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<SEC-DOCUMENT>0000950117-02-000677.txt : 20020415
<SEC-HEADER>0000950117-02-000677.hdr.sgml : 20020415
ACCESSION NUMBER:		0000950117-02-000677
CONFORMED SUBMISSION TYPE:	N-2/A
PUBLIC DOCUMENT COUNT:		9
FILED AS OF DATE:		20020329

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			COHEN & STEERS QUALITY INCOME REALTY FUND INC
		CENTRAL INDEX KEY:			0001157842

	FILING VALUES:
		FORM TYPE:		N-2/A
		SEC ACT:		1933 Act
		SEC FILE NUMBER:	333-82436
		FILM NUMBER:		02592478

	BUSINESS ADDRESS:	
		STREET 1:		757 THIRD AVENUE 20TH FLOOR
		CITY:			NEW YORK
		STATE:			NY
		ZIP:			10017
		BUSINESS PHONE:		2124469155

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	COHEN & STEERS INCOME REALTY FUND INC
		DATE OF NAME CHANGE:	20010821

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			COHEN & STEERS QUALITY INCOME REALTY FUND INC
		CENTRAL INDEX KEY:			0001157842

	FILING VALUES:
		FORM TYPE:		N-2/A
		SEC ACT:		1940 Act
		SEC FILE NUMBER:	811-10481
		FILM NUMBER:		02592479

	BUSINESS ADDRESS:	
		STREET 1:		757 THIRD AVENUE 20TH FLOOR
		CITY:			NEW YORK
		STATE:			NY
		ZIP:			10017
		BUSINESS PHONE:		2124469155

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	COHEN & STEERS INCOME REALTY FUND INC
		DATE OF NAME CHANGE:	20010821
</SEC-HEADER>
<DOCUMENT>
<TYPE>N-2/A
<SEQUENCE>1
<FILENAME>a31981.txt
<DESCRIPTION>COHEN & STEERS QUALITY INCOME FUND
<TEXT>


<PAGE>


     AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MARCH 28, 2002

                                               SECURITIES ACT FILE NO. 333-82436
                                       INVESTMENT COMPANY ACT FILE NO. 811-10481
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                              -------------------

                                    FORM N-2

(CHECK APPROPRIATE BOX OR BOXES)

[x] REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933

[x] PRE-EFFECTIVE AMENDMENT NO. 2

[ ] POST-EFFECTIVE AMENDMENT NO.

                                     AND/OR

[x] REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940

[x] AMENDMENT NO. 6

                              -------------------
                                 COHEN & STEERS
                        QUALITY INCOME REALTY FUND, INC.
               (EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER)
                              -------------------
                                757 THIRD AVENUE
                            NEW YORK, NEW YORK 10017
                    (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)

       REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (212) 832-3232

                                ROBERT H. STEERS
                    COHEN & STEERS CAPITAL MANAGEMENT, INC.
                                757 THIRD AVENUE
                            NEW YORK, NEW YORK 10017
                                 (212) 832-3232
                    (NAME AND ADDRESS OF AGENT FOR SERVICE)
                              -------------------
                                WITH COPIES TO:
<Table>
<S>                                                 <C>
              SARAH E. COGAN, ESQ.                            LEONARD B. MACKEY, JR.
           SIMPSON THACHER & BARTLETT                   CLIFFORD CHANCE ROGERS & WELLS LLP
              425 LEXINGTON AVENUE                               200 PARK AVENUE
            NEW YORK, NEW YORK 10017                         NEW YORK, NEW YORK 10166
</Table>
                              -------------------

    APPROXIMATE DATE OF PROPOSED PUBLIC OFFERING: As soon as practicable after
the effective date of this Registration Statement.

    If any of the securities being registered on this form are to be offered on
a delayed or continuous basis in reliance on Rule 415 under the Securities Act
of 1933, other than securities offered in connection with a dividend
reinvestment plan, check the following box. [ ]
                              -------------------
       CALCULATION OF REGISTRATION FEE UNDER THE SECURITIES ACT OF 1933

<Table>
<Caption>
===============================================================================================================
                                                         PROPOSED         PROPOSED
                                                         MAXIMUM           MAXIMUM
         TITLE OF SECURITIES            AMOUNT BEING  OFFERING PRICE      AGGREGATE      AMOUNT OF REGISTRATION
           BEING REGISTERED              REGISTERED    PER UNIT(1)    OFFERING PRICE(1)        FEE(1)(2)
- ---------------------------------------------------------------------------------------------------------------
<S>                                     <C>           <C>             <C>                <C>
Series T Preferred Shares, par value
  $0.001..............................     2,800         $25,000         $70,000,000             $6,440
- ---------------------------------------------------------------------------------------------------------------
Series TH Preferred Shares, par value
  $0.001..............................     2,800         $25,000         $70,000,000             $6,440
- ---------------------------------------------------------------------------------------------------------------
Series F Preferred Shares, par value
  $0.001..............................     2,800         $25,000         $70,000,000             $6,440
- ---------------------------------------------------------------------------------------------------------------
Series W Preferred Shares, par value
  $0.001..............................     2,800         $25,000         $70,000,000             $6,440
===============================================================================================================
</Table>

(1) Estimated solely for the purpose of computing the registration fee pursuant
    to Rule 457.

(2) Includes registration fees paid on February 7, 2002 and March 22, 2002 of
    $920 and $24,840, respectively.

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

    THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF THE
SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATES AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(a), MAY DETERMINE.

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



<Page>




    This filing contains only the Exhibits that have not been previously filed.

                COHEN & STEERS QUALITY INCOME REALTY FUND, INC.
                            FORM N-2 REFERENCE SHEET
                              PART A -- PROSPECTUS

         Incorporated by reference to Part A filed with the Fund's Amendment
No. 1 to Form N-2 (File No. 333-82436, 811-10481) on March 26, 2002.


                 PART B -- STATEMENT OF ADDITIONAL INFORMATION

         Incorporated by reference to Part B filed with the Fund's Amendment
No. 1 to Form N-2 (File No. 333-82436, 811-10481) on March 26, 2002.



                              PART C -- OTHER INFORMATION

         Items 23-33 are contained herein and Exhibits which have not been
previously filed are included.




<Page>


                                     PART C

                               OTHER INFORMATION

ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS

(1) Financial Statements:

    Part A -- None

     -- Statement of Assets and Liabilities, as of February 15, 2002 (audited)

    Part B -- Statement of Operations, for the one day ended February 15,
              2002 (audited)

          -- Statement of Assets and Liabilities, as of March 21,
             2002 (unaudited)

          -- Statement of Operations, as of March 21, 2002 (unaudited)

          -- Statement of Changes in Net Assets, for the period February 25,
             2002 through March 21, 2002 (unaudited)

          -- Report of Independent Accountants

         All other financial statements, schedules and historical financial
         information are omitted because the conditions requiring their filing
         do not exist.

(2) Exhibits:


<Table>
<S>  <C>
(a)  -- Articles of Incorporation.'D'
        Articles of Amendment'D''D'
(b)  -- By-Laws. Incorporated by reference to the Registration
        Statement.'D'
(c)  -- Not applicable.
(d)  -- (i) Form of Articles Supplementary Creating AMPS.'D''D''D'
     -- (ii) Specimen Certificate for AMPS.'D''D''D'
(e)  -- Dividend Reinvestment Plan.'D''D'
(f)  -- Not applicable.
(g)  -- Investment Management Agreement.'D''D'
(h)  -- Form of Purchase Agreement.'D''D''D'
(i)  -- Not applicable.
(j)  -- Form of Master Custodian Agreement.'D''D'
(k)  -- (i) Form of Transfer Agency, Registrar and Dividend
        Disbursing Agreement.'D''D'
     -- (ii) Form of Administration Agreement between the Fund
        and the Investment Manager.'D''D'
     -- (iii) Form of Administration Agreement between the Fund
        and State Street Bank and Trust Company.'D''D'
     -- (iv) Form of Auction Agency Agreement between the Fund
        and The Bank of New York.'D''D''D'
     -- (v) Form of Broker-Dealer Agreement.'D''D''D'
(l)  -- (i) Opinion and Consent of Simpson Thacher & Bartlett.'D''D''D'
     -- (ii) Opinion and Consent of Venable, Baetjer and Howard, LLP.'D''D''D'
(m)  -- Not applicable.
(n)  -- Consent of Independent Auditors.'D''D''D'
(o)  -- Not applicable.
(p)  -- Not applicable.
(q)  -- Not applicable.
(r)  -- (i) Code of Ethics of the Fund.'D''D'
     -- (ii) Code of Ethics of Investment Manager.'D''D'
</Table>


                                      C-1



<Page>


<Table>
<S>  <C>
(s)  -- Power of Attorney.'D''D'
</Table>

- ---------


'D'       Incorporated by reference to the Fund's Registration Statement on
          Form N-2, (File Nos. 333-68150 and 811-10481) filed on August 22,
          2001.
'D''D'    Incorporated by reference to Amendment No. 1 to the Fund's
          Registration Statement (File Nos. 333-68150 and 811-10481), filed
          January 23, 2002.
'D''D''D' Filed herewith.

ITEM 25. MARKETING ARRANGEMENTS

    See Exhibit 2(h).

ITEM 26. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION

    The approximate expenses in connection with the Offering, all of which are
being borne by the Registrant, are as follows:

<Table>
<S>                                                           <C>
Printing Costs..............................................  $100,000
Legal Fees..................................................  $200,000
Auditing Fees...............................................  $ 48,000
Registration Fees...........................................  $ 25,760
S&P and Moody's Rating Initial Costs........................  $167,500
Miscellaneous...............................................  $  1,000
                                                              --------
                                                              $542,260
                                                              --------
                                                              --------
</Table>

ITEM 27. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL

    None.

ITEM 28. NUMBER OF HOLDERS OF SECURITIES

    Set forth below is the number of record holders as of March 21, 2002
of each class of securities of the Registrant:

<Table>
<Caption>
                                                                NUMBER OF
                       TITLE OF CLASS                         RECORD HOLDERS
                       --------------                         --------------
<S>                                                           <C>
Common Shares
Series T Preferred Shares, par value $0.001 per share......        -0-
Series TH Preferred Shares, par value $0.001 per share.....        -0-
Series F Preferred Shares, par value $0.001 per share......        -0-
Series W Preferred Shares, par value $0.001 per share......        -0-
</Table>

ITEM 29. INDEMNIFICATION

    It is the Registrant's policy to indemnify its directors, officers,
employees and other agents to the maximum extent permitted by Section 2-418 of
the General Corporation Law of the State of Maryland as set forth in Article
NINTH of Registrant's Charter (the 'Charter'), and Article VIII, of the
Registrant's By-Laws. The liability of the Registrant's directors and officers
is dealt with in Article NINTH of Registrant's Charter. The liability of Cohen &
Steers Capital Management, Inc., the Registrant's investment manager (the
'Investment Manager'), for any loss suffered by the Registrant or its
shareholders is set forth in Section 5 of the Investment Management Agreement.

    Insofar as indemnification for liabilities arising under the Securities Act
of 1933, as amended (the 'Securities Act'), may be permitted to directors,
officers and controlling persons of the Registrant pursuant to the provisions
described in this Item 29, or otherwise, the Registrant has been advised that in
the opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Securities Act and is therefore
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Registrant of expenses incurred or
paid by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director,

                                      C-2







<Page>


officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.

ITEM 30. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT MANAGER

    The description of the Investment Manager under the caption 'Management of
the Fund' in the Prospectus and in the Statement of Additional Information,
respectively, constituting Parts A and B, respectively, of this Registration
Statement are incorporated by reference herein.

    The following is a list of the Directors and Officers of the Investment
Manager. None of the persons listed below has had other business connections of
a substantial nature during the past two fiscal years.

<Table>
<Caption>
                      NAME                                               TITLE
                      ----                                               -----
<S>                                               <C>
Robert H. Steers................................  Chairman, Director
Martin Cohen....................................  President, Director
Joseph M. Harvey................................  Senior Vice President and Director of Research
James S. Corl...................................  Senior Vice President and Director of Investment
                                                    Strategy
John J. McCombe.................................  Senior Vice President
Adam M. Derechin................................  Senior Vice President
Lawrence B. Stoller.............................  Senior Vice President and General Counsel
Greg E. Brooks..................................  Senior Vice President
Michael J. Kozoriz..............................  Vice President
Jay J. Chen.....................................  Vice President
Terrance R. Ober................................  Vice President
Victor M. Gomez.................................  Vice President -- Finance and Treasurer
</Table>

    Cohen & Steers Capital Management, Inc. acts as Investment Manager of, in
addition to the Registrant, the following registered investment companies:

    Cohen & Steers Advantage Income Realty Fund, Inc.

    Cohen & Steers Institutional Realty Shares, Inc.

    Cohen & Steers Equity Income Fund, Inc.

    Cohen & Steers Realty Shares, Inc.

    Cohen & Steers Total Return Realty Fund, Inc.

    Cohen & Steers Special Equity Fund, Inc.

    Frank Russell Investment Management Company -- Real Estate Securities Fund

    Russell Insurance Funds -- Real Estate Securities Fund

    American Skandia Trust -- AST Cohen & Steers Realty Portfolio

    Manufacturers Investment Trust -- Real Estate Securities Portfolio

ITEM 31. LOCATION OF ACCOUNTS AND RECORDS

    The majority of the accounts, books and other documents required to be
maintained by Section 31(a) of the Investment Company Act of 1940, as amended
and the Rules thereunder will be maintained as follows: journals, ledgers,
securities records and other original records will be maintained principally at
the offices of the Registrant's Administrator and Custodian, State Street Bank
and Trust Company. All other records so required to be maintained will be
maintained at the offices of Cohen & Steers Capital Management, Inc., 757 Third
Avenue, New York, New York 10017.

                                      C-3







<Page>


ITEM 32. MANAGEMENT SERVICES

    Not applicable.

ITEM 33. UNDERTAKINGS

    (1) The Registrant undertakes to suspend the offering of AMPS until the
prospectus is amended if (1) subsequent to the effective date of this
Registration Statement, the net asset value declines more than ten percent from
its net asset value as of the effective date of this Registration Statement or
(2) the net asset value increases to an amount greater than its net proceeds as
stated in the prospectus.

    (2) Not applicable.

    (3) Not applicable.

    (4) Not applicable.

    (5) The Registrant undertakes that:

        a. for the purpose of determining any liability under the Securities
           Act, the information omitted from the form of prospectus filed as
           part of this Registration Statement in reliance upon Rule 430A and
           contained in the form of prospectus filed by the Registrant pursuant
           to 497(h) under the 1933 Act shall be deemed to be part of the
           Registration Statement as of the time it was declared effective; and

        b. for the purpose of determining any liability under the Securities
           Act, each post-effective amendment that contains a form of prospectus
           shall be deemed to be a new registration statement relating to the
           securities offered therein, and the offering of such securities at
           that time shall be deemed to be the initial bona fide offering
           thereof.

    (6) The Registrant undertakes to send by first class mail or other means
designed to ensure equally prompt delivery, within two business days of receipt
of an oral or written request, its Statement of Additional Information.

                                      C-4











<Page>



                                   SIGNATURES

    Pursuant to requirements of the Securities Act of 1933 and the Investment
Company Act of 1940, the Registrant has duly caused this registration statement
to be signed on its behalf by the undersigned, thereunto duly authorized in the
City of New York and the State of New York, on the 28th day of March 2002.

                                          COHEN & STEERS QUALITY INCOME
                                          REALTY FUND, INC.

                                          By:          /s/ MARTIN COHEN
                                              ..................................
                                                        MARTIN COHEN
                                               PRESIDENT, TREASURER (PRINCIPAL
                                                        FINANCIAL
                                                 AND ACCOUNTING OFFICER) AND
                                                         DIRECTOR

    Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated.


<Table>
<Caption>
                SIGNATURE                               TITLE                            DATE
                ---------                               -----                            ----
<S>                                         <C>                                   <C>
                    *
 ..........................................  Chairman of the Board (principal        March 28, 2002
            (ROBERT H. STEERS)                executive officer), Secretary and
                                              Director

                    *                       Director                                March 28, 2002
 .........................................
            (GREGORY C. CLARK)

                    *                       Director                                March 28, 2002
 .........................................
              (BONNIE COHEN)

                                            Director                                March 28, 2002
 .........................................
              (MARTIN COHEN)

                    *                       Director                                March 28, 2002
 .........................................
            (GEORGE GROSSMAN)

                    *                       Director                                March 28, 2002
 .........................................
           (RICHARD J. NORMAN)

                    *                       Director                                March 28, 2002
 .........................................
          (WILLARD H. SMITH JR.)

 *By      /s/ MARTIN COHEN
    ......................................
              MARTIN COHEN,
            ATTORNEY-IN-FACT**
</Table>


** Powers of Attorney were previously filed.

                                      C-5





                          STATEMENT OF DIFFERENCES
                          ------------------------

 The registered trademark symbol shall be expressed as.................. 'r'
 The dagger symbol shall be expressed as................................ 'D'
 Characters normally expressed as superscript shall be preceded by...... 'pp'




</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.2D
<SEQUENCE>3
<FILENAME>ex99-2d1.txt
<DESCRIPTION>EXHIBIT 99.2(D)(I)
<TEXT>


<PAGE>


                             ARTICLES SUPPLEMENTARY

                 COHEN & STEERS QUALITY INCOME REALTY FUND, INC.



            Articles Supplementary Creating And Fixing The Rights of
                   Series T, Series TH, Series F and Series W
                     Taxable Auction Market Preferred Shares

         Cohen & Steers Quality Income Realty Fund, Inc., a Maryland corporation
having its principal Maryland office in the City of Baltimore in the State of
Maryland (the "Corporation"), certifies to the State Department of Assessments
and Taxation of Maryland that:

         First: Pursuant to authority expressly vested in the Board of Directors
of the Corporation by Article FIFTH of its Amended and Restated Articles of
Incorporation (which as hereafter amended, restated and supplemented from time
to time, is together with these Articles Supplementary, the "Charter"), and the
Maryland General Corporation Law (the "MGCL"), the Board of Directors has duly
classified out of the Corporation's authorized and unissued common stock, and
authorized the creation and issuance of, 11,200 shares of the Corporation's
Taxable Auction Market Preferred Shares (par value $.001 per share) (the "AMPS")
and has further classified 2,800 of such shares as "Series T AMPS", liquidation
preference $25,000 per share, 2,800 of such shares as "Series TH AMPS",
liquidation preference $25,000 per share, 2,800 of such shares as "Series F
AMPS", liquidation preference $25,000 per share, and 2,800 of such shares as
"Series W AMPS", liquidation preference $25,000 per share (respectively the
"Series T AMPS" the "Series TH AMPS", the "Series F AMPS", and the "Series W
AMPS" and each a "Series" of Taxable Auction Market Preferred Shares, and,
together, the "AMPS").

         Second: Pursuant to Section 2-411 of the MGCL and authority granted by
Article III of the Corporation`s Amended and Restated By-laws, the Board of
Directors of the Corporation has appointed a pricing committee (the "Pricing
Committee") and has authorized such Pricing Committee to fix the terms of the
AMPS for each Series, as set forth herein.

         Third: The preferences, voting powers, restrictions, limitations as to
dividends, qualifications, and terms and conditions of redemption, of the AMPS
are as follows:


                                   DESIGNATION

         Series T AMPS: A series of 2,800 AMPS, par value $0.001 per share,
liquidation preference $25,000 per share, is hereby designated "Series T Taxable
Auction Market Preferred Shares" ("Series T AMPS"). Each share of Series T AMPS
may be issued on a date to be determined by the Board of Directors of the
Corporation or pursuant to their delegated authority; have an initial dividend
rate per annum, initial Dividend Period and an initial Dividend Payment Date as
shall be determined in advance of the issuance thereof by the Board of Directors
of the Corporation or pursuant to their delegated authority; and have such other
preferences, rights, voting powers, restrictions, limitations as to dividends,
qualifications and terms and conditions of redemption, in addition to those
required by applicable law, or as are set forth in Part I and Part II of these
Articles Supplementary. The Series T AMPS shall constitute a separate series of
AMPS of the Corporation.

         Series TH AMPS: A series of 2,800 AMPS, par value $0.001 per share,
liquidation preference $25,000 per share, is hereby designated "Series TH
Taxable Auction Market Preferred Shares" ("Series TH AMPS"). Each share of
Series TH Preferred Share may be issued on a date to be determined by the Board
of Directors of the Corporation or pursuant to their delegated authority; have
an initial dividend rate per annum, initial Dividend Period and an initial
Dividend Payment Date as shall be determined in advance of the issuance thereof
by the Board of Directors of the Corporation or pursuant to their delegated
authority; and have such other preferences, rights, voting powers, restrictions,
limitations as to dividends, qualifications and terms and conditions of
redemption, in addition to those required by applicable law, or as are set forth
in Part I and Part II of these Articles Supplementary. The Series TH Preferred
Shares shall constitute a separate series of AMPS of the Corporation.

         Series F AMPS: A series of 2,800 AMPS, par value $0.001 per share,
liquidation preference $25,000 per share, is hereby designated "Series F Taxable
Auction Market Preferred Shares" ("Series F AMPS"). Each share of Series F AMPS
may be issued on a date to be determined by the Board of Directors of the
Corporation or pursuant



<PAGE>


to their delegated authority; have an initial dividend rate per annum, initial
Dividend Period and an initial Dividend Payment Date as shall be determined in
advance of the issuance thereof by the Board of Directors of the Corporation or
pursuant to their delegated authority; and have such other preferences, rights,
voting powers, restrictions, limitations as to dividends, qualifications and
terms and conditions of redemption, in addition to those required by applicable
law, or as are set forth in Part I and Part II of these Articles Supplementary.
The Series F AMPS shall constitute a separate series of AMPS of the Corporation.

         Series W AMPS: A series of 2,800 AMPS, par value $0.001 per share,
liquidation preference $25,000 per share, is hereby designated "Series W Taxable
Auction Market Preferred Shares" ("Series W AMPS"). Each share of Series W AMPS
may be issued on a date to be determined by the Board of Directors of the
Corporation or pursuant to their delegated authority; have an initial dividend
rate per annum, initial Dividend Period and an initial Dividend Payment Date as
shall be determined in advance of the issuance thereof by the Board of Directors
of the Corporation or pursuant to their delegated authority; and have such other
preferences, rights, voting powers, restrictions, limitations as to dividends,
qualifications and terms and conditions of redemption, in addition to those
required by applicable law, or as are set forth in Part I and Part II of these
Articles Supplementary. The Series W AMPS shall constitute a separate series of
AMPS of the Corporation.

         Subject to the provisions of Section 11(b) of Part I hereof, the Board
of Directors of the Corporation may, in the future, reclassify additional shares
of the Corporation's unissued common stock as preferred stock, with the same
preferences, rights, voting powers, restrictions, limitations as to dividends,
qualifications and terms and conditions of redemption and other terms herein
described, except that the dividend rate for its initial Dividend Period, its
initial Dividend Payment Date and any other changes in the terms herein set
forth shall be as set forth in these Articles Supplementary with respect to the
additional shares.

         As used in Part I and Part II of these Articles Supplementary,
capitalized terms shall have the meanings provided in Section 17 of Part I and
Section 1 of Part II of these Articles Supplementary.

                             PART I: TERMS OF AMPS

         1. Number of Shares; Ranking.

         (a) The initial number of authorized shares constituting the Series T
AMPS is 2,800 shares, the initial number of authorized shares constituting the
Series TH AMPS is 2,800 shares, the initial number of authorized shares
constituting the Series F AMPS is 2,800 shares, and the initial number of
authorized shares constituting the Series W AMPS is 2,800 shares. No fractional
shares of any Series shall be issued.

         (b) Shares of each Series which at any time have been redeemed or
purchased by the Corporation shall, after such redemption or purchase, have the
status of authorized but unissued shares of preferred stock.

         (c) Shares of each Series shall rank on a parity with shares of any
other series of preferred stock of the Corporation (including any other AMPS) as
to the payment of dividends to which such shares are entitled.

         (d) No Holder of shares of any Series shall have, solely by reason of
being such a holder, any preemptive or other right to acquire, purchase or
subscribe for any shares of any Series, Common Shares of the Corporation or
other securities of the Corporation which it may hereafter issue or sell.

         2. Dividends.

         (a) The Holders of shares of each Series shall be entitled to receive,
when, as and if declared by the Board of Directors, out of funds legally
available therefor, cumulative cash dividends on their shares at the Applicable
Rate, determined as set forth in paragraph (c) of this Section 2, and no more,
payable on the respective dates determined as set forth in paragraph (b) of this
Section 2. Dividends on the Outstanding shares of each Series issued on the Date
of Original Issue shall accumulate from the Date of Original Issue.

         (b) (i) Dividends shall be payable when, as and if declared by the
Board of Directors following the initial Dividend Payment Date, subject to
subparagraph (b)(ii) of this Section 2, on the shares of each Series, as
follows:

                                       2



<PAGE>


                  (A) with respect to any Dividend Period of one year or less,
         on the Business Day following the last day of such Dividend Period;
         provided, however, if the Dividend Period is more than 91 days then on
         the 91st, 181st and 271st days within such period, if applicable, and
         on the Business Day following the last day of such Dividend Period; and

                  (B) with respect to any Dividend Period of more than one year,
         on a quarterly basis on each January 1, April 1, July 1 and October 1
         within such Dividend Period and on the Business Day following the last
         day of such Dividend Period.

         (ii) If a day for payment of dividends resulting from the application
of subparagraph (b) above is not a Business Day, then the Dividend Payment Date
shall be the first Business Day following such day for payment of dividends.

         (iii) The Corporation shall pay to the Paying Agent not later than
12:00 noon, New York City time, on each Dividend Payment Date for a Series, an
aggregate amount of immediately available funds equal to the dividends to be
paid to all Holders of such Series on such Dividend Payment Date. The
Corporation shall not be required to establish any reserves for the payment of
dividends.

         (iv) All moneys paid to the Paying Agent for the payment of dividends
shall be held in trust for the payment of such dividends by the Paying Agent for
the benefit of the Holders specified in subparagraph (b)(v) of this Section 2.
Any moneys paid to the Paying Agent in accordance with the foregoing but not
applied by the Paying Agent to the payment of dividends will, upon request and
to the extent permitted by law, be repaid to the Corporation at the end of 90
days from the date on which such moneys were to have been so applied.

         (v) Each dividend on each Series shall be paid on the Dividend Payment
Date therefor to the Holders of that Series as their names appear on the stock
ledger or stock records of the Corporation on the Business Day next preceding
such Dividend Payment Date; provided, however, if dividends are in arrears, they
may be declared and paid at any time to Holders as their names appear on the
stock ledger or stock records of the Corporation on such date not exceeding 15
days preceding the payment date thereof, as may be fixed by the Board of
Directors. No interest will be payable in respect of any dividend payment or
payments which may be in arrears.

         (c) (i) dividend rate on Outstanding shares of each Series during the
period from and after the Date of Original Issue to and including the last day
of the initial Dividend Period therefor shall be equal to the rate as determined
in the manner set forth under "Designation" above. For each subsequent Dividend
Period for each Series, the dividend rate shall be equal to the rate per annum
that results from an Auction (but the rate set at the Auction will not exceed
the Maximum Rate); provided, however, that if an Auction for any subsequent
Dividend Period of a Series is not held for any reason or if Sufficient Clearing
Orders have not been made in an Auction (other than as a result of all shares of
any Series being the subject of Submitted Hold Orders and other than in an
auction for a Special Dividend Period), then the dividend rate on the shares of
that Series for any such Dividend Period shall be the Maximum Rate (except (i)
during a Default Period when the dividend rate shall be the Default Rate, as set
forth in Section 2(c)(ii) below or (ii) after a Default Period and prior to the
beginning of the next Dividend Period when the dividend rate shall be the
Maximum Rate at the close of business on the last day of such Default Period).
If the Fund has declared a Special Dividend Period and there are not Sufficient
Clearing Orders, the dividend rate for the next rate period will be the same as
during the current rate period. If as a result of an unforeseeable disruption of
the financial markets, an Auction cannot be held for a period of more than three
business days, the dividend rate for the subsequent Dividend Period will be the
same as the dividend rate for the current Dividend Period.

         (ii) Subject to the cure provisions in Section 2(c)(iii) below, a
"Default Period" with respect to a particular Series will commence on any date
the Corporation fails to deposit irrevocably in trust in same-day funds, with
the Paying Agent by 12:00 noon, New York City time, (A) the full amount of any
declared dividend on that Series payable on the Dividend Payment Date (a
"Dividend Default") or (B) the full amount of any redemption price (the
"Redemption Price") payable on the date fixed for redemption (the "Redemption
Date") (a "Redemption Default") and together with a Dividend Default,
hereinafter referred to as "Default").

         Subject to the cure provisions of Section 2(c)(iii) below, a Default
Period with respect to a Dividend Default or a Redemption Default shall end on
the Business Day on which, by 12:00 noon, New York City time, all

                                       3



<PAGE>


unpaid dividends and any unpaid Redemption Price shall have been deposited
irrevocably in trust in same-day funds with the Paying Agent. In the case of a
Dividend Default, the Applicable Rate for each Dividend Period commencing during
a Default Period will be equal to the Default Rate, and each subsequent Dividend
Period commencing after the beginning of a Default Period shall be a Standard
Dividend Period; provided, however, that the commencement of a Default Period
will not by itself cause the commencement of a new Dividend Period. No Auction
shall be held during a Default Period applicable to that Series.

         (iii) No Default Period with respect to a Dividend Default or
Redemption Default shall be deemed to commence if the amount of any dividend or
any Redemption Price due (if such default is not solely due to the willful
failure of the Corporation) is deposited irrevocably in trust, in same-day funds
with the Paying Agent by 12:00 noon, New York City time within three Business
Days after the applicable Dividend Payment Date or Redemption Date, together
with an amount equal to the Default Rate applied to the amount of such
non-payment based on the actual number of days comprising such period divided by
360 for each Series. The Default Rate shall be equal to the Reference Rate
multiplied by three (3).

         (iv) The amount of dividends per share payable (if declared) on each
Dividend Payment Date of each Dividend Period of less than one (1) year (or in
respect of dividends on another date in connection with a redemption during such
Dividend Period) shall be computed by multiplying the Applicable Rate (or the
Default Rate) for such Dividend Period (or a portion thereof) by a fraction, the
numerator of which will be the number of days in such Dividend Period (or
portion thereof) that such share was Outstanding and for which the Applicable
Rate or the Default Rate was applicable and the denominator of which will be 360
for each Series, multiplying the amount so obtained by $25,000, and rounding the
amount so obtained to the nearest cent. During any Dividend Period of one (1)
year or more, the amount of dividends per share payable on any Dividend Payment
Date (or in respect of dividends on another date in connection with a redemption
during such Dividend Period) shall be computed as described in the preceding
sentence, except that it will be determined on the basis of a year consisting of
twelve 30-day months.

         (d) Any dividend payment made on shares of any Series shall first be
credited against the earliest accumulated but unpaid dividends due with respect
to that Series.

         (e) For so long as the AMPS are Outstanding, except as otherwise
contemplated by Part I of these Articles Supplementary, the Corporation will 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, Common Shares or other shares ranking
junior to the AMPS as to dividends or upon liquidation) with respect to Common
Shares or any other capital stock of the Corporation ranking junior to the AMPS
as to dividends or upon liquidation, or call for redemption, redeem, purchase or
otherwise acquire for consideration any Common Shares or other capital stock
ranking junior to the AMPS (except by conversion into or exchange for shares of
the Corporation ranking junior to the AMPS as to dividends and upon
liquidation), unless (i) immediately after such transaction, the Corporation
would have Eligible Assets with an aggregate Discounted Value at least equal to
the Preferred Shares Basic Maintenance Amount and the 1940 Act Preferred Shares
Asset Coverage would be achieved, (ii) all cumulative and unpaid dividends due
on or prior to the date of the transaction have been declared and paid in full
with respect to the Corporation's preferred stock, including the AMPS or shall
have been declared and sufficient funds for the payment thereof deposited with
the Auction Agent, and (iii) the Corporation has redeemed the full number of
shares of preferred stock required to be redeemed by any mandatory provision for
redemption including the AMPS required to be redeemed by any provision for
mandatory redemption contained in Section 3(a)(ii) of Part I of these Articles
Supplementary.

         (f) For so long as the AMPS are Outstanding, except as set forth in the
next sentence, the Corporation will not declare, pay or set apart for payment on
any series of stock of the Corporation ranking, as to the payment of dividends,
on a parity with the AMPS for any period unless full cumulative dividends have
been or contemporaneously are declared and paid on each Series through their
most recent Dividend Payment Date. When dividends are not paid in full upon the
AMPS through their most recent Dividend Payment Dates or upon any other series
of stock ranking on a parity as to the payment of dividends with AMPS through
their most recent respective Dividend Payment Dates, all dividends declared upon
the AMPS and any other such series of stock ranking on a parity as to the
payment of dividends with the AMPS shall be declared pro rata so that the amount
of dividends declared per share on the AMPS and such other series of preferred
stock ranking on a parity therewith shall in all cases bear to each other the
same ratio that accumulated dividends per share on the AMPS and such other
series of preferred stock ranking on a parity therewith bear to each other.

                                       4



<PAGE>


         3. Redemption.

         (a) (i) After the initial Dividend Period, subject to the provisions of
this Section 3 and to the extent permitted under the 1940 Act and Maryland law,
the Corporation may, at its option, redeem in whole or in part out of funds
legally available therefor shares of any Series herein designated as (A) having
a Dividend Period of one year or less, on the Business Day after the last day of
such Dividend Period by delivering a notice of redemption not less than 15
calendar days and not more than 40 calendar days prior to the Redemption Date,
at a redemption price per share equal to $25,000, plus an amount equal to
accumulated but unpaid dividends thereon (whether or not earned or declared) to
the Redemption Date ("Redemption Price"), or (B) having a Dividend Period of
more than one year, on any Business Day prior to the end of the relevant
Dividend Period by delivering a notice of redemption not less than 15 calendar
days and not more than 40 calendar days prior to the Redemption Date, at the
Redemption Price, plus a redemption premium, if any, determined by the Board of
Directors after consultation with the Broker-Dealers and set forth in any
applicable Specific Redemption Provisions at the time of the designation of such
Dividend Period as set forth in Section 4 of Part I of these Articles
Supplementary; provided, however, that during a Dividend Period of more than one
year, no shares of any Series will be subject to optional redemption except in
accordance with any Specific Redemption Provisions approved by the Board of
Directors after consultation with the Broker-Dealers at the time of the
designation of such Dividend Period. Notwithstanding the foregoing, the
Corporation shall not give a notice of or effect any redemption pursuant to this
Section 3(a)(i) unless, on the date on which the Corporation gives such notice
and on the Redemption Date, (a) the Corporation has available Deposit Securities
with maturity or tender dates not later than the day preceding the applicable
Redemption Date and having a value not less than the amount (including any
applicable premium) due to Holders of each Series by reason of the redemption of
each Series on the Redemption Date and (b) the Corporation would have Eligible
Assets with an aggregate Discounted Value at least equal to the Preferred Shares
Basic Maintenance Amount immediately subsequent to such redemption, if such
redemption were to occur on such date, it being understood that the provisions
of paragraph (d) of this Section 3 shall be applicable in such circumstances in
the event the Corporation makes the deposit and takes the other action required
thereby.

         (ii) If the Corporation fails as of any Valuation Date to meet the
Preferred Shares Basic Maintenance Amount Test or, as of the last Business Day
of any month, the 1940 Act Preferred Shares Asset Coverage, and such failure is
not cured within ten Business Days following the relevant Valuation Date, in the
case of a failure to meet the Preferred Shares Basic Maintenance Amount Test, or
the last Business Day of the following month in the case of a failure to meet
the 1940 Act Preferred Shares Asset Coverage (each an "Asset Coverage Cure
Date"), the AMPS will be subject to mandatory redemption out of funds legally
available therefor. The number of AMPS to be redeemed in such circumstances will
be equal to the lesser of (A) the minimum number of AMPS the redemption of
which, if deemed to have occurred immediately prior to the opening of business
on the relevant Asset Coverage Cure Date, would result in the Corporation
meeting the Preferred Shares Basic Maintenance Amount Test, and the 1940 Act
Preferred Shares Asset Coverage, as the case may be, in either case as of the
relevant Asset Coverage Cure Date (provided that, if there is no such minimum
number of shares the redemption of which would have such result, all AMPS then
Outstanding will be redeemed) and (B) the maximum number of AMPS that can be
redeemed out of funds expected to be available therefor on the Mandatory
Redemption Date at the Mandatory Redemption Price set forth in subparagraph
(a)(iii) of this Section 3.

         (iii) In determining the AMPS required to be redeemed in accordance
with the foregoing Section 3(a)(ii), the Corporation shall allocate the number
of shares required to be redeemed to satisfy the Preferred Shares Basic
Maintenance Amount Test or the 1940 Act Preferred Shares Asset Coverage, as the
case may be, pro rata or among the Holders of the AMPS in proportion to the
number of shares they hold and shares of other preferred stock subject to
mandatory redemption provisions similar to those contained in this Section 3,
subject to the further provisions of this subparagraph (iii). The Corporation
shall effect any required mandatory redemption pursuant to: (A) the Preferred
Shares Basic Maintenance Amount Test, as described in subparagraph (a)(ii) of
this Section 3, no later than 30 days after the Corporation last met the
Preferred Shares Basic Maintenance Amount Test, or (B) the 1940 Act Preferred
Shares Asset Coverage, as described in subparagraph (a)(ii) of this Section 3,
no later than 30 days after the Asset Coverage Cure Date (the "Mandatory
Redemption Date"), except that if the Corporation does not have funds legally
available for the redemption of, or is not otherwise legally permitted to
redeem, the number of AMPS which would be required to be redeemed by the
Corporation under clause (A) of subparagraph (a)(ii) of this Section 3 if
sufficient funds were available, together with shares of other preferred stock
which are subject to mandatory redemption under provisions similar to those
contained in this Section 3, or the Corporation otherwise is unable to effect
such redemption on or prior to such Mandatory Redemption Date, the Corporation
shall redeem those AMPS, and shares of other preferred stock which it was unable
to redeem, on the earliest practicable date on

                                       5



<PAGE>


which the Corporation will have such funds available, upon notice pursuant to
Section 3(b) to record owners of AMPS to be redeemed and the Paying Agent. The
Corporation will deposit with the Paying Agent funds sufficient to redeem the
specified number of AMPS with respect to a redemption required under
subparagraph (a)(ii) of this Section 3, by 1:00 P.M., New York City time, of the
Business Day immediately preceding the Mandatory Redemption Date. If fewer than
all of the Outstanding AMPS are to be redeemed pursuant to this Section
3(a)(iii), the number of shares to be redeemed shall be redeemed pro rata from
the Holders of such shares in proportion to the number of the AMPS held by such
Holders, by lot or by such other method as the Corporation shall deem fair and
equitable, subject, however, to the terms of any applicable Specific Redemption
Provisions. "Mandatory Redemption Price" means the Redemption Price plus (in the
case of a Dividend Period of one year or more only) a redemption premium, if
any, determined by the Board of Directors after consultation with the
Broker-Dealers and set forth in any applicable Specific Redemption Provisions.

         (b) In the event of a redemption pursuant to the foregoing Section
3(a), the Corporation will file a notice of its intention to redeem with the
Securities and Exchange Commission so as to provide at least the minimum notice
required under Rule 23c-2 under the 1940 Act or any successor provision. In
addition, the Corporation shall deliver a notice of redemption to the Auction
Agent (the "Notice of Redemption") containing the information set forth below
(i) in the case of an optional redemption pursuant to Section 3(a)(i) above, one
Business Day prior to the giving of notice to the Holders, (ii) in the case of a
mandatory redemption pursuant to Section 3(a)(ii) above, on or prior to the 10th
day preceding the Mandatory Redemption Date. Only with respect to shares held by
the Securities Depository, the Auction Agent will use its reasonable efforts to
provide telephonic notice to each Holder of shares of any Series called for
redemption not later than the close of business on the Business Day immediately
following the day on which the Auction Agent determines the shares to be
redeemed (or, during a Default Period with respect to such shares, not later
than the close of business on the Business Day immediately following the day on
which the Auction Agent receives Notice of Redemption from the Corporation). The
Auction Agent shall confirm such telephonic notice in writing not later than the
close of business on the third Business Day preceding the date fixed for
redemption by providing the Notice of Redemption to each Holder of shares called
for redemption, the Paying Agent (if different from the Auction Agent) and the
Securities Depository. Notice of Redemption will be addressed to the registered
owners of shares of any Series at their addresses appearing on the share records
of the Corporation. Such Notice of Redemption will set forth (i) the date fixed
for redemption, (ii) the number and identity of shares of each Series to be
redeemed, (iii) the redemption price (specifying the amount of accumulated
dividends to be included therein), (iv) that dividends on the shares to be
redeemed will cease to accumulate on such date fixed for redemption, and (v) the
provision under which redemption shall be made. No defect in the Notice of
Redemption or in the transmittal or mailing thereof will affect the validity of
the redemption proceedings, except as required by applicable law. If fewer than
all shares held by any Holder are to be redeemed, the Notice of Redemption
mailed to such Holder shall also specify the number of shares to be redeemed
from such Holder.

         (c) Notwithstanding the provisions of paragraph (a) of this Section 3,
no preferred stock, including the AMPS, may be redeemed at the option of the
Corporation unless all dividends in arrears on the Outstanding AMPS and any
other preferred stock have been or are being contemporaneously paid or set aside
for payment; provided, however, that the foregoing shall not prevent the
purchase or acquisition of outstanding shares of preferred stock pursuant to the
successful completion of an otherwise lawful purchase or exchange offer made on
the same terms to holders of all outstanding shares of preferred stock.

         (d) Upon the deposit of funds sufficient to redeem shares of any Series
with the Paying Agent and the giving of the Notice of Redemption to the Auction
Agent under paragraph (b) of this Section 3, dividends on such shares shall
cease to accumulate and such shares shall no longer be deemed to be Outstanding
for any purpose (including, without limitation, for purposes of calculating
whether the Corporation has met the Preferred Shares Basic Maintenance Amount
Test or the 1940 Act Preferred Shares Asset Coverage), and all rights of the
Holders of the shares so called for redemption shall cease and terminate, except
the right of such Holder to receive the redemption price specified herein, but
without any interest or other additional amount. Such redemption price shall be
paid by the Paying Agent to the nominee of the Securities Depository. The
Corporation shall be entitled to receive from the Paying Agent, promptly after
the date fixed for redemption, any cash deposited with the Paying Agent in
excess of (i) the aggregate redemption price of the shares of any Series called
for redemption on such date and (ii) such other amounts, if any, to which
Holders of shares of any Series called for redemption may be entitled. Any funds
so deposited that are unclaimed at the end of two years from such redemption
date shall, to the extent permitted by law, be paid to the Corporation, after
which time the Holders of shares of each Series so called for redemption may
look only to the Corporation for payment of the redemption price and all other
amounts, if any, to which they may be entitled; provided, however, that the
Paying Agent shall notify all Holders whose funds are

                                       6



<PAGE>


unclaimed by placing a notice in The Wall Street Journal concerning the
availability of such funds once each week for three consecutive weeks. The
Corporation shall be entitled to receive, from time to time after the date fixed
for redemption, any interest earned on the funds so deposited.

         (e) To the extent that any redemption for which Notice of Redemption
has been given is not made by reason of the absence of legally available funds
therefor, or is otherwise prohibited, such redemption shall be made as soon as
practicable to the extent such funds become legally available or such redemption
is no longer otherwise prohibited. Failure to redeem shares of any Series shall
be deemed to exist at any time after the date specified for redemption in a
Notice of Redemption when the Corporation shall have failed, for any reason
whatsoever, to deposit in trust with the Paying Agent the redemption price with
respect to any shares for which such Notice of Redemption has been given.
Notwithstanding the fact that the Corporation may not have redeemed shares of
each Series for which a Notice of Redemption has been given, dividends may be
declared and paid on shares of any Series and shall include those shares of any
Series for which Notice of Redemption has been given but for which deposit of
funds has not been made.

         (f) All moneys paid to the Paying Agent for payment of the redemption
price of shares of any Series called for redemption shall be held in trust by
the Paying Agent for the benefit of holders of shares so to be redeemed.

         (g) So long as any shares of any Series are held of record by the
nominee of the Securities Depository, the redemption price for such shares will
be paid on the date fixed for redemption to the nominee of the Securities
Depository for distribution to Agent Members for distribution to the persons for
whom they are acting as agent.

         (h) Except for the provisions described above, nothing contained in
these Articles Supplementary limits any right of the Corporation to purchase or
otherwise acquire any shares of each Series outside of an Auction at any price,
whether higher or lower than the price that would be paid in connection with an
optional or mandatory redemption, so long as, at the time of any such purchase,
there is no arrearage in the payment of dividends on, or the mandatory or
optional redemption price with respect to, any shares of each Series for which
Notice of Redemption has been given and the Corporation meets the 1940 Act
Preferred Shares Asset Coverage and the Preferred Shares Basic Maintenance
Amount Test after giving effect to such purchase or acquisition on the date
thereof. Any shares which are purchased, redeemed or otherwise acquired by the
Corporation shall have no voting rights. If fewer than all the Outstanding
shares of any Series are redeemed or otherwise acquired by the Corporation, the
Corporation shall give notice of such transaction to the Auction Agent, in
accordance with the procedures agreed upon by the Board of Directors.

         (i) In the case of any redemption pursuant to this Section 3, only
whole shares of each Series shall be redeemed, and in the event that any
provision of the Charter would require redemption of a fractional share, the
Auction Agent shall be authorized to round up so that only whole shares are
redeemed.

         (j) Notwithstanding anything herein to the contrary, including, without
limitation, Section 6(k) of Part I of these Articles Supplementary, the Board of
Directors, upon notification to each Rating Agency, may authorize, create or
issue other series of preferred stock, including other series of AMPS, series of
preferred stock ranking on a parity with the AMPS with respect to the payment of
dividends or the distribution of assets upon dissolution, liquidation or winding
up of the affairs of the Corporation, to the extent permitted by the 1940 Act,
if upon issuance of any such series, either (A) the net proceeds from the sale
of such stock (or such portion thereof needed to redeem or repurchase the
Outstanding AMPS) are deposited with the Paying Agent in accordance with Section
3(d) of Part I of these Articles Supplementary, Notice of Redemption as
contemplated by Section 3(b) of Part I of these Articles Supplementary has been
delivered prior thereto or is sent promptly thereafter, and such proceeds are
used to redeem all Outstanding AMPS or (B) the Corporation would meet the 1940
Act Preferred Shares Asset Coverage, the Preferred Shares Basic Maintenance
Amount Test and the requirements of Section 12(b) of Part I of these Articles
Supplementary.

         4. Designation of Dividend Period.

         (a) The initial Dividend Period for each Series shall be as determined
in the manner set forth under "Designation" above. The Corporation will
designate the duration of subsequent Dividend Periods of each Series; provided,
however, that no such designation is necessary for a Standard Dividend Period
and, provided further, that

                                       7



<PAGE>


any designation of a Special Dividend Period shall be effective only if (i)
notice thereof shall have been given as provided herein, (ii) any failure to pay
in a timely manner to the Auction Agent the full amount of any dividend on, or
the redemption price of, each Series shall have been cured as provided above,
(iii) Sufficient Clearing Orders shall have existed in an Auction held on the
Auction Date immediately preceding the first day of such proposed Special
Dividend Period, (iv) if the Corporation shall have mailed a Notice of
Redemption with respect to any shares, the redemption price with respect to such
shares shall have been deposited with the Paying Agent, (v) in the case of the
designation of a Special Dividend Period, the Broker-Dealers shall have notified
the Corporation in writing that it believes the Auction for the Special Dividend
Period will be successful, and (vi) each Rating Agency shall have confirmed in
writing to the Corporation that such designation shall not adversely affect
their respective then-current ratings of the AMPS.

         (b) If the Corporation proposes to designate any Special Dividend
Period, not fewer than seven Business Days (or two Business Days in the event
the duration of the Dividend Period prior to such Special Dividend Period is
fewer than eight days) nor more than 30 Business Days prior to the first day of
such Special Dividend Period, notice shall be (i) made by press release and (ii)
communicated by the Corporation by telephonic or other means to the Auction
Agent and each Broker-Dealer and confirmed in writing promptly thereafter. Each
such notice shall state (A) that the Corporation proposes to exercise its option
to designate a succeeding Special Dividend Period, specifying the first and last
days thereof and the Maximum Applicable Rate for such Special Dividend Period
and (B) that the Corporation will by 3:00 P.M., New York City time, on the
second Business Day next preceding the first day of such Special Dividend
Period, notify the Auction Agent, who will promptly notify the Broker-Dealers,
of either (x) its determination, subject to certain conditions, to proceed with
such Special Dividend Period, subject to the terms of any Specific Redemption
Provisions, or (y) its determination not to proceed with such Special Dividend
Period, in which latter event the succeeding Dividend Period shall be a Standard
Dividend Period. No later than 3:00 P.M., New York City time, on the second
Business Day next preceding the first day of any proposed Special Dividend
Period, the Corporation shall deliver to the Auction Agent, who will promptly
deliver to the Broker-Dealers and Existing Holders, either:

                  (i) a notice stating (A) that the Corporation has determined
         to designate the next succeeding Dividend Period as a Special Dividend
         Period, specifying the first and last days thereof and (B) the terms of
         any Specific Redemption Provisions; or

                  (ii) a notice stating that the Corporation has determined not
         to exercise its option to designate a Special Dividend Period.

         If the Corporation fails to deliver either such notice with respect to
any designation of any proposed Special Dividend Period to the Auction Agent or
is unable to make the confirmation provided in clause (v) of paragraph (a) of
this Section 4 by 3:00 P.M., New York City time, on the second Business Day next
preceding the first day of such proposed Special Dividend Period, the
Corporation shall be deemed to have delivered a notice to the Auction Agent with
respect to such Dividend Period to the effect set forth in clause (ii) above,
thereby resulting in a Standard Dividend Period.

         5. Restrictions on Transfer. Shares of each Series may be transferred
only (a) pursuant to an order placed in an Auction, (b) to or through a
Broker-Dealer or (c) to the Corporation or any Affiliate. Notwithstanding the
foregoing, a transfer other than pursuant to an Auction will not be effective
unless the selling Existing Holder or the Agent Member of such Existing Holder,
in the case of an Existing Holder whose shares are listed in its own name on the
books of the Auction Agent, or the Broker-Dealer or Agent Member of such
Broker-Dealer, in the case of a transfer between persons holding shares of any
Series through different Broker-Dealers, advises the Auction Agent of such
transfer. The certificates representing the shares of each Series issued to the
Securities Depository will bear legends with respect to the restrictions
described above and stop-transfer instructions will be issued to the Transfer
Agent and/or Registrar.

         6. Voting Rights.

         (a) Except as otherwise provided in the Charter or as otherwise
required by applicable law, (i) each Holder of shares of any Series shall be
entitled to one vote for each share of any Series held on each matter on which
the Holders of the AMPS are entitled to vote, and (ii) the holders of the
Outstanding shares of preferred stock, including each Series, and holders of
shares of Common Shares shall vote together as a single class on all matters
submitted to

                                       8



<PAGE>


the stockholders; provided, however, that, with respect to the election of
directors, the holders of the Outstanding shares of preferred stock, including
each Series, represented in person or by proxy at a meeting for the election of
directors, shall be entitled, as a class, to the exclusion of the holders of all
other securities and classes of capital stock, including the Common Shares, to
elect two directors of the Corporation, each share of preferred stock, including
each Series, entitling the holder thereof to one vote. The identities of the
nominees of such directorships may be fixed by the Board of Directors. Subject
to paragraph (b) of this Section 6, the holders of outstanding shares of Common
Shares and outstanding shares of preferred stock, including each Series, voting
together as a single class, shall be entitled to elect the balance of the
directors.

         (b) If at any time dividends on the AMPS shall be unpaid in an amount
equal to two full years' dividends on the AMPS (a "Voting Period"), the number
of directors constituting the Board of Directors shall be automatically
increased by the smallest number of additional directors that, when added to the
number of directors then constituting the Board of Directors, shall (together
with the two directors elected by the holders of preferred stock, including each
Series, pursuant to paragraph (a) of this Section 6) constitute a majority of
such increased number, and the holders of any shares of preferred stock,
including each Series, shall be entitled, voting as a single class on a
one-vote-per-share basis (to the exclusion of the holders of all other
securities and classes of capital stock of the Corporation), to elect the
smallest number of such additional directors of the Corporation that shall
constitute a majority of the total number of directors of the Corporation so
increased. The Voting Period and the voting rights so created upon the
occurrence of the conditions set forth in this paragraph (b) of Section 6 shall
continue unless and until all dividends in arrears on each Series shall have
been paid or declared and sufficient cash or specified securities are set apart
for the payment of such dividends. Upon the termination of a Voting Period, the
voting rights described in this paragraph (b) of Section 6 shall cease, subject
always, however, to the revesting of such voting rights in the holders of
preferred stock, including each Series, upon the further occurrence of any of
the events described in this paragraph (b) of Section 6.

         (c) As soon as practicable after the accrual of any right of the
holders of shares of preferred stock, including each Series, to elect additional
directors as described in paragraph (b) of this Section 6, the Corporation shall
notify the Auction Agent, and the Auction Agent shall call a special meeting of
such holders, by mailing a notice of such special meeting to such holders, such
meeting to be held not less than ten nor more than 90 days after the date of
mailing of such notice. If the Corporation fails to send such notice to the
Auction Agent or if the Auction Agent does not call such a special meeting, it
may be called by any such holder on like notice. The record date for determining
the holders entitled to notice of and to vote at such special meeting shall be
the close of business on the fifth Business Day preceding the day on which such
notice is mailed. At any such special meeting and at each meeting of holders of
preferred stock, including each Series, held during a Voting Period at which
directors are to be elected, such holders, 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 (b) of this Section 6 on a one-vote-per-share basis. At any such
meeting or adjournment thereof in the absence of a quorum, a majority of the
holders of shares of preferred stock, including Holders of the AMPS, present in
person or by proxy shall have the power to adjourn the meeting without notice,
other than an announcement at the meeting, until a quorum is present.

         (d) For purposes of determining any rights of the holders of the shares
of preferred stock, including each Series, to vote on any matter, whether such
right is created by these Articles Supplementary, by statute or otherwise, if
redemption of some or all of the shares of preferred stock, including each
Series, is required, no holder of shares of preferred stock, including each
Series, shall be entitled to vote and no share of preferred stock, including
each Series, shall be deemed to be "outstanding" for the purpose of voting or
determining the number of shares required to constitute a quorum, if prior to or
concurrently with the time of determination, sufficient Deposit Securities for
the redemption of such shares have been deposited in the case of AMPS in trust
with the Paying Agent for that purpose and the requisite Notice of Redemption
with respect to such shares shall have been given as provided in Section 3(b) of
Part I of these Articles Supplementary and in the case of other preferred stock
the Corporation has otherwise met the conditions for redemption applicable to
such shares.

         (e) The terms of office of all persons who are directors of the
Corporation at the time of a special meeting of Holders of the AMPS and holders
of other shares of preferred stock to elect directors pursuant to paragraph (b)
of this Section 6 shall continue, notwithstanding the election at such meeting
by the holders of the number of directors that they are entitled to elect.

                                       9



<PAGE>


         (f) Simultaneously with the termination of a Voting Period, the terms
of office of the additional directors elected by the Holders of the AMPS and
holders of shares of other preferred stock pursuant to paragraph (b) of this
Section 6 shall terminate, the remaining directors shall constitute the
directors of the Corporation and the voting rights of such holders to elect
additional directors pursuant to paragraph (b) of this Section 6 shall cease,
subject to the provisions of the last sentence of paragraph (b) of this
Section 6.

         (g) Unless otherwise required by law or in the Corporation's Charter,
the Holders of AMPS shall not have any relative rights or preferences or other
special rights other than those specifically set forth herein. In the event that
the Corporation fails to pay any dividends on the AMPS of the Corporation or
fails to redeem any AMPS which it is required to redeem, or any other event
occurs which requires the mandatory redemption of AMPS and the required Notice
of Redemption has not been given, other than the rights set forth in paragraph
(a) of Section 3 of Part I of these Articles Supplementary, the exclusive remedy
of the Holders of AMPS shall be the right to vote for directors pursuant to the
provisions of paragraph (b) of this Section 6. In no event shall the Holders of
AMPS have any right to sue for, or bring a proceeding with respect to, such
dividends or redemptions or damages for the failure to receive the same.

         (h) For so long as any shares of preferred stock, including each
Series, are outstanding, the Corporation will not, without the affirmative vote
of the Holders of a majority of the outstanding preferred stock, (i) institute
any proceedings to be adjudicated bankrupt or insolvent, or consent to the
institution of bankruptcy or insolvency proceedings against it, or file a
petition seeking or consenting to reorganization or relief under any applicable
federal or state law relating to bankruptcy or insolvency, or consent to the
appointment of a receiver, liquidator, assignee, trustee, sequestrator (or other
similar official) of the Corporation or a substantial part of its property, or
make any assignment for the benefit of creditors, or, except as may be required
by applicable law, admit in writing its inability to pay its debts generally as
they become due or take any corporate action in furtherance of any such action;
(ii) create, incur or suffer to exist, or agree to create, incur or suffer to
exist, or consent to cause or permit in the future (upon the happening of a
contingency or otherwise) the creation, incurrence or existence of any material
lien, mortgage, pledge, charge, security interest, security agreement,
conditional sale or trust receipt or other material encumbrance of any kind upon
any of the Corporation's assets as a whole, except (A) liens the validity of
which are being contested in good faith by appropriate proceedings, (B) liens
for taxes that are not then due and payable or that can be paid thereafter
without penalty, (C) liens, pledges, charges, security interests, security
agreements or other encumbrances arising in connection with any indebtedness
senior to the AMPS, (D) liens, pledges, charges, security interests, security
agreements or other encumbrances arising in connection with any indebtedness
permitted under clause (iii) below and (E) liens to secure payment for services
rendered including, without limitation, services rendered by the Corporation's
Paying Agent and the Auction Agent; or (iii) create, authorize, issue, incur or
suffer to exist any indebtedness for borrowed money or any direct or indirect
guarantee of such indebtedness for borrowed money or any direct or indirect
guarantee of such indebtedness, except the Corporation may borrow as may be
permitted by the Corporation's investment restrictions; provided, however, that
transfers of assets by the Corporation subject to an obligation to repurchase
shall not be deemed to be indebtedness for purposes of this provision to the
extent that after any such transaction the Corporation has Eligible Assets with
an aggregate Discounted Value at least equal to the Preferred Shares Basic
Maintenance Amount as of the immediately preceding Valuation Date.

         (i) The affirmative vote of the holders of a majority, as defined in
the 1940 Act, of the outstanding shares of preferred stock, including each
Series, voting as a separate class, shall be required to approve any plan of
reorganization (as such term is used in the 1940 Act) adversely affecting such
shares or any action requiring a vote of security holders of the Corporation
under Section 13(a) of the 1940 Act. In the event a vote of holders of shares of
preferred stock is required pursuant to the provisions of Section 13(a) of the
1940 Act, the Corporation shall, not later than ten Business Days prior to the
date on which such vote is to be taken, notify each Rating Agency that such vote
is to be taken and the nature of the action with respect to which such vote is
to be taken and shall, not later than ten Business Days after the date on which
such vote is taken, notify each Rating Agency of the results of such vote.

         (j) The affirmative vote of the Holders of a majority, as defined in
the 1940 Act, of the outstanding shares of preferred stock of any series, voting
separately from any other series, shall be required with respect to any matter
that materially and adversely affects the rights, preferences, or powers of that
series in a manner different from that of other series or classes of the
Corporation's shares of capital stock. For purposes of the foregoing, no matter
shall be deemed to adversely affect any rights, preference or power unless such
matter (i) alters or abolishes any preferential right of such series; (ii)
creates, alters or abolishes any right in respect of redemption of such series;
or (iii) creates or alters (other than to abolish) any restriction on transfer
applicable to such series. The vote of holders

                                       10




<PAGE>


of any series described in this Section (j) will in each case be in addition to
a separate vote of the requisite percentage of Common Shares and/or preferred
stock necessary to authorize the action in question.

         (k) The Board of Directors, without the vote or consent of any holder
of shares of preferred stock, including each Series, or any other stockholder of
the Corporation, may from time to time amend, alter or repeal any or all of the
definitions contained herein, add covenants and other obligations of the
Corporation, or confirm the applicability of covenants and other obligations set
forth herein, all in connection with obtaining or maintaining the rating of any
Rating Agency with respect to each Series, and any such amendment, alteration or
repeal will not be deemed to affect the preferences, rights or powers of AMPS or
the Holders thereof, provided that the Board of Directors receives written
confirmation from each relevant Rating Agency (with such confirmation in no
event being required to be obtained from a particular Rating Agency with respect
to definitions or other provisions relevant only to and adopted in connection
with another Rating Agency's rating of the any Series) that any such amendment,
alteration or repeal would not adversely affect the rating then assigned by such
Rating Agency.

         In addition, subject to compliance with applicable law, the Board of
Directors may amend the definition of Maximum Rate to increase the percentage
amount by which the Reference Rate is multiplied to determine the Maximum Rate
shown therein without the vote or consent of the holders of shares of preferred
stock, including each Series, or any other stockholder of the Corporation, but
only with confirmation from each Rating Agency, and after consultation with the
Broker-Dealers, provided that immediately following any such increase the
Corporation would meet the Preferred Shares Basic Maintenance Amount Test.

         7. 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 preferred stock, including each Series, shall be entitled to receive
out of the assets of the Corporation available for distribution to stockholders,
after claims of creditors but before distribution or payment shall be made in
respect of the Common Shares or to any other shares of stock of the Corporation
ranking junior to the preferred stock, as to liquidation payments, a liquidation
distribution in the amount of $25,000 per share (the "Liquidation Preference"),
plus an amount equal to all unpaid dividends accrued to and including the date
fixed for such distribution or payment (whether or not declared by the Board of
Directors, but excluding interest thereon), but such Holders shall be entitled
to no further participation in any distribution or payment in connection with
any such liquidation, dissolution or winding up. Each Series shall rank on a
parity with shares of any other series of preferred stock of the Corporation
(including each Series) as to the distribution of assets upon dissolution,
liquidation or winding up of the affairs of the Corporation.

         (b) If, upon any such 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 preferred stock, including each Series, shall be insufficient to
permit the payment in full to such holders of the amounts to which they are
entitled, then such available assets shall be distributed among the holders of
all outstanding shares of preferred stock, including each Series, ratably in any
such distribution of assets according to the respective amounts which would be
payable on all such shares if all amounts thereon were paid in full. Unless and
until payment in full has been made to the holders of all outstanding shares of
preferred stock, including each Series, of the liquidation distributions to
which they are entitled, no dividends or distributions will be made to holders
of Common Shares or any stock of the Corporation ranking junior to the preferred
stock as to liquidation.

         (c) Neither the consolidation nor merger of the Corporation with or
into any other corporation or corporations, nor the sale, lease, exchange or
transfer by the Corporation of all or substantially all of its property and
assets, shall be deemed to be a liquidation, dissolution or winding up of the
Corporation for purposes of this Section 7.

         (d) After the payment to Holders of AMPS of the full preferential
amounts provided for in this Section 7, the Holders of the AMPS as such shall
have no right or claim to any of the remaining assets of the Corporation.

         (e) In the event the assets of the Corporation or proceeds thereof
available for distribution to the Holders of AMPS, upon dissolution, liquidation
or winding up of the affairs of the Corporation, whether voluntary or
involuntary, shall be insufficient to pay in full all amounts to which such
Holders are entitled pursuant to paragraph (a) of this Section 7, no such
distribution shall be made on account of any shares of any other series of
preferred

                                       11



<PAGE>


stock unless proportionate distributive amounts shall be paid on account of the
AMPS, ratably, in proportion to the full distributable amounts to which holders
of all shares of preferred stock are entitled upon such dissolution, liquidation
or winding up.

         (f) Subject to the rights of the holders of shares of other preferred
stock or after payment shall have been made in full to the Holders of AMPS as
provided in paragraph (a) of this Section 7, but not prior thereto, any other
series or class of shares ranking junior to the AMPS with respect to the
distribution of assets upon dissolution, liquidation or winding up of the
affairs of the Corporation shall, subject to any respective terms and provisions
(if any) applying thereto, be entitled to receive any and all assets remaining
to be paid or distributed, and the Holders of the AMPS shall not be entitled to
share therein.

         8. Auction Agent. For so long as any AMPS are Outstanding, the Auction
Agent, duly appointed by the Corporation to so act, shall be in each case a
commercial bank, trust company or other financial institution independent of the
Corporation and its Affiliates (which, however, may engage or have engaged in
business transactions with the Corporation or its Affiliates) and at no time
shall the Corporation or any of its Affiliates act as the Auction Agent in
connection with the Auction Procedures. If the Auction Agent resigns or for any
reason its appointment is terminated during any period that any shares of any
Series are Outstanding, the Corporation will use its best efforts to enter into
an agreement with a successor auction agent containing substantially the same
terms and conditions as the auction agency agreement. The Fund may remove the
auction agent provided that prior to such removal the Fund shall have entered
into such an agreement with a successor auction agent.

         9. 1940 Act Preferred Shares Asset Coverage. The Corporation shall
maintain, as of the last Business Day of each month in which any AMPS are
Outstanding, the 1940 Act Preferred Shares Asset Coverage; provided, however,
that Section 3(a)(ii) shall be the sole remedy in the event the Corporation
fails to do so.

         10. Preferred Shares Basic Maintenance Amount. So long as any AMPS are
Outstanding and any Rating Agency so requires, the Corporation shall maintain,
as of each Valuation Date, Moody's Eligible Assets and S&P Eligible Assets, as
applicable, having an aggregate Discounted Value equal to or greater than the
Preferred Shares Basic Maintenance Amount; provided, however, that Section
3(a)(ii) shall be the sole remedy in the event the Corporation fails to do so.

         11. Certain Other Restrictions. So long as any AMPS are Outstanding and
S&P, Moody's or any Other Rating Agency that is rating such shares so requires,
the Corporation will not, unless it has received written confirmation from S&P
(if S&P is then rating the AMPS), Moody's (if Moody's is then rating the AMPS)
and (if applicable) such Other Rating Agency, that any such action would not
impair the rating then assigned by such Rating Agency to the AMPS, engage in any
one or more of the following transactions:

         (a) purchase or sell futures contracts or options thereon with respect
    to portfolio securities or write put or call options on portfolio
    securities;

         (b) except in connection with a refinancing of the AMPS, issue
    additional shares of any series of preferred stock, including any Series or
    reissue any shares of preferred stock, including any Series previously
    purchased or redeemed by the Corporation;

         (c) engage in any short sales of securities;

         (d) lend portfolio securities;

         (e) merge or consolidate into or with any other fund; or

         (f) for purposes of valuation of Moody's Eligible Assets: (A) if the
    Corporation writes a call option, the underlying asset will be valued as
    follows: (1) if the option is exchange-traded and may be offset readily or
    if the option expires before the earliest possible redemption of the AMPS,
    at the lower of the Discounted Value of the underlying security of the
    option and the exercise price of the option or (2) otherwise, it has no
    value; (B) if the Corporation writes a put option, the underlying asset will
    be valued as follows: the lesser of (1) exercise price and (2) the
    Discounted Value of the underlying security; and (C) call or put option
    contracts which the Corporation buys have no value. For so long as the AMPS
    are rated by Moody's: (A) the Corporation will not

                                       12



<PAGE>


    engage in options transactions for leveraging or speculative purposes; (B)
    the Corporation will not write or sell any anticipatory contracts pursuant
    to which the Corporation hedges the anticipated purchase of an asset prior
    to completion of such purchase; (C) the Corporation will not enter into an
    option transaction with respect to portfolio securities unless, after giving
    effect thereto, the Corporation would continue to have Eligible Assets with
    an aggregate Discounted Value equal to or greater than the Preferred Shares
    Basic Maintenance Amount; (D) the Corporation will not enter into an option
    transaction with respect to portfolio securities unless after giving effect
    to such transaction the Corporation would continue to be in compliance with
    the provisions relating to the Preferred Shares Basic Maintenance Amount;
    (E) for purposes of the Preferred Shares Basic Maintenance Amount assets in
    margin accounts are not Eligible Assets; (F) the Corporation shall write
    only exchange-traded options on exchanges approved by Moody's (if Moody's is
    then rating the AMPS); (G) where delivery may be made to the Corporation
    with any of a class of securities, the Corporation shall assume for purposes
    of the Preferred Shares Basic Maintenance Amount that it takes delivery of
    that security which yields it the least value; (H) the Corporation will not
    engage in forward contracts; and (I) there shall be a quarterly audit made
    of the Corporation's options transactions by the Corporation's independent
    auditors to confirm that the Corporation is in compliance with these
    standards.

         (g) For so long as any AMPS are rated by S&P, the Corporation will not
    purchase or sell futures contracts, write, purchase or sell options on
    futures contracts or write put options (except covered put options) or call
    options (except covered call options) on portfolio securities unless it
    receives written confirmation from S&P that engaging in such transactions
    will not impair the ratings then assigned to the AMPS by S&P.

         12. Compliance Procedures for Asset Maintenance Tests. For so long as
any AMPS are Outstanding and any Rating Agency so requires:

         (a) As of each Valuation Date, the Corporation shall determine (i) the
    Market Value of each Eligible Asset owned by the Corporation on that date,
    (ii) the Discounted Value of each such Eligible Asset, (iii) whether the
    Preferred Shares Basic Maintenance Amount Test is met as of that date, (iv)
    the value (as used in the 1940 Act) of the total assets of the Corporation,
    less all liabilities, and (v) whether the 1940 Act Preferred Shares Asset
    Coverage is met as of that date.

         (b) Upon any failure to meet the Preferred Shares Basic Maintenance
    Amount Test or 1940 Act Preferred Shares Asset Coverage on any Valuation
    Date, the Corporation may use reasonable commercial efforts (including,
    without limitation, altering the composition of its portfolio, purchasing
    AMPS outside of an Auction or, in the event of a failure to file a
    certificate on a timely basis, submitting the requisite certificate), to
    meet (or certify in the case of a failure to file a certificate on a timely
    basis, as the case may be) the Preferred Shares Basic Maintenance Amount
    Test or 1940 Act Preferred Shares Asset Coverage on or prior to the Asset
    Coverage Cure Date.

         (c) Compliance with the Preferred Shares Basic Maintenance Amount and
    1940 Act Asset Coverage Tests shall be determined with reference to those
    AMPS which are deemed to be Outstanding hereunder.

         (d) In the case of the asset coverage requirements for Moody's and S&P,
    the auditors must certify once per quarter the asset coverage test on a date
    randomly selected by the auditor.

         (e) The Corporation shall deliver to the Auction Agent and each Rating
    Agency a certificate which sets forth a determination of items (i)-(iii) of
    paragraph (a) of this Section 12 (a "Preferred Shares Basic Maintenance
    Certificate") as of (A) the Date of Original Issue, (B) the last Valuation
    Date of each month, (C) any date requested by any Rating Agency, (D) a
    Business Day on or before any Asset Coverage Cure Date relating to the
    Corporation's cure of a failure to meet the Preferred Shares Basic
    Maintenance Amount Test, (E) any day that Common Shares or AMPS are redeemed
    and (F) any day the S&P Eligible Assets have an aggregate discounted value
    less than or equal to 110% of the Preferred Shares Basic Maintenance Amount.
    Such Preferred Shares Basic Maintenance Certificate shall be delivered in
    the case of clause (i)(A) on the Date of Original Issue and in the case of
    all other clauses above on or before the seventh Business Day after the
    relevant Valuation Date or Asset Coverage Cure Date.

         (f) The Corporation shall deliver to the Auction Agent and each Rating
    Agency a certificate which sets forth a determination of items (iv) and (v)
    of paragraph (a) of this Section 12 (a "1940 Act Preferred Shares

                                       13



<PAGE>


    Asset Coverage Certificate") (i) as of the Date of Original Issue, and (ii)
    as of (A) the last Valuation Date of each quarter thereafter, and (B) as of
    a Business Day on or before any Asset Coverage Cure Date relating to the
    failure to meet the 1940 Act Preferred Shares Asset Coverage. Such 1940 Act
    Preferred Shares Asset Coverage Certificate shall be delivered in the case
    of clause (i) on the Date of Original Issue and in the case of clause (ii)
    on or before the seventh Business Day after the relevant Valuation Date or
    the Asset Coverage Cure Date. The certificates required by paragraphs (d)
    and (e) of this Section 12 may be combined into a single certificate.

         (g) Within ten Business Days of the Date of Original Issue, the
    Corporation shall deliver to the Auction Agent and each Rating Agency a
    letter prepared by the Corporation's independent auditors (an "Auditor's
    Certificate") regarding the accuracy of the calculations made by the
    Corporation in the Preferred Shares Basic Maintenance Certificate and the
    1940 Act Preferred Shares Asset Coverage Certificate required to be
    delivered by the Corporation on the Date of Original Issue. Within ten
    Business Days after delivery of the Preferred Shares Basic Maintenance
    Certificate and the 1940 Act Preferred Shares Asset Coverage Certificate
    relating to the last Valuation Date of each fiscal quarter of the
    Corporation, the Corporation will deliver to the Auction Agent and each
    Rating Agency an Auditor's Certificate regarding the accuracy of the
    calculations made by the Corporation in such Certificates and in one other
    Preferred Shares Basic Maintenance Certificate randomly selected by the
    Corporation's independent auditors during such fiscal quarter. In addition,
    the Corporation will deliver to the persons specified in the preceding
    sentence an Auditor's Certificate regarding the accuracy of the calculations
    made by the Corporation on each Preferred Shares Basic Maintenance
    Certificate and 1940 Act Preferred Shares Asset Coverage Certificate
    delivered in relation to an Asset Coverage Cure Date within ten days after
    the relevant Asset Coverage Cure Date. If an Auditor's Certificate shows
    that an error was made in any such report, the calculation or determination
    made by the Corporation's independent auditors will be conclusive and
    binding on the Corporation.

         (h) The Auditor's Certificates referred to in paragraph (f) above will
    confirm, based upon the independent auditor's review of portfolio data
    provided by the Corporation, (i) the mathematical accuracy of the
    calculations reflected in the related Preferred Shares Basic Maintenance
    Amount Certificates and 1940 Act Preferred Shares Asset Coverage
    Certificates and (ii) that, based upon such calculations, the Corporation
    had, at such Valuation Date, met the Preferred Shares Basic Maintenance
    Amount Test.

         (i) In the event that a Preferred Shares Basic Maintenance Certificate
    or 1940 Act Preferred Shares Asset Coverage Certificate with respect to an
    applicable Valuation Date is not delivered within the time periods specified
    in this Section 12, the Corporation shall be deemed to have failed to meet
    the Preferred Shares Basic Maintenance Amount Test or the 1940 Act Preferred
    Shares Asset Coverage, as the case may be, on such Valuation Date for
    purposes of Section 12(b) of Part I of these Articles Supplementary. In the
    event that a Preferred Shares Basic Maintenance Certificate, a 1940 Act
    Preferred Shares Asset Coverage Certificate or an applicable Auditor's
    Certificate with respect to an Asset Coverage Cure Date is not delivered
    within the time periods specified herein, the Corporation shall be deemed to
    have failed to meet the Preferred Shares Basic Maintenance Amount Test or
    the 1940 Preferred Shares Asset Coverage, as the case may be, as of the
    related Valuation Date.

         13. Notice. All notices or communications hereunder, unless otherwise
specified in these Articles Supplementary, shall be sufficiently given if in
writing and delivered in person, by telecopier or mailed by first-class mail,
postage prepaid. Notices delivered pursuant to this Section 13 shall be deemed
given on the earlier of the date received or the date five-days after which such
notice is mailed, except as otherwise provided in these Articles Supplementary
or by the MGCL for notices of stockholders' meetings.

         14. Waiver. To the extent permitted by Maryland Law, Holders of at
least two-thirds of the Outstanding AMPS, acting collectively, or each Series,
acting as a separate series, may waive any provision hereof intended for their
respective benefit in accordance with such procedures as may from time to time
be established by the Board of Directors.

         15. Termination. In the event that no AMPS are Outstanding, all rights
and preferences of such shares established and designated hereunder shall cease
and terminate, and all obligations of the Corporation under these Articles
Supplementary shall terminate.

                                       14



<PAGE>


         16. Amendment. Subject to the provisions of these Articles
Supplementary, the Board of Directors may, by resolution duly adopted without
stockholder approval (except as otherwise provided by these Articles
Supplementary or required by applicable law), amend these Articles Supplementary
to reflect any amendments hereto which the Board of Directors is entitled to
adopt pursuant to the terms of Section 6(k) of Part I of these Articles
Supplementary without stockholder approval. To the extent permitted by
applicable law, the Board of Directors may interpret, amend or adjust the
provisions of these Articles Supplementary to resolve any inconsistency or
ambiguity or to remedy any patent defect.

         17. Definitions. As used in Part I and Part II of these Articles
Supplementary, the following terms shall have the following meanings (with terms
defined in the singular having comparable meanings when used in the plural and
vice versa), unless the context otherwise requires:

                  "`AA' Composite Commercial Paper Rate" on any date means (i)
         the interest equivalent of the 7-day rate, in the case of a Dividend
         Period which is 7 days or shorter; for Dividend Periods greater than 7
         days but fewer than or equal to 31 days, the 30-day rate; for Dividend
         Periods greater than 31 days but fewer than or equal to 61 days, the
         60-day rate; for Dividend Periods greater than 61 days but fewer than
         or equal to 91 days, the 90 day rate; for Dividend Periods greater than
         91 days but fewer than or equal to 270 days, the rate described in
         clause (ii) below; for Dividend Periods greater than 270 days, the
         Treasury Index Rate; on commercial paper on behalf of financial issuers
         whose corporate bonds are rated "AA" by S&P, or the equivalent of such
         rating by another nationally recognized rating agency, as announced by
         the Federal Reserve Bank of New York for the close of business on the
         Business Day immediately preceding such date; or (ii) if the Federal
         Reserve Bank of New York does not make available such a rate, then the
         arithmetic average of the interest equivalent of such rates on
         commercial paper placed on behalf of such issuers, as quoted on a
         discount basis or otherwise by the Commercial Paper Dealers to the
         Auction Agent for the close of business on the Business Day immediately
         preceding such date (rounded to the next highest .001 of 1%). If any
         Commercial Paper Dealer does not quote a rate required to determine the
         "AA" Composite Commercial Paper Rate, such rate shall be determined on
         the basis of the quotations (or quotation) furnished by the remaining
         Commercial Paper Dealers (or Dealer), if any, or, if there are no such
         Commercial Paper Dealers, by the Auction Agent as agreed to by Merrill
         Lynch & Co. For purposes of this definition, (A) "Commercial Paper
         Dealers" shall mean (1) Salomon Smith Barney Inc., Lehman Brothers
         Inc., Merrill Lynch, Pierce, Fenner & Smith Incorporated and Goldman
         Sachs & Co.; (2) in lieu of any thereof, its respective Affiliate or
         successor; and (3) in the event that any of the foregoing shall cease
         to quote rates for commercial paper of issuers of the sort described
         above, in substitution therefor, a nationally recognized dealer in
         commercial paper of such issuers then making such quotations selected
         by the Corporation, and (B) "interest equivalent" of a rate stated on a
         discount basis for commercial paper of a given number of days' maturity
         shall mean a number equal to the quotient (rounded upward to the next
         higher one-thousandth of 1%) of (1) such rate expressed as a decimal,
         divided by (2) the difference between (x) 1.00 and (y) a fraction, the
         numerator of which shall be the product of such rate expressed as a
         decimal, multiplied by the number of days in which such commercial
         paper shall mature and the denominator of which shall be 360.

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

                  "Agent Member" means a member of or a participant in the
         Securities Depository that will act on behalf of a Bidder.

                  "All Hold Rate" means the 7-day "AA" Composite Commercial
         Paper Rate in the case of the Series T, Series TH and Series F AMPS,
         and the 30-day "AA" Composite Commercial Paper Rate in the case of the
         Series W AMPS.

                  "AMPS" has the meaning set forth in paragraph FIRST of Part I
         of these Articles Supplementary.

                                       15



<PAGE>


                   "Applicable Rate" means, with respect to each Series for each
         Dividend Period (i) if Sufficient Clearing Orders exist for the Auction
         in respect thereof, the Winning Bid Rate, (ii) if Sufficient Clearing
         Orders do not exist for the Auction in respect thereof, the Maximum
         Rate, and (iii) in the case of any Dividend Period if all the shares of
         a Series are the subject of Submitted Hold Orders for the Auction in
         respect thereof, the All Hold Rate corresponding to that Series.

                  "Approved Price" means the "fair value" as determined by the
         Corporation in accordance with the valuation procedures adopted from
         time to time by the Board of Directors and for which the Corporation
         receives a mark-to-market price (which, for the purpose of clarity,
         does not mean a Market Value Price) from an independent source at least
         semi-annually.

                  "Asset Coverage Cure Date" has the meaning set forth in
         Section 3(a)(ii) of these Articles Supplementary.

                  "Auction" means each periodic operation of the Auction
         Procedures.

                  "Auction Agent" means The Bank of New York unless and until
         another commercial bank, trust company, or other financial institution
         appointed by a resolution of the Board of Directors enters into an
         agreement with the Corporation to follow the Auction Procedures for the
         purpose of determining the Applicable Rate.

                  "Auction Date" means the first Business Day next preceding the
         first day of a Dividend Period for each Series.

                  "Auction Procedures" means the procedures for conducting
         Auctions as set forth in Part II of these Articles Supplementary.

                  "Auditor's Certificate" has the meaning set forth in Section
         12(f) of Part I of these Articles Supplementary.

                  "Beneficial Owner," with respect to shares of each Series,
         means a customer of a Broker-Dealer who is listed on the records of
         that Broker-Dealer (or, if applicable, the Auction Agent) as a holder
         of shares of such series.

                  "Bid" has the meaning set forth in Section 2(a)(ii) of Part II
         of these Articles Supplementary.

                  "Bidder" has the meaning set forth in Section 2(a)(ii) of Part
         II of these Articles Supplementary, provided however that neither the
         Corporation nor any Affiliate shall be permitted to be Bidder in an
         Auction.

                  "Board of Directors" or "Board" means the Board of Directors
         of the Corporation or any duly authorized committee thereof as
         permitted by applicable law.

                  "Broker-Dealer" means any broker-dealer or broker-dealers, or
         other entity permitted by law to perform the functions required of a
         Broker-Dealer by the Auction Procedures, that has been selected by the
         Corporation and has entered into a Broker-Dealer Agreement that remains
         effective.

                  "Broker-Dealer Agreement" means an agreement between the
         Auction Agent and a Broker-Dealer, pursuant to which such Broker-Dealer
         agrees to follow the Auction Procedures.

                  "Business Day" means a day on which the New York Stock
         Exchange is open for trading and which is not a Saturday, Sunday or
         other day on which banks in The City of New York, New York are
         authorized or obligated by law to close.

                  "Charter" has the meaning set forth in the preamble to these
         Articles Supplementary.

                  "Code" means the Internal Revenue Code of 1986, as amended.

                                       16



<PAGE>


                  "Commission" means the Securities and Exchange Commission.

                  "Common Shares" means the shares of the Corporation's Common
         Stock, par value $.001 per share.

                  "Corporation" has the meaning set forth in the preamble to
         these Articles Supplementary.

                  "Date of Original Issue" means the date on which a Series is
         originally issued by the Corporation.

                  "Default" has the meaning set forth in Section 2(c)(ii) of
         Part I of these Articles Supplementary.

                  "Default Period" has the meaning set forth in Sections
         2(c)(ii) or (iii) of Part I of these Articles Supplementary.

                  "Default Rate" has the meaning set forth in Sections 2(c)(iii)
         of Part I of these Articles Supplementary.

                  "Deposit Securities" means cash and any obligations or
         securities, including Short Term Money Market Instruments that are
         Eligible Assets, rated at least AAA or A-1 by S&P, except that, for
         purposes of optional redemption, such obligations or securities will be
         considered "Deposit Securities" only if they also are rated at least
         P-1 by Moody's.

                  "Discount Factor" means the S&P Discount Factor (if S&P is
         then rating the AMPS), the Moody's Discount Factor (if Moody's is then
         rating the AMPS) or the discount factor established by any Other Rating
         Agency which is then rating the AMPS and which so requires, whichever
         is applicable.

                  "Discounted Value" means the quotient of the Market Value of
         an Eligible Asset divided by the applicable Discount Factor, provided
         that with respect to an Eligible Asset that is currently callable,
         Discounted Value will be equal to the quotient as calculated above or
         the call price, whichever is lower, and that with respect to an
         Eligible Asset that is prepayable, Discounted Value will be equal to
         the quotient as calculated above or the par value, whichever is lower.

                  "Dividend Default" has the meaning set forth in Section
         2(c)(iii) of Part I of these Articles Supplementary.

                  "Dividend Payment Date" with respect to the AMPS means any
         date on which dividends are payable pursuant to Section 2(b) of Part I
         hereof.

                  "Dividend Period" means, with respect to each Series, the
         initial period determined in the manner set forth under "Designation"
         above, and thereafter, as to such Series, the period commencing on the
         Business Day following each Dividend Period for such Series and ending
         on the day established for such Series by the Corporation.

                  "Eligible Assets" means Moody's Eligible Assets (if Moody's is
         then rating the AMPS), S&P Eligible Assets (if S&P is then rating the
         AMPS), and/or Other Rating Agency Eligible Assets if any Other Rating
         Agency is then rating the AMPS, whichever is applicable.

                  "Existing Holder" has the meaning set forth in Section 1(d) of
         Part II of these Articles Supplementary.

                  "Hold Order" has the meaning set forth in Section 2(a)(ii) of
         Part II of these Articles Supplementary.

                  "Holder" means, with respect to the AMPS, the registered
         holder of shares of each Series as the same appears on the stock ledger
         or stock records of the Corporation.

                  "Investment Manager" means Cohen & Steers Capital Management,
         Inc.


                                       17




<PAGE>


                  "Liquidation Preference" means $25,000 per Preferred Share.

                  "Mandatory Redemption Date" has meaning set forth in Section
         3(a)(iv) of Part I of these Articles Supplementary.

                  "Mandatory Redemption Price" has the meaning set forth in
         Section 3(a)(iv) of Part I of these Articles Supplementary.

                  "Market Value" means the fair market value of an asset of the
         Corporation as computed as follows: Securities listed on the New York
         Stock Exchange at the last sale price reflected on the consolidated
         tape at the close of the New York Stock Exchange on the business day as
         of which such value is being determined provided that, if there has
         been no sale on such day, the securities are valued at the closing bid
         prices on such day and provided further that, if no bid prices are
         quoted on such day, then the security is valued by such method as the
         Board of Directors shall determine in good faith to reflect its fair
         market value. Readily marketable securities not listed on the New York
         Stock Exchange but listed on other domestic or foreign securities
         exchanges or admitted to trading on the National Association of
         Securities Dealers Automated Quotations, Inc. ("NASDAQ") National List
         are valued in a like manner. Portfolio securities traded on more than
         one securities exchange are valued at the last sale price on the
         business day as of which such value is being determined as reflected on
         the tape at the close of the exchange representing the principal market
         for such securities. Readily marketable securities traded in the
         over-the-counter market, including listed securities whose primary
         market is believed by the Investment Manager to be over-the-counter,
         but excluding securities admitted to trading on the NASDAQ National
         List, are valued at the current bid prices as reported by NASDAQ or, in
         the case of securities not quoted by NASDAQ, the National Quotation
         Bureau or such other comparable source as the directors deem
         appropriate to reflect their fair market value. The fair market value
         of certain fixed-income securities is computed based upon (i) the basis
         of prices provided by a Pricing Service or (ii) the lower of the value
         set forth in bids from two independent dealers in securities, one of
         which bids will be in writing, in each case with interest accrued added
         to such computation for those assets of the Corporation where such
         computation does not include interest accrued. The independent dealers
         from whom bids are sought shall be either (a) market makers in the
         securities being valued or (b) members of the National Association of
         Securities Dealers, Inc. Where securities are traded on more than one
         exchange and also over-the-counter, the securities will generally be
         valued using the quotations the Board of Directors believes reflect
         most closely the value of such securities.

                  "Maximum Rate" means, on any date on which the Applicable Rate
         is determined, the applicable percentage of the "AA" Composite
         Commercial Paper Rate on the date of such Auction determined as set
         forth below based on the lower of the credit ratings assigned to the
         AMPS by Moody's and S&P subject to upward but not downward adjustment
         in the discretion of the Board of Directors after consultation with the
         Broker-Dealers; provided that immediately following any such increase
         the Corporation would be in compliance with the AMPS Shares Basic
         Maintenance Amount.

<TABLE>
<CAPTION>
                      Moody's              S&P          Applicable
                  Credit Rating      Credit Rating      Percentage
                 ---------------    ---------------    ------------
                 <S>                <C>                <C>
                   aa3 or Above       AA- or Above         150%
                   a3 or a1           A- to A+             200%
                   baa3 to baa1       BBB- to BBB+         225%
                   Below baa3         Below BBB-           275%
</TABLE>

                  "Moody's" means Moody's Investors Service, Inc. and its
         successors at law.

                  "Moody's Discount Factor" means, for purposes of determining
         the Discounted Value of any Moody's Eligible Asset, the percentage
         determined as follows. The Moody's Discount Factor for any Moody's
         Eligible Asset other than the securities set forth below will be the
         percentage provided in writing by Moody's.

                           (a) Common Stock and Preferred Stock of REITs and
                  Other Real Estate Companies:

                                       18



<PAGE>


<TABLE>
<CAPTION>
                                                                      Discount Factor (1)(2)(3)
                                                                      ---------------------------
<S>                                                                   <C>
        common stock of REITs                                                    154%
        preferred stock of REITs
           with Senior Implied Moody's (or S&P) rating:                          154%
           without Senior Implied Moody's (or S&P) rating:                       208%
        preferred stock of Other Real Estate Companies
           with Senior Implied Moody's (or S&P) rating:                          208%
           without Senior Implied Moody's (or S&P) rating                        250%
</TABLE>

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

         (1) A Discount Factor of 250% will be applied to those assets in a
             single Moody's Real Estate Industry/Property Sector Classification
             which exceed 30% of Moody's Eligible Assets but are not greater
             than 35% of Moody's Eligible Assets.

         (2) A Discount Factor of 250% will be applied if dividends on such
             securities have not been paid consistently (either quarterly or
             annually) over the previous three years, or for such shorter time
             period that such securities have been outstanding.

         (3) A Discount Factor of 250% will be applied if the market
             capitalization (including common stock and preferred stock) of an
             issuer is below $500 million.

                           (b) Debt Securities of REITs and Other Real Estate
                  Companies(1):

<TABLE>
<CAPTION>
             Maturity
             in Years        Aaa       Aa       A       Baa      Ba       B       Caa      NR(2)
         ----------------  -------  -------  ------- -------- -------- -------  -------  --------
         <S>               <C>      <C>      <C>     <C>      <C>      <C>      <C>      <C>
                1            109%     112%     115%     118%     119%    125%     225%      250%
                2            115%     118%     122%     125%     127%    133%     225%      250%
                3            120%     123%     127%     131%     133%    140%     225%      250%
                4            126%     129%     133%     138%     140%    147%     225%      250%
                5            132%     135%     139%     144%     146%    154%     225%      250%
                7            139%     143%     147%     152%     156%    164%     225%      250%
                10           1455     150%     155%     160%     164%    173%     225%      250%
                15           150%     155%     160%     165%     170%    180%     225%      250%
                20           150%     155%     160%     165%     170%    190%     225%      250%
                30           150%     155%     160%     165%     170%    191%     225%      250%
</TABLE>

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

         (1) The Moody's Discount Factors for debt securities shall also be
             applied to any interest rate swap or cap, in which case the rating
             of the counterparty shall determine the appropriate rating
             category.

         (2) Unrated debt securities are limited to 10% of discounted Eligible
             Assets. If a security is unrated by Moody's but is rated by S&P, a
             rating two numeric ratings below the S&P rating will be used, e.g.,
             where the S&P rating is AAA, a Moody's rating of Aa2 will be used;
             where the S&P rating is AA+, a Moody's rating of Aa3 will be used.
             If a security is unrated by either Moody's or S&P, the percentage
             set forth under "NR" in this table will be used.

                           (c) U.S. Treasury Securities and U.S. Treasury Strips
                  (as defined by Moody's):

                                       19



<PAGE>


<TABLE>
<CAPTION>
                                                                   U.S. Treasury         U.S. Treasury
                                                                     Securities              Strips
       Remaining Term to Maturity                                 Discount Factor       Discount Factor
       -------------------------------------------------------  ---------------------  -------------------
       <S>                                                      <C>                    <C>
       1 year or less                                                   107%                  107%
       2 years or less (but longer than 1 year)                         113%                  114%
       3 years or less (but longer than 2 year)                         118%                  120%
       4 years or less (but longer than 3 year)                         123%                  127%
       5 years or less (but longer than 4 year)                         128%                  133%
       7 years or less (but longer than 5 year                          135%                  145%
       10 years or less (but longer than 7 year)                        141%                  159%
       15 years or less (but longer than 10 year)                       146%                  184%
       20 years or less (but longer than 15 year)                       154%                  211%
       30 years or less (but longer than 20 year)                       154%                  236%
</TABLE>

                           (d) Short-Term Instruments and Cash. The Moody's
                  Discount Factor applied to Moody's Eligible Assets that are
                  short term money instruments (as defined by Moody's) will be
                  (i) 100%, so long as such portfolio securities mature or have
                  a demand feature at par exercisable within 49 days of the
                  relevant valuation date, (ii) 102%, so long as such portfolio
                  securities mature or have a demand feature at par not
                  exercisable within 49 days of the relevant valuation date, and
                  (iii) 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 49 days of the relevant valuation date. A
                  Moody's Discount Factor of 100% will be applied to cash.

                  "Moody's Eligible Assets" means the following:

                           (a) Common Stock, Preferred Stock and any debt
                  security of REITs and Other Real Estate Companies. (i) Common
                  stock of REITs and preferred stock and any debt security of
                  REITs and Other Real Estate Companies: (A) which comprise at
                  least 7 of the 14 Moody's Real Estate Industry/ Property
                  Sector Classifications ("Moody's Sector Classifications")
                  listed below and of which no more than 35% may constitute a
                  single such classification; (B) which in the aggregate
                  constitute at least 40 separate classes of common stock,
                  preferred stock, and debt securities, issued by at least 30
                  issuers; (C) issued by a single issuer which in the aggregate
                  constitute no more than 7.0% of the Market Value of Moody's
                  Eligible Assets, and (D) issued by a single issuer which, with
                  respect to 50% of the Market Value of Moody's Eligible Assets,
                  constitute in the aggregate no more than 5% of Market Value of
                  Moody's Eligible Assets; and

                           (ii) Unrated debt securities issued by an issuer
                  which: (A) has not filed for bankruptcy within the past three
                  years; (B) is current on all principal and interest on its
                  fixed income obligations; (C) is current on all preferred
                  stock dividends; (D) possesses a current, unqualified
                  auditor's report without qualified, explanatory language and
                  (E) in the aggregate do not exceed 10% of the discounted
                  Moody's Eligible Assets;

                           (b) Interest rate swaps entered into according to
                  International Swap Dealers Association ("ISDA") standards if
                  (i) the counterparty to the swap transaction has a short-term
                  rating of not less than P-1 or, if the counterparty does not
                  have a short-term rating, the counterparty's senior unsecured
                  long-term debt rating is Aa3 or higher and (ii) the original
                  aggregate notional amount of the interest rate swap
                  transaction or transactions is not to be greater than the
                  liquidation preference of the AMPS originally issued. The
                  interest rate swap transaction will be marked-to-market daily;

                           (c) U.S. Treasury Securities and Treasury Strips (as
                  defined by Moody's);

                           (d) Short-Term Money Market Instruments so long as
                  (A) such securities are rated at least P-1, (B) in the case of
                  demand deposits, time deposits and overnight funds, the
                  supporting entity is rated at least A2, or (C) in all other
                  cases, the supporting entity (1) is rated A2 and the security
                  matures within one month, (2) is rated A1 and the security
                  matures within three months or (3) is rated at least Aa3 and
                  the security matures within six months; provided, however,
                  that for

                                       20



<PAGE>


                           purposes of this definition, such instruments (other
                           than commercial paper rated by S&P and not rated by
                           Moody's) need not meet any otherwise applicable
                           Moody's rating criteria; and

                           (e) Cash (including, for this purpose, 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 49 days of the relevant valuation date)
                  and receivables for Moody's Eligible 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 (2) with
                  counterparties having a Moody's Short-Term Money Market
                  Instrument rating of at least P-1.

                  "Moody's Real Estate Industry/ Property Sector Classification"
         means, for the purposes of determining Moody's Eligible Assets, each of
         the following Industry Classifications (as defined by the National
         Association of Real Estate Investment Trusts, "NAREIT"):

                  1.       Office

                  2.       Industrial

                  3.       Mixed

                  4.       Shopping Centers

                  5.       Regional Malls

                  6.       Free Standing

                  7.       Apartments

                  8.       Manufactured Homes

                  9.       Diversified

                  10.      Lodging/Resorts

                  11.      Health Care

                  12.      Home Financing

                  13.      Commercial Financing

                  14.      Self Storage

                  The Corporation will use its discretion in determining which
         NAREIT Industry Classification is applicable to a particular investment
         in consultation with the independent auditor and/or Moody's, as
         necessary.

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

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

                  "1940 Act Preferred Shares Asset Coverage" means asset
         coverage, as determined in accordance with Section 18(h) of the 1940
         Act, of at least 200% with respect to all outstanding senior securities
         of the Corporation which are stock, including all Outstanding AMPS (or
         such other asset coverage as may in the future be specified in or under
         the 1940 Act as the minimum asset coverage for senior securities which
         are

                                       21



<PAGE>


         stock of a closed-end investment company as a condition of
         declaring dividends on its common shares), determined on the
         basis of values calculated as of a time within 48 hours (not
         including Sundays or holidays) next preceding the time of such
         determination.

                  "1940 Act Preferred Shares Asset Coverage Certificate" means
         the certificate required to be delivered by the Corporation pursuant to
         Section 12(e) of these Articles Supplementary.

                  "Notice of Redemption" means any notice with respect to the
         redemption of AMPS pursuant to Section 3 of Part I of these Articles
         Supplementary.

                  "Order" has the meaning set forth in Section 2(a)(ii) of Part
         II of these Articles Supplementary.

                  "Other Rating Agency" means any rating agency other than S&P
         or Moody's then providing a rating for the AMPS pursuant to the request
         of the Corporation.

                  "Other Rating Agency Eligible Assets" means assets of the
         Corporation designated by any Other Rating Agency as eligible for
         inclusion in calculating the discounted value of the Corporation's
         assets in connection with such Other Rating Agency's rating of the
         AMPS.

                  "Other Real Estate Companies" companies which generally derive
         at least 50% of their revenue from real estate or has at least 50% of
         its assets in real estate, but not including REITs.

                  "Outstanding" means, as of any date, AMPS theretofore issued
         by the Corporation except, without duplication, (i) any AMPS
         theretofore canceled, redeemed or repurchased by the Corporation, or
         delivered to the Auction Agent for cancellation or with respect to
         which the Corporation has given notice of redemption and irrevocably
         deposited with the Paying Agent sufficient funds to redeem such shares
         and (ii) any AMPS represented by any certificate in lieu of which a new
         certificate has been executed and delivered by the Corporation.
         Notwithstanding the foregoing, (A) for purposes of voting rights
         (including the determination of the number of shares required to
         constitute a quorum), any AMPS as to which the Corporation or any
         Affiliate is the Existing Holder will be disregarded and not deemed
         Outstanding; (B) in connection with any Auction, any AMPS as to which
         the Corporation or any person known to the Auction Agent to be an
         Affiliate is the Existing Holder will be disregarded and not deemed
         Outstanding; and (C) for purposes of determining the Preferred Shares
         Basic Maintenance Amount, AMPS held by the Corporation will be
         disregarded and not deemed Outstanding, but shares held by any
         Affiliate will be deemed Outstanding.

                  "Paying Agent" means The Bank of New York unless and until
         another entity appointed by a resolution of the Board of Directors
         enters into an agreement with the Corporation to serve as paying agent,
         which paying agent may be the same as the Auction Agent.

                  "Person" or "Person" means and includes an individual, a
         partnership, the corporation, a trust, a corporation, a limited
         liability company, an unincorporated association, a joint venture or
         other entity or a government or any agency or political subdivision
         thereof.

                  "Potential Beneficial Owner or Holder" has the meaning set
         forth in Section 1 of Part II of these Articles Supplementary.

                  "Preferred Shares Basic Maintenance Amount" means as of any
         Valuation Date as the dollar amount equal to the sum of:

                           (i)(A) the sum of the products resulting from
                  multiplying the number of Outstanding AMPS on such date by the
                  Liquidation Preference (and redemption premium, if any) per
                  share; (B) the aggregate amount of dividends that will have
                  accumulated at the Applicable Rate (whether or not earned or
                  declared) for each Outstanding Preferred Share to the 30th day
                  after such Valuation Date; (C) the amount of anticipated
                  Corporation non-interest expenses for the 90 days subsequent
                  to such Valuation Date; (D) the amount of the current
                  outstanding balances of any indebtedness which is senior to
                  the AMPS plus interest actually accrued together with 30 days

                                       22



<PAGE>


                  additional interest on the current outstanding balances
                  calculated at the current rate; and (E) any other current
                  liabilities payable during the 30 days subsequent to such
                  Valuation Date, including, without limitation, indebtedness
                  due within one year and any redemption premium due with
                  respect to AMPS for which a Notice of Redemption has been
                  given, as of such Valuation Date, to the extent not reflected
                  in any of (i)(A) through (i)(D): less

                           (ii) the sum of any cash plus the value of any of the
                  Corporation's assets irrevocably deposited by the Corporation
                  for the payment of any (i)(B) through (i)(F) ("value," for
                  purposes of this clause (ii), means the Discounted Value of
                  the security, except that if the security matures prior to the
                  relevant redemption payment date and is either fully
                  guaranteed by the U.S. Government or is rated at least P-1 by
                  Moody's and A-1 by S&P, it will be valued at its face value).

                  "Preferred Shares Basic Maintenance Amount Test" means a test
         which is met if the lower of the aggregate Discounted Values of the
         Moody's Eligible Assets or the S&P Eligible Assets meets or exceeds the
         Preferred Shares Basic Maintenance Amount.

                  "Preferred Shares Basic Maintenance Certificate" has the
         meaning set forth in Section 12(d) of Part I of these Articles
         Supplementary.

                  "Pricing Service" means any of the following: Bloomberg,
         Bridge Information Services, Data Resources Inc., Interactive Data,
         International Securities Market Association, Merrill Lynch Securities
         Pricing Service, Muller Data Corp., Reuters, Standard & Poors/J.J.
         Kenny, Telerate, Trepp Pricing and Wood Gundy.

                  "Rating Agency" means Moody's and S&P as long as such rating
         agency is then rating the AMPS.

                  "Redemption Date" has the meaning set forth in Section
         2(c)(ii) of Part II of these Articles Supplementary.

                  "Redemption Default" has the meaning set forth in Section
         2(c)(ii) of Part I of these Articles Supplementary.

                  "Redemption Price" has the meaning set forth in Section
         3(a)(i) of Part I of these Articles Supplementary.

                  "Reference Rate" means, with respect to the determination of
         the Default Rate, the applicable "AA" Composite Commercial Paper Rate
         (for a Dividend Period of fewer than 184 days) or the applicable
         Treasury Index Rate (for a Dividend Period of 184 days or more).

                  "Registrar" means The Bank of New York, unless and until
         another entity appointed by a resolution of the Board of Directors
         enters into an agreement with the Corporation to serve as transfer
         agent.

                  "REIT" or real estate investment trust, means a company
         dedicated to owning, and usually operating, income producing real
         estate, or to financing real estate.

                  "S&P" means Standard & Poor's, a division of The McGraw-Hill
         Companies, Inc., or its successors at law.

                  "S&P Discount Factor" means, for purposes of determining the
         Discounted Value of any S&P Eligible Asset, the percentage determined
         as follows. The S&P Discount Factor for any S&P Eligible Asset other
         than the securities set forth below will be the percentage provided in
         writing by S&P:

                           (a) Common Stock and Preferred Stock of REITs and
                  Other Real Estate Companies:

                                       23



<PAGE>


<TABLE>
<CAPTION>
                                                                        Diversification Standard
                                                                ------------------------------------------
                                                                 Level 1    Level 2   Level 3    Level 4
                                                                ----------  --------- ---------  ---------
         <S>                                                    <C>         <C>       <C>        <C>
         Minimum Number of:
         Issuers(1)                                                 44          40        44         30
         Real Estate Industry/Property Sectors(2)                   10           8         7          7
         Percent of Assets in:
         Largest Real Estate Industry/Property Sector               17%         25%       30%        30%
         2nd Largest Real Estate Industry/Property Sector           15%         20%       25%        25%
         3rd Largest Real Estate Industry/Property Sector           12%         15%       15%        15%
         4th Largest Real Estate Industry/Property Sector           12%         12%       12%        12%
         S&P Discount Factor:
         common stock                                              190%        208%      223%       231%
         preferred stock(3)                                        157%        167%      174%       178%
</TABLE>

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

         (1) Three issuers may each constitute 6% of assets and four issuers may
             each constitute 5% of assets.

         (2) As defined by NAREIT.

         (3) Applies to preferred stock of real estate companies, subject to
             diversification guidelines whereby at least 34% of the preferred
             assets are rated BB (or Moody's equivalent) or greater; at least
             33% are rated B (or Moody's equivalent) or greater; and the balance
             of the preferred assets is rated B- (or Moody's equivalent) or is
             unrated. The Discount Factor for common stock will apply to
             preferred stock which is not in compliance with the diversification
             standard.

                           (b) Debt Securities:

<TABLE>
<CAPTION>
                                                       Diversification Standard
                                            -----------------------------------------------
          Bond Rating(1)                      Level 1      Level 2     Level 3     Level 4
          --------------                    -----------  ----------  ----------  ----------
          <S>                               <C>          <C>         <C>         <C>
          A                                     116%         117%        119%        118%
          A-                                    117%         119%        120%        120%
          BBB+                                  119%         121%        122%        122%
          BBB                                   121%         122%        124%        124%
          BBB-                                  122%         124%        126%        126%
          BB+                                   127%         130%        133%        132%
          BB                                    133%         137%        141%        139%
          BB-                                   139%         144%        149%        147%
          B+                                    152%         159%        166%        164%
          B                                     163%         172%        182%        179%
          B-                                    176%         188%        202%        197%
          CCC+                                  198%         212%        230%        224%
          CCC                                   236%         262%        295%        284%
</TABLE>

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

         (1) The S&P Discount Factors for debt securities shall also be applied
             to any interest rate swap or cap, in which case the rating of the
             counterparty shall determine the appropriate rating category.

         (2) If a security is unrated by S&P but is rated by Moody's, the
             conversion chart under S&P OC Test Rating Chart will apply.

                           (c) U.S. Treasury Securities, including Treasury
                  interest-only Strips and Treasury principal-only Strips, as
                  set forth below:

                                       24



<PAGE>


<TABLE>
             <S>                                                     <C>
             52-week Treasury Bills*                                 102%
             Two-Year Treasury Notes                                 104%
             Three-Year Treasury Notes                               108%
             Five-Year Treasury Notes                                109%
             10-Year Treasury Notes                                  115%
             30-Year Treasury Bonds                                  126%
</TABLE>

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

         *   Treasury Bills with maturities of less than 52 weeks will be
             discounted at the appropriate Short-Term Money Market Instrument
             levels. Treasury Bills that mature the next day are considered cash
             equivalents and are valued at 100%.

             Treasury Strips: Treasury interest-only Strips will apply the
             discount factor for the Treasury category set forth above following
             the maturity of the Treasury Strip, e.g., a Treasury interest-only
             Strip with a maturity of seven years will apply the discount factor
             for the U.S. Treasury securities with a 10-year maturity. Treasury
             principal-only Strips will apply the discount factor that is two
             categories greater than its maturity, e.g., a Treasury
             principal-only Strip with a maturity of seven years will apply the
             discount factor for U.S. Treasury securities with a 30-year
             maturity.

                           (d) Cash and Cash Equivalents: The S&P Discount
                  Factor applied to Cash and Cash Equivalents will be (A) 100%
                  and (B) 102% for those portfolio securities which mature in
                  181 to 360 calendar days.

                  "S&P Eligible Assets" means the following:

                           (a) Common Stock, Preferred Stock and any debt
                  securities of REITs and Real Estate Companies;

                           (b) Interest rate swaps entered into according to
                  International Swap Dealers Association ("ISDA") standards if
                  (i) the counterparty to the swap transaction has a short-term
                  rating of not less than A-1 or, if the counterparty does not
                  have a short-term rating, the counterparty's senior unsecured
                  long-term debt rating is AA - or higher and (ii) the original
                  aggregate notional amount of the interest rate swap
                  transaction or transactions is not to be greater than the
                  liquidation preference of the AMPS originally issued. The
                  interest rate swap transaction will be marked-to-market daily;

                           (c) U.S. Treasury Securities and Treasury Strips (as
                  defined by S&P);

                           (d) Short-Term Money Market Instruments so long as
                  (A) such securities are issued by an institution, which, at
                  the time of investment, is a permitted bank (including
                  commercial paper issued by a corporation which complies with
                  the applicable assumptions that follow) ("permitted bank"
                  means any bank, domestic or foreign, whose commercial paper is
                  rated A-1+) provided, however, that Short-Term Money Market
                  Instruments with maturities of 30 days of less, invested in an
                  institution rated A-1 may comprise up to 20% of eligible
                  portfolio assets; and

                           (e) Cash, which is any immediately available funds in
                  U.S. dollars or any currency other than U.S. dollars which is
                  a freely convertible currency, and Cash Equivalents, which
                  means investments (other than Cash) that are one or more of
                  the following obligations or securities: (i) U.S. Government
                  Securities; (ii) certificates of deposits of, banker's
                  acceptances issued by or money market accounts in any
                  depository institution or trust company incorporated under the
                  laws of the United States of America or any state thereof and
                  subject to supervision and examination by Federal and/ or
                  state banking authorities, so long as the deposits offered by
                  such depository institution or trust company at the time of
                  such investments are rated and have a rating of at least "P-1"
                  by Moody's and "A-1+" by S&P (or, in the case of the principal
                  depository institution in a holding company system whose
                  deposits are not so rated, the long term debt obligations of
                  such holding company are rated and such rating is at least
                  "A-1" by Moody's and "A+" by S&P); (iii)

                                       25



<PAGE>


                  commercial paper issued by any depositary institution or trust
                  company incorporated under the laws of the United States of
                  America or any state thereof and subject to supervision and
                  examination by Federal and/or state banking authorities, or
                  any corporation incorporated under the laws of the United
                  States of America or any state thereof, so long as the
                  commercial paper of such issuer is rated and has at the time
                  of such investment a short term rating of at least "P-1" by
                  Moody's and "A-1+" by S&P on its commercial paper; (iv)
                  securities bearing interest or sold at a discount issued by
                  any corporation incorporated under the laws of the United
                  States of America or any state thereof the obligations of
                  which at the time of such investment are rated and that have a
                  credit rating of at least "P-1" by Moody's and "A-1+" by S&P
                  either at the time of such investment or the making of a
                  contractual commitment providing for such investment; (v)
                  shares of any money market fund organized under the laws of a
                  jurisdiction other than the United States, so long as such
                  money market fund is rated and has at the time of such
                  investment a short-term rating of at least "AAAm" or "AAAg" by
                  S&P and "Aaa" by Moody's and ownership of such investments
                  will not cause the issuer to become engaged in a trade or
                  business within the United States for U.S. Federal income tax
                  purposes or subject the issuer to tax on a net income basis;
                  and (vi) unleveraged overnight repurchase obligations on
                  customary terms with respect to investments described in
                  clauses (i) through (iv) above entered into a depository
                  institution, trust company or corporation that has a
                  short-term rating of at least "A-1+" by S&P; provided, that
                  (i) in no event shall Cash Equivalents include any obligation
                  that provides for payment of interest alone; (ii) Cash
                  Equivalents referred to in clauses (ii) and (iii) above shall
                  mature within 183 days of issuance; (iii) either Moody's or
                  S&P changes its rating system, then any ratings included in
                  this definition shall be deemed to be an equivalent rating in
                  a successor rating category of Moody's or S&P, as the case may
                  be; (iv) if either Moody's or S&P is not in the business of
                  rating securities, then any ratings included in this
                  definition shall be deemed to be an equivalent rating from
                  another Rating Agency; (v) Cash Equivalents (other than U.S.
                  Government Securities or money market funds maintained by the
                  Custodian) shall not include any such investment of more than
                  $100 million in any single issuer; and (vi) in no event shall
                  Cash Equivalents include any obligation that is not
                  denominated in Dollars, any synthetic securities, any
                  Securities with ratings containing an "r" subscript, and IOs
                  or any POs (other than commercial paper with a maturity within
                  183 days of issuance).

                  "S&P OC Test Rating Chart" means the chart set forth below:

<TABLE>
<CAPTION>
                        Moody's Rating          Mapped S&P Rating
                        ---------------------   ----------------------
                        <S>                     <C>
                           Aaa                   AA+
                           Aa1                   AA
                           Aa2                   AA-
                           Aa3                   A+
                           A1                    A
                           A2                    A-
                           A3                    BBB+
                           Baa1                  BBB
                           Baa2                  BBB-
                           Baa3                  BB+
                           Ba1                   BB-
                           Ba2                   B+
                           Ba3                   B
                           B1                    B-
                           B2                    CCC+
                           B3                    CCC
                           Caa                   CCC-
                           NR or below Caa       NR
</TABLE>

                  "S&P Real Estate Industry/Property Sector Classification"
         means, for the purposes of determining S&P Eligible Assets, each of the
         following Industry Classifications (as defined by NAREIT):

                                       26



<PAGE>


                  1.       Office

                  2.       Industrial

                  3.       Mixed

                  4.       Shopping Centers

                  5.       Regional Malls

                  6.       Free Standing

                  7.       Apartments

                  8.       Manufactured Homes

                  9.       Diversified

                  10.      Lodging/Resorts

                  11.      Health Care

                  12.      Home Financing

                  13.      Commercial Financing

                  14.      Self Storage

                  The Corporation will use its discretion in determining which
         NAREIT Industry Classification is applicable to a particular
         investment, and, when necessary will consult with the independent
         auditor and/or S&P, as necessary.

                  "Securities Depository" means The Depository Trust Company and
         its successors and assigns or any successor securities depository
         selected by the Corporation that agrees to follow the procedures
         required to be followed by such securities depository in connection
         with the AMPS.

                  "Sell Order" has the meaning set forth in Section 2(b) of Part
         II of these Articles Supplementary.

                  "Short-Term Money Market Instrument" 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 A-1 if such commercial
                  paper matures in 30 days or A-1+ 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; and

                           (iv) U.S. Government Securities.

                  "Special Dividend Period" means a Dividend Period that is not
         a Standard Dividend Period.

                                       27



<PAGE>


                  "Specific Redemption Provisions" means, with respect to any
         Special Dividend Period of more than one year, either, or any
         combination of (i) a period (a "Non-Call Period") determined by the
         Board of Directors after consultation with the Broker-Dealers, during
         which the shares subject to such Special Dividend Period are not
         subject to redemption at the option of the Corporation and (ii) a
         period (a "Premium Call Period"), consisting of a number of whole years
         as determined by the Board of Directors after consultation with the
         Broker-Dealers, during each year of which the shares subject to such
         Special Dividend Period will be redeemable at the Corporation's option
         at a price per share equal to the Liquidation Preference plus
         accumulated but unpaid dividends (whether or not earned or declared)
         plus a premium expressed as a percentage or percentages of the
         Liquidation Preference or expressed as a formula using specified
         variables as determined by the Board of Directors after consultation
         with the Broker-Dealers.

                  "Standard Dividend Period" means a Dividend Period of seven
         days in the case of Series T, Series TH and Series F AMPS unless such
         7th day is not a Business Day, then the number of days ending on the
         Business Day next preceding such 7th day, or 28 days in the case of the
         Series W Preferred Shares, unless such day is not a Business Day, then
         the number of days ending on the Business Day next preceding such 28th
         day.

                  "Submission Deadline" means 1:00 p.m., New York City time, on
         any Auction Date or such other time on any Auction Date by which
         Broker-Dealers are required to submit Orders to the Auction Agent as
         specified by the Auction Agent from time to time.

                  "Transfer Agent" means The Bank of New York, unless and until
         another entity appointed by a resolution of the Board of Directors
         enters into an agreement with the Corporation to serve as Transfer
         Agent.

                  "Treasury Index Rate" means the average yield to maturity for
         actively traded marketable U.S. Treasury fixed interest rate securities
         having the same number of 30-day periods to maturity as the length of
         the applicable Dividend Period, determined, to the extent necessary, by
         linear interpolation based upon the yield for such securities having
         the next shorter and next longer number of 30-day periods to maturity
         treating all Dividend Periods with a length greater than the longest
         maturity for such securities as having a length equal to such longest
         maturity, in all cases based upon data set forth in the most recent
         weekly statistical release published by the Board of Governors of the
         Federal Reserve System (currently in H.15 (519)); provided, however, if
         the most recent such statistical release shall not have been published
         during the 15 days preceding the date of computation, the foregoing
         computations shall be based upon the average of comparable data as
         quoted to the Corporation by at least three recognized dealers in U.S.
         Government Securities selected by the Corporation.

                  "U.S. Government Securities" means direct obligations of the
         United States or by its agencies or instrumentalities that are entitled
         to the full faith and credit of the United States and that, other than
         United States Treasury Bills, provide for the periodic payment of
         interest and the full payment of principal at maturity or call for
         redemption.

                  "Valuation Date" means the last Business Day of each week, or
         such other date as the Corporation and Rating Agencies may agree to for
         purposes of determining the Preferred Shares Basic Maintenance Amount.

                  "Voting Period" has the meaning set forth in Section 6(b) of
         Part I of these Articles Supplementary.

                  "Winning Bid Rate" has the meaning set forth in Section
         4(a)(iii) of Part II of these Articles Supplementary.

         18. Interpretation. References to sections, subsections, clauses,
sub-clauses, paragraphs and subparagraphs are to such sections, subsections,
clauses, sub-clauses, paragraphs and subparagraphs contained in this Part I or
Part II hereof, as the case may be, unless specifically identified otherwise.

                                       28



<PAGE>

                          PART II: AUCTION PROCEDURES

         1. Certain Definitions. As used in Part II of these Articles
Supplementary, the following terms shall have the following meanings, unless the
context otherwise requires and all section references below are to Part II of
these Articles Supplementary except as otherwise indicated: Capitalized terms
not defined in Section 1 of Part II of these Articles Supplementary shall have
the respective meanings specified in Part I of these Articles Supplementary.

                  "Agent Member" means a member of or participant in the
         Securities Depository that will act on behalf of existing or potential
         holders of AMPS.

                  "Available AMPS" has the meaning set forth in Section 4(a)(i)
         of Part II of these Articles Supplementary.

                  "Existing Holder" means (a) a person who beneficially owns
         those AMPS listed in that person's name in the records of the Auction
         Agent or (b) the beneficial owner of those AMPS which are listed under
         such person's Broker-Dealer's name in the records of the Auction Agent,
         which Broker-Dealer shall have signed a Master Purchaser's Letter.

                  "Hold Order" has the meaning set forth in Section 2(a)(ii) of
         Part II of these Articles Supplementary.

                  "Master Purchaser's Letter" means the letter which is required
         to be executed by each prospective purchaser of AMPS or the
         Broker-Dealer through whom the shares will be held.

                  "Order" has the meaning set forth in Section 2(a)(ii) of Part
         II of these Articles Supplementary.

                  "Potential Holder," means (a) any Existing Holder who may be
         interested in acquiring additional AMPS or (b) any other person who may
         be interested in acquiring AMPS and who has signed a Master Purchaser's
         Letter or whose shares will be listed under such person's
         Broker-Dealer's name on the records of the Auction Agent which
         Broker-Dealer shall have executed a Master Purchaser's Letter.

                  "Sell Order" has the meaning set forth in Section 2(b) of Part
         II of these Articles Supplementary.

                  "Submitted Bid Order" has the meaning set forth in Section
         4(a) of Part II of these Articles Supplementary.

                  "Submitted Hold Order" has the meaning set forth in Section
         4(a) of Part II of these Articles Supplementary.

                  "Submitted Order" has the meaning set forth in Section 4(a) of
         Part II of these Articles Supplementary.

                  "Submitted Sell Order" has the meaning set forth in Section
         4(a) of Part II of these Articles Supplementary.

                  "Sufficient Clearing Orders" means that all AMPS are the
         subject of Submitted Hold Orders or that the number of AMPS that are
         the subject of Submitted Buy Orders by Potential Holders specifying one
         or more rates equal to or less than the Maximum Rate exceeds or equals
         the sum of (A) the number of AMPS that are subject of Submitted
         Hold/Sell Orders by Existing Holders specifying one or more rates
         higher than the Maximum Applicable Rate and (B) the number of AMPS that
         are subject to Submitted Sell Orders.

                  "Winning Bid Rate" means the lowest rate specified in the
         Submitted Orders which, if (A) each Submitted Hold/Sell Order from
         Existing Holders specifying such lowest rate and all other Submitted
         Hold/Sell Orders from Existing Holders specifying lower rates were
         accepted and (B) each Submitted Buy Order from Potential Holders
         specifying such lowest rate and all other Submitted Buy Orders from
         Potential Holders specifying lower rates were accepted, would result in
         the Existing Holders described in

                                       29



<PAGE>


         clause (A) above continuing to hold an aggregate number of AMPS which,
         when added to the number of AMPS to be purchased by the Potential
         Holders described in clause (B) above and the number of AMPS subject to
         Submitted Hold Orders, would be equal to the number of AMPS.

         2. Orders.

         (a) On or prior to the Submission Deadline on each Auction Date for
shares of a series of AMPS:

         (i) each Beneficial Owner of shares of such Series may submit to its
Broker-Dealer by telephone or otherwise information as to:

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

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

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

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

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

         (b) (i) A Bid by a Beneficial Owner or an Existing Holder of shares of
a series of AMPS subject to an Auction on any Auction Date shall constitute an
irrevocable offer to sell:

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

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

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

                                       30



<PAGE>

         (ii) A Sell Order by a Beneficial Owner or an Existing Holder of shares
of a series of AMPS subject to an Auction on any Auction Date shall constitute
an irrevocable offer to sell:

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

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

provided, however, that a Broker-Dealer that is an Existing Holder with respect
to shares of a series of AMPS shall not be liable to any Person for failing to
sell such shares pursuant to a Sell Order described in the proviso to paragraph
(c) of Section 3 of this Part II if (1) such shares were transferred by the
Beneficial Owner thereof without compliance by such Beneficial Owner or its
transferee Broker-Dealer (or other transferee person, if permitted by the
Corporation) with the provisions of Section 6 of this Part II or (2) such
Broker-Dealer has informed the Auction Agent pursuant to the terms of its
Broker-Dealer Agreement that, according to such Broker-Dealer's records, such
Broker-Dealer believes it is not the Existing Holder of such shares.

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

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

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

         3. Submission of Orders by Broker-Dealers to Auction Agent.

         (a) Each Broker-Dealer shall submit in writing to the Auction Agent
prior to the Submission Deadline on each Auction Date all Orders for AMPS of a
series subject to an Auction on such Auction Date obtained by such
Broker-Dealer, designating itself (unless otherwise permitted by the
Corporation) as an Existing Holder in respect of shares subject to Orders
submitted or deemed submitted to it by Beneficial Owners and as a Potential
Holder in respect of shares subject to Orders submitted to it by Potential
Beneficial Owners, and shall specify with respect to each Order for such shares:

                  (i) the name of the Bidder placing such Order (which shall be
         the Broker-Dealer unless otherwise permitted by the Corporation);

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

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

                           (A) the number of shares, if any, of such series
                  subject to any Hold Order of such Existing Holder;

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

                           (C) the number of shares, if any, of such series
                  subject to any Sell Order of such Existing Holder; and

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

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

                                       31



<PAGE>


         (c) If an Order or Orders covering all of the Outstanding AMPS of a
series held by any Existing Holder is not submitted to the Auction Agent prior
to the Submission Deadline, the Auction Agent shall deem a Hold Order to have
been submitted by or on behalf of such Existing Holder covering the number of
Outstanding shares of such series held by such Existing Holder and not subject
to Orders submitted to the Auction Agent; provided, however, that if an Order or
Orders covering all of the Outstanding shares of such series held by any
Existing Holder is not submitted to the Auction Agent prior to the Submission
Deadline for an Auction relating to a Special Dividend Period consisting of more
than 91 Dividend Period days, the Auction Agent shall deem a Sell Order to have
been submitted by or on behalf of such Existing Holder covering the number of
outstanding shares of such series held by such Existing Holder and not subject
to Orders submitted to the Auction Agent.

         (d) If one or more Orders of an Existing Holder is submitted to the
Auction Agent covering in the aggregate more than the number of Outstanding AMPS
of a series subject to an Auction held by such Existing Holder, such Orders
shall be considered valid in the following order of priority:

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

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

                           (B) subject to subclause (A), if more than one Bid of
                  an Existing Holder for shares of such series is submitted to
                  the Auction Agent with the same rate and the number of
                  Outstanding shares of such series subject to such Bids is
                  greater than such excess, such Bids shall be considered valid
                  up to and including the amount of such excess, and the number
                  of shares of such series subject to each Bid with the same
                  rate shall be reduced pro rata to cover the number of shares
                  of such series equal to such excess;

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

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

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

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

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

                                       32



<PAGE>


         4. Determination of Sufficient Clearing Bids, Winning Bid Rate and
Applicable Rate.

         (a) Not earlier than the Submission Deadline on each Auction Date for
shares of a series of AMPS, the Auction Agent shall assemble all valid Orders
submitted or deemed submitted to it by the Broker-Dealers in respect of shares
of such series (each such Order as submitted or deemed submitted by a
Broker-Dealer being hereinafter referred to individually as a "Submitted Hold
Order," a "Submitted Bid" or a "Submitted Sell Order," as the case may be, or as
a "Submitted Order" and collectively as "Submitted Hold Orders," "Submitted
Bids" or "Submitted Sell Orders," as the case may be, or as "Submitted Orders")
and shall determine for such series:

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

                  (ii) from the Submitted Orders for shares of such series
         whether:

                           (A) the number of Outstanding shares of such series
                  subject to Submitted Bids of Potential Holders specifying one
                  or more rates equal to or lower than the Maximum Rate (for all
                  Dividend Periods) for shares of such series; exceeds or is
                  equal to the sum of

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

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

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

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

                           (B) (I) each such Submitted Bid of Potential Holders
                  specifying such lowest rate and (II) all other such Submitted
                  Bids of Potential Holders specifying lower rates were
                  accepted; would result in such Existing Holders described in
                  subclause (A) above continuing to hold an aggregate number of
                  Outstanding shares of such series which, when added to the
                  number of Outstanding shares of such series to be purchased by
                  such Potential Holders described in subclause (B) above, would
                  equal not less than the Available AMPS of such series.

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

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

                  (ii) if Sufficient Clearing Bids for shares of such series do
         not exist (other than because all of the Outstanding shares of such
         series are subject to Submitted Hold Orders), that the Applicable Rate
         for all shares of such series for the next succeeding Dividend Period
         thereof shall be equal to the Maximum Rate for shares of such series;
         or

                                       33



<PAGE>


                  (iii) if all of the Outstanding shares of such series are
         subject to Submitted Hold Orders, that the Applicable Rate for all
         shares of such series for the next succeeding Dividend Period thereof
         shall be the All Hold Rate.

         5. Acceptance and Rejection of Submitted Bids and Submitted Sell Orders
and Allocation. Existing Holders shall continue to hold the AMPS that are
subject to Submitted Hold Orders, and, based on the determinations made pursuant
to paragraph (a) of Section 4 of this Part II, the Submitted Bids and Submitted
Sell Orders shall be accepted or rejected by the Auction Agent and the Auction
Agent shall take such other action as set forth below:

                  (a) If Sufficient Clearing Bids for shares of a series of AMPS
         have been made, all Submitted Sell Orders with respect to shares of
         such series shall be accepted and, subject to the provisions of
         paragraphs (d) and (e) of this Section 5, Submitted Bids with respect
         to shares of such series shall be accepted or rejected as follows in
         the following order of priority and all other Submitted Bids with
         respect to shares of such series shall be rejected:

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

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

                           (iii) Potential Holders' Submitted Bids for shares of
                  such series specifying any rate that is lower than the Winning
                  Bid Rate for shares of such series shall be accepted;

                           (iv) each Existing Holder's Submitted Bid for shares
                  of such series specifying a rate that is equal to the Winning
                  Bid Rate for shares of such series shall be rejected, thus
                  entitling such Existing Holder to continue to hold the AMPS
                  subject to such Submitted Bid, unless the number of
                  Outstanding AMPS subject to all such Submitted Bids shall be
                  greater than the number of AMPS ("remaining shares") in the
                  excess of the Available AMPS of such series over the number of
                  AMPS subject to Submitted Bids described in clauses (ii) and
                  (iii) of this paragraph (a), in which event such Submitted Bid
                  of such Existing Holder shall be rejected in part, and such
                  Existing Holder shall be entitled to continue to hold AMPS
                  subject to such Submitted Bid, but only in an amount equal to
                  the AMPS of such series obtained by multiplying the number of
                  remaining shares by a fraction, the numerator of which shall
                  be the number of Outstanding AMPS held by such Existing Holder
                  subject to such Submitted Bid and the denominator of which
                  shall be the aggregate number of Outstanding AMPS subject to
                  such Submitted Bids made by all such Existing Holders that
                  specified a rate equal to the Winning Bid Rate for shares of
                  such series; and

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

                  (b) If Sufficient Clearing Bids for shares of a series of AMPS
         have not been made (other than because all of the Outstanding shares of
         such series are subject to Submitted Hold Orders), subject to the
         provisions of paragraph (d) of this Section 5, Submitted Orders for
         shares of such series shall be accepted or rejected as follows in the
         following order of priority and all other Submitted Bids for shares of
         such series shall be rejected:

                                       34



<PAGE>


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

                           (ii) Potential Holders' Submitted Bids for shares of
                  such series specifying any rate that is equal to or lower than
                  the Maximum Rate for shares of such series shall be accepted;
                  and

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

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

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

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

                  (f) Based on the results of each Auction for shares of a
         series of AMPS, the Auction Agent shall determine the aggregate number
         of shares of such series to be purchased and the aggregate number of
         shares of such series to be sold by Potential Holders and Existing
         Holders and, with respect to each Potential Holder and Existing Holder,
         to the extent that such aggregate number of shares to be purchased and
         such aggregate number of shares to be sold differ, determine to which
         other Potential Holder(s) or Existing Holder(s) they shall deliver, or
         from which other Potential Holder(s) or Existing Holder(s) they shall
         receive, as the case may be, AMPS of such series. Notwithstanding any
         provision of the Auction Procedures or the Settlement Procedures to the
         contrary, in the event an Existing Holder or Beneficial Owner of shares
         of a series of AMPS with respect to whom a Broker-Dealer submitted a
         Bid to the Auction Agent for such shares that was accepted in whole or
         in part, or submitted or is deemed to have submitted a Sell Order for
         such shares that was accepted in whole or in part, fails to instruct
         its Agent Member to deliver such shares against payment therefor,
         partial deliveries of AMPS that have been made in respect of Potential
         Holders' or Potential Beneficial Owners' Submitted Bids for shares of
         such series that have been accepted in whole or in part shall
         constitute good delivery to such Potential Holders and Potential
         Beneficial Owners.

                  (g) Neither the Corporation nor the Auction Agent nor any
         affiliate of either shall have any responsibility or liability with
         respect to the failure of an Existing Holder, a Potential Holder, a
         Beneficial

                                       35



<PAGE>


         Owner, a Potential Beneficial Owner or its respective Agent Member to
         deliver AMPS of any series or to pay for AMPS of any series sold or
         purchased pursuant to the Auction Procedures or otherwise.

         6. Transfer of AMPS. Unless otherwise permitted by the Corporation, a
Beneficial Owner or an Existing Holder may sell, transfer or otherwise dispose
of AMPS only in whole shares and only pursuant to a Bid or Sell Order placed
with the Auction Agent in accordance with the procedures described in this Part
II or to a Broker-Dealer; provided, however, that (a) a sale, transfer or other
disposition of AMPS from a customer of a Broker-Dealer who is listed on the
records of that Broker-Dealer as the holder of such shares to that Broker-Dealer
or another customer of that Broker-Dealer shall not be deemed to be a sale,
transfer or other disposition for purposes of this Section 6 if such
Broker-Dealer remains the Existing Holder of the shares so sold, transferred or
disposed of immediately after such sale, transfer or disposition and (b) in the
case of all transfers other than pursuant to Auctions, the Broker-Dealer (or
other Person, if permitted by the Corporation) to whom such transfer is made
shall advise the Auction Agent of such transfer.



                         [Remainder of page left blank]


                                       36



<PAGE>


         IN WITNESS WHEREOF, COHEN & STEERS QUALITY INCOME REALTY FUND, INC. has
caused these presents to be signed in its name and on its behalf by its Vice
President and witnessed by its Assistant Secretary as of this __ day of
____________, 2002.


WITNESS:


By:
     ---------------------------------
Name: Lawrence B. Stoller
Title: Assistant Secretary

                                          COHEN & STEERS QUALITY
                                          INCOME REALTY FUND, INC.
                                          By:
                                              ----------------------------------
                                              Name: Adam M. Derechin
                                              Title: Vice President

         THE UNDERSIGNED, Vice President of the COHEN & STEERS QUALITY INCOME
REALTY FUND, INC., who executed on behalf of the Corporation the foregoing
Articles Supplementary hereby acknowledges the foregoing Articles Supplementary
to be the corporate act of the Corporation and hereby certifies to the best of
his knowledge, information, and belief that the matters and facts set forth
herein with respect to the authorization and approval thereof are true in all
material respects under the penalties of perjury.




                                          --------------------------------------
                                          Name: Adam M. Derechin
                                          Title: Vice President

                                       37



</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.2D
<SEQUENCE>4
<FILENAME>ex99-2d2.txt
<DESCRIPTION>EXHIBIT 99.2(D)(II)
<TEXT>


<PAGE>


CERTIFICATE NUMBER                                              NUMBER OF SHARES


                                                                  2,800
- -------------                                                     -----



                 COHEN & STEERS QUALITY INCOME REALTY FUND, INC.
                             a Maryland corporation
          Series [T][TH][F][W] Taxable Auction Market Preferred Shares
                            $.001 Par Value Per Share
                    $25,000 Liquidation Preference Per Share


                                                                 Cusip No.______


         This certifies that Cede & Co. is the owner of 2,800 fully paid and
non-assessable Series [T][TH][F][W] Shares of Taxable Auction Market Preferred
Shares, par value $.001 per share, $25,000 liquidation preference per share, of
Cohen & Steers Quality Income Realty Fund, Inc. (the "Fund") transferable only
on the books of the Fund by the holder thereof in person or by duly authorized
attorney upon surrender of this Certificate properly endorsed. This Certificate
is not valid unless countersigned by the transfer agent and registrar.


         IN WITNESS WHEREOF, the Fund has caused this Certificate to be signed
by its duly authorized officers and its Seal to be hereunto affixed this __th
day of April A.D. 2002.



THE BANK OF NEW YORK                                COHEN & STEERS QUALITY
As Transfer Agent and Registrar                       INCOME REALTY FUND, INC.

By:_________________________                        By:_________________________
     Authorized Signature                                 Name: Martin Cohen
                                                          Title:   President


                                                  Attest:_______________________
                                                      Name:  Lawrence B. Stoller
                                                      Title: Assistant Secretary



<PAGE>



                                  TRANSFER FORM



         FOR VALUE RECEIVED, ____________________________ hereby sells, assigns
and transfers unto _______________ Series [T][TH][F][W] Taxable Auction Market
Preferred Shares represented by this Certificate, and does hereby irrevocably
constitute and appoint ___________________________ attorney to transfer said
Shares on the books of the within named Fund with full power of substitution in
the premises.


Dated: _____________________, _______


    In presence of:


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




         Series [T][TH][F][W] Taxable Auction Market Preferred Shares evidenced
by this Certificate may be sold, transferred or otherwise disposed of only
pursuant to the provisions of the Fund's Articles Supplementary Creating and
Fixing the Rights of Series T, Series TH, Series F and Series W Auction Market
Preferred Shares, a copy of which may be obtained at the office of the State
Department of Assessments and Taxation of Maryland.

         The Fund will furnish information about the restrictions on
transferability to any stockholder upon request and without charge. Any such
request should be addressed to the Secretary of the Fund.

         The Fund will furnish to any stockholder on request and without charge
a full statement of the designations, and any preferences, conversion and other
rights, voting powers, restrictions, limitations as to dividends,
qualifications, and terms and conditions of redemption of the stock of each
class authorized to be issued, the differences in the relative rights and
preferences between shares of any series of any authorized preferred or special
class to the extent they have been set, and the authority of the Board of
Directors to classify unissued shares and to set the relative rights and
preference thereof and of any subsequent series of such preferred or special
classes. Any such request should be addressed to the Secretary of the Fund.

         Unless this Certificate is presented by an authorized representative of
The Depository Trust Company, a New York corporation ("DTC"), to Issuer or its
agent for registration of transfer, exchange, or payment, and any certificate
issued is registered in the name of Cede & Co. or in such other name as is
requested by an authorized representative of DTC (and any payment is made to
Cede & Co. or to such other entity as is requested by an authorized
representative of DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner
hereof, Cede & Co., has an interest herein.



</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.2H
<SEQUENCE>5
<FILENAME>ex99-2h.txt
<DESCRIPTION>EXHIBIT 99.2(H)
<TEXT>


<PAGE>


                 Cohen & Steers Quality Income Realty Fund, Inc.
                            (a Maryland corporation)


                Taxable Auction Market Preferred Shares ("AMPS")
                          2,800 Shares __AMPS, Series T
                         2,800 Shares __AMPS, Series TH
                          2,800 Shares __AMPS, Series F
                          2,800 Shares __AMPS, Series W
                    Liquidation Preference $25,000 per share


                               PURCHASE AGREEMENT

                                                                 April [ ], 2002

Merrill Lynch & Co.
Merrill Lynch, Pierce, Fenner & Smith
               Incorporated
c/o Merrill Lynch, Pierce, Fenner & Smith
                Incorporated
North Tower
World Financial Center
New York, New York 10080

Ladies and Gentlemen:

         Cohen & Steers Quality Income Realty Fund, Inc., a Maryland corporation
(the "Fund"), proposes, upon the terms and conditions set forth herein, to issue
and sell an aggregate of 2,800 shares of its Taxable Auction Market Preferred
Shares, Series T, 2,800 shares of its Taxable Auction Market Preferred Shares,
Series TH, 2,800 of its Taxable Auction Market Preferred Shares, Series F and
2,800 of its Taxable Auction Market Preferred Shares, Series W, each with a
liquidation preference of $25,000 per share (the "AMPS"). The AMPS will be
authorized by, and subject to the terms and conditions of, the Articles of
Incorporation of the Fund, as amended through April __, 2002 (the "Charter"), in
the form filed as an exhibits to the Registration Statement referred to in the
second following paragraph of this Agreement, as the same may be amended from
time to time. The Fund and the Fund's investment manager, Cohen & Steers Capital
Management, Inc., a New York corporation ("CSCM" or the "Investment Manager")
each confirms its agreement with Merrill Lynch & Co., Merrill Lynch, Pierce,
Fenner & Smith Incorporated ("Merrill Lynch") and each of the other Underwriters
named in Schedule A hereto (collectively, the "Underwriters", which term shall
also include any underwriter substituted as hereinafter provided in Section 10
hereof), for whom Merrill Lynch is acting as representative (in such capacity,
the "Representative"), with respect to the issue and sale by the Fund and the
purchase by the Underwriters, acting severally and not jointly, of the
respective number of AMPS set forth in said Schedule A.

         The Fund understands that the Underwriters propose to make a public
offering of the AMPS as soon as the Representative deems advisable after this
Agreement has been executed and delivered.

         The Fund has filed with the Securities and Exchange Commission (the
"Commission") a registration statement on Form N-2 (No. 333- 82436 and No.
811-10481) covering the registration of the AMPS under the Securities Act of
1933, as amended (the "1933 Act"), including the related preliminary prospectus
or prospectuses, and a notification on Form N-8A of registration (the "1940 Act
Notification") of the Fund as an investment company under the Investment Company
Act of 1940, as amended (the



<PAGE>


"1940 Act"), and the rules and regulations of the Commission under the 1933 Act
and the 1940 Act (the "Rules and Regulations"). Promptly after execution and
delivery of this Agreement, the Fund will either (i) prepare and file a
prospectus in accordance with the provisions of Rule 430A ("Rule 430A") of the
Rules and Regulations and paragraph (c) or (h) of Rule 497 ("Rule 497") of the
Rules and Regulations or (ii) if the Fund has elected to rely upon Rule 434
("Rule 434") of the Rules and Regulations, prepare and file a term sheet (a
"Term Sheet") in accordance with the provisions of Rule 434 and Rule 497. The
information included in any such prospectus or in any such Term Sheet, as the
case may be, that was omitted from such registration statement at the time it
became effective but that is deemed to be part of such registration statement at
the time it became effective, if applicable, (a) pursuant to paragraph (b) of
Rule 430A is referred to as "Rule 430A Information" or (b) pursuant to paragraph
(d) of Rule 434 is referred to as "Rule 434 Information." Each prospectus used
before such registration statement became effective, and any prospectus that
omitted, as applicable, the Rule 430A Information or the Rule 434 Information,
that was used after such effectiveness and prior to the execution and delivery
of this Agreement, including in each case any statement of additional
information incorporated therein by reference, is herein called a "preliminary
prospectus." Such registration statement, including the exhibits thereto and
schedules thereto at the time it became effective and including the Rule 430A
Information and the Rule 434 Information, as applicable, is herein called the
"Registration Statement." Any registration statement filed pursuant to Rule
462(b) of the Rules and Regulations is herein referred to as the "Rule 462(b)
Registration Statement," and after such filing the term "Registration Statement"
shall include the Rule 462(b) Registration Statement. The final prospectus in
the form first furnished to the Underwriters for use in connection with the
offering of the AMPS, including the statement of additional information
incorporated therein by reference, is herein called the "Prospectus." If Rule
434 is relied on, the term "Prospectus" shall refer to the preliminary
prospectus dated February 11, 2002 together with the Term Sheet and all
references in this Agreement to the date of the Prospectus shall mean the date
of the Term Sheet. For purposes of this Agreement, all references to the
Registration Statement, any preliminary prospectus, the Prospectus or any Term
Sheet or any amendment or supplement to any of the foregoing shall be deemed to
include the copy filed with the Commission pursuant to its Electronic Data
Gathering, Analysis and Retrieval system ("EDGAR").

         All references in this Agreement to financial statements and schedules
and other information which is "contained," "included" or "stated" in the
Registration Statement, any preliminary prospectus or the Prospectus (or other
references of like import) shall be deemed to mean and include all such
financial statements and schedules and other information which is incorporated
by reference in the Registration Statement, any preliminary prospectus or the
Prospectus, as the case may be; and all reference in this Agreement to
amendments or supplements to the Registration Statement, any preliminary
prospectus or the Prospectus shall be deemed to mean and include the filing of
any document under the Securities Exchange Act of 1934 (the "1934 Act") which is
incorporated by reference in the Registration Statement, such preliminary
prospectus or the Prospectus, as the case may be.

         SECTION 1. Representations and Warranties.

         (a) Representations and Warranties by the Fund and the Investment
Manager. The Fund and the Investment Manager jointly and severally represent and
warrant to each Underwriter as of the date hereof, as of the Closing Time
referred to in Section 2(c) hereof and agree with each Underwriter, as follows:

                  (i) Compliance with Registration Requirements. Each of the
         Registration Statement and any Rule 462(b) Registration Statement has
         become effective under the 1933 Act and no stop order suspending the
         effectiveness of the Registration Statement or any Rule 462(b)
         Registration Statement has been issued under the 1933 Act, or order of
         suspension or revocation of registration pursuant to Section 8(e) of
         the 1940 Act, and no proceedings for any such purpose have been
         instituted or are pending or, to the knowledge of the Fund or the
         Investment Manager, are

                                       2



<PAGE>


         contemplated by the Commission, and any request on the part of the
         Commission for additional information has been complied with.

                  At the respective times the Registration Statement, any Rule
         462(b) Registration Statement and any post-effective amendments thereto
         became effective and at the Closing Time, the Registration Statement,
         the Rule 462(b) Registration Statement, the notification of Form N-8A
         and any amendments and supplements thereto complied and will comply in
         all material respects with the requirements of the 1933 Act, the 1940
         Act and the Rules and Regulations and did not and will not contain an
         untrue statement of a material fact or omit to state a material fact
         required to be stated therein or necessary to make the statements
         therein not misleading. Neither the Prospectus nor any amendments or
         supplements thereto, at the time the Prospectus or any such amendment
         or supplement was issued and at the Closing Time, included or will
         include an untrue statement of a material fact or omitted or will omit
         to state a material fact necessary in order to make the statements
         therein, in the light of the circumstances under which they were made,
         not misleading (except that this representation and warranty does not
         apply to statements in or omissions from the Registration Statements or
         the Prospectus made in reliance upon and in conformity with information
         relating to the Underwriters furnished to the Fund by or on behalf of
         the Underwriters expressly for use therein). If Rule 434 is used, the
         Fund will comply with the requirements of Rule 434 and the Prospectus
         shall not be "materially different", as such term is used in Rule 434,
         from the prospectus included in the Registration Statement at the time
         it became effective.

                  Each preliminary prospectus and the prospectus filed as part
         of the Registration Statement as originally filed or as part of any
         amendment thereto, or filed pursuant to Rule 497 under the 1933 Act,
         complied when so filed in all material respects with the Rules and
         Regulations and each preliminary prospectus and the Prospectus
         delivered to the Underwriters for use in connection with this offering
         was identical to the electronically transmitted copies thereof filed
         with the Commission pursuant to EDGAR, except to the extent permitted
         by Regulation S-T.

                  If a Rule 462(b) Registration Statement is required in
         connection with the offering and sale of the AMPS, the Fund has
         complied or will comply with the requirements of Rule 111 under the
         1933 Act Regulations relating to the payment of filing fees thereof.

                  (ii) Independent Accountants. The accountants who certified
         the statement of assets and liabilities included in the Registration
         Statement have represented to the Fund that they are independent public
         accountants as required by the 1933 Act and the Rules and Regulations.

                  (iii) Financial Statements. The statement of assets and
         liabilities included in the Registration Statement and the Prospectus,
         together with the related notes, presents fairly the financial position
         of the Fund at the date indicated; said statement has been prepared in
         conformity with generally accepted accounting principles ("GAAP").

                  (iv) No Material Adverse Change. Since the respective dates as
         of which information is given in the Registration Statement and the
         Prospectus, except as otherwise stated therein, (A) there has been no
         material adverse change in the condition, financial or otherwise, or in
         the earnings, business affairs or business prospects (other than as a
         result of a change in the financial markets generally) of the Fund,
         whether or not arising in the ordinary course of business (a "Material
         Adverse Effect"), (B) there have been no transactions entered into by
         the Fund, other than those in the ordinary course of business, which
         are material with respect to the Fund, and (C) there has been no
         dividend or distribution of any kind declared, paid or made by the Fund
         on any class of its capital stock.

                                       3



<PAGE>


                  (v) Good Standing of the Fund. The Fund has been duly
         organized and is validly existing as a corporation in good standing
         under the laws of the State of Maryland and has the corporate power and
         authority to own, lease and operate its properties and to conduct its
         business as described in the Prospectus and to enter into and perform
         its obligations under this Agreement; and the Fund is duly qualified as
         a foreign corporation to transact business and is in good standing in
         each other jurisdiction in which such qualification is required,
         whether by reason of the ownership or leasing of property or the
         conduct of business, except where the failure so to qualify or to be in
         good standing would not result in a Material Adverse Effect.

                  (vi) No Subsidiaries. The Fund has no subsidiaries.

                  (vii) Investment Company Status. The Fund is duly registered
         with the Commission under the 1940 Act as a closed-end non-diversified
         management investment company, and to the Fund's knowledge, no order of
         suspension or revocation of such registration has been issued or
         proceedings therefor initiated or threatened by the Commission.

                  (viii) Officers and Directors. No person is serving or acting
         as an officer, director or investment manager of the Fund except in
         accordance with the provisions of the 1940 Act and the Rules and
         Regulations and the Investment Advisers Act of 1940, as amended (the
         "Advisers Act"), and the rules and regulations of the Commission
         promulgated under the Advisers Act (the "Advisers Act Rules and
         Regulations"). Except as disclosed in the Registration Statement and
         the Prospectus (or any amendment or supplement to either of them), no
         director of the Fund is an "interested person" (as defined in the 1940
         Act) of the Fund or an "affiliated person" (as defined in the 1940 Act)
         of any Underwriter listed in Schedule A hereto.

                  (ix) Capitalization. The authorized, issued and outstanding
         shares of common stock of the Fund is as set forth in the Prospectus as
         of the date thereof under the caption "Description of Common Shares."
         All issued and outstanding common shares of the Fund have been duly
         authorized and validly issued and are fully paid and non-assessable,
         and have been offered and sold or exchanged by the Fund in compliance
         with all applicable laws (including, without limitation, federal and
         state securities laws); none of the outstanding shares of common shares
         of the Fund was issued in violation of the preemptive or other similar
         rights of any securityholder of the Fund.

                  (x) Authorization and Description of AMPS. The AMPS to be
         purchased by the Underwriters from the Fund have been duly authorized
         for issuance and sale to the Underwriters pursuant to this Agreement
         and, when issued and delivered by the Fund pursuant to this Agreement
         against payment of the consideration set forth herein, will be validly
         issued and fully paid and non-assessable. The AMPS conform to all
         statements relating thereto contained in the Prospectus and such
         description conforms to the rights of holders of AMPS set forth in the
         Charter and other documents defining the same; no holder of the AMPS
         will be subject to personal liability by reason of being such a holder;
         and the issuance of the AMPS is not subject to the preemptive or other
         similar rights of any securityholder of the Fund.

                  (xi) Absence of Defaults and Conflicts. The Fund is not in
         violation of its Charter or by-laws, or in default in the performance
         or observance of any obligation, agreement, covenant or condition
         contained in any contract, indenture, mortgage, deed of trust, loan or
         credit agreement, note, lease or other agreement or instrument to which
         it is a party or by which it may be bound, or to which any of the
         property or assets of the Fund is subject (collectively, "Agreements
         and Instruments") except for such violations or defaults that would not
         result in a Material Adverse Effect; and the execution, delivery and
         performance of this Agreement, the Investment Management Agreement, the
         Custodian Agreement, the Transfer Agent and Service Agreement and the
         Auction Agency Agreement referred to in the Registration Statement (as
         used herein, the

                                       4



<PAGE>


         "Management Agreement," the "Custodian Agreement", the "Transfer Agency
         Agreement" and the "Auction Agency Agreement," respectively) and the
         consummation of the transactions contemplated herein and in the
         Registration Statement (including the issuance and sale of the AMPS and
         the use of the proceeds from the sale of the AMPS as described in the
         Prospectus under the caption "Use of Proceeds") and compliance by the
         Fund with its obligations hereunder have been duly authorized by all
         necessary corporate action and do not and will not, whether with or
         without the giving of notice or passage of time or both, conflict with
         or constitute a breach of, or default or Repayment Event (as defined
         below) under, or result in the creation or imposition of any lien,
         charge or encumbrance upon any property or assets of the Fund pursuant
         to, the Agreements and Instruments (except for such conflicts, breaches
         or defaults or liens, charges or encumbrances that would not result in
         a Material Adverse Effect), nor will such action result in any
         violation of the provisions of the Charter or by-laws of the Fund or
         any applicable law, statute, rule, regulation, judgment, order, writ or
         decree of any government, government instrumentality or court, domestic
         or foreign, having jurisdiction over the Fund or any of its assets,
         properties or operations. As used herein, a "Repayment Event" means any
         event or condition which gives the holder of any note, debenture or
         other evidence of indebtedness (or any person acting on such holder's
         behalf) the right to require the repurchase, redemption or repayment of
         all or a portion of such indebtedness by the Fund.

                  (xii) Absence of Proceedings. There is no action, suit,
         proceeding, inquiry or investigation before or brought by any court or
         governmental agency or body, domestic or foreign, now pending, or, to
         the knowledge of the Fund or the Investment Manager, threatened,
         against or affecting the Fund, which is required to be disclosed in the
         Registration Statement (other than as disclosed therein), or which
         might reasonably be expected to result in a Material Adverse Effect, or
         which might reasonably be expected to materially and adversely affect
         the properties or assets of the Fund or the consummation of the
         transactions contemplated in this Agreement or the performance by the
         Fund of its obligations hereunder. The aggregate of all pending legal
         or governmental proceedings to which the Fund is a party or of which
         any of its property or assets is the subject which are not described in
         the Registration Statement, including ordinary routine litigation
         incidental to the business, could not reasonably be expected to result
         in a Material Adverse Effect.

                  (xiii) Accuracy of Exhibits. There are no contracts or
         documents which are required to be described in the Registration
         Statement or the Prospectus or to be filed as exhibits thereto by the
         1933 Act, the 1940 Act or by the Rules and Regulations which have not
         been so described and filed as required.

                  (xiv) Absence of Further Requirements. No filing with, or
         authorization, approval, consent, license, order, registration,
         qualification or decree of, any court or governmental authority or
         agency is necessary or required for the performance by the Fund of its
         obligations hereunder, in connection with the offering, issuance or
         sale of the AMPS hereunder or the consummation of the transactions
         contemplated by this Agreement, except such as have been already
         obtained or as may be required under the 1933 Act, the 1940 Act, the
         Securities Exchange Act of 1934, as amended (the "1934 Act"), or state
         securities laws.

                  (xv) Possession of Licenses and Permits. The Fund possesses
         such permits, licenses, approvals, consents and other authorizations
         (collectively, "Governmental Licenses") issued by the appropriate
         federal, state, local or foreign regulatory agencies or bodies
         necessary to operate its properties and to conduct the business as
         contemplated in the Prospectus; the Fund is in compliance with the
         terms and conditions of all such Governmental Licenses, except where
         the failure so to comply would not, singly or in the aggregate, have a
         Material Adverse Effect; all of the Governmental Licenses are valid and
         in full force and effect, except when the invalidity of such
         Governmental Licenses or the failure of

                                       5



<PAGE>


         such Governmental Licenses to be in full force and effect would not
         have a Material Adverse Effect; and the Fund has not received any
         notice of proceedings relating to the revocation or modification of any
         such Governmental Licenses which, singly or in the aggregate, if the
         subject of an unfavorable decision, ruling or finding, would result in
         a Material Adverse Effect.

                  (xvi) Advertisements. Any advertising, sales literature or
         other promotional material (including "prospectus wrappers", "broker
         kits," "road show slides" and "road show scripts") authorized in
         writing by or prepared by the Fund or the Investment Manager used in
         connection with the public offering of the AMPS (collectively, "sales
         material") does not contain an untrue statement of a material fact or
         omit to state a material fact required to be stated therein or
         necessary to make the statements therein not misleading. Moreover, all
         sales material complied and will comply in all material respects with
         the applicable requirements of the 1933 Act, the 1940 Act, the Rules
         and Regulations and the rules and interpretations of the National
         Association of Securities Dealers, Inc. ("NASD").

                  (xvii) Subchapter M. The Fund intends to direct the investment
         of the proceeds of the offering described in the Registration Statement
         in such a manner as to comply with the requirements of Subchapter M of
         the Internal Revenue Code of 1986, as amended ("Subchapter M of the
         Code" and the "Code," respectively), and intends to qualify as a
         regulated investment company under Subchapter M of the Code.

                  (xviii) Distribution of Offering Materials. The Fund has not
         distributed and, prior to the later to occur of (A) the Closing Time
         and (B) completion of the distribution of the AMPS, will not distribute
         any offering material in connection with the offering and sale of the
         AMPS other than the Registration Statement, a preliminary prospectus,
         the Prospectus or other materials, if any, permitted by the 1933 Act or
         the 1940 Act or the Rules and Regulations.

                  (xix) Material Agreements. This Agreement, the Management
         Agreement, the Custodian Agreement, the Transfer Agency Agreement and
         the Auction Agency Agreement have each been duly authorized by all
         requisite action on the part of the Fund, executed and delivered by the
         Fund, as of the dates noted therein and each complies with all
         applicable provisions of the 1940 Act. Assuming due authorization,
         execution and delivery by the other parties thereto with respect to the
         Custodian Agreement, the Transfer Agency Agreement and the Auction
         Agency Agreement, each of the Management Agreement, the Custodian
         Agreement, the Transfer Agency Agreement and the Auction Agency
         Agreement constitutes a valid and binding agreement of the Fund,
         enforceable in accordance with its terms, except as affected by
         bankruptcy, insolvency, fraudulent conveyance, reorganization,
         moratorium and other similar laws relating to or affecting creditors'
         rights generally, general equitable principles (whether considered in a
         proceeding in equity or at law).

                  (xx) Registration Rights. There are no persons with
         registration rights or other similar rights to have any securities
         registered pursuant to the Registration Statement or otherwise
         registered by the Fund under the 1933 Act.

                  (xxi) NYSE Listing. The Fund's shares of common stock are duly
         listed on the New York Stock Exchange ("NYSE").

                  (xxii) Ratings. The AMPS have been, or prior to the Closing
         Date will be, assigned a rating of 'aaa' by Moody's Investors Service,
         Inc. ("Moody's") and "Aaa" by Standard & Poor's Rating Services
         ("S&P").

                                       6



<PAGE>


         (b) Representations and Warranties by the Investment Manager. The
Investment Manager represents and warrants to each Underwriter as of the date
hereof, as of the Closing Time referred to in Section 2(c) hereof as follows:

                  (i) Good Standing of the Investment Manager. The Investment
         Manager has been duly organized and is validly existing and in good
         standing as a corporation under the laws of the State of New York with
         full corporate power and authority to own, lease and operate its
         properties and to conduct its business as described in the Prospectus
         and is duly qualified as a foreign corporation to transact business and
         is in good standing in each other jurisdiction in which such
         qualification is required except where the failure so to register or to
         qualify does not have a material adverse effect on the condition
         (financial or other), business, business prospects, properties, net
         assets or results of operations of the Investment Manager to perform
         its obligations under this Agreement and the Management Agreement.

                  (ii) Investment Manager Status. The Investment Manager is duly
         registered and in good standing with the Commission as an investment
         adviser under the Advisers Act, and is not prohibited by the Advisers
         Act or the 1940 Act, or the rules and regulations under such acts, from
         acting under the Management Agreement for the Fund as contemplated by
         the Prospectus.

                  (iii) Description of Investment Manager. The description of
         the Investment Manager in the Registration Statement and the Prospectus
         (and any amendment or supplement to either of them) complied and comply
         in all material respects with the provisions of the 1933 Act, the 1940
         Act, the Advisers Act, the Rules and Regulations and the Advisers Act
         Rules and Regulations and is true and correct and does not contain any
         untrue statement of a material fact or omit to state any material fact
         required to be stated therein or necessary in order to make the
         statements therein, in light of the circumstances under which they were
         made, not misleading.

                  (iv) Capitalization. The Investment Manager has the financial
         resources available to it necessary for the performance of its services
         and obligations as contemplated in the Prospectus, this Agreement and
         under the Investment Management Agreement.

                  (v) Authorization of Agreements; Absence of Defaults and
         Conflicts. This Agreement and the Management Agreement have each been
         duly authorized, executed and delivered by the Investment Manager, and
         the Management Agreement constitutes a valid and binding obligation of
         the Investment Manager, enforceable in accordance with its terms,
         except as affected by bankruptcy, insolvency, fraudulent conveyance,
         reorganization, moratorium and other similar laws relating to or
         affecting creditors' rights generally and general equitable principles
         (whether considered in a proceeding in equity or at law); and neither
         the execution and delivery of this Agreement or the Management
         Agreement nor the performance by the Investment Manager of its
         obligations hereunder or thereunder will conflict with, or result in a
         breach of any of the terms and provisions of, or constitute, with or
         without the giving of notice or lapse of time or both, a default under,
         any agreement or instrument to which the Investment Manager is a party
         or by which it is bound, the certificate of incorporation, the by-laws
         or other organizational documents of the Investment Manager, or to the
         Investment Manager's knowledge, by any law, order, decree, rule or
         regulation applicable to it of any jurisdiction, court, federal or
         state regulatory body, administrative agency or other governmental
         body, stock exchange or securities association having jurisdiction over
         the Investment Manager or its respective properties or operations; and
         no consent, approval, authorization or order of any court or
         governmental authority or agency is required for the consummation by
         the Investment Manager of the transactions contemplated by this
         Agreement or the Management Agreement, except as have been obtained or
         may be required under the 1933 Act, the 1940 Act, the 1934 Act or state
         securities laws.

                                       7



<PAGE>


                  (vi) No Material Adverse Change. Since the respective dates as
         of which information is given in the Registration Statement and the
         Prospectus, except as otherwise stated therein, there has not occurred
         any event which should reasonably be expected to have a material
         adverse effect on the ability of the Investment Manager to perform its
         obligations under this Agreement and the Investment Management
         Agreement.

                  (vii) Absence of Proceedings. There is no action, suit,
         proceeding, inquiry or investigation before or brought by any court or
         governmental agency or body, domestic or foreign, now pending, or, to
         the knowledge of the Investment Manager, threatened against or
         affecting the Investment Manager or any "affiliated person" of the
         Investment Manager (as such term is defined in the 1940 Act) or any
         partners, directors, officers or employees of the foregoing, whether or
         not arising in the ordinary course of business, which might reasonably
         be expected to result in any material adverse change in the condition,
         financial or otherwise, or earnings, business affairs or business
         prospects of the Investment Manager, materially and adversely affect
         the properties or assets of the Investment Manager or materially impair
         or adversely affect the ability of the Investment Manager to function
         as an investment manager or perform its obligations under the
         Management Agreement, or which is required to be disclosed in the
         Registration Statement and the Prospectus.

                  (viii) Absence of Violation or Default. The Investment Manager
         is not in violation of its certificate of incorporation, by-laws or
         other organizational documents or in default under any agreement,
         indenture or instrument except for such violations or defaults that
         would not result in a material adverse change in the condition,
         financial or otherwise, or in the earnings, business affairs or
         business prospects of the Investment Manager or the Fund.

         (c) Officer's Certificates. Any certificate signed by any officer of
the Fund or the Investment Manager delivered to the Representative or to counsel
for the Underwriters shall be deemed a representation and warranty by the Fund
or the Investment Manager, as the case may be, to each Underwriter as to the
matters covered thereby.

         SECTION 2. Sale and Delivery to Underwriters; Closing.

         (a) AMPS. On the basis of the representations and warranties herein
contained and subject to the terms and conditions herein set forth, the Fund
agrees to sell to each Underwriter, severally and not jointly, and each
Underwriter, severally and not jointly, agrees to purchase from the Fund, at the
price per share set forth in Schedule B, the number of AMPS set forth in
Schedule A opposite the name of such Underwriter, plus any additional number of
AMPS which such Underwriter may become obligated to purchase pursuant to the
provisions of Section 10 hereof.

         (b) Commission. The Fund agrees to pay to the Underwriters a commission
set forth in Schedule B as compensation to the Underwriters for their
commitments under this Agreement.

         (c) Payment. Payment of the purchase price for, and delivery of
certificates for, the AMPS shall be made at the offices of Simpson Thacher &
Bartlett, New York, New York 10017, or at such other place as shall be agreed
upon by the Representative and the Fund, at 10:00 A.M. (Eastern time) on the
business day after the date hereof (unless postponed in accordance with the
provisions of Section 10), or such other time not later than ten business days
after such date as shall be agreed upon by the Representative and the Fund (such
time and date of payment and delivery being herein called "Closing Time").

         Payment shall be made to the Fund by wire transfer of immediately
available funds to a bank account designated by the Fund, against delivery to
the Representative for the respective accounts of the Underwriters of
certificates for the AMPS to be purchased by them. It is understood that each
Underwriter has authorized the Representative, for its account, to accept
delivery of, receipt for, and make

                                       8



<PAGE>


payment of the purchase price for, the AMPS which it has agreed to purchase.
Merrill Lynch, individually and not as representative of the Underwriters, may
(but shall not be obligated to) make payment of the purchase price for the AMPS
to be purchased by any Underwriter whose funds have not been received by the
Closing Time but such payment shall not relieve such Underwriter from its
obligations hereunder.

         (d) Denominations; Registration. Certificates for the AMPS shall be in
such denominations and registered in such names as the Representative may
request in writing at least one full business day before the Closing Time. The
certificates for the AMPS will be made available for examination and packaging
by the Representative in the City of New York not later than 10:00 A.M. (Eastern
time) on the business day prior to the Closing Time.

         SECTION 3. Covenants.

         (a) The Fund and the Investment Manager, jointly and severally,
covenant with each Underwriter as follows:

                  (i) Compliance with Securities Regulations and Commission
         Requests. The Fund, subject to Section 3(a)(ii), will comply with the
         requirements of Rule 430A or Rule 434, as applicable, and will notify
         the Representatives immediately, and confirm the notice in writing, (i)
         when any post-effective amendment to the Registration Statement shall
         become effective, or any supplement to the Prospectus or any amended
         Prospectus shall have been filed, (ii) of the receipt of any comments
         from the Commission, (iii) of any request by the Commission for any
         amendment to the Registration Statement or any amendment or supplement
         to the Prospectus or for additional information, and (iv) of the
         issuance by the Commission of any stop order suspending the
         effectiveness of the Registration Statement or of any order preventing
         or suspending the use of any preliminary prospectus, or of the
         suspension of the qualification of the Securities for offering or sale
         in any jurisdiction, or of the initiation or threatening of any
         proceedings for any of such purposes. The Fund will promptly effect the
         filings necessary pursuant to Rule 497 and will take such steps as it
         deems necessary to ascertain promptly whether the form of prospectus
         transmitted for filing under Rule 497 was received for filing by the
         Commission and, in the event that it was not, it will promptly file
         such prospectus. The Fund will make every reasonable effort to prevent
         the issuance of any stop order, or order of suspension or revocation of
         registration pursuant to Section 8(e) of the 1940 Act, and, if any such
         stop order or order of suspension or revocation of registration is
         issued, to obtain the lifting thereof at the earliest possible moment.

                  (ii) Filing of Amendments. The Fund will give the
         Representative notice of its intention to file or prepare any amendment
         to the Registration Statement (including any filing under Rule 462(b)),
         any Term Sheet or any amendment, supplement or revision to either the
         prospectus included in the Registration Statement at the time it became
         effective or to the Prospectus, will furnish the Representative with
         copies of any such documents a reasonable amount of time prior to such
         proposed filing or use, as the case may be, and will not file or use
         any such document to which the Representative or counsel for the
         Underwriters shall object.

                  (iii) Delivery of Registration Statements. The Fund has
         furnished or will deliver to the Representative and counsel for the
         Underwriters, without charge, signed copies of the Registration
         Statement as originally filed and of each amendment thereto (including
         exhibits filed therewith or incorporated by reference therein) and
         signed copies of all consents and certificates of experts, and will
         also deliver to the Representative, without charge, a conformed copy of
         the Registration Statement as originally filed and of each amendment
         thereto (without exhibits) for each of the Underwriters. The copies of
         the Registration Statement and each amendment thereto furnished to the
         Underwriters will be identical to the electronically transmitted copies
         thereof

                                       9



<PAGE>


         filed with the Commission pursuant to EDGAR, except to the extent
         permitted by Regulation S-T.

                  (iv) Delivery of Prospectuses. The Fund has delivered to each
         Underwriter, without charge, as many copies of each preliminary
         prospectus as such Underwriter reasonably requested, and the Fund
         hereby consents to the use of such copies for purposes permitted by the
         1933 Act prior to the date of the Prospectus. The Fund will furnish to
         each Underwriter, without charge, during the period when in the opinion
         of counsel for the Underwriter the Prospectus is required under the
         1933 Act to be delivered in connection with sales by any Underwriter or
         dealer or the 1934 Act, such number of copies of the Prospectus (as
         amended or supplemented) as such Underwriter may reasonably request.
         The Prospectus and any amendments or supplements thereto furnished to
         the Underwriters will be identical to the electronically transmitted
         copies thereof filed with the Commission pursuant to EDGAR, except to
         the extent permitted by Regulation S-T.

                  (v) Continued Compliance with Securities Laws. If at any time
         when a prospectus is required by the 1933 Act to be delivered in
         connection with sales of the AMPS, any event shall occur or condition
         shall exist as a result of which it is necessary, in the opinion of
         counsel for the Underwriters or for the Fund, to amend the Registration
         Statement or amend or supplement the Prospectus in order that the
         Prospectus will not include any untrue statements of a material fact or
         omit to state a material fact necessary in order to make the statements
         therein not misleading in the light of the circumstances existing at
         the time it is delivered to a purchaser, or if it shall be necessary,
         in the opinion of such counsel, at any such time to amend the
         Registration Statement or amend or supplement the Prospectus in order
         to comply with the requirements of the 1933 Act or the Rules and
         Regulations, the Fund will promptly prepare and file with the
         Commission, subject to Section 3(a)(ii), such amendment or supplement
         as may be necessary to correct such statement or omission or to make
         the Registration Statement or the Prospectus comply with such
         requirements, and the Fund will furnish to the Underwriters such number
         of copies of such amendment or supplement as the Underwriters may
         reasonably request.

                  (vi) Blue Sky Qualifications. The Fund will use its best
         efforts, in cooperation with the Underwriters, to qualify the AMPS for
         offering and sale under the applicable securities laws of such states
         and other jurisdictions of the United States as the Representative may
         designate and to maintain such qualifications in effect for a period of
         not less than one year from the later of the effective date of the
         Registration Statement and any Rule 462(b) Registration Statement;
         provided, however, that the Fund shall not be obligated to file any
         general consent to service of process or to qualify as a foreign
         corporation or as a dealer in AMPS in any jurisdiction in which it is
         not so qualified or to subject itself to taxation in respect of doing
         business in any jurisdiction in which it is not otherwise so subject.
         In each jurisdiction in which the AMPS have been so qualified, the Fund
         will file such statements and reports as may be required by the laws of
         such jurisdiction to continue such qualification in effect for a period
         of not less than one year from the effective date of the Registration
         Statement and any Rule 462(b) Registration Statement.

                  (vii) Rule 158. The Fund will timely file such reports
         pursuant to the 1934 Act as are necessary in order to make generally
         available to its securityholders as soon as practicable an earnings
         statement for the purposes of, and to provide the benefits contemplated
         by, the last paragraph of Section 11(a) of the 1933 Act.

                  (viii) Use of Proceeds. The Fund will use the net proceeds
         received by it from the sale of the AMPS in the manner specified in the
         Prospectus under "Use of Proceeds".

                  (ix) Reporting Requirements. The Fund, during the period when
         the Prospectus is required to be delivered under the 1933 Act or the
         1934 Act, will file all documents required to be

                                       10



<PAGE>


         filed with the Commission pursuant to the 1940 Act and the 1934 Act
         within the time periods required by the 1940 Act and the Rules and
         Regulations and the 1934 Act and the rules and regulations of the
         Commission thereunder, respectively.

                  (x) Subchapter M. The Fund will comply with the requirements
         of Subchapter M of the Code to qualify as a regulated investment
         company under the Code.

                  (xi) No Manipulation of Market for AMPS. The Fund will not (a)
         take, directly or indirectly, any action designed to cause or to result
         in, or that might reasonably be expected to constitute, the
         stabilization or manipulation of the price of any security of the Fund
         to facilitate the sale or resale of the AMPS, and (b) until the Closing
         Date, or the Date of Delivery, if any, (i) sell, bid for or purchase
         the AMPS or pay any person any compensation for soliciting purchases of
         the AMPS or (ii) pay or agree to pay to any person any compensation for
         soliciting another to purchase any other Shares of the Fund.

                  (xii) Rule 462(b) Registration Statement. If the Fund elects
         to rely upon Rule 462(b), the Fund shall file a Rule 462(b)
         Registration Statement with the Commission in compliance with Rule
         462(b) by 10:00 P.M., Washington, D.C. time, on the date of this
         Agreement, and the Fund shall at the time of filing either pay to the
         Commission the filing fee for the Rule 462(b) Registration Statement or
         give irrevocable instructions for the payment of such fee pursuant to
         Rule 111(b) under the 1933 Act.

                  (xiii) Accountant's Certificate. The Fund will furnish to the
         Underwriters, on the date on which delivery is made to the Rating
         Agencies, the Accountant's Certificate (as defined in the Charter)
         corresponding to the Certificate of Dividend Coverage and Certificate
         of Eligible Asset Coverage (as defined in the Charter) for the first
         Valuation Date (as defined in the Charter) following the Closing Time.

         (b) Except as provided in this Agreement, the Fund will not sell,
contract to sell or otherwise dispose of any of its preferred shares of
beneficial interest of the same series as the AMPS or any securities convertible
into or exercisable or exchangeable for its preferred shares of beneficial
interest of the same series as the AMPS, or grant any options or warrants to
purchase its preferred shares of beneficial interest of the same series as the
AMPS, for a period of 180 days after the date of the Prospectus, without the
prior written consent of Merrill Lynch.

         SECTION 4. Payment of Expenses.

         (a) Expenses. The Fund will pay all expenses incident to the
performance of its obligations under this Agreement, including (i) the
preparation, printing and filing of the Registration Statement (including
financial statements and exhibits) as originally filed and of each amendment
thereto, (ii) the preparation, printing and delivery to the Underwriters of this
Agreement, any Agreement among Underwriters and such other documents as may be
required in connection with the offering, purchase, sale, issuance or delivery
of the AMPS, (iii) the preparation, issuance and delivery of the certificates
for the AMPS to the Underwriters, including any stock or other transfer taxes
and any stamp or other duties payable upon the sale, issuance or delivery of the
AMPS to the Underwriters, (iv) the fees and disbursements of the Fund's counsel,
accountants and other advisors, (v) the qualification of the AMPS under
securities laws in accordance with the provisions of Section 3(a)(vi) hereof,
including filing fees and the reasonable fees and disbursements of counsel for
the Underwriters in connection therewith and in connection with the preparation
of the Blue Sky Survey and any supplement thereto, (vi) the printing and
delivery to the Underwriters of copies of each preliminary prospectus,
Prospectus and any amendments or supplements thereto, (vii) the preparation,
printing and delivery to the Underwriters of copies of the Blue Sky Survey and
any supplement thereto, (viii) the fees and expenses of any transfer agent or
registrar for the AMPS, (ix) the filing fees incident to, and the reasonable
fees and disbursements of counsel to the

                                       11



<PAGE>


Underwriters (up to $5,000) in connection with, the review by the NASD of the
terms of the sale of the AMPS, (x) the fees and expenses incurred in connection
with the rating of the AMPS and (xi) the printing of any sales material.

         (b) Termination of Agreement. If this Agreement is terminated by the
Representative in accordance with the provisions of Section 5 or Section 9(a)
hereof, the Fund and the Investment Manager, jointly and severally, agree that
they shall reimburse the Underwriters for all of their out-of-pocket expenses,
including the reasonable fees and disbursements of counsel for the Underwriters.

         SECTION 5. Conditions of Underwriters' Obligations.

         The obligations of the several Underwriters hereunder are subject to
the accuracy of the representations and warranties of the Fund and the
Investment Manager contained in Section 1 hereof or in certificates of any
officer of the Fund or the Investment Manager delivered pursuant to the
provisions hereof, to the performance by the Fund and the Investment Manager of
their respective covenants and other obligations hereunder, and to the following
further conditions:

         (a) Effectiveness of Registration Statement. The Registration
Statement, including any Rule 462(b) Registration Statement, has become
effective and at Closing Time no stop order suspending the effectiveness of the
Registration Statement shall have been issued under the 1933 Act, no notice or
order pursuant to Section 8(e) of the 1940 Act shall have been issued, and no
proceedings with respect to either shall have been initiated or threatened by
the Commission, and any request on the part of the Commission for additional
information shall have been complied with to the reasonable satisfaction of
counsel to the Underwriters. A prospectus containing the Rule 430A Information
shall have been filed with the Commission in accordance with Rule 497 (or a
post-effective amendment providing such information shall have been filed and
declared effective in accordance with the requirements of Rule 430A) or, if the
Fund has elected to rely upon Rule 434, a Term Sheet shall have been filed with
the Commission in accordance with Rule 497.

         (b) Opinion of Counsel for Fund and the Investment Manager. At Closing
Time, the Representative shall have received the favorable opinions, dated as of
Closing Time, of Simpson Thacher & Bartlett, counsel for the Fund, and of
Lawrence B. Stoller, Esq., internal counsel for the Investment Manager, in form
and substance satisfactory to counsel for the Underwriters, together with signed
or reproduced copies of such letters for each of the other Underwriters
substantially to the effect set forth in Exhibit A hereto and to such further
effect as counsel to the Underwriters may reasonably request. Insofar as the
opinions expressed above relate to or are dependant upon matters governed by
Maryland law, Simpson Thacher & Bartlett will be permitted to rely on the
opinion of Venable, Baetjer and Howard, LLP.

         (c) Opinion of Counsel for Underwriters. At Closing Time, the
Representative shall have received the favorable opinion, dated as of Closing
Time, of Clifford Chance Rogers & Wells LLP, counsel for the Underwriters,
together with signed or reproduced copies of such letter for each of the other
Underwriters with respect to the matters set forth in clauses (A) (i), (ii),
(vi), (vii) (solely as to preemptive or other similar rights arising by
operation of law or under the charter or by-laws of the Fund), (viii) through
(x), inclusive, (xii), (xiv) (solely as to the information in the Prospectus
under "Description of Shares") and the penultimate paragraph of Exhibit A
hereto. In giving such opinion such counsel may rely, as to all matters governed
by the laws of jurisdictions other than the law of the State of New York and the
federal law of the United States, upon the opinions of counsel satisfactory to
the Representative. Such counsel may also state that, insofar as such opinion
involves factual matters, they have relied, to the extent they deem proper, upon
certificates of officers of the Fund and certificates of public officials.

         (d) Officers' Certificates. At Closing Time, there shall not have been,
since the date hereof or since the respective dates as of which information is
given in the Prospectus, any material adverse

                                       12



<PAGE>


change in the condition, financial or otherwise, or in the earnings, business
affairs or business prospects of the Fund, whether or not arising in the
ordinary course of business, and the Representative shall have received a
certificate of a duly authorized officer of the Fund and of the chief financial
or chief accounting officer of the Fund and of the President or a Vice President
or Managing Director of the Investment Manager, dated as of Closing Time, to the
effect that (i) there has been no such material adverse change, (ii) the
representations and warranties in Sections 1(a) and (b) hereof are true and
correct with the same force and effect as though expressly made at and as of
Closing Time, (iii) each of the Fund and the Investment Manager, respectively,
has complied with all agreements and satisfied all conditions on its part to be
performed or satisfied at or prior to Closing Time, and (iv) to the knowledge of
such officers, no stop order suspending the effectiveness of the Registration
Statement, or order of suspension or revocation of registration pursuant to
Section 8(e) of the 1940 Act, has been issued and no proceedings for any such
purpose have been instituted or are pending or are contemplated by the
Commission.

         (e) Accountant's Comfort Letter. At the time of the execution of this
Agreement, the Representatives shall have received from PricewaterhouseCoopers
LLP a letter dated such date, in form and substance satisfactory to the
Representatives, together with signed or reproduced copies of such letter for
each of the other Underwriters containing statements and information to the
effect that:

                  (i) They are independent certified public accountants with
         respect to the Fund within the meaning of the 1933 Act and 1940 Act,
         and the applicable rules and regulations thereunder adopted by the
         Commission;

                  (ii) In their opinion, the financial statements of the Fund
         audited by them and included in the Registration Statement comply as to
         form in all material respects with the applicable accounting
         requirements of the 1933 Act and 1940 Act and the related rules and
         regulations adopted by the Commission;

                  (iii) On the basis of procedures (but not an audit in
         accordance with generally accepting auditing standards) consisting of:

                  a. Reading the minutes of meetings of the Board of Directors
                  of the Fund as set forth in the minute books through a
                  specified date not more than three business days prior to the
                  date of delivery of such letter;

                  b. Making inquiries of certain officials of the Fund who have
                  responsibility for financial and accounting matters regarding
                  changes in the capital stock, net assets or long term
                  liabilities of the Fund as compared with the amounts shown in
                  the latest balance sheet included in the Registration
                  Statement or for the period from the date of the latest income
                  statement included in the Registration Statement to a
                  specified date not more than three business days prior to the
                  delivery of such letter.

                  (iv) The letter shall also state that the information set
         forth under the captions "Prospectus Summary - The Fund", "Prospectus
         Summary - Asset Maintenance", "Financial Highlights", "The Fund",
         "Capitalization - Shareholders' Equity" and "Description of AMPS -
         Rating Agency Guidelines" which is expressed in dollars (or percentages
         derived from such dollar amounts) and has been obtained from accounting
         records which are subject to controls over financial reporting or which
         has been derived directly from such accounting records by analysis or
         computation, is in agreement with such records or computations made
         therefrom, and such other procedures as the Representative may request
         and PricewaterhouseCoopers LLP are willing to perform and report upon.

                                       13



<PAGE>


         (f) Bring-down Comfort Letter. At Closing Time, the Representative
shall have received from PricewaterhouseCoopers LLP a letter, dated as of
Closing Time, to the effect that they reaffirm the statements made in the letter
furnished pursuant to subsection (e) of this Section, except that the specified
date referred to shall be a date not more than three business days prior to
Closing Time.

         (g) No Objection. The NASD has not raised any objection with respect to
the fairness and reasonableness of the underwriting terms and arrangements.

         (h) Rating. The Fund shall have delivered and you shall have received
evidence satisfactory to you that the AMPS are rated 'aaa' by Moody's and 'AAA'
by S&P as of the Closing Date, and there shall not have been given any notice of
any intended or potential downgrading, or of any review for a potential
downgrading, in the rating accorded to the AMPS or any other securities issued
by the Fund, by Moody's or by S&P.

         (i) Asset Coverage. As of the Closing Date and assuming the receipt of
the net proceeds from the sale of the AMPS, the 1940 Act Preferred Shares Asset
Coverage and the Preferred Shares Basic Maintenance Amount (each as defined in
the Charter) each will be met.

         (j) Additional Documents. At Closing Time and at each Date of Delivery,
counsel for the Underwriters shall have been furnished with such documents and
opinions as they may require for the purpose of enabling them to pass upon the
issuance and sale of the AMPS as herein contemplated, or in order to evidence
the accuracy of any of the representations or warranties, or the fulfillment of
any of the conditions, herein contained; and all proceedings taken by the Fund
and the Investment Manager in connection with the organization and registration
of the Fund under the 1940 Act and the issuance and sale of the AMPS as herein
contemplated shall be satisfactory in form and substance to the Representative
and counsel for the Underwriters.

         (k) Termination of Agreement. If any condition specified in this
Section shall not have been fulfilled when and as required to be fulfilled, this
Agreement may be terminated by the Representative by notice to the Fund at any
time at or prior to Closing Time, and such termination shall be without
liability of any party to any other party except as provided in Section 4 and
except that Sections 1, 6, 7, 8 and 13 shall survive any such termination and
remain in full force and effect.

         SECTION 6. Indemnification.

         (a) Indemnification of Underwriters. The Fund and the Investment
Manager, jointly and severally, agree to indemnify and hold harmless each
Underwriter and each person, if any, who controls any Underwriter within the
meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act, as follows:

                  (i) against any and all loss, liability, claim, damage and
         expense whatsoever, as incurred, arising out of any untrue statement or
         alleged untrue statement of a material fact contained in the
         Registration Statement (or any amendment thereto), including the Rule
         430A Information and the Rule 434 Information, if applicable, or the
         omission or alleged omission therefrom of a material fact required to
         be stated therein or necessary to make the statements therein not
         misleading or arising out of any untrue statement or alleged untrue
         statement of a material fact included in any preliminary prospectus or
         the Prospectus (or any amendment or supplement thereto), or the
         omission or alleged omission therefrom of a material fact necessary in
         order to make the statements therein, in the light of the circumstances
         under which they were made, not misleading;

                  (ii) against any and all loss, liability, claim, damage and
         expense whatsoever, as incurred, to the extent of the aggregate amount
         paid in settlement of any litigation, or any investigation or
         proceeding by any governmental agency or body, commenced or threatened,
         or

                                       14



<PAGE>


         of any claim whatsoever based upon any such untrue statement or
         omission, or any such alleged untrue statement or omission; provided
         that (subject to Section 6(e) below) any such settlement is effected
         with the written consent of the Fund; and

                  (iii) against any and all expense whatsoever, as incurred
         (including the fees and disbursements of counsel chosen by Merrill
         Lynch), reasonably incurred in investigating, preparing or defending
         against any litigation, or any investigation or proceeding by any
         governmental agency or body, commenced or threatened, or any claim
         whatsoever based upon any such untrue statement or omission, or any
         such alleged untrue statement or omission, to the extent that any such
         expense is not paid under (i) or (ii) above;

provided, however, that this indemnity agreement shall not apply to any loss,
liability, claim, damage or expense to the extent arising out of any untrue
statement or omission or alleged untrue statement or omission made in reliance
upon and in conformity with written information furnished to the Fund or the
Investment Manager by any Underwriter through Merrill Lynch expressly for use in
the Registration Statement (or any amendment thereto), including the Rule 430A
Information and the Rule 434 Information, if applicable, or any preliminary
prospectus or the Prospectus (or any amendment or supplement thereto); provided,
however, that the indemnification contained in this paragraph (a) with respect
to any preliminary prospectus shall not inure to the benefit of any Underwriter
(or to the benefit of any person controlling such Underwriter) on account of any
such loss, claim, damage, liability or expense arising from the sale of the
Securities by such Underwriter to any person if the Fund sustains the burden of
proof that a copy of the Prospectus has not been delivered or sent by the
Underwriters as required to such person within the time required by the 1933 Act
and the Rules and Regulations, and the untrue statement or alleged untrue
statement or omission or alleged omission of a material fact contained in such
preliminary prospectus was corrected in such Prospectus.

         (b) Indemnification of Fund, Investment Manager, Directors and
Officers. Each Underwriter severally agrees to indemnify and hold harmless the
Fund and the Investment Manager, their respective directors, each of the Fund's
officers who signed the Registration Statement, and each person, if any, who
controls the Fund or the Investment Manager within the meaning of Section 15 of
the 1933 Act or Section 20 of the 1934 Act against any and all loss, liability,
claim, damage and expense described in the indemnity contained in subsection (a)
of this Section, as incurred, but only with respect to untrue statements or
omissions, or alleged untrue statements or omissions, made in the Registration
Statement (or any amendment thereto), including the Rule 430A Information and
the Rule 434 Information, if applicable, or any preliminary prospectus or the
Prospectus (or any amendment or supplement thereto) in reliance upon and in
conformity with written information furnished to the Fund or the Investment
Manager by such Underwriter through Merrill Lynch expressly for use in the
Registration Statement (or any amendment thereto) or such preliminary prospectus
or the Prospectus (or any amendment or supplement thereto).

         (c) Indemnification for Marketing Materials. In addition to the
foregoing indemnification, the Fund and the Investment Manager also, jointly and
severally, agree to indemnify and hold harmless each Underwriter and each
person, if any, who controls any Underwriter within the meaning of Section 15 of
the 1933 Act or Section 20 of the 1934 Act, against any and all loss, liability,
claim, damage and expense described in the indemnity contained in Section 6(a),
as limited by the proviso set forth therein, with respect to any sales material.

         (d) Actions against Parties; Notification. Each indemnified party shall
give notice as promptly as reasonably practicable to each indemnifying party of
any action commenced against it in respect of which indemnity may be sought
hereunder, but failure to so notify an indemnifying party shall not relieve such
indemnifying party from any liability hereunder to the extent it is not
materially prejudiced as a result thereof and in any event shall not relieve it
from any liability which it may have otherwise than on account of this indemnity
agreement. In the case of parties indemnified pursuant to

                                       15



<PAGE>


Section 6(a) above, counsel to the indemnified parties shall be selected by
Merrill Lynch, and, in the case of parties indemnified pursuant to Section 6(b)
above, counsel to the indemnified parties shall be selected by the Fund and the
Investment Manager. An indemnifying party may participate at its own expense in
the defense of any such action; provided, however, that counsel to the
indemnifying party shall not (except with the consent of the indemnified party)
also be counsel to the indemnified party. In no event shall the indemnifying
parties be liable for fees and expenses of more than one counsel (in addition to
any local counsel) separate from their own counsel for all indemnified parties
in connection with any one action or separate but similar or related actions in
the same jurisdiction arising out of the same general allegations or
circumstances. No indemnifying party shall, without the prior written consent of
the indemnified parties, settle or compromise or consent to the entry of any
judgment with respect to any litigation, or any investigation or proceeding by
any governmental agency or body, commenced or threatened, or any claim
whatsoever in respect of which indemnification or contribution could be sought
under this Section 6 or Section 7 hereof (whether or not the indemnified parties
are actual or potential parties thereto), unless such settlement, compromise or
consent (i) includes an unconditional release of each indemnified party from all
liability arising out of such litigation, investigation, proceeding or claim and
(ii) does not include a statement as to or an admission of fault, culpability or
a failure to act by or on behalf of any indemnified party.

         (e) Settlement without Consent if Failure to Reimburse. If at any time
an indemnified party shall have requested an indemnifying party to reimburse the
indemnified party for fees and expenses of counsel, such indemnifying party
agrees that it shall be liable for any settlement of the nature contemplated by
Section 6(a)(ii) effected without its written consent if (i) such settlement is
entered into more than 45 days after receipt by such indemnifying party of the
aforesaid request, (ii) such indemnifying party shall have received notice of
the terms of such settlement at least 30 days prior to such settlement being
entered into and (iii) such indemnifying party shall not have reimbursed such
indemnified party in accordance with such request prior to the date of such
settlement.

SECTION 7.        Contribution.

         If the indemnification provided for in Section 6 hereof is for any
reason unavailable to or insufficient to hold harmless an indemnified party in
respect of any losses, liabilities, claims, damages or expenses referred to
therein, then each indemnifying party shall contribute to the aggregate amount
of such losses, liabilities, claims, damages and expenses incurred by such
indemnified party, as incurred, (i) in such proportion as is appropriate to
reflect the relative benefits received by the Fund and the Investment Manager on
the one hand and the Underwriters on the other hand from the offering of the
AMPS pursuant to this Agreement or (ii) if the allocation provided by clause (i)
is not permitted by applicable law, in such proportion as is appropriate to
reflect not only the relative benefits referred to in clause (i) above but also
the relative fault of the Fund and the Investment Manager on the one hand and of
the Underwriters on the other hand in connection with the statements or
omissions which resulted in such losses, liabilities, claims, damages or
expenses, as well as any other relevant equitable considerations.

         The relative benefits received by the Fund and the Investment Manager
on the one hand and the Underwriters on the other hand in connection with the
offering of the AMPS pursuant to this Agreement shall be deemed to be in the
same respective proportions as the total net proceeds from the offering of the
AMPS pursuant to this Agreement (before deducting expenses) received by the Fund
and the total underwriting discount received by the Underwriters (whether from
the Fund or otherwise), in each case as set forth on the cover of the
Prospectus, or, if Rule 434 is used, the corresponding location on the Term
Sheet, bear to the aggregate initial public offering price of the AMPS as set
forth on such cover.

         The relative fault of the Fund and the Investment Manager on the one
hand and the Underwriters on the other hand shall be determined by reference to,
among other things, whether any such untrue or alleged untrue statement of a
material fact or omission or alleged omission to state a material fact relates
to information supplied by the Fund or the Investment Manager or by the
Underwriters and the parties'

                                       16



<PAGE>


relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission.

         The Fund, the Investment Manager and the Underwriters agree that it
would not be just and equitable if contribution pursuant to this Section 7 were
determined by pro rata allocation (even if the Underwriters were treated as one
entity for such purpose) or by any other method of allocation which does not
take account of the equitable considerations referred to above in this Section
7. The aggregate amount of losses, liabilities, claims, damages and expenses
incurred by an indemnified party and referred to above in this Section 7 shall
be deemed to include any legal or other expenses reasonably incurred by such
indemnified party in investigating, preparing or defending against any
litigation, or any investigation or proceeding by any governmental agency or
body, commenced or threatened, or any claim whatsoever based upon any such
untrue or alleged untrue statement or omission or alleged omission.

         Notwithstanding the provisions of this Section 7, no Underwriter shall
be required to contribute any amount in excess of the amount by which the total
price at which the AMPS underwritten by it and distributed to the public were
offered to the public exceeds the amount of any damages which such Underwriter
has otherwise been required to pay by reason of any such untrue or alleged
untrue statement or omission or alleged omission.

         No person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the 1933 Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation.

         For purposes of this Section 7, each person, if any, who controls an
Underwriter within the meaning of Section 15 of the 1933 Act or Section 20 of
the 1934 Act shall have the same rights to contribution as such Underwriter, and
each director of the Fund and each director of the Investment Manager,
respectively, each officer of the Fund who signed the Registration Statement,
and each person, if any, who controls the Fund or the Investment Manager, within
the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act shall
have the same rights to contribution as the Fund and the Investment Manager,
respectively. The Underwriters' respective obligations to contribute pursuant to
this Section 7 are several in proportion to the number of Shares set forth
opposite their respective names in Schedule A hereto and not joint.

         SECTION 8. Representations, Warranties and Agreements to Survive
Delivery.

         All representations, warranties and agreements contained in this
Agreement or in certificates of officers of the Fund or the Investment Manager
submitted pursuant hereto, shall remain operative and in full force and effect,
regardless of any investigation made by or on behalf of any Underwriter or
controlling person, or by or on behalf of the Fund or the Investment Manager,
and shall survive delivery of the AMPS to the Underwriters.

         SECTION 9. Termination of Agreement.

         (a) Termination; General. The Representative may terminate this
Agreement, by notice to the Fund, at any time at or prior to Closing Time (i) if
there has been, since the time of execution of this Agreement or since the
respective dates as of which information is given in the Prospectus, any
material adverse change in the condition, financial or otherwise, or in the
earnings, business affairs or business prospects of the Fund or the Investment
Manager, whether or not arising in the ordinary course of business, or (ii) if
there has occurred any material adverse change in the financial markets in the
United States or the international financial markets, any outbreak of
hostilities or escalation thereof or other calamity or crisis or any change or
development involving a prospective change in national or international
political, financial or economic conditions, in each case the effect of which is
such as to make it, in the judgment of the Representative, impracticable or
inadvisable to market the AMPS or to enforce contracts for the sale of the AMPS,
or (iii) if trading in the shares of common stock of the Fund has been suspended
or materially limited by the Commission or the NYSE, or if trading generally on
the

                                      17



<PAGE>


American Stock Exchange or the NYSE or in the Nasdaq National Market has been
suspended or materially limited, or minimum or maximum prices for trading have
been fixed, or maximum ranges for prices have been required, by any of said
exchanges or by such system or by order of the Commission, the NASD or any other
governmental authority, or a material disruption has occurred in commercial
banking or securities settlement or clearance services in the United States, or
(iv) if a banking moratorium has been declared by either Federal or New York
authorities.

         (b) Liabilities. If this Agreement is terminated pursuant to this
Section, such termination shall be without liability of any party to any other
party except as provided in Section 4 hereof, and provided further that Sections
1, 6, 7, 8 and 13 shall survive such termination and remain in full force and
effect.

         SECTION 10. Default by One or More of the Underwriters.

         If one or more of the Underwriters shall fail at Closing Time or a Date
of Delivery to purchase the AMPS which it or they are obligated to purchase
under this Agreement (the "Defaulted AMPS"), the Representative shall have the
right, within 24 hours thereafter, to make arrangements for one or more of the
non-defaulting Underwriters, or any other underwriters, to purchase all, but not
less than all, of the Defaulted AMPS in such amounts as may be agreed upon and
upon the terms herein set forth; if, however, the Representative shall not have
completed such arrangements within such 24-hour period, then:

         (a) if the number of Defaulted AMPS does not exceed 10% of the number
of AMPS to be purchased on such date, each of the non-defaulting Underwriters
shall be obligated, severally and not jointly, to purchase the full amount
thereof in the proportions that their respective underwriting obligations
hereunder bear to the underwriting obligations of all non-defaulting
Underwriters, or

         (b) if the number of Defaulted AMPS exceeds 10% of the number of AMPS
to be purchased on such date, this Agreement shall terminate without liability
on the part of any non-defaulting Underwriter.

         No action taken pursuant to this Section shall relieve any defaulting
Underwriter from liability in respect of its default.

         In the event of any such default which does not result in a termination
of this Agreement, either the Representative or the Fund shall have the right to
postpone Closing Time for a period not exceeding seven days in order to effect
any required changes in the Registration Statement or Prospectus or in any other
documents or arrangements. As used herein, the term "Underwriter" includes any
person substituted for an Underwriter under this Section 10.

         SECTION 11. Notices.

         All notices and other communications hereunder shall be in writing and
shall be deemed to have been duly given if mailed or transmitted by any standard
form of telecommunication. Notices to the Underwriters shall be directed to the
Representative, c/o Merrill Lynch & Co., North Tower, World Financial Center,
New York, New York 10080, attention of Equity Capital Markets; and notices to
the Fund or the Investment Manager shall be directed, as appropriate, to the
office of Cohen & Steers Capital Management, Inc. at 757 Third Avenue, New York,
New York 10017, Attention: Robert H. Steers.

         SECTION 12. Parties.

         This Agreement shall each inure to the benefit of and be binding upon
the Underwriters, the Fund, the Investment Manager and their respective partners
and successors. Nothing expressed or mentioned in this Agreement is intended or
shall be construed to give any person, firm or corporation, other than the
Underwriters, the Fund, the Investment Manager and their respective successors
and the controlling persons and officers and directors referred to in Sections 6
and 7 and their heirs and legal

                                       18



<PAGE>


Representative, any legal or equitable right, remedy or claim under or in
respect of this Agreement or any provision herein contained. This Agreement and
all conditions and provisions hereof are intended to be for the sole and
exclusive benefit of the Underwriters, the Fund, the Investment Manager and
their respective partners and successors, and said controlling persons and
officers, directors and their heirs and legal Representative, and for the
benefit of no other person, firm or corporation. No purchaser of Shares from any
Underwriter shall be deemed to be a successor by reason merely of such purchase.

         SECTION 13. GOVERNING LAW AND TIME.

         THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO AGREEMENTS MADE AND TO BE
PERFORMED IN SAID STATE. UNLESS OTHERWISE EXPLICITLY PROVIDED, SPECIFIED TIMES
OF DAY REFER TO NEW YORK CITY TIME.

         SECTION 14. Effect of Headings.

         The Article and Section headings herein and the Table of Contents are
for convenience only and shall not affect the construction hereof.

                                       19



<PAGE>


         If the foregoing is in accordance with your understanding of our
agreement, please sign and return to us a counterpart hereof, whereupon this
instrument, along with all counterparts, will become a binding agreement among
the Underwriters, the Fund and the Investment Manager in accordance with its
terms.



                                    Very truly yours,


                                    Cohen & Steers Quality Income Realty Fund,
                                       Inc.


                                    By:
                                        ----------------------------------------
                                        Name:
                                        Title:


                                    Cohen & Steers Capital Management, Inc.


                                    By:
                                        ----------------------------------------
                                        Name:
                                        Title:



CONFIRMED AND ACCEPTED,
  as of the date first above written:

MERRILL LYNCH & CO.
MERRILL LYNCH, PIERCE, FENNER & SMITH
            INCORPORATED


By:  MERRILL LYNCH, PIERCE, FENNER & SMITH
                 INCORPORATED


By:
     -------------------------------------
     Authorized Signatory

For themselves and as
Representative of the
other Underwriters named
in Schedule A hereto.

                                       20



<PAGE>


                                   SCHEDULE A




<TABLE>
<CAPTION>
                                                              Number of     Number of    Number of    Number of
                                                              Shares -       Shares -    Shares -     Shares -
                                                              Series T      Series TH    Series F     Series W
                      Name of Underwriter                       AMPS           AMPS         AMPS        AMPS
                      -------------------
<S>                                                          <C>            <C>          <C>          <C>
Merrill Lynch, Pierce, Fenner & Smith Incorporated.........     [   ]         [   ]        [   ]       [   ]
A.G. Edwards & Sons, Inc...................................     [   ]         [   ]        [   ]       [   ]
Prudential Securities Incorporated.........................     [   ]         [   ]        [   ]       [   ]
UBS Warburg LLC............................................     [   ]         [   ]        [   ]       [   ]
         Total.............................................     2,800         2,800        2,800       2,800
                                                                =====         =====        =====       =====
</TABLE>

                                     Sch A-1



<PAGE>


                                   SCHEDULE B

                  COHEN & STEERS QUALITY INCOME REALTY FUND, INC.
                      2,800 Auction Market Preferred Shares
                                    Series T
                      2,800 Auction Market Preferred Shares
                                    Series TH
                      2,800 Auction Market Preferred Shares
                                    Series F
                      2,800 Auction Market Preferred Shares
                                    Series W
                    Liquidation Preference $25,000 per share


         1. The initial public offering price per share for the AMPS, determined
as provided in said Section 2, shall be $25,000.

         2. The purchase price per share for the AMPS to be paid by the several
Underwriters shall be $24,750.

         3. The commission to be paid to the Underwriters for their commitment
hereunder shall be $250 per share.

         4.  The initial dividend rate on the AMPS, Series T shall be ___% per
             annum.

             The initial dividend rate on the AMPS, Series TH shall be ___% per
             annum.

             The initial dividend rate on the AMPS, Series F shall be __ % per
             annum.

             The initial dividend rate on the AMPS, Series W shall be __ % per
             annum.

                                     Sch B-1



<PAGE>


                                                                       Exhibit A

               FORM OF OPINION OF FUND'S AND INVESTMENT MANAGER'S
                       COUNSEL TO BE DELIVERED PURSUANT TO
                                  SECTION 5(b)


With respect to the Fund:

     1.  The Fund (A) has been duly incorporated and is validly existing and in
         good standing as a corporation under the laws of the State of Maryland
         with full corporate power and authority to conduct its business as
         described in the Registration Statement and the Prospectus and to enter
         and perform its obligations under the Purchase Agreement, and (B) is
         duly registered and qualified to conduct its business and is in good
         standing in the State of New York (which is the only jurisdiction
         identified by management of the Fund to us in which the Fund owns or
         leases property or operates or conducts its business);

     2.  The statements made in the Prospectus under the captions "Description
         of Common Shares", insofar as they purport to constitute summaries of
         the terms of the Fund's capital stock, constitute accurate summaries of
         the terms of such capital stock in all material respects;

     3.  All outstanding shares of capital stock of the Fund have been duly
         authorized and validly issued by the Fund, and are fully paid and
         nonassessable;

     4.  The Shares have been duly authorized and, when issued and delivered to
         the Underwriters against payment therefor in accordance with the terms
         of the Purchase Agreement, will be validly issued by the Fund, fully
         paid and nonassessable. There are no preemptive rights under federal or
         New York law or under the Maryland General Corporation Law to subscribe
         for or purchase shares of the Fund's capital stock. There are no
         preemptive or other rights to subscribe for or to purchase, nor any
         restriction upon the issuance, voting or, transfer of, any shares of
         the Fund's capital stock pursuant to the Fund's Charter or Bylaws
         except for certain transfer restrictions with respect to the Shares and
         certain restrictions on the future issuance of shares of capital stock
         set forth in the Articles Supplementary;

     5.  The form of the certificates for the Shares conforms to the
         requirements of the Maryland General Corporation Law;

     6.  The Registration Statement and all post-effective amendments, if any,
         have become effective under the 1933 Act and the 1933 Act Rules and
         Regulations and, to our knowledge, no stop order suspending the
         effectiveness of the Registration Statement or order pursuant to
         Section 8(e) of the 1940 Act has been issued and no proceedings for
         that purpose are pending before or threatened by the Commission; and
         any required filing of the Prospectus pursuant to Rule 497 of the 1933
         Act Rules and Regulations has been made in accordance with Rule 497;

     7.  (A) The Purchase Agreement and each of the Advisory Agreement dated as
         of February 25, 2002 between the Fund and the Investment Manager and
         the Fee Waiver Agreement dated as of February 25, 2002 between the Fund
         and the Investment Manager (collectively, the "Advisory Agreement"),
         the Administration Agreement dated as of February 25, 2002 between the
         Fund and the Investment Manager (the "Administration Agreement"), the
         Master Custodian Agreement dated as of March 9, 2001 and effective with
         respect to Fund as of February 15, 2002 between the Fund and State
         Street Bank and Trust Company (the "Custodian Agreement"), the
         agreement dated as of March 12, 2001 and effective with respect to Fund
         as of February 22, 2002 between

                                      A-1



<PAGE>


         the Fund and State Street Bank and Trust Company (the
         "Sub-Administration Agreement"), and the Auction Agency Agreement,
         dated as of ________, 2002, between the Fund and The Bank of New York
         (the "Auction Agency Agreement"; collectively with the Advisory
         Agreement, Administration Agreement, Custodian Agreement and
         Sub-Administration Agreement, the "Fund Agreements") have been duly
         authorized, executed and delivered by the Fund and (B) the Advisory
         Agreement, assuming that the Advisory Agreement is the valid and
         legally binding obligation of the other parties thereto, is a valid and
         legally binding agreement of the Fund, enforceable against the Fund in
         accordance with its terms, subject to the effects of bankruptcy,
         insolvency, fraudulent conveyance, reorganization, moratorium and other
         similar laws relating to or affecting creditors' rights generally and
         to general equitable principles (whether considered in a proceeding in
         equity or at law) and an implied covenant of good faith and fair
         dealing;

     8.  The issue and sale of the Shares by the Fund and the compliance by the
         Fund with the provisions of the Purchase Agreement and the Fund
         Agreements will not breach or result in a default under or result in
         the creation or imposition of any lien, charge, or encumbrance upon any
         property or assets of the Fund pursuant to any indenture, mortgage,
         deed of trust, loan agreement or other agreement or instrument filed or
         incorporated by reference as an exhibit to the Registration Statement,
         nor will such action violate the Charter, Articles Supplementary or
         Bylaws of the Fund or any federal or New York statute or any rule or
         regulation thereunder or the Maryland General Corporation Law or order
         known to us issued pursuant to any federal or New York statute or the
         Maryland General Corporation Law by any court or governmental agency or
         body having jurisdiction over the Fund or any of its properties;

     9.  No consent, approval, authorization, order, registration, filing or
         qualification of or with any federal or New York governmental agency or
         body or any Maryland governmental agency or body acting pursuant to the
         Maryland General Corporation Law or, to our knowledge, any federal or
         New York court or any Maryland court acting pursuant to the Maryland
         General Corporation Law is required for the issue and sale of the
         Shares by the Fund and the compliance by the Fund with all of the
         provisions of the Purchase Agreement and the Fund Agreements, except
         for the registration of the Shares under the 1933 Act pursuant to the
         Registration Statement, which has been filed and has become effective,
         and such consents, approvals, authorizations, registrations, or
         qualifications as may be required under state securities or Blue Sky
         laws in connection with the purchase and distribution of the Shares by
         the Underwriters;

     10. To our knowledge, (A) other than as described or contemplated in the
         Registration Statement or Prospectus, there are no legal or
         governmental proceedings pending or threatened against the Fund, or to
         which the Fund or any of its properties is subject, which are required
         to be described in the Registration Statement or Prospectus, and (B)
         there are no agreements, contracts, indentures, leases or other
         instruments that are required to be described in the Registration
         Statement or the Prospectus or to be filed as an exhibit to the
         Registration Statement that are not described or filed as required, as
         the case may be;

     11. The statements made in the Prospectus under the captions "Management of
         the Fund", "Description of Common Shares", "Description of AMPS", "The
         Auction" and in the Registration Statement under Item 29
         (Indemnification), insofar as they purport to constitute summaries of
         the terms of the Maryland General Corporation Law in all material
         respects;

     12. The statements made in the Prospectus and statement of additional
         information under the caption "U.S. Federal Taxation" insofar as they
         purport to constitute summaries of matters of United States federal tax
         law and regulations or legal conclusions with respect thereto,
         constitute accurate summaries of the matters described therein in all
         material respects;

                                      A-2



<PAGE>


     13. Each of the Fund Agreements complies as to form with all applicable
         provisions of the 1933 Act, the 1940 Act, the Investment Advisers Act
         of 1940, as amended (the "Advisers Act"), the 1933 Rules and
         Regulations and the rules and regulations under the Advisers Act;

     14. The Fund is duly registered with the Commission under the 1940 Act and
         the rules and regulations under the 1940 Act (the "1940 Act Rules and
         Regulations") as a closed-end, non-diversified management investment
         company and, to our knowledge, no order of suspension or revocation of
         such registration under the 1940 Act and the 1940 Act Rules and
         Regulations has been issued or proceedings therefor initiated or
         threatened by the Commission; the provisions of the Charter, Articles
         Supplementary and Bylaws do not violate the provisions of the 1940 Act
         or the 1940 Act Rules and Regulations; and the provisions of the
         Charter, Articles Supplementary and the Bylaws and the investment
         policies and restrictions described in the Registration Statement and
         the Prospectus under the captions "Investment Objectives and Policies"
         and "Risk Factors" and "Investment Restrictions" (in the Prospectus and
         the statement of additional information incorporated by reference
         therein) comply in all material respects with the requirements of the
         1933 Act, the 1940 Act and the applicable 1933 Act Rules and
         Regulations and the 1940 Act Rules and Regulations; and

     15. Except as described in the Prospectus, there are no outstanding
         options, warrants or other rights calling for the issuance of, and we
         do not know of any commitment, plan or arrangement to issue (other than
         in connection with the reinvestment of dividends) any shares of capital
         stock of the Fund or any security convertible into or exchangeable or
         exercisable for shares of capital stock of the Fund or to otherwise
         register such securities for sale.

         Insofar as the opinions expressed herein relate to or are dependent
upon matters governed by the laws of the State of Maryland, we have relied upon
the opinion of Venable, Baetjer and Howard, LLP.

         We have not independently verified the accuracy, completeness or
fairness of the statements made or included in the Registration Statement or the
Prospectus and take no responsibility therefor, except as and to the extent set
forth in paragraphs 2, 11 and 12 above. In the course of the preparation by the
Fund of the Registration Statement and the Prospectus, we participated in
conferences with certain officers and employees of the Fund and the Investment
Manager, with representatives of PricewaterhouseCoopers LLP and with counsel to
the Investment Manager. Based upon our examination of the Registration Statement
and the Prospectus, our investigations made in connection with the preparation
of the Registration Statement and the Prospectus and our participation in the
conferences referred to above, (i) we are of the opinion that the Registration
Statement, as of its effective date, and the Prospectus, as of its date complied
as to form in all material respects with the requirements of the 1933 Act and
the 1940 Act and the applicable rules and regulations of the Commission
thereunder, except that in each case we express no opinion with respect to the
financial statements or other financial data contained or incorporated by
reference in the Registration Statement or the Prospectus, and (ii) we have no
reason to believe that the Registration Statement, at the time the Registration
Statement became effective, contained an untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary in
order to make the statements therein not misleading or that the Prospectus as of
__________, 2002 contained, or as of the date hereof contains, any untrue
statement of a material fact, or as of ________, 2002 omitted, or as of the date
hereof omits, to state any material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading, except that in each case we express no belief with respect
to the financial statements or other financial data contained or incorporated by
reference in the Registration Statement or the Prospectus.

With respect to the Investment Manager:

                                      A-3



<PAGE>


     1.  The Investment Manager (A) has been duly incorporated and is validly
         existing as a corporation under the laws of the State of New York with
         full corporate power and authority to conduct its business as described
         in the Registration Statement and the Prospectus and (B) is duly
         registered and qualified to conduct its business and is in good
         standing in the State of New York (which is the only jurisdiction in
         which the Investment Manager owns or leases property or operates or
         conducts its business).

     2.  The Investment Manager is duly registered with the Commission as an
         investment adviser under the Investment Advisers Act of 1940, as
         amended (the "Advisers Act") and is not prohibited by the Advisers Act,
         the rules and regulations under the Advisers Act (the "Advisers Act
         Rules and Regulations"), the 1940 Act or the rules and regulations
         under the 1940 Act from acting under the Advisory Agreement dated as of
         February 25, 2002 between the Fund and the Investment Manager and the
         Fee Waiver Agreement dated as of February 25, 2002 between the Fund and
         the Investment Manager (collectively, the "Advisory Agreement"), for
         the Fund as contemplated by the Prospectus; and to my knowledge, no
         order of suspension or revocation of such registration under the
         Advisers Act and the Advisers Act Rules and Regulations has been issued
         and no proceedings for that purpose are pending before or threatened by
         the Commission;

     3.  Each of the Purchase Agreement and the Advisory Agreement has been duly
         authorized, executed and delivered by the Investment Manager and, the
         Advisory Agreement, assuming that the Advisory Agreement is the valid
         and legally binding agreement of the other parties thereto, is a valid
         and legally binding agreement of the Investment Manager, enforceable
         against the Investment Manager in accordance with its terms subject to
         the effects of bankruptcy, insolvency, fraudulent conveyance,
         reorganization, moratorium and other similar laws relating to or
         affecting creditors' rights generally and by general equitable
         principles (whether considered in a proceeding in equity or at law) and
         an implied covenant of good faith and fair dealing;

     4.  Neither the execution, delivery or performance of the Purchase
         Agreement or the Advisory Agreement by the Investment Manager or
         compliance by the Investment Manager with the provisions of the
         Purchase Agreement or the Advisory Agreement nor consummation by the
         Investment Manager of the transactions contemplated hereby and thereby
         will breach or result in a default under any indenture, mortgage, deed
         of trust, loan agreement or other agreement or instrument to which the
         Investment Manager is a party or by which its properties are bound
         except where breach or default would not reasonably be expected to have
         a material adverse effect on the ability of the Investment Manager to
         perform its obligations under the Purchase Agreement and the Advisory
         Agreement, nor will such action violate the charter or by-laws of the
         Investment Manager or any federal or New York statute or any rules or
         regulations thereunder or order known to me issued pursuant to any
         federal or New York statute by any court or governmental agency or body
         having jurisdiction over the Investment Manager or any of its
         properties;

     5.  No consent, approval, authorization, order, registration, filing or
         qualification of or with any federal or New York governmental agency or
         body or, to my knowledge, any federal or New York court is required on
         the part of the Investment Manager for the execution, delivery and
         performance by the Investment Manager of the Purchase Agreement and the
         Advisory Agreement, except such consents, approvals, authorizations,
         orders, registrations, filings or qualifications as have been obtained
         or made prior to the date hereof;

     6.  To my knowledge, there are no legal or governmental proceedings pending
         or threatened against the Investment Manager, or to which the
         Investment Manager or any of its properties is subject, which are
         required to be described in the Registration Statement or Prospectus
         that are not

                                      A-4



<PAGE>


         described as required or which may reasonably be expected to involve a
         prospective material adverse change in the ability of the Investment
         Manager to perform its obligations under the Purchase Agreement and the
         Advisory Agreement.

         I have not independently verified the accuracy, completeness or
fairness of the statements made or included in the Registration Statement or the
Prospectus and take no responsibility therefor. In the course of the preparation
by the Fund of the Registration Statement and the Prospectus, I participated in
conferences with certain officers and employees of the Fund and the Investment
Manager, with representatives of PricewaterhouseCoopers LLP and with counsel to
the Fund. Based upon my examination of the Registration Statement and the
Prospectus, my investigations made in connection with the preparation of the
Registration Statement and the Prospectus and my participation in the
conferences referred to above, I have no reason to believe that the Registration
Statement, at the time the Registration Statement became effective, contained an
untrue statement of a material fact or omitted to state a material fact required
to be stated therein or necessary in order to make the statements therein not
misleading or that the Prospectus contains any untrue statement of material fact
or omits to state any material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading, except I express no belief with respect to the financial statements
or other financial or statistical data contained or incorporated by reference in
the Registration Statement or the Prospectus.


                                      A-5


</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.2K
<SEQUENCE>6
<FILENAME>ex99-2k4.txt
<DESCRIPTION>EXHIBIT 99.2(K)(IV)
<TEXT>


<PAGE>


                 COHEN & STEERS QUALITY INCOME REALTY FUND, INC.


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


                            AUCTION AGENCY AGREEMENT

                           dated as of April [_], 2002

                                    Relating

                    to Auction Market Preferred Shares (AMPS)

                   Series T, Series TH, Series F and Series W

                                       of

                 COHEN & STEERS QUALITY INCOME REALTY FUND, INC.

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



                              THE BANK OF NEW YORK
                                as Auction Agent



<PAGE>


         This Auction Agency Agreement (this "Agreement"), dated as of April
[_], 2002, is between COHEN & STEERS QUALITY INCOME REALTY, INC. (the "Fund")
and The Bank of New York, a New York banking corporation.

         The Fund proposes to issue four series of auction market preferred
shares, par value $.001 per share, designated Series T Preferred Shares,
liquidation preference $25,000 per share, Series TH Preferred Shares,
liquidation preference $25,000 per share, Series F Preferred Shares, liquidation
preference $25,000 per share, and Series W Preferred Shares, liquidation
preference $25,000 per share (collectively, the "AMPS"), pursuant to the Fund's
Articles Supplementary (as defined below).

         The Fund desires that The Bank of New York perform certain duties as
agent in connection with each Auction (as defined below) of AMPS (in such
capacity, the "Auction Agent"), and as the transfer agent, registrar, dividend
paying agent and redemption agent with respect to the AMPS (in such capacity,
the "Paying Agent"), upon the terms and conditions of this Agreement, and the
Fund hereby appoints The Bank of New York as said Auction Agent and Paying Agent
in accordance with those terms and conditions (hereinafter generally referred to
as the "Auction Agent," except in Sections 3 and 4 below).

         NOW, THEREFORE, in consideration of the premises and the mutual
covenants contained herein, the Fund and the Auction Agent agree as follows:

I.       DEFINITIONS AND RULES OF CONSTRUCTION.

         1.1  Terms Defined by Reference to the Articles Supplementary.

         Capitalized terms not defined herein shall have the respective meanings
specified in the Articles Supplementary.

         1.2  Certain Defined Terms.

         As used herein, the following terms shall have the following meanings,
unless the context otherwise requires:

              (a) "Agent Member" of any Person shall mean such Person's agent
member of a participant in the Securities Depository that will act on behalf of
a Bidder.

              (b) "Articles Supplementary" shall mean the Articles Supplementary
for Preferred Shares of the Fund dated April [_], 2002 specifying the powers,
preferences and rights of the AMPS attached hereto as Exhibit B.

              (c) "Auction" shall have the meaning specified in Section 2.1
hereof.

              (d) "Auction Procedures" shall mean the Auction Procedures that
are set forth in Part II of the Articles Supplementary.

              (e) "Authorized Officer" shall mean each Vice President, Assistant
Vice President and Assistant Treasurer of the Auction Agent and every other
officer or employee of the Auction Agent designated as an "Authorized Officer"
for purposes hereof in a written communication from the Auction Agent to the
Fund.



<PAGE>


              (f) "Broker-Dealer Agreement" shall mean each agreement between
the Auction Agent and a broker-dealer substantially in the form attached hereto
as Exhibit A.

              (g) "Closing" shall mean the date the Fund consummates the
transactions for the issuance and sale of the AMPS.

              (h) "Fund Officer" shall mean the Chairman, the President, each
Vice President (whether or not designated by a number or word or words added
before or after the title "Vice President"), the Secretary, the Treasurer, each
Assistant Secretary and each Assistant Treasurer of the Fund and every other
officer or employee of the Fund designated as a "Fund Officer" for purposes
hereof in a written notice from the Fund to the Auction Agent.

              (i) "Holder" shall be a holder of record of one or more AMPS,
listed as such in the share register maintained by the Paying Agent pursuant to
Section 4.6 hereof.

              (j) "Interest Equivalent" means a yield on a 360-day basis of a
discount basis security which is equal to the yield on an equivalent
interest-bearing security.

         1.3   Rules of Construction.

         Unless the context or use indicates another or different meaning or
intent, the following rules shall apply to the construction of this Agreement:

              (a) Words importing the singular number shall include the plural
number and vice versa.

              (b) The captions and headings herein are solely for convenience of
reference and shall not constitute a part of this Agreement nor shall they
affect its meaning, construction or effect.

              (c) The words "hereof," "herein," "hereto," and other words of
similar import refer to this Agreement as a whole.

              (d) All references herein to a particular time of day shall be to
New York City time.

II.      THE AUCTION.

         2.1   Purpose; Incorporation by Reference of Auction Procedures.

              (a) The Articles Supplementary provides that the Applicable Rate
on shares of a series of AMPS, as the case may be, for each Dividend Period
therefor after the initial Dividend Period shall be the rate per annum that a
commercial bank, trust company or other financial institution appointed by the
Fund advises results from the implementation of the Auction Procedures. The
Board of Directors of the Fund has adopted a resolution appointing The Bank of
New York as Auction Agent for purposes of the Auction Procedures. The Auction
Agent hereby accepts such appointment and agrees that, on each Auction Date, it
shall follow the procedures set forth in this Section 2 and the Auction
Procedures for the purpose of determining the Applicable Rate for the AMPS for
the next Dividend Period. Each periodic operation of such procedures is
hereinafter referred to as an "Auction."

                                       2



<PAGE>


              (b) All of the provisions contained in the Auction Procedures are
incorporated herein by reference in their entirety and shall be deemed to be a
part hereof to the same extent as if such provisions were set forth fully
herein.

         2.2 Preparation for Each Auction; Maintenance of Registry of Existing
Holders.

              (a) As of the date hereof, the Fund shall provide the Auction
Agent with a list of the Broker-Dealers previously approved by the Auction Agent
and shall cause to be delivered to the Auction Agent for execution by the
Auction Agent a Broker-Dealer Agreement signed by each such Broker-Dealer. The
Auction Agent shall keep such list current and accurate based upon information
provided to it by Broker-Dealers and shall indicate thereon, or on a separate
list, the identity of each Existing Holder, if any, whose most recent Order was
submitted by a Broker-Dealer on such list and resulted in such Existing Holder
continuing to hold or purchase AMPS. Not later than five Business Days prior to
any Auction Date for which any change in such list of Broker-Dealers is to be
effective, the Fund shall notify the Auction Agent in writing of such change
and, if any such change is the addition of a Broker-Dealer to such list, the
Fund shall cause to be delivered to the Auction Agent for execution by the
Auction Agent a Broker-Dealer Agreement signed by such Broker-Dealer. The
Auction Agent shall have entered into a Broker-Dealer Agreement with each
Broker-Dealer prior to the participation of any such Broker-Dealer in any
Auction.

              (b) The provisions contained in Section 4 of Part I of the
Articles Supplementary concerning Special Dividend Periods and the notification
of a Special Dividend Period will be followed by the Fund and, to the extent
applicable, the Auction Agent, and the provisions contained therein are
incorporated herein by reference in their entirety and shall be deemed to be a
part of this Agreement to the same extent as if such provisions were set forth
fully herein.

              (c) (i) On each Auction Date, the Auction Agent shall determine
the dividend rate and the Maximum Rate. If any "AA" Composite Commercial Paper
Rate, Treasury Index Rate or Reference Rate, as the case may be, is not quoted
on an interest or bond equivalent, as the case may be, basis, the Auction Agent
shall convert the quoted rate to the interest or bond equivalent thereof as set
forth in the definition of such rate in the Articles Supplementary if the rate
obtained by the Auction Agent is quoted on a discount basis, or if such rate is
quoted on a basis other than an interest or bond equivalent or discount basis
the Auction Agent shall convert the quoted rate to an interest or bond
equivalent rate after consultation with the Fund as to the method of such
conversion.

                  (ii) If any "AA" Composite Commercial Paper Rate is to be
based on rates supplied by Commercial Paper Dealers and one or more of the
Commercial Paper Dealers shall not provide a quotation for the determination of
such "AA" Composite Commercial Paper Rate, the Auction Agent shall immediately
notify the Fund so that the Fund can determine whether to select a substitute
Commercial Paper Dealer or substitute Commercial Paper Dealers to provide the
quotation or quotations not being supplied by any Commercial Paper Dealer or
Commercial Paper Dealers. The Fund shall promptly advise the Auction Agent of
any such selection.

                  (iii) If any Treasury Index Rate or Treasury Bill Rate is to
be based on rates supplied by U.S. Government Securities Dealers and one or more
of the U.S. Government Securities Dealers shall not provide a quotation for the
determination of such Treasury Rate, the Auction Agent shall immediately notify
the Fund so that the Fund can determine whether to select a substitute U.S.
Government Securities Dealer or substitute U.S. Government Securities Dealers to
provide the quotation or quotations not being supplied by any U.S. Government
Securities Dealer or U.S. Government Securities Dealers. The Fund shall promptly
advise the Auction Agent of any such selection.

                                       3



<PAGE>


              (d) (i) The Auction Agent shall maintain a current registry of the
Existing Holders of the AMPS based upon information provided to it by
Broker-Dealers for purposes of each individual Auction. The Fund shall use
commercially reasonable efforts to provide or cause to be provided to the
Auction Agent within ten Business Days following the date of the Closing a list
of the initial Existing Holders of AMPS, and the Broker-Dealer of each such
Existing Holder through which such Existing Holder purchased such shares. The
Auction Agent may conclusively rely upon, as evidence of the identities of the
Existing Holders, such list, the results of each Auction and notices from any
Existing Holder, the Agent Member of any Existing Holder or the Broker-Dealer of
any Existing Holder with respect to such Existing Holder's transfer of any AMPS
to another Person.

                  (ii) In the event of any partial redemption of AMPS, upon
notice in writing by the Fund to the Auction Agent of such partial redemption,
the Auction Agent promptly shall request the Securities Depository to notify the
Auction Agent in writing of the identities of the Agent Members (and the
respective numbers of shares) from the accounts of which shares have been called
for redemption and the person or department at such Agent Member to contact
regarding such redemption. At least two Business Days prior to the Auction
preceding the date of redemption, the Auction Agent shall request each Agent
Member so identified to disclose to the Auction Agent (upon selection by such
Agent Member of the Existing Holders whose shares are to be redeemed) the number
of AMPS of each such Existing Holder, if any, to be redeemed by the Fund,
provided that the Auction Agent has been furnished with the name and telephone
number of a person or department at such Agent Member from which it is to
request such information. In the absence of receiving any such information with
respect to an Existing Holder, from such Existing Holder's Agent Member or
otherwise, the Auction Agent may continue to treat such Existing Holder as
having ownership of the number of AMPS shown in the Auction Agent's registry of
Existing Holders.

                  (iii) The Auction Agent shall register a transfer of the
ownership of AMPS from an Existing Holder to another Existing Holder, or to
another Person if permitted by the Fund, only if (A) such transfer is made
pursuant to an Auction or (B) if such transfer is made other than pursuant to an
Auction, the Auction Agent has been notified of such transfer in writing, in a
notice substantially in the form of Exhibit B to the Broker-Dealer Agreement, by
such Existing Holder or by the Agent Member of such Existing Holder. The Auction
Agent is not required to accept any notice of transfer delivered for an Auction
unless it is received by the Auction Agent by 3:00 p.m. on the Business Day next
preceding the Auction Date. The Auction Agent shall rescind a transfer made on
the registry of the Existing Holders of any AMPS if the Auction Agent has been
notified in writing, in a notice substantially in the form of Exhibit C to the
Broker-Dealer Agreement, by the Agent Member or the Broker-Dealer of any Person
that (i) purchased any AMPS and the seller failed to deliver such shares or (ii)
sold any AMPS and the purchaser failed to make payment to such Person upon
delivery to the purchaser of such shares.

              (e) The Auction Agent may, but shall not be obligated to, request
that the Broker Dealers, as set forth in Section 3.2(b) of the Broker-Dealer
Agreements, provide the Auction Agent with a list of their respective customers
that such Broker-Dealers believe are Beneficial Owners of AMPS. The Auction
Agent shall keep confidential any such information and shall not disclose any
such information so provided to any Person other than the relevant Broker-Dealer
and the Fund; provided, however, that the Auction Agent reserves the right and
is authorized to disclose any such information if (a) it is ordered to do so by
a court of competent jurisdiction or a regulatory body, judicial or
quasi-judicial agency or authority having the authority to compel such
disclosure, (b) it is advised by its counsel that its failure to do so would be
unlawful or (c) failure to do so would expose the Auction Agent to loss,
liability, claim, damage or expense for which it has not received indemnity or
security satisfactory to it.

                                       4



<PAGE>

         2.3 Auction Schedule.

         The Auction Agent shall normally conduct Auctions every Tuesday,
Thursday, Friday, and, in the case of the Series W Preferred Shares, every 28
days after the first Auction, in accordance with the schedule set forth below.
Such schedule may be changed by the Auction Agent with the consent of the Fund,
which consent shall not be withheld unreasonably. The Auction Agent shall give
notice of any such change to each Broker-Dealer. Such notice shall be received
prior to the first Auction Date on which any such change shall be effective.

<TABLE>
<CAPTION>
Time                          Event
- ----                          -----
<S>                           <C>
By 9:30 am.                   Auction Agent shall advise the Fund and the
                              Broker-Dealers of Maximum Rate as set forth in
                              Section 2.2(c)(i) hereof.

9:30 a.m. - 1:30 p.m.         Auction Agent shall assemble information
                              communicated to it by Broker-Dealers as provided
                              in Section 3(a) of Part II of the Articles
                              Supplementary. Submission deadline is 1:30 p.m.

Not earlier than 1:30p.m.     Auction Agent shall make determinations pursuant
                              to Section 4(a) of Part II of the Articles
                              Supplementary.

By approximately 3:30 p.m.    Auction Agent shall advise the Fund of the results
                              of the Auction as provided in Section 4(b) of Part
                              II of the Articles Supplementary.

                              Submitted Bid Orders and Submitted Sell Orders
                              will be accepted and rejected in whole or in part
                              and AMPS will be allocated as provided in Section
                              5 of Part II of the Articles Supplementary.
                              Auction Agent shall give notice of the Auction
                              results as set forth in Section 2.4 hereof.
</TABLE>

         2.4  Notice of Auction Results.

         On each Auction Date, the Auction Agent shall notify Broker-Dealers of
the results of the Auction held on such date by telephone or other electronic
means acceptable to the parties.

         2.5  Broker-Dealers.

              (a) Not later than 12:00 noon on each Auction Date, the Fund shall
pay to the Auction Agent in Federal Funds or similar same-day funds an amount in
cash equal to (i) in the case of any Auction Date immediately preceding a
seven-day Dividend Period, the product of (A) a fraction the numerator of which
is the number of days in such Dividend Period (calculated by counting the first
day of such Dividend Period but excluding the last day thereof) and the
denominator of which is 360, times (B) 1/4 of 1%, times (C) $25,000 times (D)
the sum of the aggregate number of outstanding AMPS for which the Auction is
conducted and (ii) in the case of any Special Dividend Period, the amount
determined by mutual consent of the Fund and the Broker-Dealers pursuant to
Section 3.5 of the Broker-Dealer Agreements. The Auction Agent shall apply such
moneys as set forth in Section 3.5 of the Broker-Dealer Agreements and shall
thereafter remit to the Fund any remaining funds paid to the Auction Agent
pursuant to this Section 2.5(a).

              (b) The Fund shall not designate any Person to act as a
Broker-Dealer, or permit an Existing Holder or a Potential Beneficial Owner to
participate in Auctions through any Person other than

                                       5



<PAGE>


a Broker-Dealer, without the prior written approval of the Auction Agent, which
approval shall not be withheld unreasonably. The Fund may designate an Affiliate
or Merrill Lynch, Pierce, Fenner & Smith Incorporated to act as a Broker-Dealer.

              (c) The Auction Agent shall terminate any Broker-Dealer Agreement
as set forth therein if so directed in writing by the Fund.

              (d) Subject to Section 2.5(b) hereof, the Auction Agent from time
to time shall enter into such Broker-Dealer Agreements as the Fund shall request
in writing.

              (e) The Auction Agent shall maintain a list of Broker-Dealers.

         2.6  Ownership of AMPS and Submission of Bids by the Fund and Its
Affiliates.

         Neither the Fund nor any Affiliate of the Fund may submit any Sell
Order or Bid, directly or indirectly, in any Auction, except that an Affiliate
of the Fund that is a Broker-Dealer may submit a Sell Order or Bid on behalf of
a Beneficial Owner or a Potential Beneficial Owner. The Fund shall notify the
Auction Agent in writing if the Fund or, to the best of the Fund's knowledge,
any Affiliate of the Fund becomes a Beneficial Owner of any AMPS. Any AMPS
redeemed, purchased or otherwise acquired (i) by the Fund shall not be reissued,
except in accordance with the requirements of the Securities Act of 1933, as
amended ("Securities Act") or (ii) by its Affiliates shall not be transferred
(other than to the Fund). The Auction Agent shall have no duty or liability with
respect to enforcement of this Section 2.6.

         2.7  Access to and Maintenance of Auction Records.

         The Auction Agent shall afford to the Fund, its agents, independent
public accountants and counsel, access at reasonable times during normal
business hours to review and make extracts or copies (at the Fund's sole cost
and expense) of all books, records, documents and other information concerning
the conduct and results of Auctions, provided that any such agent, accountant or
counsel shall furnish the Auction Agent with a letter from the Fund requesting
that the Auction Agent afford such person access at least one Business Day prior
to the date of such access. The Auction Agent shall maintain records relating to
any Auction for a period of at least two years after such Auction (unless
requested in writing by the Fund to maintain such records for such longer period
not in excess of four years, then for such longer period), and such records, in
reasonable detail, shall accurately and fairly reflect the actions taken by the
Auction Agent hereunder. The Fund agrees to keep confidential any information
regarding the customers of any Broker-Dealer received from the Auction Agent in
connection with this Agreement or any Auction, and shall not disclose such
information or permit the disclosure of such information without the prior
written consent of the applicable Broker-Dealer to anyone except such agent,
accountant or counsel engaged to audit or review the results of Auctions as
permitted by this Section 2.7. The Fund reserves the right to disclose any such
information if it is advised by its counsel that its failure to do so would (i)
be unlawful or (ii) expose it to liability, unless the Broker-Dealer shall have
offered indemnification satisfactory to the Fund. Any such agent, accountant or
counsel, before having access to such information, shall agree to keep such
information confidential and not to disclose such information or permit
disclosure of such information without the prior written consent of the
applicable Broker-Dealer, provided that such agent, accountant or counsel may
reserve the right to disclose any such information if it is advised by its
counsel that its failure to do so would (i) be unlawful or (ii) expose it to
liability, unless the Broker-Dealer shall have offered indemnification
satisfactory to such agent, accountant or counsel. The Auction Agent shall have
no responsibility for, and shall have no liability in connection with, the
Fund's performance of its duties under this Section 2.7.

                                       6



<PAGE>


III.     THE AUCTION AGENT AS PAYING AGENT.

         3.1  The Paying Agent.

         The Board of Directors of the Fund has adopted a resolution appointing
The Bank of New York as Auction Agent and Paying Agent. The Paying Agent hereby
accepts such appointment and agrees to act in accordance with its standard
procedures and the provisions of the Articles Supplementary which are specified
herein with respect to the AMPS and as set forth in this Section 3.

         3.2  The Fund's Notices to the Paying Agent.

         Whenever any AMPS are to be redeemed, the Fund promptly shall deliver
to the Paying Agent a Notice of Redemption, which will be mailed by the Paying
Agent to each Holder at least five Business Days prior to the date such Notice
of Redemption is required to be mailed pursuant to the Articles Supplementary.
The Paying Agent shall have no responsibility to confirm or verify the accuracy
of any such Notice.

         3.3  The Fund to Provide Funds for Dividends and Redemptions.

              (a) Not later than 12:00 noon on each Dividend Payment Date, the
Fund shall deposit with the Paying Agent an aggregate amount of Federal Funds or
similar same-day funds equal to the declared dividends to be paid to Holders on
such Dividend Payment Date, and shall give the Paying Agent irrevocable written
instructions to apply such funds to the payment of such dividends on such
Dividend Payment Date.

              (b) If the Fund shall give a Notice of Redemption, then by noon of
the date fixed for redemption, the Fund shall deposit in trust with the Paying
Agent an aggregate amount of Federal Funds or similar same-day funds sufficient
to redeem such AMPS called for redemption and shall give the Paying Agent
irrevocable written instructions and authority to pay the redemption price to
the Holders of AMPS called for redemption upon surrender of the certificate or
certificates therefor.

         3.4  Disbursing Dividends and Redemption Price.

         After receipt of the Federal Funds or similar same-day funds and
instructions from the Fund described in Section 3.3 above, the Paying Agent
shall pay to the Holders (or former Holders) entitled thereto (i) on each
corresponding Dividend Payment Date, dividends on the AMPS, and (ii) on any date
fixed for redemption, the redemption price of any shares of AMPS called for
redemption. The amount of dividends for any Dividend Period to be paid by the
Paying Agent to Holders will be determined by the Fund as set forth in Section 2
of Part I of the Articles Supplementary. The redemption price to be paid by the
Paying Agent to the Holders of any shares of AMPS called for redemption will be
determined as set forth in Section 3 of Part I of the Articles Supplementary.
The Paying Agent shall have no duty to determine the redemption price and may
rely on the amount thereof set forth in the Notice of Redemption.

IV.      THE PAYING AGENT AS TRANSFER AGENT AND REGISTRAR.

         4.1  Original Issue of Share Certificates.

         On the Date of Original Issue for any Preferred Share, one certificate
for each series of AMPS shall be issued by the Fund and registered in the name
of Cede & Co., as nominee of the Securities Depository, and countersigned by the
Paying Agent.

                                       7



<PAGE>


         4.2  Registration of Transfer or Exchange of Shares.

         Except as provided in this Section 4.2, the shares of each series of
AMPS shall be registered solely in the name of the Securities Depository or its
nominee. If the Securities Depository shall give notice of its intention to
resign as such, and if the Fund shall not have selected a substitute Securities
Depository acceptable to the Paying Agent prior to such resignation, then upon
such resignation of the shares of each Series, at the Fund's request, may be
registered for transfer or exchange, and new certificates thereupon shall be
issued in the name of the designated transferee or transferees, upon surrender
of the old certificate in form deemed by the Paying Agent to be properly
endorsed for transfer with (a) all necessary endorsers' signatures guaranteed in
such manner and form and by such guarantor as the Paying Agent may reasonably
require, (b) such assurances as the Paying Agent shall deem necessary or
appropriate to evidence the genuineness and effectiveness of each necessary
endorsement and (c) satisfactory evidence of compliance with all applicable laws
relating to the collection of taxes in connection with any registration of
transfer or exchange or funds necessary for the payment of such taxes. If the
certificate or certificates for AMPS are not held by the Securities Depository
or its nominee, payments upon transfer of shares in an Auction shall be made in
Federal Funds or similar same-day funds to the Auction Agent against delivery of
certificates therefor.

         4.3  Removal of Legend.

         Any request for removal of a legend indicating a restriction on
transfer from a certificate evidencing AMPS shall be accompanied by an opinion
of counsel stating that such legend may be removed and such shares may be
transferred free of the restriction described in such legend, said opinion to be
delivered under cover of a letter from a Fund Officer authorizing the Paying
Agent to remove the legend on the basis of said opinion.

         4.4  Lost, Stolen or Destroyed Shares Certificates.

         The Paying Agent shall issue and register replacement certificates for
certificates represented to have been lost, stolen or destroyed, upon the
fulfillment of such requirements as shall be deemed appropriate by the Fund and
by the Paying Agent, subject at all times to provisions of law, the Articles
Supplementary governing such matters and resolutions adopted by the Fund with
respect to lost, stolen or destroyed securities. The Paying Agent may issue new
certificates in exchange for and upon the cancellation of mutilated
certificates. Any request by the Fund to the Paying Agent to issue a replacement
or new certificate pursuant to this Section 4.4 shall be deemed to be a
representation and warranty by the Fund to the Paying Agent that such issuance
will comply with provisions of applicable law and the Articles Supplementary and
resolutions of the Fund.

         4.5  Disposition of Canceled Certificates: Record Retention.

         The Paying Agent shall retain stock certificates which have been
canceled in transfer or in exchange and accompanying documentation in accordance
with applicable rules and regulations of the Securities and Exchange Commission
(the "Commission") for at least two calendar years from the date of such
cancellation. The Paying Agent, upon written request by the Fund, shall afford
to the Fund, its agents and counsel access at reasonable times during normal
business hours to review and make extracts or copies (at the Fund's sole cost
and expense) of such certificates and accompanying documentation. Upon written
request by the Fund at any time within the six month period commencing
immediately after the expiration of this two-year period, the Paying Agent shall
deliver to the Fund the canceled certificates and accompanying documentation.
The Fund, at its expense, shall retain such records for a minimum additional
period of at least four calendar years from the date of delivery of the records
to the Fund and shall make such records available during this period at any
time, or from time to time, for reasonable

                                       8



<PAGE>


periodic, special, or other examinations by representatives of the Commission.
The Fund also shall undertake to furnish to the Commission, upon demand, either
at its principal office or at any regional office, complete, correct and current
hard copies of any and all such records. Thereafter, such records shall not be
destroyed by the Fund without the approval of the Paying Agent, which approval
shall not be withheld unreasonably, but will be safely stored for possible
future reference.

         4.6  Stock Register.

         The Paying Agent shall maintain the stock register, which shall contain
a list of the Holders, the number of shares held by each Holder and the address
of each Holder. The Paying Agent shall record in the stock register any change
of address of a Holder upon written notice by such Holder. In case of any
written request or demand for the inspection of the share register or any other
books of the Fund in the possession of the Paying Agent, the Paying Agent will
notify the Fund and secure instructions as to permitting or refusing such
inspection. The Paying Agent reserves the right, however, to exhibit the stock
register or other records to any person in case it is advised by its counsel
that its failure to do so would (i) be unlawful or (ii) expose it to liability,
unless the Fund shall have offered indemnification satisfactory to the Paying
Agent.

         4.7  Return of Funds.

         Any funds deposited with the Paying Agent by the Fund for any reason
(other than for the payment of amounts due to the Paying Agent) under this
Agreement, including for the payment of dividends or the redemption of AMPS,
that remain with the Paying Agent after 12 months shall be repaid to the Fund
upon written request by the Fund.

V.       REPRESENTATIONS AND WARRANTIES.

         5.1  Representations and Warranties of the Fund.

         The Fund represents and warrants to the Auction Agent that:

                  (i) the Fund is duly organized and is validly existing as a
corporation under the laws of the State of Maryland, and has full power to
execute and deliver this Agreement and to authorize, create and issue the AMPS;

                  (ii) the Fund is registered with the Commission under the 1940
Act as a closed-end, non-diversified, management investment company;

                  (iii) this Agreement has been duly and validly authorized,
executed and delivered by the Fund and constitutes the legal, valid and binding
obligation of the Fund, enforceable against the Fund in accordance with its
terms, subject to bankruptcy, insolvency, reorganization and other laws of
general applicability relating to or affecting creditors' rights and to general
equitable principles;

                  (iv) the form of the certificates evidencing the AMPS comply
with all applicable laws of the State of Maryland;

                  (v) the AMPS have been duly and validly authorized by the Fund
and, upon completion of the initial sale of the AMPS and receipt of payment
therefor, will be validly issued by the Fund, fully paid and nonassessable;

                                       9



<PAGE>


                  (vi) at the time of the offering of the AMPS, the shares
offered will be registered under the Securities Act and no further action by or
before any governmental body or authority of the United States or of any state
thereof is required in connection with the execution and delivery of this
Agreement or will be required in connection with the issuance of shares of the
AMPS, except such action as required by applicable state securities laws;

                  (vii) the execution and delivery of this Agreement and the
issuance and delivery of the AMPS do not and will not conflict with, violate, or
result in a breach of the terms, conditions or provisions of, or constitute a
default under, the Articles of Incorporation, any order or decree of any court
or public authority having jurisdiction over the Fund, or any mortgage,
indenture, contract, agreement or undertaking to which the Fund is a party or by
which it is bound; and

                  (viii) no taxes are payable upon or in respect of the
execution of this Agreement or will be payable upon or in respect of the
issuance of the AMPS.

         5.2  Representations and Warranties of the Auction Agent.

         The Auction Agent represents and warrants to the Fund that:

              (i) the Auction Agent is duly organized and is validly existing as
a banking corporation in good standing under the laws of the State of New York
and has the corporate power to enter into and perform its obligations under this
Agreement; and

              (ii) this Agreement has been duly and validly authorized, executed
and delivered by the Auction Agent and constitutes the legal, valid and binding
obligation of the Auction Agent, enforceable against the Auction Agent in
accordance with its terms, subject to bankruptcy, insolvency, reorganization and
other laws of general applicability relating to or affecting creditors' rights
and to general equitable principles.

VI.      THE AUCTION AGENT.

         6.1  Duties and Responsibilities.

              (a) The Auction Agent is acting solely as agent for the Fund
hereunder and owes no fiduciary duties to any Person.

              (b) The Auction Agent undertakes to perform such duties and only
such duties as are set forth specifically in this Agreement, and no implied
covenants or obligations shall be read into this Agreement against the Auction
Agent.

              (c) In the absence of willful misconduct or gross negligence on
its part, the Auction Agent shall not be liable for any action taken, suffered
or omitted by it or for any error of judgment made by it in the performance of
its duties under this Agreement.

              (d) In no event shall the Auction Agent be liable for special,
punitive, indirect or consequential loss or damage of any kind whatsoever
(including, but not limited to, lost profits), even if the Auction Agent has
been advised of the likelihood of such loss or damage and regardless of the form
of action.

                                       10



<PAGE>


         6.2  Rights of the Auction Agent.

              (a) The Auction Agent may conclusively rely upon, and shall be
fully protected in acting or refraining from acting upon, any communication
authorized hereby and any written instruction, notice, request, direction,
consent, report, certificate, share certificate or other instrument, paper or
document reasonably believed by it to be genuine. The Auction Agent shall not be
liable for acting or refraining from acting upon any telephone communication
authorized hereby which the Auction Agent reasonably believes in good faith to
have been given by the Fund or by a Broker-Dealer. The Auction Agent may record
telephone communications with the Fund or with the Broker-Dealers or with both.

              (b) The Auction Agent may consult with counsel of its choice, and
the advice of such counsel shall be full and complete authorization and
protection in respect of any action taken, suffered or omitted by it hereunder
in good faith and in reasonable reliance thereon.

              (c) The Auction Agent shall not be required to advance, expend or
risk its own funds or otherwise incur or become exposed to financial liability
in the performance of its duties hereunder. The Auction Agent shall be under no
liability for interest on any money received by it hereunder except as otherwise
agreed in writing with the Fund.

              (d) The Auction Agent may perform its duties and exercise its
rights hereunder either directly or by or through agents or attorneys and, in
the absence of willful misconduct or gross negligence on the part of any such
agent or attorney, shall not be responsible for the conduct on the part of any
such agent or attorney appointed by it with due care.

              (e) The Auction Agent shall not be liable for any error of
judgment made in good faith unless the Auction Agent shall have been grossly
negligent in ascertaining the pertinent facts necessary to make such judgment.
In no event shall the Auction Agent be liable for special, indirect or
consequential loss or damages of any kind whatsoever (including, but not limited
to, loss of profits), even if the Auction Agent has been advised of the
likelihood of such loss or damages and regardless of the form of action, except
in the event of willful misconduct or gross negligence on the part of the
Auction Agent.

              (f) The Auction Agent shall not be required to and shall make no
representations and have no responsibilities as to the validity, accuracy, value
or genuineness of any signatures or endorsements, other than its own. The
Auction Agent makes no representations as to and shall have no liability with
respect to the correctness of the recitals in, or the validity, accuracy or
adequacy of this Agreement, any Broker-Dealer Agreement, any offering material
used in connection with the offer and sale of the AMPS or any other agreement or
instrument executed in connection with the transactions contemplated herein or
in any thereof. The Auction Agent shall have no obligation or liability in
respect of the registration or exemption therefrom of the AMPS under federal or
state securities laws in respect of the sufficiency or the conformity of any
transfer of the AMPS pursuant to the terms of the Auction Agency Agreement, any
Broker Dealer Agreement, or any other document contemplated thereby or related
thereto.

              (g) Whenever in the administration of the provisions of this
Agreement the Auction Agent shall deem it necessary or desirable that a matter
be proved or established prior to taking or suffering any action to be taken
hereunder, such matter (unless other evidence in respect thereof be herein
specifically prescribed) may, in the absence of gross negligence or willful
misconduct on the part of the Auction Agent, be deemed to be conclusively proved
and established by a certificate signed by the Fund or the Broker-Dealer, and
delivered to the Auction Agent and such certificate, in the absence of gross

                                       11



<PAGE>


negligence or willful misconduct on the part of the Auction Agent, shall be full
warrant to the Auction Agent for any action taken or omitted by it under the
provisions of this Agreement upon the faith thereof.

              (h) The Auction Agent shall not be bound to make any investigation
into the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, consent, entitlement order,
approval or other paper or document furnished by Fund or the Broker-Dealer,
except to the extent that such failure to investigate would be deemed grossly
negligent.

              (i) Any corporation into which the Auction Agent may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which the Auction Agent shall be
a party, or any corporation succeeding to the Dealing and Trading business of
the Auction Agent shall be the successor of the Auction Agent hereunder, with
the consent of the Fund but without the execution of filing any paper with any
party hereto or any further act on the part of any of the parties hereto, except
where any instrument of transfer or assignment is required by law to effect such
succession, anything herein to the contrary notwithstanding.

         6.3  Compensation, Expenses and Indemnification.

              (a) The Fund shall pay to the Auction Agent from time to time
reasonable compensation for all services rendered by it under this Agreement and
under the Broker-Dealer Agreements as shall be set forth in a separate writing
signed by the Fund and the Auction Agent, subject to adjustments if the AMPS no
longer are held of record by the Securities Depository or its nominee or if
there shall be such other change as shall increase or decrease materially the
Auction Agent's obligations hereunder or under the Broker-Dealer Agreements.

              (b) The Fund shall reimburse the Auction Agent upon its request
for all reasonable expenses, disbursements and advances incurred or made by the
Auction Agent in accordance with any provision of this Agreement and of the
Broker-Dealer Agreements (including the reasonable compensation, expenses and
disbursements of its agents and counsel), except any expense, disbursement or
advance attributable to its gross negligence or willful misconduct.

              (c) The Fund shall indemnify the Auction Agent and its officers,
directors, employees and agents for, and hold it harmless against, any loss,
liability or expense incurred without gross negligence or willful misconduct on
the part of the Auction Agent arising out of or in connection with its agency
under this Agreement and under the Broker-Dealer Agreements, including the costs
and expenses of defending itself against any claim of liability in connection
with its exercise or performance of any of its duties hereunder and thereunder,
except such as may result from its gross negligence or willful misconduct.

         6.4  Force Majeure

              The Auction Agent shall not be responsible for or liable for any
failure or delay in the performance of its obligations under this Agreement
arising out of or caused, directly or indirectly, by circumstances beyond its
reasonable control, including, without limitation, acts of God; earthquakes;
fires; floods; wars; civil or military disturbances; sabotage; epidemics; riots;
interruptions, loss or malfunctions of utilities; computer (hardware or
software) or communications services; accidents; labor disputes; acts of civil
or military authority or governmental actions; it being understood that the
Auction Agent shall use reasonable efforts which are consistent with accepted
practices in the banking industry to resume performance as soon as practicable
under the circumstances.

                                       12



<PAGE>


VII.     MISCELLANEOUS.

         7.1  Term of Agreement.

              (a) The term of this Agreement is unlimited unless it shall be
terminated as provided in this Section 7.1. The Fund may terminate this
Agreement at any time by so notifying the Auction Agent in writing, provided
that, if any AMPS remain outstanding, the Fund shall have entered into an
agreement with a successor auction agent. The Auction Agent may terminate this
Agreement upon prior notice to the Fund on the date specified in such notice,
which date shall be no earlier than 60 days after delivery of such notice. The
Auction Agent may resign after 30 days following the delivery of notice to the
Fund that the Auction Agent has not been paid amounts due to it. If the Auction
Agent terminates this Agreement while any AMPS remains outstanding, the Fund
shall use its best efforts to enter into an agreement with a successor auction
agent containing substantially the same terms and conditions as this Agreement.

              (b) Except as otherwise provided in this Section 7.1(b), the
respective rights and duties of the Fund and the Auction Agent under this
Agreement shall cease upon termination of this Agreement. The Fund's
representations, warranties, covenants and obligations to the Auction Agent
under Sections 5.1 and 6.3 hereof shall survive the termination hereof. Upon
termination of this Agreement, the Auction Agent shall (i) resign as Auction
Agent under the Broker-Dealer Agreements, (ii) at the Fund's written request,
deliver promptly to the Fund copies of all books and records maintained by it in
connection with its duties hereunder, and (iii) at the written request of the
Fund, transfer promptly to the Fund or to any successor auction agent any funds
deposited by the Fund with the Auction Agent (whether in its capacity as Auction
Agent or as Paying Agent) pursuant to this Agreement which have not been
distributed previously by the Auction Agent in accordance with this Agreement.

         7.2  Communications.

         Except for (i) communications authorized to be made by telephone
pursuant to this Agreement or the Auction Procedures and (ii) communications in
connection with Auctions (other than those expressly required to be in writing),
all notices, requests and other communications to any party hereunder shall be
in writing (including telecopy or similar writing) and shall be given to such
party at its address or telecopier number set forth below:


If to the Fund,              Cohen & Steers Quality Income Realty Fund, Inc.
addressed to:                Attn:  Robert H. Steers
                             757 Third Avenue
                             New York, New York  10017
                             Telecopier No.:  (212) 832-3232
                             Telephone No.:  (212) 832-3622

If to the Auction Agent,     The Bank of New York
addressed to:                Corporate Trust Administration
                             5 Penn Plaza, 13th Floor
                             New York, NY 10001
                             Attention: Dealing and Trading Group - Auction Desk
                             Telephone No.: (212) 328-7676
                             Facsimile No.: (212) 328-8237/8238/8239

                                       13



<PAGE>


or such other address or telecopier number as such parry hereafter may specify
for such purpose by notice to the other party. Each such notice, request or
communication shall be effective when delivered at the address specified herein.
Communications shall be given on behalf of the Fund by a Fund Officer and on
behalf of the Auction Agent by an Authorized Officer.

         7.3  Entire Agreement.

         This Agreement contains the entire agreement between the parties
relating to the subject matter hereof, and there are no other representations,
endorsements, promises, agreements or understandings, oral, written or implied,
between the parties relating to the subject matter hereof, except for written
agreements relating to the compensation of the Auction Agent.

         7.4  Benefits.

         Nothing herein, express or implied, shall give to any Person, other
than the Fund, the Auction Agent and their respective successors and assigns,
any benefit of any legal or equitable right, remedy or claim hereunder.

         7.5  Amendment; Waiver.

              (a) This Agreement shall not be deemed or construed to be
modified, amended, rescinded, canceled or waived, in whole or in part, except by
a written instrument signed by a duly authorized representative of the party to
be charged. The Fund shall notify the Auction Agent in writing of any change in
the Articles Supplementary prior to the effective date of any such change. If
any such change in the Articles Supplementary materially increases the Auction
Agent's obligations hereunder, the Fund shall obtain the written consent of the
Auction Agent prior to the effective date of such change.

              (b) Failure of either party hereto to exercise any right or remedy
hereunder in the event of a breach hereof by the other party shall not
constitute a waiver of any such right or remedy with respect to any subsequent
breach.

         7.6  Successors and Assigns.

         This Agreement shall be binding upon, inure to the benefit of, and be
enforceable by, the respective successors and permitted assigns of each of the
Fund and the Auction Agent. This Agreement may not be assigned by either party
hereto absent the prior written consent of the other party, which consent shall
not be withheld unreasonably.

         7.7  Severability.

         If any clause, provision or section hereof shall be ruled invalid or
unenforceable by any court of competent jurisdiction, the invalidity or
unenforceability of such clause, provision or section shall not affect any of
the remaining clauses, provisions or sections hereof.

                                       14



<PAGE>


         7.8  Execution in Counterparts.

         This Agreement may be executed in several counterparts, each of which
shall be an original and all of which shall constitute but one and the same
instrument.

         7.9  Governing Law.

         This Agreement shall be governed by and construed in accordance with
the laws of the State of New York applicable to agreements made and to be
performed in said state.

         7.10 Jurisdiction.

         The parties agree that all actions and proceedings arising out of this
Auction Agency Agreement or any of the transactions contemplated hereby shall be
brought in the County of New York, and, in connection with any such action or
proceeding, submit to the jurisdiction of, and venue in, such County. Each of
the parties hereto also irrevocably waives all right to trial by jury in any
action, proceeding or counterclaim arising out of this Agreement or the
transactions contemplated hereby.





                            [Signature pages follow]

                                       15



<PAGE>


         IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered by their proper and duly authorized officers as of
the date first above written.

                                 COHEN & STEERS QUALITY INCOME REALTY FUND, INC.



                                 By:____________________________________________
                                     Name: Martin Cohen
                                     Title: President


                                 THE BANK OF NEW YORK, As Auction Agent



                                 By:____________________________________________
                                     Name: Joseph Panepinto
                                     Title:  Vice President

                                       16



<PAGE>


                                                                       EXHIBIT A




                 COHEN & STEERS QUALITY INCOME REALTY FUND, INC.



                              THE BANK OF NEW YORK,
                                as Auction Agent



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


                             BROKER-DEALER AGREEMENT

                           dated as of April [_],2002

                                   Relating to

                     Auction Market Preferred Shares (AMPS)

                   Series T, Series TH, Series F and Series W

                                       of

                 COHEN & STEERS QUALITY INCOME REALTY FUND, INC.

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



                                 [BROKER DEALER]



                                      A-1


<PAGE>


                                    EXHIBIT B

  (Note: To be used only for transfers made other than pursuant to an Auction)

                                  TRANSFER FORM

         Re:      COHEN & STEERS ADVANTAGE INCOME REALTY FUND, INC.
                  Auction Rate Cumulative AMPS ("AMPS")


We are (check one):

         [ ]      the Existing Holder named below;

         [ ]      the Broker-Dealer for such Existing Holder; or

         [ ]      the Agent Member for such Existing Holder.


         We hereby notify you that such Beneficial Owner has transferred
___________ Series _____ AMPS to ________________________________.



                                               ---------------------------------
                                               (Name of Existing Holder)



                                               ---------------------------------
                                               (Name of Broker-Dealer)



                                               ---------------------------------
                                               (Name of Agent Member)

By:_____________________________
    Printed Name:
    Title:


                                      B-1



<PAGE>


                                    EXHIBIT C

          (Note: To be used only for failures to deliver or to pay for
                        AMPS sold pursuant to an Auction)

                         NOTICE OF A FAILURE TO DELIVER


         We are a Broker-Dealer for ___________________ (the "Purchaser"), which
purchased ________ Series __ AMPS of COHEN & STEERS ADVANTAGE INCOME REALTY
FUND, INC. in the Auction held on _____________________ from the seller of such
shares.

         We hereby notify you that (check one):

         _____ the Seller failed to deliver such shares to the Purchaser.

         _____ the Purchaser failed to make payment to the Seller upon
               delivery of such shares.


                                       Name: ___________________________________
                                              (Name of Broker-Dealer)


                                       By:   ___________________________________
                                              Printed Name:
                                              Title:


                                       C-1


</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.2K
<SEQUENCE>7
<FILENAME>ex99-2k5.txt
<DESCRIPTION>EXHIBIT 99.2(K)(V)
<TEXT>

<PAGE>


                 COHEN & STEERS QUALITY INCOME REALTY FUND, INC.



                              THE BANK OF NEW YORK,
                                as Auction Agent
                             -----------------------

                             BROKER-DEALER AGREEMENT

                           dated as of April [_], 2002

                                   Relating to

                    Auction Market Preferred Shares ("AMPS")

                   Series T, Series TH, Series F, and Series W

                                       of

                 COHEN & STEERS QUALITY INCOME REALTY FUND, INC.

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

                MERRILL LYNCH, PIERCE FENNER & SMITH INCORPORATED







<PAGE>


                             BROKER-DEALER AGREEMENT

         This Broker-Dealer Agreement dated as of April [_], 2002, is between
The Bank of New York, a New York banking corporation (the "Auction Agent") (not
in its individual capacity, but solely as agent of COHEN & STEERS QUALITY INCOME
REALTY FUND, INC. (the "Fund"), pursuant to authority granted to it in the
Auction Agency Agreement dated as of April [_], 2002, between the Fund and the
Auction Agent (the "Auction Agency Agreement") and MERRILL LYNCH, PIERCE FENNER
& SMITH (together with its successors and assigns, "BD").

         The Fund proposes to issue four series of auction market preferred
shares, par value $.001 per share, designated Series T Preferred Shares,
liquidation preference $25,000 per share, Series TH Preferred Shares,
liquidation preference $25,000 per share, Series F Preferred Shares, liquidation
preference $25,000 per share, and Series W Preferred Shares, liquidation
preference $25,000 per share (collectively, the "AMPS"), pursuant to the Fund's
Articles Supplementary (as defined below).

         The Fund's Articles Supplementary provides that for each subsequent
Dividend Period of AMPS then outstanding, the Applicable Rate for each series of
AMPS for each subsequent Dividend Period shall be equal to the rate per annum
that results from an Auction for Outstanding shares of each Series on the
respective Auction Date therefor next preceding the period from and after the
Date of Original Issue to and including the last day of the initial Dividend
Period. The Board of Directors of the Fund has adopted a resolution appointing
The Bank of New York as Auction Agent for purposes of the Auction Procedures,
and pursuant to Section 2.5 of the Auction Agency Agreement, the Fund has
requested and directed the Auction Agent to execute and deliver this Agreement.

         The Auction Procedures require the participation of one or more
Broker-Dealers.

         NOW, THEREFORE, in consideration of the premises and the mutual
covenants contained herein, the Auction Agent and BD agree as follows:

I.       DEFINITIONS AND RULES OF CONSTRUCTION.

         1.1 Terms Defined by Reference to the Articles Supplementary.

         Capitalized terms not defined herein shall have the respective meanings
specified in the Articles Supplementary.

         1.2 Terms Defined Herein.

         As used herein, the following terms shall have the following meanings,
unless the context otherwise requires:

             (a) "Articles Supplementary" shall mean the Articles Supplementary
for Preferred Shares of the Fund dated as of April [_], 2002 specifying the
powers, preferences and rights of the AMPS.

             (b) "Auction" shall have the meaning specified in Section 2.1 of
the Auction Agency Agreement.

             (c) "Auction Procedures" shall mean the Auction Procedures that are
set forth in Part II of the Articles Supplementary.

             (d) "Authorized Officer" of the Auction Agent shall mean each Vice
President, Assistant Vice President and Assistant Treasurer of the Auction Agent
and every other officer or employee of the Auction Agent designated as an
"Authorized Officer" for purposes of this Agreement in a written communication
to BD.


                                       2




<PAGE>


             (e) "BD Officer" shall mean each officer or employee of BD
designated as a "BD Officer" for purposes of this Agreement in a communication
to the Auction Agent.

             (f) "Broker-Dealer Agreement" shall mean this Agreement and any
substantially similar agreement between the Auction Agent and a Broker-Dealer.

         1.3 Rules of Construction.

         Unless the context or use indicates another or different meaning or
intent, the following rules shall apply to the construction of this Agreement:

             (a) Words importing the singular number shall include the plural
number and vice versa.

             (b) The captions and headings herein are solely for convenience of
reference and shall not constitute a part of this Agreement, nor shall they
affect its meaning, construction or effect.

             (c) The words "hereof," "herein," "hereto," and other words of
similar import refer to this Agreement as a whole.

             (d) All references herein to a particular time of day shall be to
New York City time.

II.      NOTIFICATION OF DIVIDEND.

         The provisions contained in Section 4 of Part I of the Articles
Supplementary concerning the notification of a Special Dividend Period will be
followed by the Auction Agent and BD, and the provisions contained therein are
incorporated herein by reference in their entirety and shall be deemed to be a
part of this Agreement to the same extent as if such provisions were set forth
fully herein.

III.     THE AUCTION.

         3.1 Purpose; Incorporation by Reference of Auction Procedures.

             (a) On each Auction Date, the provisions of the Auction Procedures
will be followed by the Auction Agent for the purpose of determining the
Applicable Rate for the AMPS, for each Dividend Period. Each periodic operation
of such procedures is hereinafter referred to as an "Auction."

             (b) All of the provisions contained in the Auction Procedures are
incorporated herein by reference in their entirety and shall be deemed to be a
part of this Agreement to the same extent as if such provisions were set forth
fully herein.

             (c) BD agrees to act as, and assumes the obligations of and
limitations and restrictions placed upon, a Broker-Dealer under this Agreement.
BD understands that other Persons meeting the requirements specified in the
definition of "Broker-Dealer" contained in Section 19 of Part I of the Articles
Supplementary may execute a Broker-Dealer Agreement and participate as
Broker-Dealers in Auctions.

             (d) BD and other Broker-Dealers may participate in Auctions for
their own accounts. However, the Fund, by notice to BD and all other Broker
Dealers, may prohibit all Broker-Dealers from submitting Bids in Auctions for
their own accounts, provided that Broker-Dealers may continue to submit Hold
Orders and Sell Orders.


                                       3




<PAGE>


         3.2 Preparation for Each Auction.

             (a) Not later than 9:30 A.M. on each Auction Date for the AMPS, the
Auction Agent shall advise BD by telephone or other electronic means of
communication acceptable to the parties of the Maximum Rate in effect on such
Auction Date.

             (b) The Auction Agent from time to time may, but shall not be
obligated to, request BD to provide it with a list of the respective customers
BD believes are Beneficial Owners of AMPS. BD shall comply with any such
request, and the Auction Agent shall keep confidential any such information,
including information received as to the identity of Bidders in any Auction, and
shall not disclose any such information so provided to any Person other than the
Fund; and such information shall not be used by the Auction Agent or its
officers, employees, agents or representatives for any purpose other than such
purposes as are described herein; provided, however, that the Auction Agent
reserves the right and is authorized to disclose any such information if (a) it
is ordered to do so by a court of competent jurisdiction or a regulatory body,
judicial or quasi-judicial agency or authority having the authority to compel
such disclosure, (b) it is advised by its counsel that its failure to do so
would be unlawful or (c) failure to do so would expose the Auction Agent to
loss, liability, claim, damage or expense for which it has not received
indemnity or security satisfactory to it. In the event that the Auction Agent
is required to disclose information in accordance with the foregoing sentence,
it shall provide prompt written notice of such requirement to BD so BD may
seek an appropriate protective order or other appropriate remedy. The Auction
Agent shall, subject to the terms of the Auction Agency Agreement, transmit
any list of customers BD believes are Beneficial Owners of AMPS and information
related thereto only to its officers, employees, agents or representatives who
need to know such information for the purposes of acting in accordance with
this Agreement, and the Auction Agent shall prevent the transmission of such
information to others and shall cause its officers, employees, agents and
representatives to abide by the foregoing confidentiality restrictions;
provided, however, that the Auction Agent shall have no responsibility or
liability for the actions of any of its officers, employees, agents or
representatives after they have left the employ of the Auction Agent.

         3.3 Auction Schedule; Method of Submission of Orders.

             (a) The Fund and the Auction Agent shall conduct Auctions for AMPS
in accordance with the schedule set forth below. Such schedule may be changed at
any time by the Auction Agent with the consent of the Fund, which consent shall
not be withheld unreasonably. The Auction Agent shall give notice of any such
change to BD. Such notice shall be received prior to the first Auction Date on
which any such change shall be effective.

<TABLE>
<CAPTION>
Time                                       Event
- ----                                       -----
<S>                                        <C>
By 9:30 A.M.                               Auction Agent shall advise the Fund
                                           and the Broker-Dealers of the Maximum
                                           Rate as set forth in Section 3.2(a)
                                           hereof.

9:30 A.M. - 1:30 P.M.                      Auction Agent shall assemble
                                           information communicated to it by
                                           Broker-Dealers as provided in Section
                                           2(a) of Part II of the Articles
                                           Supplementary. Submission Deadline is
                                           1:30 P.M.

Not earlier than 1:30 P.M.                 Auction Agent shall make
                                           determinations pursuant to Section
                                           4(a) of Part II of the Articles
                                           Supplementary.

By approximately 3:30 P.M.                 Auction Agent shall advise the Fund
                                           of the results of the Auction as
                                           provided in Section 4(b) of Part II
                                           of the Articles Supplementary.

                                           Submitted Bids and Submitted Sell
                                           Orders will be accepted and rejected
                                           in whole or in part and AMPS will be
                                           allocated as provided in Section 5 of
                                           Part II of the Articles
                                           Supplementary.
</TABLE>


                                       4




<PAGE>

<TABLE>
<CAPTION>
Time                                       Event
- ----                                       -----
<S>                                        <C>
                                           Auction Agent shall give notice of
                                           the Auction results as set forth in
                                           Section 3.4(a) hereof.
</TABLE>


              (b) BD agrees to maintain a list of Potential Beneficial Owners
and to contact the Potential Beneficial Owners on such list on or prior to each
Auction Date for the purposes set forth in Section 2 of Part II of the Articles
Supplementary.

              (c) BD shall submit Orders to the Auction Agent in writing in
substantially the form attached hereto as Exhibit A. BD shall submit separate
Orders to the Auction Agent for each Potential Beneficial Owner or Beneficial
Owner on whose behalf BD is submitting an Order and shall not net or aggregate
the Orders of Potential Beneficial Owners or Beneficial Owners on whose behalf
BD is submitting Orders.

              (d) BD shall deliver to the Auction Agent (i) a written notice,
substantially in the form attached hereto as Exhibit B, of transfers of AMPS,
made through BD by an Existing Holder to another Person other than pursuant to
an Auction, and (ii) a written notice, substantially in the form attached hereto
as Exhibit C, of the failure of AMPS to be transferred to or by any Person that
purchased or sold AMPS through BD pursuant to an Auction. The Auction Agent is
not required to accept any notice delivered pursuant to the terms of the
foregoing sentence with respect to an Auction unless it is received by the
Auction Agent by 3:00 P.M. on the Business Day next preceding the applicable
Auction Date.

         3.4 Notice of Auction Results.

             (a) On each Auction Date, the Auction Agent shall notify BD by
telephone or other electronic means acceptable to the parties. On the Business
Day next succeeding such Auction Date, the Auction Agent shall notify BD in
writing of the disposition of all Orders submitted by BD in the Auction held on
such Auction Date.

             (b) BD shall notify each Beneficial Owner, Potential Beneficial
Owner, Existing Holder or Potential Holder on whose behalf BD has submitted an
Order, and take such other action as is required of BD.

         If any Beneficial Owner or Existing Holder selling AMPS in an Auction
fails to deliver such shares, the Broker-Dealer of any Person that was to have
purchased AMPS in such Auction may deliver to such Person a number of whole
shares of AMPS that is less than the number of shares that otherwise was to be
purchased by such Person. In such event, the number of AMPS to be so delivered
shall be determined by such Broker-Dealer. Delivery of such lesser number of
shares shall constitute good delivery. Upon the occurrence of any such failure
to deliver shares, such Broker-Dealer shall deliver to the Auction Agent the
notice required by Section 3.3(d)(ii) hereof. Notwithstanding the foregoing
terms of this Section 3.4(b), any delivery or non-delivery of AMPS which
represents any departure from the results of an Auction, as determined by the
Auction Agent, shall be of no effect unless and until the Auction Agent shall
have been notified of such delivery or non-delivery in accordance with the terms
of Section 3.3(d) hereof. The Auction Agent shall have no duty or liability with
respect to enforcement of this Section 3.4(b).


                                       5




<PAGE>


         3.5 Service Charge to be Paid to BD.

         On the Business Day next succeeding each Auction Date, the Auction
Agent shall pay to BD from moneys received from the Fund an amount equal to: (a)
in the case of any Auction Date immediately preceding a Dividend Period of less
than one year, the product of (i) a fraction the numerator of which is the
number of days in such Dividend Period (calculated by counting the first day of
such Dividend Period but excluding the last day thereof) and the denominator of
which is 360, times (ii) 1/4 of 1%, times (iii) $25,000, times (iv) the sum of
(A) the aggregate number of AMPS placed by BD in the applicable Auction that
were (x) the subject of a Submitted Bid of a Beneficial Owner submitted by BD
and continued to be held as a result of such submission and (y) the subject of a
Submitted Bid of a Potential Beneficial Owner submitted by BD and were purchased
as a result of such submission plus (B) the aggregate number of AMPS subject to
valid Hold Orders (determined in accordance with Section 2 of Part II of the
Articles Supplementary) submitted to the Auction Agent by BD plus (C) the number
of AMPS deemed to be subject to Hold Orders by Beneficial Owners pursuant to
Section 2 of Part II of the Articles Supplementary that were acquired by BD for
its own account or were acquired by such Beneficial Owners through BD; and (b)
in the case of any Auction Date immediately preceding a Special Dividend Period
of one year or longer, that amount as mutually agreed upon by the Fund and BD,
based on the selling concession that would be applicable to an underwriting of
fixed or variable rate preferred shares with a similar final maturity or
variable rate dividend period, at the commencement of such Special Dividend
Period.

         For purposes of subclause (a)(iv)(C) of the foregoing sentence, if any
Beneficial Owner who acquired AMPS through BD transfers those shares to another
Person other than pursuant to an Auction, then the Broker-Dealer for the shares
so transferred shall continue to be BD, provided, however, that if the transfer
was effected by, or if the transferee is, a Broker-Dealer other than BD, then
such Broker-Dealer shall be the Broker-Dealer for such shares.

                                      6




<PAGE>

IV.       MISCELLANEOUS.

         4.1 Termination.

         Any party may terminate this Agreement at any time upon five days'
prior written notice to the other party; provided, however, that if the
Broker-Dealer is Merrill Lynch, Pierce, Fenner & Smith Incorporated neither
Merrill Lynch, Pierce, Fenner & Smith Incorporated nor the Auction Agent may
terminate this Agreement without first obtaining the prior written consent of
the Fund to such termination, which consent shall not be withheld unreasonably.
This Agreement shall automatically terminate upon the redemption of all
outstanding AMPS or upon termination of the Auction Agent Agreement.

         4.2 Force Majeure

         Neither party to this Agreement shall be responsible or liable for any
failure or delay in the performance of its obligations under this Agreement
arising our of or caused, directly or indirectly, by circumstances beyond its
reasonable control, including, without limitation, acts of God; earthquakes;
fires; floods; wars; civil or military disturbances; sabotage; epidemics;
riots; interruptions, loss or malfunctions or utilities; computer (hardware
or software) or communications services; accidents; labor disputes; acts of
civil or military authority or governmental actions; it being understood
that the parties shall use reasonable efforts which are consistent
with accepted practices in the banking industry to resume performance as
soon as practicable under the circumstances.


                                       7




<PAGE>


         4.3 Participant in Securities Depository; Payment of Dividends in
             Same-Day Funds.

             (a) BD is, and shall remain for the term of this Agreement, a
member of, or a participant in, the Securities Depository (or an affiliate of
such a member or participant).

             (b) BD represents that it (or if BD does not act as Agent Member,
one of its affiliates) shall make all dividend payments on the AMPS available in
same-day funds on each Dividend Payment Date to customers that use BD (or its
affiliate) as Agent Member.

         4.4 Agent Member.

         At the date hereof, BD is a participant of the Securities Depository.

         4.5 Communications.

         Except for (i) communications authorized to be made by telephone
pursuant to this Agreement or the Auction Procedures and (ii) communications in
connection with the Auctions (other than those expressly required to be in
writing), all notices, requests and other communications to any party hereunder
shall be in writing (including telecopy or similar writing) and shall be given
to such party at its address or telecopier number set forth below:


<TABLE>
<S>                              <C>
If to the Auction Agent,
addressed to:                    The The Bank of New York
                                 Corporate Trust Administration
                                 5 Penn Plaza, 13th Floor
                                 New York, NY 10001
                                 Attn: Dealing and Trading Group - Auction Desk
                                 Telecopier No.: (212) 328-8237/8238/8239
                                 Telephone No.: (212) 328-7676
If to the BD,
addressed to:                    Merrill Lynch, Pierce, Fenner & Smith
                                 Incorporated.
                                 4 World Financial Center
                                 New York, NY 10080
                                 Attn: Frances Constable
                                 Telecopier No.: (212) 449-2761
                                 Telephone No.: (212) 449-4940
</TABLE>

         or such other address or telecopier number as such party hereafter may
         specify for such purpose by notice to the other party. Each such
         notice, request or communication shall be effective when delivered at
         the address specified herein. Communications shall be given on behalf
         of BD by a BD Officer and on behalf of the Auction Agent by an
         Authorized Officer. BD may record telephone communications with the
         Auction Agent.

         4.6 Entire Agreement.

         This Agreement contains the entire agreement between the parties
relating to the subject matter hereof, and there are no other representations,
endorsements, promises, agreements or understandings, oral, written or implied,
between the parties relating to the subject matter hereof.


                                       8




<PAGE>


         4.7 Benefits.

         Nothing in this Agreement, express or implied, shall give to any
person, other than the Fund, the Auction Agent and BD and their respective
successors and permitted assigns, any benefit of any legal or equitable right,
remedy or claim under this Agreement.

         4.8 Amendment; Waiver.

             (a) This Agreement shall not be deemed or construed to be modified,
amended, rescinded, canceled or waived, in whole or in part, except by a written
instrument signed by a duly authorized representative of the party to be
charged.

             (b) Failure of either party to this Agreement to exercise any right
or remedy hereunder in the event of a breach of this Agreement by the other
party shall not constitute a waiver of any such right or remedy with respect to
any subsequent breach.

         4.9 Successors and Assigns.

         This Agreement shall be binding upon, inure to the benefit of, and be
enforceable by, the respective successors and permitted assigns of each of BD
and the Auction Agent. This Agreement may not be assigned by either party hereto
absent the prior written consent of the other party.

         4.10 Severability.

         If any clause, provision or section of this Agreement shall be ruled
invalid or unenforceable by any court of competent jurisdiction, the invalidity
or unenforceability of such clause, provision or section shall not affect any
remaining clause, provision or section hereof.

         4.11 Execution in Counterparts.

         This Agreement may be executed in several counterparts, each of which
shall be an original and all of which shall constitute but one and the same
instrument.

         4.12 Governing Law.

         This Agreement shall be governed by and construed in accordance with
the laws of the State of New York applicable to agreements made and to be
performed in said state.

         4.13 Jurisdiction.

         The parties agree that all actions and proceedings arising out of this
Auction Agency Agreement or any of the transactions contemplated hereby shall be
brought in the County of New York, and, in connection with any such action or
proceeding, submit to the jurisdiction of, and venue in, such County. Each of
the parties hereto also irrevocably waives all right to trial by jury in any
action, proceeding or counterclaim arising out of this Agreement or the
transactions contemplated hereby.

                            [Signature pages follow]


                                       9




<PAGE>


         IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered by their proper and duly authorized officers as of
the date first above written.

                                  THE BANK OF NEW YORK, As Auction Agent


                                  By:
                                       -----------------------------------------
                                       Name:
                                       Title:

                                  MERRILL LYNCH, PIERCE, FENNER & SMITH


                                  By:
                                       -----------------------------------------
                                       Name:
                                       Title:



                                       10




<PAGE>


                                    EXHIBIT A

                              THE BANK OF NEW YORK
                                AUCTION BID FORM

<TABLE>
<CAPTION>
Submit To:                                             Issue:
- ---------                                              -----
<S>                                                    <C>
The The Bank of New York                               Cohen & Steers Quality Income Realty Fund, Inc.
Corporate Trust Administration                         Auction Market Preferred Shares, Series T, Series TH,
5 Penn Plaza, 13th Floor                               Series F, and Series W ("AMPS")
New York, NY 10001
Attn: Dealing and Trading Group - Auction Desk
Telecopier No.: (212) 328-7676
</TABLE>




The undersigned Broker-Dealer submits the following Order on behalf of the
Bidder listed below:

Name of Bidder:
               --------------------------------------

                                BENEFICIAL OWNER

<TABLE>
<S>                                                    <C>
Shares of Series now held                          HOLD
                         -----------------------       --------------
                                                   BID at rate of____________________
                                                   SELL
                                                       --------------
</TABLE>



                           POTENTIAL BENEFICIAL OWNER

                                                   # of shares of Series________
                                                   BID at rate of________ Notes:

          (1) If submitting more than one Bid for one Bidder, use additional
              Auction Bid Forms.

          (2) If one or more Bids covering in the aggregate more than the number
              of outstanding shares held by any Beneficial Owner are submitted,
              such bid shall be considered valid in the order of priority set
              forth in the Auction Procedures on the above issue.

          (3) A Hold or Sell Order may be placed only by a Beneficial Owner
              covering a number of shares not greater than the number of shares
              currently held.

          (4) Potential Beneficial Owners may make only Bids, each of which must
              specify a rate. If more than one Bid is submitted on behalf of any
              Potential Beneficial Owner, each Bid submitted shall be a separate
              Bid with the rate specified.

          (5) Bids may contain no more than three figures to the right of the
              decimal point (.001 of 1%). Fractions will not be accepted.

          (6) An Order must be submitted in whole shares of AMPS with an
              aggregate liquidation preference of $25,000.


                                      A-1




<PAGE>


         MERRILL LYNCH, PIERCE FENNER & SMITH INCORPORATED

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

         Authorized Signature
                             ------------------------------------------


                                      A-2




<PAGE>


                                    EXHIBIT B

    (Note: To be used only for transfers made other than pursuant to an Auction)

                                  TRANSFER FORM

    Re:      COHEN & STEERS QUALITY INCOME REALTY FUND, INC.
             Auction Market Preferred Shares ("AMPS")

We are (check one):

    [  ]     the Existing Holder named below;

    [  ]     the Broker-Dealer for such Existing Holder; or

    [  ]     the Agent Member for such Existing Holder.

    We hereby notify you that such Beneficial Owner has transferred _________
Series ___ AMPS to__________________________________



                                        ________________________________________
                                        (Name of Existing Holder)


                                        ________________________________________
                                        (Name of Broker-Dealer)


                                        ________________________________________
                                        (Name of Agent Member)



By:
     _______________________________________
     Printed Name:
     Title:



                                      B-1




<PAGE>


                                    EXHIBIT C

          (Note: To be used only for failures to deliver or to pay for
                        AMPS sold pursuant to an Auction)

                         NOTICE OF A FAILURE TO DELIVER


         We are a Broker-Dealer for _____________________ (the "Purchaser"),
which purchased _______ Series ___ AMPS of COHEN & STEERS QUALITY INCOME REALTY
FUND, INC. in the Auction held on ____________________ from the seller of such
shares.

       We hereby notify you that (check one):

______ the Seller failed to deliver such shares to the Purchaser.

______ the Purchaser failed to make payment to the Seller upon delivery of such
       shares.


                                 Name:
                                          --------------------------------------
                                          MERRILL LYNCH, PIERCE FENNER & SMITH
                                          INCORPORATED

                                 By:
                                          --------------------------------------
                                          Printed Name:
                                          Title:



                                      C-1

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.2L
<SEQUENCE>8
<FILENAME>ex99-2l1.txt
<DESCRIPTION>EXHIBIT 99.2(L)(I)
<TEXT>

<PAGE>


                   [LETTERHEAD OF SIMPSON THACHER & BARTLETT]


                                                           March 28, 2002


Cohen & Steers Quality Income Realty Fund, Inc.
757 Third Avenue
New York, New York 10017


Dear Ladies and Gentlemen:

         We have acted as counsel to Cohen & Steers Quality Income Realty Fund,
Inc., a closed-end management investment company organized as a Maryland
corporation (the "Company"), in connection with the Registration Statement on
Form N-2, File Nos. 333-82436 and 811-10481, (the "Registration Statement"),
filed by the Company with the Securities and Exchange Commission (the
"Commission") under the Securities Act of 1933, as amended (the "Act"), relating
to the issuance of 2,800 shares of Series T taxable auction market preferred
stock, 2,800 shares of Series TH taxable auction market preferred stock, 2,800
shares of Series F taxable auction market preferred stock and 2,800 shares of
Series W taxable auction market preferred stock, each par value $.001 per share,
with a liquidation preference of $25,000 per share (collectively, the "Shares"),
in connection with the offering described in the Registration Statement.

We have examined the Registration Statement and a specimen share
certificate which has been filed with the Commission as an exhibit to the
Registration Statement. We also have examined the originals, or duplicates or
certified or conformed copies, of such records, agreements, instruments and
other documents and have made such other and further







<PAGE>

                                                                               2

investigations as we have deemed relevant and necessary in connection with the
opinions expressed herein. As to questions of fact material to this opinion, we
have relied upon certificates of public officials and of officers and
representatives of the Company.

         In such examination, we have assumed the genuineness of all signatures,
the legal capacity of natural persons, the authenticity of all documents
submitted to us as originals, the conformity to original documents of all
documents submitted to us as duplicates or certified or conformed copies, and
the authenticity of the originals of such latter documents.

         Based on the foregoing, and subject to the qualifications and
limitations stated herein, we are of the opinion that when the Pricing Committee
of the Board of Directors has determined certain of the terms, rights and
preferences of the Shares pursuant to authority delegated to it by the Board of
Directors, and the Articles Supplementary have been filed with the Maryland
State Department of Assessments and Taxation, the Shares to be offered for sale
pursuant to the Prospectus will have been duly authorized and, when thereafter,
sold, issued and paid for in accordance with the applicable definitive
underwriting agreement approved by the Board of Directors, will have been
validly and legally issued and will be fully paid and nonassessable.

         Insofar as the opinions expressed herein relate to or are dependent
upon matters governed by the laws of the State of Maryland, we have relied upon
the opinion of Venable, Baetjer and Howard, LLP dated the date hereof.








<PAGE>

                                                                               3

         We are members of the Bar of the State of New York, and we do not
express any opinion herein concerning any law other than the law of the State of
New York and to the extent set forth herein, the Maryland General Corporation
Law.

         We hereby consent to the filing of this opinion letter as Exhibit
2(l)(i) to the Registration Statement and to the use of our name under the
caption "Legal Opinions" in the Prospectus included in the Registration
Statement.


                                       Very truly yours,

                                       /s/ Simpson Thacher & Bartlett

                                       SIMPSON THACHER & BARTLETT





</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.2L
<SEQUENCE>9
<FILENAME>ex99-2l2.txt
<DESCRIPTION>EXHIBIT 2(L)(II)
<TEXT>


<PAGE>



                [LETTERHEAD OF VENABLE, BAETJER AND HOWARD, LLP]


                                 March 28, 2002



Simpson Thacher & Bartlett
425 Lexington Avenue
New York, New York  10017-3909

        Re: Cohen & Steers Quality Income Realty Fund, Inc.

Ladies and Gentlemen:

                  We have acted as special Maryland counsel for Cohen & Steers
Quality Income Realty Fund Inc., a Maryland corporation (the "Fund"), in
connection with its offering of 2,800 shares of preferred stock designated
"Taxable Auction Market Preferred Shares, Series T," 2,800 shares of preferred
stock designated "Taxable Auction Market Preferred Shares, Series TH," 2,800
shares of preferred stock designated "Taxable Auction Market Preferred Shares,
Series F," and 2,800 shares of preferred stock designated "Taxable Auction
Market Preferred Shares, Series W, each with a par value of $0.001 and a
liquidation preference of $25,000 (collectively, the "Shares").

                  As special Maryland counsel for the Fund, we are familiar with
its Charter and Bylaws. We have examined the prospectus (the "Prospectus")
included in its Registration Statement on Form N-2 with respect to the Shares
(Securities Act Registration File No. 333-82436, Investment Company Act File No.
811-10481) (the "Registration Statement"), substantially in the form in which it
is to become effective. We are also familiar with the form of Articles
Supplementary relating to the Shares (the "Articles Supplementary") that has
been filed as an exhibit to the Registration Statement. We have further examined
and relied on a certificate of the Maryland State Department of Assessments and
Taxation ("SDAT") to the effect that the Fund is duly incorporated and existing
under the laws of the State of Maryland and is in good standing and duly
authorized to transact business in the State of Maryland.

                  We have also examined and relied on such other corporate
records of the Fund and documents and certificates with respect to factual
matters as we have deemed necessary to render the opinion expressed herein. We
have assumed, without independent verification, the genuineness of all
signatures on documents submitted to us, the authenticity of all documents
submitted to us as originals, and the conformity with originals of all documents
submitted to us as copies.



<PAGE>



Simpson Thacher & Bartlett
425 Lexington Avenue
New York, New York  10017-3909


                  Based on such examination, we are of the opinion that when the
Pricing Committee of the Board of Directors has determined certain of the terms,
rights and preferences of the Shares pursuant to authority delegated to it by
the Board of Directors, and the Articles Supplementary have been filed with
SDAT, the Shares to be offered for sale pursuant to the Prospectus will have
been duly authorized and, when thereafter, sold, issued and paid for in
accordance with the applicable definitive underwriting agreement approved by the
Board of Directors, will have been validly and legally issued and will be fully
paid and nonassessable.

                  This letter expresses our opinion with respect to the Maryland
General Corporation Law governing matters such as due organization and the
authorization and issuance of stock. It does not extend to the securities or
"Blue Sky" laws of Maryland, to federal securities laws or to other laws.

                  You may rely on this opinion in rendering your opinion to the
Fund that is to be filed as an exhibit to the Registration Statement. We consent
to the filing of this opinion as an exhibit to the Registration Statement and to
the reference to our firm under the heading "Legal Opinions" in the Prospectus.
We do not thereby admit that we are "experts" within the meaning of the
Securities Act of 1933 and the rules and regulations thereunder. This opinion
may not be relied on for any other purpose or by any other person without our
prior written consent.


                                        Very truly yours,

                                        /s/ Venable, Baetjer and Howard, LLP
                                        ------------------------------------
                                        Venable, Baetjer and Howard, LLP







</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.2N
<SEQUENCE>10
<FILENAME>ex99-2n.txt
<DESCRIPTION>EXHIBIT 99.2(N)
<TEXT>


<PAGE>


                       CONSENT OF INDEPENDENT ACCOUNTANTS


We hereby consent to incorporation by reference of this Registration Statement
on Form N-2 of our report dated February 19, 2002, relating to the financial
statements of Cohen & Steers Quality Income Realty Fund, Inc. as of February 15,
2002, which are incorporated by reference in such Registration Statement. We
also consent to the references to us under the headings "Independent Auditors"
and "Experts" in the Prospectus and Statement of Additional Information
incorporated by reference in such Registration Statement.


PricewaterhouseCoopers LLP
New York, New York
March 28, 2002



</TEXT>
</DOCUMENT>
</SEC-DOCUMENT>
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