.
(6) Portfolio holdings from issues ranging from $50 million to $100 million are
    limited to 20% of the Corporation's total assets.

                  (vii)  Common stocks (A) (i) which are traded in the United
                  States on a national securities exchange or in the
                  over-the-counter market, (ii) which, if cash dividend paying,
                  pay cash dividends in U.S. dollars, and (iii) which may be
                  sold without restriction by the Corporation; provided,
                  however, that common stock which, while a Moody's Eligible
                  Asset owned by the Corporation, ceases paying any regular cash
                  dividend will no longer be considered a Moody's Eligible Asset
                  until 71 days after the date of the announcement of such
                  cessation, unless the issuer of the common stock has senior
                  debt securities rated at least A3 by Moody's or the equivalent
                  by S&P or Fitch, (B) which are securities denominated in any
                  currency other than the U.S. dollar or securities of issuers
                  formed under the laws of jurisdictions other than the United
                  States, its states, commonwealths, territories and
                  possessions, including the District of Columbia, for which
                  there are dollar-denominated American Depository Receipts
                  ("ADRs") which are (i) sponsored

                                       11
<PAGE>

                  ADR programs or (ii) Level II or Level III ADRs, and (C) which
                  are securities of issuers formed under the laws of
                  jurisdictions other than the United States, its states,
                  commonwealths, territories and possessions, including the
                  District of Columbia (and in existence for at least five
                  years), for which no ADRs are traded;

         Common Stock Diversification Table:
         -----------------------------------

<TABLE>
<CAPTION>
                                        Maximum Single       Maximum Single       Maximum Single
                  Industry Category     Issuer (%)(1)        Industry (%)(1)       State (%)(1)
                  -----------------     -------------        ---------------       ------------
<S>                                           <C>                  <C>                  <C>
                  Utility                     4                    50                     7(2)
                  Industrial                  4                    45                     7
                  Financial                   5                    40                     6
                  Other                       6                    20                    N/A
</TABLE>

-----------------------
                  (1) Percentages represent both a portion of the aggregate
                      Market Value and the number of outstanding shares of the
                      common stock portfolio.
                  (2) Utility companies operating in more than one state should
                      be diversified according to the state of incorporation.

                  (viii)  Financial contracts, as such term is defined in
                  Section 3(c)(2)(B)(ii) of the 1940 Act, not otherwise
                  provided for in this definition but only upon receipt by the
                  Corporation of a letter from Moody's specifying any
                  conditions on including such financial contract in Moody's
                  Eligible Assets and assuring the Corporation that including
                  such financial contract in the manner so specified would not
                  affect the credit rating assigned by Moody's to the AMPS.

                  When the Corporation sells a portfolio security and agrees to
                  repurchase it at a future date, the Discounted Value of such
                  security will constitute a Moody's Eligible Asset and the
                  amount the Corporation is required to pay upon repurchase of
                  such security will count as a liability for purposes of
                  calculating the Basic Maintenance Amount. When the Corporation
                  purchases a security and agrees to sell it at a future date to
                  another party, cash receivable by the Corporation thereby will
                  constitute a Moody's Eligible Asset if the long term debt of
                  such other party is rated at least A2 by Moody's or the
                  equivalent by S&P or Fitch and such agreement has a term of 30
                  days or less; otherwise the Discounted Value of such security
                  will constitute a Moody's Eligible Asset. For the purpose of
                  calculation of Moody's Eligible Assets, portfolio securities
                  which have been called for redemption by the issuer thereof
                  shall be valued at the lower of Market Value or the call price
                  of such portfolio securities.

                                       12
<PAGE>

                  Notwithstanding the foregoing, an asset will not be considered
                  a Moody's Eligible Asset to the extent that it has been
                  irrevocably deposited for the payment of (i)(A) through (i)(D)
                  under the definition of Basic Maintenance Amount or to the
                  extent it is subject to any Liens, including assets segregated
                  under margin account requirements in connection with the
                  engagement in hedging transactions, except for (A) Liens which
                  are being contested in good faith by appropriate proceedings
                  and which Moody's has indicated to the Corporation will not
                  affect the status of such assets as a Moody's Eligible Asset,
                  (B) Liens for taxes that are not then due and payable or that
                  can be paid thereafter without penalty, (C) Liens to secure
                  payment for services rendered or cash advanced to the
                  Corporation by the Adviser, the Corporation's custodian,
                  transfer agent or registrar or the Auction Agent and (D) Liens
                  arising by virtue of any repurchase agreement.

For purposes of this definition, ratings assigned by S&P or Fitch are generally
accepted by Moody's at face value. However, adjustments to face value may be
made by Moody's to particular categories of credits for which the S&P and/or
Fitch rating does not seem to approximate a Moody's rating equivalent. Split
rated securities assigned by S&P and Fitch will be accepted by Moody's at the
lower of the two ratings.

         "Moody's Exposure Period"* means the sum of (i) that number of calendar
days from the last Valuation Date on which the Portfolio Calculation was at
least equal to the Basic Maintenance Amount to the Valuation Date on which the
Portfolio Calculation was not at least equal to the Basic Maintenance Amount,
(ii) that number of calendar days following a Valuation Date that the
Corporation has under these terms of the Cumulative Preferred Stock to cure any
failure to maintain a Portfolio Calculation at least equal to the Basic
Maintenance Amount, and (iii) the maximum number of calendar days the
Corporation has to effect a redemption under Article II, paragraph 3 of these
terms of the Cumulative Preferred Stock.

         "Moody's Industry Classifications"* means, for the purposes of
         determining Moody's Eligible Assets, each of the following industry
         classifications (or such other classifications as Moody's may from time
         to time approve for application to the Cumulative Preferred Stock):

         Aerospace and Defense: Major Contractor, Subsystems, Research, Aircraft
         Manufacturing, Arms, Ammunition

         Automobile: Automotive Equipment, Auto-Manufacturing, Auto Parts
         Manufacturing, Personal Use Trailers, Motor Homes, Dealers

         Banking: Bank Holding, Savings and Loans, Consumer Credit, Small Loan,
         Agency, Factoring, Receivables

         Beverage, Food and Tobacco: Beer and Ale, Distillers, Wines and
         Liquors, Distributors, Soft Drink Syrup, Bottlers, Bakery, Mill Sugar,
         Canned Foods, Corn Refiners, Dairy Products, Meat Products, Poultry
         Products, Snacks, Packaged Foods, Distributors, Candy, Gum, Seafood,
         Frozen Food, Cigarettes, Cigars, Leaf/Snuff, Vegetable Oil

                                       13
<PAGE>

         Buildings and Real Estate: Brick, Cement, Climate Controls,
         Contracting, Engineering, Construction, Hardware, Forest Products
         (building-related only), Plumbing, Roofing, Wallboard, Real Estate,
         Real Estate Development, REITs, Land Development

         Chemicals, Plastics and Rubber: Chemicals (non-agriculture), Industrial
         Gases, Sulfur, Plastics, Plastic Products, Abrasives, Coatings, Paints,
         Varnish, Fabricating

         Containers, Packaging and Glass: Glass, Fiberglass, Containers made of:
         Glass, Metal, Paper, Plastic, Wood, or Fiberglass

         Personal and Non Durable Consumer Products (Manufacturing Only): Soaps,
         Perfumes, Cosmetics, Toiletries, Cleaning Supplies, School Supplies

         Diversified/Conglomerate Manufacturing

         Diversified/Conglomerate Service

         Diversified Natural Resources, Precious Metals and Minerals:
         Fabricating, Distribution

         Ecological: Pollution Control, Waste Removal, Waste Treatment, Waste
         Disposal

         Electronics: Computer Hardware, Electric Equipment, Components,
         Controllers, Motors, Household Appliances, Information Service
         Communication Systems, Radios, Televisions, Tape Machines, Speakers,
         Printers, Drivers, Technology

         Finance: Investment Brokerage, Leasing, Syndication, Securities

         Farming and Agriculture: Livestock, Grains, Produce; Agricultural
         Chemicals, Agricultural Equipment, Fertilizers

         Grocery: Grocery Stores, Convenience Food Stores

         Healthcare, Education and Childcare: Ethical Drugs, Proprietary Drugs,
         Research, Health Care Centers, Nursing Homes, HMOs, Hospitals, Hospital
         Supplies, Medical Equipment

         Home and Office Furnishings, Housewares, and Durable Consumer Products:
         Carpets, Floor Coverings, Furniture, Cooking, Ranges

         Hotels, Motels, Inns and Gaming

         Insurance: Life, Property and Casualty, Broker, Agent, Surety

         Leisure, Amusement, Motion Pictures, Entertainment: Boating, Bowling,
         Billiards, Musical Instruments, Fishing, Photo Equipment, Records,
         Tapes, Sports, Outdoor Equipment (Camping), Tourism, Resorts, Games,
         Toy Manufacturing, Motion Picture Production Theaters, Motion Picture
         Distribution

                                       14
<PAGE>

         Machinery (Non-Agriculture, Non-Construction, Non-Electronic):
         Industrial, Machine Tools, Steam Generators

         Mining, Steel, Iron and Non Precious Metals: Coal, Copper, Lead,
         Uranium, Zinc, Aluminum, Stainless Steel, Integrated Steel, Ore
         Production, Refractories, Steel Mill Machinery, Mini-Mills,
         Fabricating, Distribution and Sales of the foregoing

         Oil and Gas: Crude Producer, Retailer, Well Supply, Service and
         Drilling

         Printing, Publishing and Broadcasting: Graphic Arts, Paper, Paper
         Products, Business Forms, Magazines, Books, Periodicals, Newspapers,
         Textbooks, Radio, Television, Cable Broadcasting Equipment

         Cargo Transport: Rail, Shipping, Railroads, Rail-Car Builders, Ship
         Builders, Containers, Container Builders, Parts, Overnight Mail,
         Trucking, Truck Manufacturing, Trailer Manufacturing, Air Cargo,
         Transport

         Retail Stores: Apparel, Toy, Variety, Drugs, Department, Mail Order
         Catalog, Showroom

         Telecommunications: Local, Long Distance, Independent, Telephone,
         Telegraph, Satellite, Equipment, Research, Cellular

         Textiles and Leather: Producer, Synthetic Fiber, Apparel Manufacturer,
         Leather Shoes

         Personal Transportation: Air, Bus, Rail, Car Rental

         Utilities: Electric, Water, Hydro Power, Gas

         Diversified Sovereigns: Semi-sovereigns, Canadian Provinces,
         Supra-national agencies

         The Corporation will use its discretion in determining which industry
classification is applicable to a particular investment in consultation with the
Independent Accountant and Moody's, to the extent the Corporation considers
necessary.

         "Nasdaq" means the Nasdaq Stock Market, Inc.

         "1940 Act" means the Investment Company Act of 1940, as amended.

         "Notice of Redemption" has the meaning set forth in paragraph 3(c)(i)
of Article II hereof.

         "NRSRO" means any nationally reorganized statistical rating
organization, as that term is used in Rule 15a3-1 under the Securities Exchange
Act of 1934, as amended, or any successor provisions.

         "Officers' Certificate" means a certificate signed by any two of the
President, a Vice President, the Treasurer or the Secretary of the Corporation
or by any one of the foregoing and an Assistant Treasurer or Assistant Secretary
of the Corporation.

                                       15
<PAGE>

         "Paying Agent" means Equiserve Trust Company, N.A. and its successors
or any other paying agent appointed by the Corporation with respect to the
Cumulative Preferred Stock and/or any other Preferred Stock.

         "Portfolio Calculation"* means the aggregate Discounted Value of all
Moody's Eligible Assets.

         "Preferred Stock" means the preferred stock, par value $.001 per share,
of the Corporation, and includes the Cumulative Preferred Stock.

         "Quarterly Valuation Date"* means the last Valuation Date in March,
June, September and December of each year, commencing _____________, ______.

         "Redemption Price" has the meaning set forth in paragraph 3(a) of
Article II hereof.

         "Rule 144A Securities" means securities that are restricted as to
resale under U.S. federal securities laws but are eligible for resale pursuant
to Rule 144A under the Securities Act or successor provisions.

         "Securities Act" means the Securities Act of 1933, as amended.

         "Short-Term Money Market Instruments" means the following types of
instruments if, on the date of purchase or other acquisition thereof by the
Corporation, the remaining term to maturity thereof is not in excess of 180
days:

                  (i)    Commercial paper rated P-1 by Moody's, F1 by Fitch or
                  A-1 by S&P if such commercial paper matures in 30 days or
                  less, or P-1 by Moody's and either F1 by Fitch or A-1+ by S&P
                  if such commercial paper matures in over 30 days;

                  (ii)   Demand or time deposits in, and banker's acceptances
                  and certificates of deposit of (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
                  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);

                  (iii)  Overnight funds;

                  (iv)   U.S. Government Obligations; and

                  (v)    Eurodollar demand or time deposits in, or certificates
                  of deposit of, the head office or the London branch office of
                  a depository institution or trust company if the certificates
                  of deposit, 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 that have (1) credit ratings on
                  such Valuation Date of at least P-1 from Moody's and either
                  F1+ from

                                       16
<PAGE>

                  Fitch or A-1+ from S&P, in the case of commercial paper or
                  certificates of deposit, and (2) credit ratings on each
                  Valuation Date of at least Aa3 from Moody's and either AA-
                  from Fitch or AA- from S&P, in the case of long-term unsecured
                  debt obligations; provided, however, that in the case of any
                  such investment that matures 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, Fitch and S&P shall be at least A2, A and A,
                  respectively; 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 certificates of deposit, if any, of such depository
                  institution or trust company are not rated on any Valuation
                  Date below P-1 by Moody's, F1+ by Fitch or A-1+ by S&P and
                  there is no long-term rating, 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); and
                  provided further, that the interest receivable by the
                  Corporation shall not be subject to any withholding or similar
                  taxes.

         "S&P" means Standard & Poor's, or its successor.

         "U.S. Government Agency" means any agency, sponsored enterprise or
instrumentality of the United States of America.

         "U.S. Government Obligations" means direct obligations of the United
States or U.S. Government Agencies that are entitled to the full faith and
credit of the United States and that, other than United States Treasury Bills
and U.S. Treasury Strips, provide for the periodic payment of interest and the
full payment of principal at maturity.

         "U.S. Treasury Strips" means securities based on direct obligations of
the United States Treasury created through the Separate Trading of Registered
Interest and Principal of Securities program.

         "Valuation Date"* means every Friday or, if such day is not a Business
Day, the immediately preceding Business Day.

         "Voting Period" shall have the meaning set forth in paragraph 4(b) of
Article II hereof.

         2.    Certain Definitions Dependent on Facts Ascertainable Outside the
               Charter.

         Those of the foregoing definitions which are marked with an asterisk
(the "Definitions") have been adopted by the Board of Directors of the
Corporation in order to obtain an Aaa rating from Moody's on the shares of
Cumulative Preferred Stock on their Date of Original Issue and to maintain such
rating. The interpretation or applicability of any or all of the Definitions may
from time to time be modified by the Board of Directors in its sole discretion
based on a determination by the Board of Directors that such action is necessary
or appropriate with respect

                                       17
<PAGE>

to the Cumulative Preferred Stock; provided, however, that the Board of
Directors receives written confirmation from Moody's that any such modification
would not impair the ratings then assigned by Moody's to the Cumulative
Preferred Stock. Furthermore, if the Board of Directors determines not to
continue to comply with the provisions of paragraphs 5(a)(ii), 5(c) and 6 of
Article II hereof as provided in paragraph 7 of Article II hereof, then the
Definitions, unless the context otherwise requires, shall be without force and
effect and have no meaning for these terms of the Cumulative Preferred Stock.

                                  ARTICLE II.

                           CUMULATIVE PREFERRED STOCK

1.       Dividends.
         ----------

         (a) Holders of shares of Cumulative Preferred Stock shall be entitled
to receive, when, as and if authorized by the Board of Directors and declared by
the Corporation, out of funds legally available therefor, cumulative cash
dividends at the annual rate of     % per share (computed on the basis of a
360-day year consisting of twelve 30-day months) of the initial Liquidation
Preference of $25.00 per share on the Cumulative Preferred Stock and no more,
payable quarterly on March 23, June 23, September 23 and December 23 in each
year (each, a "Dividend Payment Date"), commencing December 23, 2003 (or, if any
such day is not a Business Day, then on the next succeeding Business Day), to
holders of record of Cumulative Preferred Stock as they appear on the stock
register of the Corporation at the close of business on the preceding March 6,
June 6, September 6 and December 6 (or, if any such day is not a Business
Day, then on the next succeeding Business Day), as the case may be, in
preference to dividends on shares of Common Stock and any other stock of the
Corporation ranking junior to the Cumulative Preferred Stock in payment of
dividends. Dividends on shares of Cumulative Preferred Stock shall accumulate
from the date on which the first such shares of Cumulative Preferred Stock are
originally issued ("Date of Original Issue"). Each period beginning on and
including a Dividend Payment Date (or the Date of Original Issue, in the case of
the first dividend period after issuance of such shares) and ending on but
excluding the next succeeding Dividend Payment Date is referred to herein as a
"Dividend Period." Dividends on account of arrears for any past Dividend Period
may be declared and paid at any time, without reference to any Dividend Payment
Date, to holders of record on such date, not exceeding 30 days preceding the
payment date thereof, as shall be fixed by the Board of Directors.

         (b)   (i)       No dividends shall be declared or paid or set apart for
payment on any shares of Cumulative Preferred Stock for any Dividend Period or
part thereof unless full cumulative dividends have been or contemporaneously are
declared and paid on all outstanding shares of Cumulative Preferred Stock
through the most recent Dividend Payment Date therefor. If full cumulative
dividends are not declared and paid on the shares of Cumulative Preferred Stock,
any dividends on the shares of Cumulative Preferred Stock shall be declared and
paid pro rata on all outstanding shares of Cumulative Preferred Stock. No
holders of shares of Cumulative Preferred Stock shall be entitled to any
dividends, whether payable in cash, property or stock, in excess of full
cumulative dividends as provided in this paragraph 1(b)(i) on shares of
Cumulative Preferred Stock. No interest or sum of money in lieu of interest
shall be payable in


                                       18
<PAGE>

respect of any dividend payments on any shares of Cumulative Preferred Stock
that may be in arrears.

               (ii)      For so long as shares of Cumulative Preferred Stock are
         outstanding, the Corporation shall not declare, pay or set apart for
         payment any dividend or other distribution (other than a dividend or
         distribution paid in shares of, or options, warrants or rights to
         subscribe for or purchase shares of, Common Stock or other stock, if
         any, ranking junior to the Cumulative Preferred Stock as to dividends
         or upon liquidation) in respect of the Common Stock or any other stock
         of the Corporation ranking junior to or on parity with the Cumulative
         Preferred Stock as to dividends or upon liquidation, or call for
         redemption, redeem, purchase or otherwise acquire for consideration any
         shares of Common Stock or any other stock of the Corporation ranking
         junior to the Cumulative Preferred Stock as to dividends or upon
         liquidation (except by conversion into or exchange for stock of the
         Corporation ranking junior to or on parity with the Cumulative
         Preferred Stock as to dividends and upon liquidation), unless, in each
         case, (A) immediately thereafter, the Corporation shall have a
         Portfolio Calculation at least equal to the Basic Maintenance Amount
         and the Corporation shall maintain the Asset Coverage, (B) full
         cumulative dividends on all shares of Cumulative Preferred Stock due on
         or prior to the date of the transaction have been declared and paid (or
         shall have been declared and sufficient funds for the payment thereof
         deposited with the Paying Agent) and (C) the Corporation has redeemed
         the full number of shares of Cumulative Preferred Stock required to be
         redeemed by any provision contained herein for mandatory redemption.

               (iii)     Any dividend payment made on the shares of Cumulative
         Preferred Stock shall first be credited against the dividends
         accumulated with respect to the earliest Dividend Period for which
         dividends have not been paid.

         (c)   Not later than the Business Day next preceding each Dividend
Payment Date, the Corporation shall deposit with the Paying Agent Deposit
Securities having an initial combined value sufficient to pay the dividends that
are payable on such Dividend Payment Date, which Deposit Securities shall mature
on or prior to such Dividend Payment Date. The Corporation may direct the Paying
Agent with respect to the investment of any such Deposit Securities, provided
that such investment consists exclusively of Deposit Securities and provided
further that the proceeds of any such investment will be available at the
opening of business on such Dividend Payment Date.

         (d)   The Board of Directors may authorize and the Corporation may
declare an additional dividend on the Cumulative Preferred Stock each year in
order to permit the Corporation to distribute its income in accordance with
Section 855 (or any successor provision) of the Internal Revenue Code of 1986,
as amended (the "Code"), and the other rules and regulations under Subchapter M
of the Code. Any such additional dividend shall be payable to holders of the
Cumulative Preferred Stock on the next Dividend Payment Date, shall be part of a
regular quarterly dividend for the year of declaration payable to holders of
record pursuant to paragraph 1(a) hereof and shall not result in any increase in
the amount of cash dividends payable for such year pursuant to paragraph 1(a)
hereof.

                                       19
<PAGE>

         2.    Liquidation Rights.
               -------------------

         (a)   In the event of any liquidation, dissolution or winding up of the
affairs of the Corporation, whether voluntary or involuntary, the holders of
shares of Cumulative Preferred Stock shall be entitled to receive out of the
assets of the Corporation available for distribution to stockholders, after
claims of creditors but before any distribution or payment shall be made in
respect of the Common Stock or any other stock of the Corporation ranking junior
to the Cumulative Preferred Stock as to liquidation payments, a liquidation
distribution in the amount of $25.00 per share plus an amount equal to all
unpaid dividends thereon accumulated to and including the date fixed for such
distribution or payment (whether or not earned or declared by the Corporation,
but excluding interest thereon) (the "Liquidation Preference"), and such holders
shall be entitled to no further participation in any distribution or payment in
connection with any such liquidation, dissolution or winding up.

         (b)   If, upon any liquidation, dissolution or winding up of the
affairs of the Corporation, whether voluntary or involuntary, the assets of the
Corporation available for distribution among the holders of all outstanding
shares of Cumulative Preferred Stock and any other outstanding class or series
of Preferred Stock of the Corporation ranking on a parity with the Cumulative
Preferred Stock as to payment upon liquidation, shall be insufficient to permit
the payment in full to such holders of Cumulative Preferred Stock of the
Liquidation Preference and the amounts due upon liquidation with respect to such
other Preferred Stock, then such available assets shall be distributed among the
holders of shares of Cumulative Preferred Stock and such other Preferred Stock
ratably in proportion to the respective preferential amounts to which they are
entitled. Unless and until the Liquidation Preference has been paid in full to
the holders of shares of Cumulative Preferred Stock, no dividends or
distributions shall be made to holders of the Common Stock or any other stock of
the Corporation ranking junior to the Cumulative Preferred Stock as to
liquidation.

         3.    Redemption.
               -----------

         Shares of the Cumulative Preferred Stock shall be redeemed or
redeemable by the Corporation as provided below:

               (a)   Mandatory Redemptions.
                     ----------------------

         If the Corporation is required to redeem any shares of Cumulative
Preferred Stock pursuant to paragraphs 5(b) or 5(c) of Article II hereof, then
the Corporation shall, to the extent permitted by the 1940 Act, Maryland law and
any agreement in respect of indebtedness of the Corporation to which it may be a
party or by which it may be bound, by the close of business on such Asset
Coverage Cure Date or Basic Maintenance Amount Cure Date (herein collectively
referred to as a "Cure Date"), as the case may be, fix a redemption date and
proceed to redeem shares as set forth in paragraph 3(c) hereof. On such
redemption date, the Corporation shall redeem, out of funds legally available
therefor, the number of shares of Cumulative Preferred Stock and/or other
Preferred Stock 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 Cure Date, would have resulted in the Asset Coverage having been satisfied
or the Corporation having a Portfolio Calculation equal to or greater than the
Basic Maintenance Amount, as the

                                       20
<PAGE>

case may be, immediately prior to the opening of business on such Cure Date or,
if the Asset Coverage or a Portfolio Calculation equal to or greater than the
Basic Maintenance Amount, as the case may be, cannot be so restored, all of the
shares of Cumulative Preferred Stock, at a price equal to $25.00 per share plus
accumulated but unpaid dividends thereon (whether or not earned or declared by
the Corporation) through the date of redemption (the "Redemption Price"). In the
event that shares of Cumulative Preferred Stock are redeemed pursuant to
paragraph 5(b) of Article II hereof, the Corporation may, but shall not be
required to, redeem a sufficient number of shares of Cumulative Preferred Stock
pursuant to this paragraph 3(a) in order that the "asset coverage" of a class of
senior security which is stock, as defined in Section 18(h) of the 1940 Act, of
the remaining outstanding shares of Cumulative Preferred Stock and any other
Preferred Stock after redemption is up to 275%.

               (b)   Optional Redemptions.
                     ---------------------

         Prior to ________, 2008, the Corporation may, at its option, redeem
shares of Cumulative Preferred Stock at the Redemption Price per share only if
and to the extent that any such redemption is necessary, in the judgment of the
Corporation, to maintain the Corporation's status as a regulated investment
company under Subchapter M of the Code. Commencing ______, 2008, and at any time
and from time to time thereafter, the Corporation may, at its option, to the
extent permitted by the 1940 Act, Maryland law and any agreement in respect of
indebtedness of the Corporation to which it may be a party or by which it may be
bound, redeem the Cumulative Preferred Stock in whole or in part at the
Redemption Price per share.

               (c)   Procedures for Redemption.
                     --------------------------
               (i)   If the Corporation shall determine or be required to redeem
         shares of Cumulative Preferred Stock pursuant to this paragraph 3, it
         shall mail a written notice of redemption ("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 in respect of such redemption established by the Board of
         Directors. Each such Notice of Redemption shall state: (A) the
         redemption date, which shall be not fewer than 30 days nor more than 45
         days after the date of such notice; (B) the number of shares of
         Cumulative Preferred Stock to be redeemed; (C) the CUSIP number(s) of
         such shares; (D) the Redemption Price; (E) that dividends on the shares
         to be redeemed will cease to accumulate on such redemption date; and
         (F) the provisions of this paragraph 3 under which such redemption is
         made. If fewer than all shares of Cumulative Preferred Stock held by
         any holder are to be redeemed, the Notice of Redemption mailed to such
         holder also shall specify the number of shares to be redeemed from such
         holder. No defect in the Notice of Redemption or the mailing thereof
         shall affect the validity of the redemption proceedings, except as
         required by applicable law.

               (ii)  If the Corporation shall give a Notice of Redemption, then
         by the close of business on the Business Day preceding the redemption
         date specified in the Notice of Redemption the Corporation shall (A)
         deposit with the Paying Agent Deposit Securities having an initial
         combined value sufficient to effect the redemption of the shares of
         Cumulative Preferred Stock to be redeemed, which Deposit Securities
         shall mature on or

                                       21
<PAGE>

         prior to such redemption date, and (B) give the Paying Agent
         irrevocable instructions and authority to pay the Redemption Price to
         the holders of the shares of Cumulative Preferred Stock called for
         redemption on the redemption date. The Corporation may direct the
         Paying Agent with respect to the investment of any Deposit Securities
         so deposited, provided that the proceeds of any such investment will be
         available at the opening of business on such redemption date. Upon the
         date of such deposit (unless the Corporation shall default in making
         payment of the Redemption Price), all rights of the holders of the
         shares of Cumulative Preferred Stock so called for redemption shall
         cease and terminate except the right of the holders thereof to receive
         the Redemption Price thereof, and such shares shall no longer be deemed
         outstanding for any purpose. The Corporation shall be entitled to
         receive, promptly after the date fixed for redemption, any cash in
         excess of the aggregate Redemption Price of the shares of Cumulative
         Preferred Stock called for redemption on such date and any remaining
         Deposit Securities. Any assets so deposited that are unclaimed at the
         end of two years from such redemption date shall, to the extent
         permitted by law, be repaid to the Corporation, after which the holders
         of the shares of Cumulative Preferred Stock so called for redemption
         shall look only to the Corporation for payment thereof. The Corporation
         shall be entitled to receive, from time to time after the date fixed
         for redemption, any interest on the Deposit Securities so deposited.

               (iii) On the redemption date, each record owner of shares of
         Cumulative Preferred Stock on the books of the Paying Agent shall be
         entitled to receive the cash Redemption Price, without interest.

               (iv)  In the case of any redemption of less than all of the
         shares of Cumulative Preferred Stock pursuant to these terms of the
         Cumulative Preferred Stock, such redemption shall be made pro rata from
         each holder of shares of Cumulative Preferred Stock in accordance with
         the respective number of shares held by each such holder on the record
         date for such redemption.

               (v)   Notwithstanding the other provisions of this paragraph 3,
         the Corporation shall not redeem shares of Cumulative Preferred Stock
         or any other Preferred Stock unless all accumulated and unpaid
         dividends on all outstanding shares of Cumulative Preferred Stock for
         all applicable past Dividend Periods (whether or not earned or declared
         by the Corporation) shall have been or are contemporaneously paid or
         declared and Deposit Securities for the payment of such dividends shall
         have been deposited with the Paying Agent as set forth in paragraph
         1(c) of Article II hereof.

               (vi)  If the Corporation shall not have funds legally available
         for the redemption of, or is otherwise unable to redeem, all the shares
         of the Cumulative Preferred Stock to be redeemed on any redemption
         date, the Corporation shall redeem on such redemption date the number
         of shares of Cumulative Preferred Stock as it shall have legally
         available funds, or is otherwise able, to redeem ratably from each
         holder whose shares are to be redeemed, and the remainder of the shares
         of the Cumulative Preferred Stock required to be redeemed shall be
         redeemed on the earliest practicable date on which the Corporation
         shall have funds legally available for the redemption of, or is
         otherwise able to redeem, such shares.

                                       22
<PAGE>

         4.    Voting Rights.
               --------------

               (a)   General.
                     --------

         Except as otherwise provided by law or as specified in the Charter or
Bylaws, each holder of shares of Cumulative Preferred Stock shall be entitled to
one vote for each share held on each matter submitted to a vote of stockholders
of the Corporation, and the holders of outstanding shares of Preferred Stock,
including Cumulative Preferred Stock, and of shares of Common Stock shall vote
together as a single class; provided that, at all times the holders of
outstanding shares of Preferred Stock, including Cumulative Preferred Stock,
shall be entitled, as a class, to the exclusion of the holders of all other
securities and classes of stock of the Corporation, to elect two directors of
the Corporation. Subject to paragraph 4(b) of Article II hereof, the holders of
outstanding shares of stock of the Corporation, including the holders of
outstanding shares of Preferred Stock (including the Cumulative Preferred
Stock), voting as a single class, shall elect the balance of the directors.

               (b)   Right to Elect Majority of Board of Directors.
                     ----------------------------------------------

         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 directorships constituting the Board of Directors shall
automatically increase by the smallest number that, when added to the two
directors elected exclusively by the holders of shares of Preferred Stock, would
constitute a majority of the Board of Directors as so increased by such smallest
number; and the holders of shares of Preferred Stock shall be entitled, voting
separately as one class (to the exclusion of the holders of all other securities
and classes of 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 accumulated 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 Cumulative
         Preferred Stock equal to at least two full years' dividends shall be
         due and unpaid and sufficient Deposit Securities shall not have been
         deposited with the Paying Agent for the payment of such accumulated
         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 under the 1940 Act.

         Upon the termination of a Voting Period, the term of office of the
additional directors elected by the holders of Preferred Stock, including the
Cumulative Preferred Stock, pursuant to this paragraph 4(b) above shall
terminate, the remaining directors shall constitute the directors of the
Corporation, the number of directorships constituting the Board of Directors
shall decrease accordingly and the voting rights described in this paragraph
4(b) shall cease, subject always, however, to the reverting of such voting
rights in the holders of Preferred Stock upon the further occurrence of any of
the events described in this paragraph 4(b).

                                       23
<PAGE>

               (c)   Right to Vote with Respect to Certain Other Matters.
                     ----------------------------------------------------

               (i)   So long as any shares of Cumulative Preferred Stock are
         outstanding, the Corporation shall not, without the affirmative vote of
         the holders of a majority of the shares of Cumulative Preferred Stock
         outstanding at the time, voting separately as one class, amend, alter
         or repeal the provisions of the Charter, whether by merger,
         consolidation or otherwise, so as to materially adversely affect any of
         the contract rights expressly set forth in the Charter of holders of
         shares of Cumulative Preferred Stock. The Corporation shall notify
         Moody's ten Business Days prior to any such vote described above.
         Unless a higher percentage is provided for under the Charter, the
         affirmative vote of the holders of a majority of the outstanding shares
         of Preferred Stock, including Cumulative Preferred Stock, voting
         together as a single class, will be required to approve any plan of
         reorganization adversely affecting such shares or any action requiring
         a vote of security holders under Section 13(a) of the 1940 Act. For
         purposes of the preceding sentence, the phrase "vote of the holders of
         a majority of the outstanding shares of Preferred Stock" shall mean,
         with respect to the Preferred Stock, "a majority of the outstanding
         voting securities" as used in the 1940 Act. The class vote of holders
         of shares of Preferred Stock, including Cumulative Preferred Stock,
         described above will be in addition to a separate vote of the requisite
         percentage of shares of Common Stock and shares of Preferred Stock,
         including Cumulative Preferred Stock, voting together as a single
         class, necessary to authorize the action in question. An increase in
         the number of authorized shares of Preferred Stock pursuant to the
         Charter or the issuance of additional shares of any series of Preferred
         Stock (including Cumulative Preferred Stock) pursuant to the Charter
         shall not in and of itself be considered to adversely affect the
         contract rights of the holders of Cumulative Preferred Stock.

               (ii)  Notwithstanding the foregoing, and except as otherwise
         required by the 1940 Act, (i) holders of outstanding shares of the
         Cumulative Preferred Stock will be entitled as a series, to the
         exclusion of the holders of all other securities, including other
         Preferred Stock, Common Stock and other classes of stock of the
         Corporation, to vote on matters affecting the Cumulative Preferred
         Stock that do not materially adversely affect any of the contract
         rights of holders of such other securities, including other Preferred
         Stock, Common Stock and other classes of stock, as expressly set forth
         in the Charter, and (ii) holders of outstanding shares of Cumulative
         Preferred Stock will not be entitled to vote on matters affecting any
         other Preferred Stock that do not materially adversely affect any of
         the contract rights of holders of the Cumulative Preferred Stock, as
         expressly set forth in the Charter.

               (d)      Voting Procedures.
                        ------------------

               (i)      As soon as practicable after the accrual of any right of
         the holders of shares of Preferred Stock to elect additional directors
         as described in paragraph 4(b) above, the Corporation shall call a
         special meeting of such holders and instruct the Paying Agent to mail a
         notice of such special meeting to such holders, such meeting to be held
         not less than 10 nor more than 20 days after the date of mailing of
         such notice. If the Corporation fails to send such notice to the Paying
         Agent or if the Corporation 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

                                       24
<PAGE>

         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
         of Preferred Stock, voting together as a 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 directors
         prescribed in paragraph 4(b) above.

               (ii)  For purposes of determining any rights of the holders of
         Cumulative Preferred Stock to vote on any matter or the number of
         shares required to constitute a quorum, whether such right is created
         by these terms of the Cumulative Preferred Stock, by the other
         provisions of the Charter, by statute or otherwise, a share of
         Cumulative Preferred Stock which is not outstanding shall not be
         counted.

               (iii) 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 Cumulative Preferred Stock, 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 the holders of Preferred Stock, including
         Cumulative Preferred Stock, and the remaining incumbent directors
         elected by the holders of the Common Stock and Preferred Stock, shall
         constitute the duly elected directors of the Corporation.

               (iv)  Simultaneously with the expiration of a Voting Period, the
         term of office of the additional directors elected by the holders of
         Preferred Stock, including Cumulative Preferred Stock, pursuant to
         paragraph 4(b) above shall terminate, the remaining directors shall
         constitute the directors of the Corporation, the number of
         directorships constituting the Board of Directors shall decrease
         accordingly and the voting rights of such holders of Preferred Stock,
         including Cumulative Preferred Stock, to elect additional directors
         pursuant to paragraph 4(b) above shall cease, subject to the provisions
         of the last sentence of paragraph 4(b).

               (e)   Exclusive Remedy.
                     -----------------

         Unless otherwise required by law, the holders of shares of Cumulative
Preferred Stock shall not have any rights or preferences other than those
specifically set forth herein. The holders of shares of Cumulative Preferred
Stock shall have no appraisal rights, preemptive rights or rights to cumulative
voting. In the event that the Corporation fails to pay any dividends on the
shares of Cumulative Preferred Stock, the exclusive remedy of the holders shall
be the right to vote for directors pursuant to the provisions of this paragraph
4.

               (f)   Notification to Moody's.
                     ------------------------

         In the event a vote of holders of Cumulative Preferred Stock is
required pursuant to the provisions of Section 13(a) of the 1940 Act, as long as
the Cumulative Preferred Stock is rated by Moody's, 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

                                       25
<PAGE>

with respect to which such vote is to be taken and, not later than ten Business
Days after the date on which such vote is taken, notify Moody's of the result of
such vote.

         5.    Coverage Tests.
               ---------------

               (a)   Determination of Compliance.
                     ----------------------------

         For so long as any shares of Cumulative Preferred Stock are
outstanding, the Corporation shall make the following determinations:

               (i)   Asset Coverage. The Corporation shall maintain, as of the
         last Business Day of each March, June, September and December of each
         year in which any shares of Cumulative Preferred Stock are outstanding,
         the Asset Coverage.

               (ii)  Basic Maintenance Amount Requirement.
                     -------------------------------------

                     (A) For so long as any shares of Cumulative Preferred Stock
are outstanding, the Corporation shall maintain, on each Valuation Date, a
Portfolio Calculation at least equal to the Basic Maintenance Amount, each as of
such Valuation Date. Upon any failure to maintain the required Portfolio
Calculation, the Corporation shall use its best efforts to reattain a Portfolio
Calculation at least equal to the Basic Maintenance Amount on or prior to the
Basic Maintenance Amount Cure Date, by altering the composition of its portfolio
or otherwise.

                     (B) The Corporation shall prepare a Basic Maintenance
Report relating to each Valuation Date. On or before 5:00 P.M., New York City
time, on the third Business Day after the first Valuation Date following the
Date of Original Issue of the Cumulative Preferred Stock and after each (A)
Quarterly Valuation Date, (B) Valuation Date on which the Corporation fails to
satisfy the requirements of paragraph 5(a)(ii)(A) above, (C) Basic Maintenance
Amount Cure Date following a Valuation Date on which the Corporation fails to
satisfy the requirements of paragraph 5(a)(ii)(A) above and (D) Valuation Date
on which the Portfolio Calculation exceeds the Basic Maintenance Amount by 20%
or less, the Corporation shall complete and deliver to Moody's a Basic
Maintenance Report, which will be deemed to have been delivered to Moody's if
Moody's receives a copy or telecopy, telex or other electronic transcription
setting forth at least the Portfolio Calculation and the Basic Maintenance
Amount each as of the relevant Valuation Date and on the same day the
Corporation mails to Moody's for delivery on the next Business Day the full
Basic Maintenance Report. The Corporation also shall provide Moody's with a
Basic Maintenance Report relating to any other Valuation Date on Moody's
specific request. A failure by the Corporation to deliver a Basic Maintenance
Report under this paragraph 5(a)(ii)(B) shall be deemed to be delivery of a
Basic Maintenance Report indicating a Portfolio Calculation less than the Basic
Maintenance Amount, as of the relevant Valuation Date.

                     (C) Within ten Business Days after the date of delivery to
Moody's of a Basic Maintenance Report in accordance with paragraph 5(a)(ii)(B)
above relating to the last Quarterly Valuation Date of the Corporation's fiscal
year, the Corporation shall deliver to Moody's an Accountant's Confirmation
relating to such a Basic Maintenance Report. Also, within ten Business Days
after the date of delivery to Moody's of a Basic Maintenance Report in
accordance with paragraph 5(a)(ii)(B) above relating to a Valuation Date on
which the Corporation fails to satisfy the requirements of paragraph 5(a)(ii)(A)
and any Basic Maintenance

                                       26
<PAGE>

Amount Cure Date, the Corporation shall deliver to Moody's an Accountant's
Confirmation relating to such Basic Maintenance Report. If any Accountant's
Confirmation delivered pursuant to this paragraph 5(a)(ii)(C) shows that an
error was made in the Basic Maintenance Report for such Quarterly Valuation
Date, or shows that a lower Portfolio Calculation was determined by the
Independent Accountants, the calculation or determination made by such
Independent Accountants shall be final and conclusive and shall be binding on
the Corporation, and the Corporation shall accordingly amend the Basic
Maintenance Report and deliver the amended Basic Maintenance Report to Moody's
promptly following Moody's receipt of such Accountant's Confirmation.

                     (D) In the event the Portfolio Calculation shown in any
Basic Maintenance Report prepared pursuant to paragraph 5(a)(ii)(B) above is
less than the applicable Basic Maintenance Amount, the Corporation shall have
until the Basic Maintenance Amount Cure Date to achieve a Portfolio Calculation
at least equal to the Basic Maintenance Amount, and upon such achievement (and
not later than such Basic Maintenance Amount Cure Date) the Corporation shall
inform Moody's of such achievement in writing by delivery of a revised Basic
Maintenance Report showing a Portfolio Calculation at least equal to the Basic
Maintenance Amount as of the date of such revised Basic Maintenance Report,
together with an Officers' Certificate to such effect.

                     (E) On or before 5:00 P.M., New York City time, on the
first Business Day after shares of Common Stock are repurchased by the
Corporation, the Corporation shall complete and deliver to Moody's a Basic
Maintenance Report as of the close of business on such date that Common Stock is
repurchased. A Basic Maintenance Report delivered as provided in paragraph
5(a)(ii)(B) above also shall be deemed to have been delivered pursuant to this
paragraph 5(a)(ii)(E).

               (b)   Failure to Meet Asset Coverage.
                     -------------------------------

         If the Asset Coverage is not satisfied as provided in paragraph 5(a)(i)
hereof and such failure is not cured as of the related Asset Coverage Cure Date,
the Corporation shall give a Notice of Redemption as described in paragraph 3 of
Article II hereof with respect to the redemption of a sufficient number of
shares of Cumulative Preferred Stock and/or proceed to redeem a sufficient
number of shares of any other Preferred Stock to enable it to meet the
requirements of paragraph 5(a)(i) above, and, at the Corporation's discretion,
such additional number of shares of Cumulative Preferred Stock in order that the
"asset coverage" of a class of senior security which is stock, as defined in
Section 18(h) of the 1940 Act, of the remaining outstanding shares of Cumulative
Preferred Stock and any other Preferred Stock is up to 275%, and deposit with
the Paying Agent Deposit Securities having an initial combined value sufficient
to effect the redemption of any shares of Cumulative Preferred Stock to be
redeemed, as contemplated by paragraph 3(a) of Article II hereof, and/or any
other Preferred Stock to be redeemed, as contemplated by its terms.

                                       27
<PAGE>

               (c)   Failure to Maintain a Portfolio Calculation At Least Equal
                     to the Basic Maintenance Amount.
                     --------------------------------
         If a Portfolio Calculation for Moody's at least equal to the Basic
Maintenance Amount is not maintained as provided in paragraph 5(a)(ii)(A) above
and such failure is not cured by the related Basic Maintenance Amount Cure Date,
the Corporation shall give a Notice of Redemption as described in paragraph 3 of
Article II hereof with respect to the redemption of a sufficient number of
shares of Cumulative Preferred Stock and/or proceed to redeem a sufficient
number of shares of any other Preferred Stock to enable it to meet the
requirements of paragraph 5(a)(ii)(A) above, and, at the Corporation's
discretion, such additional number of shares of Cumulative Preferred Stock in
order that the Portfolio Calculation exceeds the Basic Maintenance Amount of the
remaining outstanding shares of Cumulative Preferred Stock and any other
Preferred Stock by up to 10%, and deposit with the Paying Agent Deposit
Securities having an initial combined value sufficient to effect the redemption
of any shares of Cumulative Preferred Stock to be redeemed, as contemplated by
paragraph 3(a) of Article II hereof, and/or any other Preferred Stock to be
redeemed, as contemplated by its terms.

               (d)   Status of Shares Called for Redemption.
                     ---------------------------------------

         For purposes of determining whether the requirements of paragraphs
5(a)(i) and 5(a)(ii)(A) hereof are satisfied, (i) no share of the Cumulative
Preferred Stock and/or any other Preferred Stock shall be deemed to be
outstanding for purposes of any computation if, prior to or concurrently with
such determination, sufficient Deposit Securities to pay the full Redemption
Price for such share of Cumulative Preferred Stock and/or the applicable
redemption price for such share of any other Preferred Stock shall have been
deposited in trust with the Paying Agent and the requisite Notice of Redemption
and/or applicable notice of redemption for shares of any other Preferred Stock
shall have been given, and (ii) such Deposit Securities deposited with the
Paying Agent shall not be included in determining whether the requirements of
paragraphs 5(a)(i) and 5(a)(ii)(A) hereof are satisfied.

         6.    Certain Other Restrictions.
               ---------------------------

               (a)   For so long as the Cumulative Preferred Stock is rated by
Moody's, the Corporation will not, and will cause the Adviser not to, (i)
knowingly and willfully purchase or sell a portfolio security for the specific
purpose of causing, and with the actual knowledge that the effect of such
purchase or sale will be to cause, the Portfolio Calculation as of the date of
the purchase or sale to be less than the Basic Maintenance Amount as of such
date, (ii) in the event that, as of the immediately preceding Valuation Date,
the Portfolio Calculation exceeded the Basic Maintenance Amount by 5% or less,
alter the composition of the Corporation's portfolio securities in a manner
reasonably expected to reduce the Portfolio Calculation, unless the Corporation
shall have confirmed that, after giving effect to such alteration, the Portfolio
Calculation exceeded the Basic Maintenance Amount or (iii) declare or pay any
dividend or other distribution on any shares of Common Stock or repurchase any
shares of Common Stock, unless the Corporation shall have confirmed that, after
giving effect to such declaration, other distribution or repurchase, the
Corporation continues to satisfy the requirements of paragraph 5(a)(ii)(A) of
Article II hereof.

                                       28
<PAGE>

               (b)   For so long as the Cumulative Preferred Stock is rated by
Moody's, the Corporation shall not (a) acquire or otherwise invest in (i) future
contracts or (ii) options on futures contracts, (b) engage in reverse repurchase
agreements, (c) engage in short sales, (d) overdraw any bank account, (e) write
options on portfolio securities other than call options on securities held in
the Corporation's portfolio or that the Corporation has an immediate right to
acquire through conversion or exchange of securities held in its portfolio, or
(f) borrow money, except for the purpose of clearing and/or settling
transactions in portfolio securities (which borrowings shall under any
circumstances be limited to the lesser of $10,000,000 and an amount equal to 5%
of the Market Value of the Corporation's assets at the time of such borrowings
and which borrowings shall be repaid within 60 days and not be extended or
renewed), unless in any such case, the Corporation shall have received written
confirmation from Moody's that such investment activity will not adversely
affect Moody's then current rating of the Cumulative Preferred Stock.
Furthermore, for so long as the Cumulative Preferred Stock is rated by Moody's,
unless the Corporation shall have received the written confirmation from Moody's
referred to in the preceding sentence, the Corporation may engage in the lending
of its portfolio securities only in an amount of up to 15% of the Corporation's
total assets, provided that the Corporation receives cash collateral for such
loaned securities which is maintained at all times in an amount equal to at
least 100% of the current market value of the loaned securities and, if
invested, is invested only in money market mutual funds meeting the requirements
of Rule 2a-7 under the 1940 Act that maintain a constant $1.00 per share net
asset value. In determining the Portfolio Calculation, the Corporation shall use
the Moody's Discount Factor applicable to the loaned securities rather than the
Moody's Discount Factor applicable to the collateral.

               (c)   For so long as the Cumulative Preferred Stock is rated by
Moody's, the Corporation shall not consolidate the Corporation with, merge the
Corporation into, sell or otherwise transfer all or substantially all of the
Corporation's assets to another entity or adopt a plan of liquidation of the
Corporation, in each case without providing prior written notification to
Moody's.

         7.    Termination of Rating Agency Provisions.
               ----------------------------------------

               (a)   The Board of Directors may determine that it is not in the
best interests of the Corporation to continue to comply with the provisions of
paragraphs 5(a)(ii), 5(c) and 6 of Article II hereof with respect to Moody's, in
which case the Corporation will no longer be required to comply with any of the
provisions of paragraphs 5(a)(ii), 5(c) and 6 of Article II hereof with respect
to Moody's, provided that (i) the Corporation has given the Paying Agent,
Moody's and holders of the Cumulative Preferred Stock at least 20 calendar days
written notice of such termination of compliance, (ii) the Corporation is in
compliance with the provisions of paragraphs 5(a)(i), 5(a)(ii), 5(c) and 6 of
Article II hereof at the time the notice required in clause (i) hereof is given
and at the time of the termination of compliance with the provisions of
paragraphs 5(a)(ii), 5(c) and 6 of Article II hereof with respect to Moody's,
(iii) at the time the notice required in clause (i) hereof is given and at the
time of termination of compliance with the provisions of paragraphs 5(a)(ii),
5(c) and 6 of Article II hereof with respect to Moody's the Cumulative Preferred
Stock is listed on the New York Stock Exchange or on another exchange registered
with the Securities and Exchange Commission as a national securities exchange
and (iv) at the time of termination of compliance with the provisions of
paragraphs 5(a)(ii), 5(c) and 6 of Article II hereof with respect to Moody's,
the Cumulative Preferred Stock shall have

                                       29
<PAGE>

received a rating from at least one NRSRO that is at least comparable to the
then current rating from Moody's.

               (b)   On the date that the notice is given in paragraph 7(a)
above and on the date that compliance with the provisions of paragraphs
5(a)(ii), 5(c) and 6 of Article II hereof with respect to Moody's is terminated,
the Corporation shall provide the Paying Agent and Moody's with an Officers'
Certificate as to the compliance with the provisions of paragraph 7(a) hereof,
and the provisions of paragraphs 5(a)(ii), 5(c) and 6 of Article II hereof with
respect to Moody's shall terminate on such later date and thereafter have no
force or effect.

         8.    Limitation on Issuance of Additional Preferred Stock.
               -----------------------------------------------------

         So long as any shares of Cumulative Preferred Stock are outstanding,
the Corporation may issue and sell additional shares of Cumulative Preferred
Stock authorized hereby and/or shares of one or more other series of Preferred
Stock constituting a series of a class of senior securities of the Corporation
representing stock under Section 18 of the 1940 Act in addition to the shares of
Cumulative Preferred Stock, provided that (i) immediately after giving effect to
the issuance and sale of such additional Preferred Stock and to the
Corporation's receipt and application of the proceeds thereof, the Corporation
will maintain the Asset Coverage of the shares of Cumulative Preferred Stock and
all other Preferred Stock of the Corporation then outstanding, and (ii) no such
additional Preferred Stock shall have any preference or priority over any other
Preferred Stock of the Corporation upon the distribution of the assets of the
Corporation or in respect of the payment of dividends. Shares of the Cumulative
Preferred Stock redeemed or otherwise acquired by Corporation shall be returned
to the status of authorized but unissued shares of Preferred Stock, without
designation as to series.

                                  ARTICLE III.

                     ABILITY OF BOARD OF DIRECTORS TO MODIFY
                   THE TERMS OF THE CUMULATIVE PREFERRED STOCK

         To the extent permitted by law, the Board of Directors may modify or
interpret these terms of the Cumulative Preferred Stock to resolve any
inconsistency or ambiguity or to remedy any formal defect so long as such
modification or interpretation does not materially adversely affect any of the
contract rights of holders of the Cumulative Preferred Stock or any other stock
of the Corporation, as expressly set forth in the Charter, or, if the
Corporation has not previously terminated compliance with the provisions hereof
with respect to Moody's pursuant to paragraph 7 of Article II hereof, adversely
affect the then current rating on the Cumulative Preferred Stock by Moody's.

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<PAGE>


         SECOND:  The shares of Cumulative Preferred Stock have been classified
and designated by the Board of Directors under the authority contained in the
Charter.

         THIRD:  These Articles Supplementary have been approved by the Board of
Directors in the manner and by the vote required by law.

         FOURTH:  The undersigned President of the Corporation acknowledges
these Articles Supplementary to be the corporate act of the Corporation and, as
to all matters or facts required to be verified under oath, the undersigned
President acknowledges that, to the best of his knowledge, information and
belief, these matters and facts are true in all material respects and that this
statement is made under the penalties for perjury.

                                       31
<PAGE>


         IN WITNESS WHEREOF, the Corporation has caused these Articles
Supplementary to be signed in its name and on its behalf by its President and
attested to by its Secretary on this ___ day of _____________, 2003

ATTEST:                                          ROYCE VALUE TRUST, INC.




By:____________________________                  By:____________________________
Name:                                            Name:
Title:  Secretary                                Title:  President


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</DOCUMENT>
