<DOCUMENT>
<TYPE>EX-99.A2
<SEQUENCE>4
<FILENAME>dex99a2.txt
<DESCRIPTION>EXHIBIT A2
<TEXT>
<PAGE>

                                                                  EXHIBIT (a)(2)

                   THE FIRST AUSTRALIA PRIME INCOME FUND, INC.

                 Articles Supplementary creating three series of

                         Auction Market Preferred Stock

         The First Australia Prime Income 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 charter, the board of directors has
authorized the issuance of three series of up to 750 shares each of its
authorized preferred stock, per value $.01 per share, liquidation preference
$100,000 per share, designated respectively: Auction Market Preferred Stock,
Series A, Auction Market Preferred Stock, Series B and Auction Market Preferred
Stock, Series C.

         SECOND: Pursuant to section 2-411 of the Maryland General Corporation
Law and authority granted by Article IV of the Corporation's 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, consistent with,
and subject to, the authorization referred to in Article FIRST of these Articles
Supplementary, the terms of the shares of Auction Market Preferred Stock, Series
A, Auction Market Preferred Stock, Series B and Auction Market Preferred Stock,
Series C.

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

                                   DESIGNATION

         SERIES A: A series of 750 shares of preferred stock, par value $.01 per
share, liquidation preference $100,000 per share, is hereby designated "Auction
Market Preferred Stock, Series A." Each share of Auction Market Preferred Stock,
Series A shall be issued on the Date of Original issue (as herein defined); have
an Initial Dividend Payment Date (as herein defined) of February 14, 1989; and
have such other preferences, limitations and relative voting rights, in addition
to those required by applicable law or set forth in the Corporation's Articles
of Incorporation applicable to preferred stock of the Corporation, as are set
forth in these Articles Supplementary. The Auction Market Preferred Stock,
Series A shall constitute a separate series of preferred stock of the
Corporation, and each share of Auction Market Preferred Stock, Series A shall be
identical except as provided in paragraph 3 of these Articles Supplementary.

         SERIES B: A series of 750 shares of preferred stock, par value $.01 per
share, liquidation preference $100,000 per share, is hereby designated "Auction
Market Preferred Stock, Series B." Each share of Auction Market Preferred Stock,
Series B shall be issued on the Date of Original Issue; have an Initial Dividend
Payment Date of February 22, 1989; and have such other preferences, limitations
and relative voting rights, in addition to those required by applicable law or
set forth in the Corporation's Articles of Incorporation applicable to preferred

<PAGE>

stock of the Corporation, as are set forth in these Articles Supplementary. The
Auction Market Preferred Stock, Series B shall constitute a separate series of
preferred stock of the Corporation, and each share of Auction Market Preferred
Stock, Series B shall be identical except as provided in paragraph 3 of these
Articles Supplementary.

         SERIES C: A series of 500 shares of preferred stock, par value $.01 per
share, liquidation preference $100,000 per share, is hereby designated "Auction
Market Preferred Stock, Series C." Each share of Auction Market Preferred Stock,
Series C shall be issued on the Date of Original Issue; have an Initial Dividend
Payment Date of February 28, 1989; and have such other preferences, limitations
and relative voting rights, in addition to those required by applicable law or
set forth in the Corporation's Articles of Incorporation applicable to preferred
stock of the Corporation, as are set forth in these Articles Supplementary. The
Auction Market Preferred Stock, Series C shall constitute a separate series of
preferred stock of the Corporation, and each share of Auction Market Preferred
Stock, Series C shall be identical except as provided in paragraph 3 of these
Articles Supplementary.

         1.  Definitions.

         Capitalized terms not defined in this paragraph 1 shall have the
respective meanings specified in paragraph 8(a) hereof. Unless the context or
use indicates another or different meaning, the following terms shall have the
following meanings, whether used in the singular or plural:

         "`AA' Composite Commercial Paper Rate," on any date, means (i) the
interest equivalent of the 30-day rate on commercial paper placed on behalf of
issuers whose corporate bonds are rated "AA" by S&P, or the equivalent of such
rating by S&P or another rating agency, as such 30-day rate is made available on
a discount basis or otherwise by the Federal Reserve Bank of New York for the
Business Day immediately preceding such date, or (ii) in the event that the
Federal Reserve Bank of New York does not make available such a rate, then the
arithmetic average of the interest equivalent of the 30-day rate on commercial
paper placed on behalf of such issuers, as quoted to the Auction Agent on a
discount basis or otherwise by the Commercial Paper Dealers for the close of
business on the Business Day immediately preceding such date. If any Commercial
Paper Dealer does not quote a rate required to determine the 30-day "AA"
Composite Commercial Paper Rate, the 30-day "AA" Composite Commercial Paper Rate
will be determined on the basis of the quotation or quotations furnished by any
Substitute Commercial Paper Dealer or Substitute Commercial Paper Dealers
selected by the Corporation to provide such rate or rates not being supplied by
the Commercial Paper Dealer. "Interest Equivalent" as used herein means the
equivalent yield on a 360-day basis of a discount basis security to an interest
bearing security.

         "Accountant's Confirmation" has the meaning set forth in paragraph
7(b)(iii) hereof.

         "Agent Member" means the member of the Securities Depository that will
act on behalf of an Existing Holder or Potential Holder and that is identified
as such in such holder's Purchaser's Letter.

                                       2

<PAGE>

         "AMPS" means either the Auction Market Preferred Stock, Series A; the
Auction Market Preferred Stock, Series B or the Auction Market Preferred Stock,
Series C.

         "AMPS Basic Maintenance Amount" means, as of any date, the dollar
amount equal to the sum of (a) $100,000 times the number of shares of AMPS then
outstanding; (b) the aggregate liquidation preference of other Preferred Stock
then outstanding, if any; (c) the Dividend Coverage Amount; (d) the aggregate
Projected Dividend Amount; (e) the aggregate principal amount of any then
outstanding indebtedness of the Corporation for money borrowed; (f) projected
expenses of the Corporation for the next succeeding three-month period; and (g)
the greater of $200,000 or the Corporation's current liabilities as of such date
to the extent not otherwise reflected in any of (a) through (f) above. The Board
of Directors shall have the authority, to the extent permitted by Maryland law,
to adjust, modify, alter or change from time to time the elements comprising the
AMPS Basic Maintenance Amount from those set forth in these Articles
Supplementary if the Board of Directors determines and the Rating Agencies
advise the Corporation in writing that the change will not adversely affect
their respective then-current ratings of the AMPS.

         "AMPS Basic Maintenance Cure Date," with respect to the failure by the
Corporation to maintain the AMPS Basic Maintenance Amount (as required paragraph
7(b) hereof) as of each Valuation Date, means the fifth Business Day following
such Valuation Date.

         "ANNIE MAEs" are securities issued against mortgage pools by Australian
National Mortgage Pool Agency Ltd., an affiliate of Security Pacific National
Bank and are rated by Australian Ratings.

         "Applicable Percentage" has the meaning set forth under "Maximum
Applicable Rate" below.

         "Applicable Rate" has the meaning specified in paragraph 3(c)(i) below.

         "Articles of Incorporation" means the Articles of Incorporation of the
Corporation, as amended and restated from time to time, including as amended by
these Articles Supplementary.

         "Auction" means each operation of the Auction Procedures.

         "Auction Agent" means Manufacturers Hanover Trust Company 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 and to act as transfer agent, registrar, paying
agent and redemption agent.

         "Auction Agent Agreement" has the meaning specified in paragraph
3(c)(i) below.

         "Auction Date" has the meaning specified in paragraph 8(a) below.

         "Auction Procedures" means the procedures for conducting Auctions set
forth in paragraph 8 below.

                                       3

<PAGE>

         "Australian Corporate Bonds" means debt obligations of Australian
corporations (other than Australian Government Securities, Australian
Semi-Government Securities, Bank Bills and Australian Short-Term Securities).

         "Australian Currency" means such coin or currency of Australia as at
the time shall be legal tender for payment of public and private debts.

         "Australian Ratings" means Australian Ratings Pty Ltd or its
successors.

         "Australian Government Securities" means all publicly traded securities
issued and guaranteed by the Government of the Commonwealth of Australia with a
fixed maturity (i.e. no perpetuals).

         "Australian Semi-Government Securities" means the following publicly
traded semi-government securities with a fixed maturity (i.e. no perpetuals) and
which are explicitly guaranteed by the Commonwealth of Australia or the
respective Australian state, provided, that if the calculation is being made for
Moody's, the then-current rating by Moody's of any outstanding senior long-term
debt issue explicitly guaranteed by the respective Australian state is identical
to the then-current Moody's rating of any senior long-term debt denominated in
the same currency which debt is guaranteed by the Commonwealth of Australia:

         1. Electricity Trust of South Australia, a body established under the
Electricity Trust of South Australia Act 1946 (South Australia).

         2. Gas & Fuel Corporation of Victoria, a corporation established under
the Gas and Fuel Corporation Act 1950 (Victoria).

         3. Melbourne & Metropolitan Board of Works, a board constituted under
section 4 of the Melbourne & Metropolitan Board of Works Act 1958 (Victoria).

         4. New South Wales Treasury Corporation, a corporation constituted
under section 4 of the Treasury Corporation Act 1983 (New South Wales).

         5. A Territory authority being an authority within the meaning of that
term under section 43 of the Northern Territory (Self Government) Act
(Commonwealth) provided that the specific issue is guaranteed by the Treasurer
of the Commonwealth of Australia.

         6. The State Electricity Commission of Qld, a commission constituted
under the Electricity Act 1976 (Qld).

         7. Queensland Treasury Corporation, a corporation established under the
Treasury Corporation Act 1988 (Qld).

         8. South Australian Financing Authority an authority established under
the Government Financing Authority Act 1982 (South Australia).

         9. State Electricity Commission of Victoria, a commission established
under the State Electricity Commission Act 1953 (Victoria).

                                       4

<PAGE>

         10. State Energy Commission of Western Australia, a commission
established under the State Energy Commission Act 1979 (Western Australia).

         11. The Australian Telecommunications Commission a commission
established under section 4 of the Telecommunications Act 1975 (Commonwealth).

         12. Victorian Public Authorities Finance Agency an agency constituted
under section 3 of the Victorian Public Authorities Act 1984 (Victoria).

         13. Australian industry Development Corporation a body established
under section 5 of the Australian Industries Development Corporation Act
(Commonwealth).

         14. South Australian Finance Trust Limited, a body corporate proclaimed
by the Governor of South Australia to be a semi-government authority pursuant to
the Public Finance and Audit Act 1987 (South Australia).

         The Board of Directors shall have the authority to adjust, modify,
alter or change from time to time the list of securities as set forth above if
the Board of Directors determines and each Rating Agency advises the Corporation
in writing that the change or specification will not adversely affect its
then-current rating of the AMPS.

         "Australian Short Term Securities" means promissory notes and other
short term commercial paper issued by Australian institutions rated A-1+ by S&P
and Prime-1 by Moody's or with a long-term rating from S&P at least as high as
their then-current comparable rating of AMPS and with a long-term foreign
currency debt rating from Moody's of at least Aa3.

         "Authorized Newspaper" means The Wall Street Journal, or if not
published on such date, The New York Times, or if neither of such papers is
published on such date, a newspaper, printed in the English language, of general
circulation in the Borough of Manhattan, The City of New York, that carries
financial news and is customarily published on each Business Day, whether or not
published on Saturdays, Sundays or holidays.

         "Bank Bills" means bills of exchange (as defined in the Bills of
Exchange Act of the Commonwealth of Australia) issued, accepted or endorsed by
Australian banks (x) with a rating from S&P at least as high as their
then-current comparable rating of the AMPS and (y)(i) if the Bank Bill has a
remaining term to maturity from the date of determination of 30 days or less,
rated Prime-1 by Moody's, (ii) with a long-term foreign currency debt rating
from Moody's of at least Aa3 or (iii) as otherwise approved in writing by
Moody's.

         "Board of Directors" means the Board of Directors of the Corporation
or, except as used in paragraph 6 hereof, any duly authorized and empowered
committee thereof.

         "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 are authorized or obligated by law to close; provided, that
for purposes of determining Valuation Dates and Cure Dates, "Business Day" means
a day on which the New York Stock Exchange and the Australian Stock Exchange
Limited are open for trading and which is not a Saturday,

                                       5

<PAGE>

Sunday or other day on which banks in The City of New York or in Sydney,
Australia are authorized or obligated by law to close.

         "Cash" means such coin or currency of the United States of America as
at the time shall be legal tender for payment of public and private debts.

         "Certificate of Minimum Liquidity" has the meaning specified in
paragraph 7(c)(i) below.

         "Commercial Paper Dealers" means Merrill Lynch, Pierce, Fenner & Smith
Incorporated and such other commercial paper dealer or dealers as the
Corporation may from time to time appoint, or, in lieu of any thereof, their
respective affiliates or successors.

         "Commission" means the Securities and Exchange Commission.

         "Common Stock" means shares of the common stock, par value $.01 per
share, of the Corporation.

         "Corporate Bonds" means debt obligations of U.S. corporations (other
than Short Term Money Market Instruments or U.S. Government Obligations) rated
Aa or better by Moody's or AA or better by S&P, which corporate debt obligations
(a) provide for the periodic payment of interest thereon in cash, (b) do not
provide for conversion or exchange into equity capital at any time over their
respective lives, (c) have been registered under the Securities Act of 1933, as
amended, and (d) have not had notice given in respect thereof that any such
corporate debt obligations are the subject of an offer by the issuer thereof of
exchange or tender for cash, securities or any other type of consideration
(except that corporate debt obligations in an amount not exceeding 10% of the
aggregate value of the Corporation's assets at any time shall not be subject to
the provisions of this clause (d)). In addition, no corporate debt obligation
held by the Corporation shall be deemed a Corporate Bond (i) if it fails to meet
the criteria in column (1) below or (ii) to the extent (and only to the
proportionate extent) the acquisition or holding thereof by the Corporation
causes the Corporation to exceed any applicable limitation set forth in column
(2) or (3) below as of any relevant date of determination (provided that in the
event that the Corporation shall exceed any such limitation, the Corporation
shall designate, in its sole discretion, the particular Corporate Bond(s) and/or
portions thereof which shall be deemed to have caused the Corporation to exceed
such limitation):

                                       6

<PAGE>

<TABLE>
<CAPTION>
                                      Column 1                Column 2               Column 3
                                      --------                --------               --------
                                                         Maximum Percent of     Maximum Percent of
                                                        Value of Corporation   Value of Corporation
                                                         Assets, Including       Assets, Including
                                                         Eligible Portfolio     Eligible Portfolio
                                 Minimum Original      Property, Invested in    Property, Invested
Rating                            Issue Size of              any One           in any One Industry
   (1)                              Each Issue              Issuer (2)             Category(2)
-------                          ------------------    ----------------------   --------------------
                                  ($ in millions)
<S>                                     <C>                       <C>                   <C>
Aaa/AAA ......................          $100                      10.0%                 50.0%
Aa/AA ........................          100                       10.0                  33.3
</TABLE>

(1)  In the event that a Corporate Bond has received a different rating from
     each of the Rating Agencies, the lower of the two ratings will be
     controlling. Rating designations include (+) or (-) modifiers to the rating
     where appropriate

(2)  The referenced percentages represent maximum cumulative totals for the
     related rating category and each lower rating category.

     The Board of Directors shall be authorized to adjust, modify, alter or
change from time to time the assets (and/or the characteristics thereof)
included within the definition of Corporate Bonds for purposes of determining
compliance with the AMPS Basic Maintenance Amount to encompass other assets
constituting, and/or other characteristics of, corporate debt obligations from
those set forth in these Articles Supplementary if the Board of Directors
determines and the Rating Agencies advise the Corporation in writing that the
change will not adversely affect their respective then-current ratings of the
AMPS.

     "Corporation" means The First Australia Prime Income Fund, Inc.

     "Cure Date" means the AMPS Basic Maintenance Cure Date or the 1940 Act Cure
Date, as the case may be.

     "Date of Original Issue" means, with respect to any share of AMPS, the date
on which the Corporation originally issues such share.

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

                                       7

<PAGE>

         "Discount Factor" means, for any asset held by the Corporation, the
number set forth opposite each such type of asset in the following table or such
other factor required under the guidelines established by the Rating Agencies
from time to time (it being understood that any asset held by the Corporation
and not listed in the following table or as provided in writing by the Rating
Agencies shall have a Discounted Value of zero):

<TABLE>
<CAPTION>
                                                                            Moody's       S&P
                                                                            Discount    Discount
     Type of Eligible Portfolio Property                                    Factor       Factor
     -------------------------------------------------------------------- -----------    -------
<S>                                                                           <C>         <C>
     Cash and Short Term Money Market Instruments:                            1.00        1.00

     Australian Government Securities: with a current outstanding issue
          size less than A $100,000,000 and with a remaining term to
          maturity equal to or longer than 56 days from the date of
          determination                                                       1.85        1.60(4)

          with a current outstanding issue size of at least A
          $100,000,000 but less than or equal to $150,000,000 and with a
          remaining term to maturity equal to or longer than 56 days from
          the date of determination                                           1.85        1.50

          with a current outstanding issue size greater than A
          $150,000,000 and with a remaining term to maturity equal to or
          longer than 56 days from the date of determination                  1.60        1.50

          with any current outstanding issue size and with a remaining
          term to security shorter than 56 days from the date of
          determination                                                       1.00        1.00(4)

     Australian Semi-Government Securities:

          with a current outstanding issue size less than A $100,000,000 and
          with a remaining term to maturity equal to or longer than 56 days
          from the date of determination                                      1.85        1.65(4)
</TABLE>

                                       8

<PAGE>

<TABLE>
<S>                                                                              <C>         <C>
              with a current outstanding issue size of at least A $100,000,000
              but less than or equal to $150,000,000 and with a remaining term
              to maturity equal to or longer than 56 days from the date of
              determination                                                       1.85       1.55

              with a current outstanding issue size greater than A
              $150,000,000 and with a remaining term to maturity equal to or
              longer than 56 days from the date of determination                  1.60       1.55


              with any current outstanding issue size and with a remaining term
              to maturity shorter than 56 days from the date of determination     1.00       1.00(4)

         Bank Bills (with maturities of not greater than 56 days from the last
              Valuation Date at which the AMPS Basic Maintenance Amount
              was met)                                                            1.00       1.00

         Australian Currency                                                      1.43       1.75

         GNMA Certificates with fixed interest rates:                               (1)      1.30

         GNMA Certificates with adjustable interest rates:                        1.59       1.30

         FHLMC and FNMA Certificates with fixed interest rates:                     (1)      1.35

         FHLMC and FNMA Certificates with adjustable interest rates:              1.58       1.35

         FHLMC Multifamily Securities:                                              (1)      1.65

         FHLMC and FNMA Certificates with variable interest rates:                  (1)      1.35

         GNMA Graduated Payment Securities:                                      (1)(2)      1.50(3)

         U.S. Government Obligations having a remaining term to maturity of
           90 days or less:                                                       1.08       1.00
</TABLE>

                                       9

<PAGE>

<TABLE>
<S>                                                                              <C>          <C>
         U.S. Government Obligations having a remaining term to maturity of
              more than 90 days but not more than one year:                      1.08        1.25

         U.S. Government obligations having a remaining term to maturity of
              more than one year but not more than two years:                    1.14        1.25

         U.S. Government Obligations having a remaining term to maturity of
              more than two years but not more than three years:                 1.19        1.25

         U.S. Government obligations having a remaining term to maturity of
              more than three years but not more than four years:                1.25        1.25

         U.S. Government obligations having a remaining term to maturity of
              more than four years but not more than five years:                 1.31        1.25

         U.S. Government Obligations having a remaining term to maturity of
              more than five years but not more than seven years:                1.39        1.33

         U.S. Government Obligations having a remaining term to maturity of
              more than seven years but not more than 10 years:                  1.47        1.33

         U.S. Government Obligations having a remaining term to maturity of
              more than 10 years but not more than 15 years:                     1.53        1.35

         U.S. Government Obligations having a remaining term to maturity of
              more than 15 years but not more than 20 years:                     1.60        1.45
</TABLE>

                                       10

<PAGE>

<TABLE>
<S>                                                                              <C>         <C>
         U.S. Government Obligations having a remaining term to maturity of
              more than 20 years but not more than 30 years:                     1.61        1.45
</TABLE>

-----------------------
(1)      The Discount Factor determined therefor in writing by the Rating
         Agencies.

(2)      Unless the Rating Agencies shall agree, GNMA Graduated Payment
         Securities with a coupon rate lower than 5% shall not be included in
         Eligible Portfolio Property.

(3)      A Discount Factor of 1.50 applies in the case of GNMA Graduated Payment
         Securities as to which the Corporation notifies the Auction Agent that
         scheduled principal payments are being made to holders; in the case of
         GNMA Graduated Payment Securities as to which the Fund notifies the
         Auction Agent that scheduled principal payments are not being made to
         holders, the Discount Factor shall be that which is determined in
         writing by the Rating Agencies.

(4)      Provided that the current outstanding issue size (as determined on each
         Quarterly Valuation Date) is equal to or greater than A $10,000,000.

         The Board of Directors shall have the authority to adjust, modify,
alter or change from time to time the initial Discount Factor as set forth above
applied to determine the Discounted Value of any item of Eligible Portfolio
Property or may specify from time to time a Discount Factor for any asset
constituting Eligible Portfolio Property if the Board of Directors determines
and each Rating Agency advises the Corporation in writing that the change or
specification will not adversely affect its then-current rating of the AMPS.

         "Discounted Value," with respect to any asset held by the Corporation,
means the quotient of the Market Value of such asset divided by the applicable
Discount Factor; provided that in no event shall the Discounted Value of any
asset constituting Eligible Portfolio Property as of any date exceed the unpaid
principal balance or face amount of such asset as of that date; provided further
that the Discounted Value of all Australian Government Securities, Australian
Semi-Government Securities and Bank Bills shall be further discounted by the
Discount Factor applicable to Australian Currency.

         "Dividend Coverage Amount," as of any date of determination, means:

                  (a)  the aggregate of the product, with respect to each series
                  of AMPS, of

                       (i)   the number of shares of AMPS of each series
                  outstanding on such date multiplied by $100,000,

                       (ii)  the Applicable Rate in effect as of such date for
                  each such series, and

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

                                       11

<PAGE>

                  (determined by including the first day thereof but excluding
                  the last day thereof) and the denominator of which is 360;

                      plus

                  (b) dividends projected to accumulate from the last dividend
         payment date with respect to each series of Preferred Stock, not
         including the AMPS, until the next dividend payment date for such
         series;

                      plus

                  (c) dividends accumulated but unpaid for any prior dividend
         periods with respect to any shares of Preferred Stock;

                      less

                  (d) the combined valve of any Dividend Coverage Assets
         irrevocably deposited by the Corporation for the payment of dividends
         on the AMPS and other Preferred Stock, if any.

         "Dividend Coverage Assets," as of any date of determination, means
Deposit Securities with maturity dates not later than the day preceding the next
Dividend Payment Date; provided that if the applicable date of determination is
a Dividend Payment Date, any Deposit Securities to be applied to the dividends
payable on the AMPS on such date shall not be included in Dividend Coverage
Assets.

         "Dividend Payment Date" means, with respect to each series of AMPS,
each date of payment of dividends on such series as provided in paragraph 3(b)
below.

         "Dividend Period" means, with respect to each series of AMPS, the
Initial Dividend Period for such series and each subsequent period commencing on
a Dividend Payment Date for such series and ending on and including the calendar
day prior to the next Dividend Payment Data for such series.

         "dollar" or "$" shall mean U.S. dollars. Amounts in Australian or New
Zealand dollars shall be converted to U.S. dollars at the rates reported by
Morgan Guaranty Trust Company for the date of determination or such other source
as shall have been approved in writing by the Rating Agencies.

         "Eligible Portfolio Property" means Australian Government Securities,
Australian Semi-Government Securities, Cash, Bank Bills, Australian Currency,
U.S. Government Obligations, Short Term Money Market Instruments, FNMA
Certificates, FHLMC Certificates, FHLMC Multifamily Securities, GNMA
Certificates, and GNMA Graduated Payment Securities; provided, (i) if the
determination is being made for Moody's, that not more than 20% in the aggregate
of the total Eligible Portfolio Property shall consist of Australian Government
Securities and/or Australian Semi-Government Securities with a current
outstanding issue size less than A $150,000,000 and (ii) if the determination is
being made for S&P that no Australian Government Securities or Australian
Semi-Government Securities contained in Eligible Portfolio

                                       12

<PAGE>

Property shall have a current outstanding issue size less than A $10,000,000 (as
determined on each Quarterly Valuation Date); provided further that, if the
determination is being made for S&P, not more than 10% of the total Eligible
Portfolio Property shall consist of Australian Semi-Government Securities issued
by any single issuer and that not more than 20% of the total Eligible Portfolio
Property shall consist of Australian Semi-Government Securities guaranteed by
any single state (except that in the case of each of Victoria and New South
Wales, such percentage shall be 25%). The Board of Directors shall have the
authority to specify from time to time other assets as Eligible Portfolio
Property if the Board of Directors determines and the Rating Agencies advise the
Corporation in writing that the specification will not adversely affect their
respective then-current ratings of the AMPS.

         "FANMAC Certificates" are securities issued by a trustee against
housing loans made through the New South Wales Department of Housing and consist
of a series of closed trusts or pools. The mortgage manager is the First
Australian National Mortgage Acceptance Corporation Ltd. ("FANMAC"). FANMAC is
owned partially by the Government of the State of New South Wales with the
remainder owned by other institutions. The Government of the State of New South
Wales has provided the FANMAC Trust with an assurance as to availability of
funds to meet payments. The securities have been rated by Australian Ratings and
S&P. FANMAC securities are subject to a call provision under which borrowers
(mortgagors) can repay early and the investors in a particular pool can be
repaid on a pro rata basis.

         "FHLMC" means the Federal Home Loan Mortgage Corporation created by
Title III of the Emergency Home Finance Act of 1970, and includes any successor
thereto.

         "FHLMC Certificate" means a mortgage participation certificate in
physical or book-entry form, the timely payment of interest on and the ultimate
collection of principal of which is guaranteed by FHLMC, and which evidences a
proportional undivided interest in, or participation interest in, specified
pools of fixed-, variable- or adjustable-rate, fully amortizing, level pay
mortgage loans with terms up to 30 years, secured by first liens on one- to
four-family residences.

         "FHLMC Multifamily Security" means a "Plan B Multifamily Security" in
physical or book-entry form, the timely payment of interest on and the ultimate
collection of principal of which is guaranteed by FHLMC, and which evidences a
proportional undivided interest in, or participation interest in, specified
pools of fixed-rate, fully amortizing, level pay mortgage loans with terms up to
30 years, secured by first-priority mortgages on multifamily residences
containing 5 or more units and which are designed primarily for residential use,
the inclusion of which in the Eligible Portfolio Property will not, in and of
itself, impair, or cause the APS to fail to retain, the rating assigned to such
AMPS by each of the Rating Agencies, as evidenced by a letter to such effect
from each of the Rating Agencies.

         "FNMA" means the Federal National Mortgage Association, a United States
Government-sponsored private corporation established pursuant to Title VIII of
the Housing and Urban Development Act of 1968, and includes any successor
thereto.

         "FNMA Certificate" means a mortgage pass-through certificate in
physical or book-entry form, the full and timely payment of principal of and
interest on which is guaranteed by FNMA,

                                       13

<PAGE>

and which evidences a proportional undivided interest in specified pools of
fixed-, variable- or adjustable-rate, fully amortizing, level pay mortgage loans
with terms up to 30 years, secured by first liens on 1 to 4 family residences.

         "GNMA" means the Government National Mortgage Association, and includes
any successor thereto.

         "GNMA Certificate" means a fully modified pass-through certificate in
physical or book-entry form, the full and timely payment of principal of and
interest on which is guaranteed by GNMA and which evidences a proportional
undivided interest in specified pools of fixed-, variable- or adjustable-rate,
fully amortizing, level pay mortgage loans with terms up to 30 years, secured by
first liens on 1 to 4 family residences.

         "GNMA Graduated Payment Security" means a fully modified pass-through
certificate in physical or book-entry form, the full and timely payment of
principal of and interest on which is guaranteed by GNMA, which obligation is
backed by the full faith and credit of the United States, and which evidences a
proportional undivided interest in specified pools of graduated payment mortgage
loans with terms up to 30 years, with payments that increase annually at a
predetermined rate for up to the first five or ten years of the mortgage loan
and that are secured by first-priority mortgages on one- to four-unit
residences; provided that such loans shall be past the graduated payment period.

         "GNMA Multifamily Security" means a fully modified pass-through
certificate in physical or book-entry form, the full and timely payment of
principal of and interest on which is guaranteed by GNMA, which obligation is
backed by the full faith and credit of the United States, and which evidences a
proportional undivided interest in specified pools of fixed-rate mortgage, level
pay loans with terms up to 30 years secured by first-priority mortgages on
multifamily residences, the inclusion of which in the Eligible Portfolio
Property will not, in and of itself, impair or cause the AMPS to fail to retain
the rating assigned to such AMPS by each of the Rating Agencies as evidenced by
a letter to such effect from each of the Rating Agencies.

         "Holder" means a Person in whose name one or more outstanding shares of
AMPS are registered on the Stock Books.

         "Independent Accountants" means the Corporation's independent
accountants, which shall be a nationally recognized accounting firm.

         "Industry Category" means, as to any Corporate Bond, any of the
industry categories set forth in the following table:

         1.   Aerospace and Defense


         2.   Airlines


         3.   Automobile/Auto Parts/Truck Manufacturing


         4.   Banks/Savings and Loans

                                       14

<PAGE>

         5.       Finance Companies/Consumer Credit


         6.       Financial Services - Brokerage/Syndication/Leasing


         7.       Building/Construction


         8.       Real Estate Development/REITS


         9.       Broadcasting - TV, Cable, and Radio


         10.      Publishing


         11.      Electronics/Computers


         12.      Electrical Equipment


         13.      Diversified/Conglomerate Services


         14.      Diversified/Conglomerate Manufacturing


         15.      Leisure/Amusement/Motion Pictures


         16.      Agricultural Chemicals


         17.      Chemicals


         18.      Food


         19.      Beverage


         20.      Tobacco


         2l.      Retail


         22.      Consumer Durable Goods/Home Furnishings


         23.      Grocery/Convenience Stores


         24.      Healthcare/Drugs/Hospital Supplies


         25.      Childcare/Toys


         26.      Personal Care Products/Cosmetics


         27.      Hotel/Gaming


         28.      Insurance Companies


         29.      Machinery

                                       15

<PAGE>

         30.      Metals/Mining


         31.      Oil/Natural Gas


         32.      Oil Services


         33.      Packaging/Containers


         34.      Paper/Forest Products/Printing


         35.      Pollution Control/Waste Removal


         36.      Electric Utilities


         37.      Other Utilities


         38.      Rail/Trucking/Overnight Delivery


         39.      Telephone/Communications


         40.      Textiles/Apparel


         41.      Transportation


         42.      Agricultural/Agricultural Equipment


         43.      Miscellaneous

         The Board of Directors shall have the authority to change the industry
categories applicable with respect to the Corporation from those set forth in
these Articles Supplementary if the Board of Directors determines and the Rating
Agencies advise the Corporation in writing that the change will not adversely
affect their respective then-current ratings of the AMPS.

         "Initial Dividend Payment Date" has the meaning set forth in paragraph
         3(b) below.

         "Initial Dividend Period" has the meaning specified in paragraph 3(b)
         below.

         "Investment Company Act" means the Investment Company act of 1940 (15
U.S. Code (S) 80 et seq.), as amended from time to time.

         "Lien" has the meaning set forth in paragraph 3(d)(iv) below.

         "Market Value" means the amount determined with respect to specific
assets of the Corporation in the manner set forth below:

                  (a) as to Australian Securities, the product of (i) the
         outstanding aggregate principal balance of the security as determined
         by the Corporation by any method which the Corporation believes
         reliable, as of the applicable Reporting Date and (ii) the dollar value
         of the lower of two bid prices per dollar of outstanding principal
         amount as of such

                                       16

<PAGE>

         applicable Reporting Date for such security, provided by two recognized
         securities dealers in Australia making a market in such security (as
         evidenced by such dealer's participation in the dealer panel for such
         security) to the Corporation or its agent, at least one of which shall
         be provided in writing or by telecopy, telex, other electronic
         transcription, computer obtained quotation reducible to written form or
         similar means (and in turn provided to the Corporation by any such
         means by such agent); plus, (i) if the determination is being made for
         Moody's, accrued interest to the date of determination if the next
         interest coupon on such security is due and payable within 56 days of
         such date of determination and (ii) if the determination is being made
         for S&P, accrued interest.

                  (b) the product of (i) as to GNMA Certificates, GNMA Graduated
         Payment Securities, FNMA Certificates, FHLMC Certificates and FHLMC
         Multifamily Securities, the aggregate unpaid principal amount of the
         mortgage loans evidenced by each such certificate or security, as the
         case may be, as of the close of business in New York City on the last
         Business Day prior to such date of determination and (ii) the lower of
         the bid prices for the same kind of certificate or, if not available,
         some other security having, as nearly as practicable, comparable
         interest rates and maturities, as quoted to the Corporation by two
         nationally recognized securities dealers, who are members of the
         National Association of Securities Dealers selected by the Corporation
         and making a market therein, with at least one such quotation in
         writing plus, (i) if the determination is being made for Moody's,
         accrued interest to the date of determination if the next interest
         coupon on such security is due and payable within 56 days of such date
         of determination and (ii) if the determination is using made for S&P,
         accrued interest;

                  (c) as to Australian Currency and Bank Bills and to Cash,
         demand deposits and bankers' acceptances included in Short Term Money
         Market Instruments, the face value thereof; and

                  (d) as to next Business Day repurchase agreements, the face
         value thereof plus accrued interest.

         Without amending the Articles of Incorporation, (i) the calculation of
         the Market Value of an asset constituting Eligible Portfolio Property
         may be changed to any method recognized by the Rating Agencies from
         that set forth in these Articles Supplementary and (ii) a method
         recognized by the Rating Agencies for calculating the Market Value of
         any asset identified as Eligible Portfolio Property may be specified if
         the Board of Directors determines and the Rating Agencies advise the
         Corporation in writing that the change or specification will not
         adversely affect their respective then-current ratings of the AMPS.

         "Maximum Applicable Rate" at any Auction will be the rate obtained by
multiplying the 30-day "AA" Composite Commercial Paper Rate on the date of such
Auction by the Applicable Percentage determined as set forth below based on the
lower of the credit rating or ratings assigned to the AMPS by Moody's and S&P
(or if Moody's or S&P or both shall not make such rating available, the
equivalent of either or both of such ratings by a Substitute Rating Agency or
two Substitute Rating Agencies or, in the event that only one such rating shall
be available, the percentage will be based on such rating).

                                       17

<PAGE>

                                                                    Applicable
                            Credit Rating                           Percentage

---------------------------------------- --------------------------------------
S&P                             Moody's
---                             -------

AA-or Above                     "aa3" or Above                         150%


A-to A+                         "a3" to "a1"                           160%


BBB- to BBB+                    "baa3" to "baa1"                       250%


Below BBB-                      Below "baa3"                           275%

         The Corporation shall take all reasonable action necessary to enable
S&P and Moody's to provide a rating for the AMPS. If either S&P or Moody's shall
not make such a rating available, or neither S&P nor Moody's shall make such a
rating available, Merrill Lynch, Pierce, Fenner & Smith Incorporated or its
respective affiliates and successors, after consultation with the Corporation,
shall select a nationally recognized securities rating agency or two nationally
recognized securities rating agencies to act as a Substitute Rating Agency or
Substitute Rating Agencies, as the case may be.

         "Minimum Liquidity Level is met" means, as of any date of
determination, that the aggregate Market Value of the Dividend Coverage Assets
equals or exceeds the Dividend Coverage Amount.

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

         "MMSs" are mortgage-backed securities issued against mortgage pools by
MGICA Securities Ltd., a wholly-owned subsidiary of AMP Society Ltd., an
Australian insurance company, and rated by Australian Ratings.

         "MTCs" are securities issued against specific mortgages by a trustee
and are similar to "pass-through" certificates. MTCs are issued on a continuous
basis, insured by Australian insurance companies against both mortgage default
and an early call, and rated by Australian Ratings.

         "New Zealand Securities" means those New Zealand government,
semi-government and other securities determined from time to time in writing by
the Rating Agencies.

         "NMMC Securities" National Mortgage Market Corporation Ltd. ("NMMC")
has issued both AUSSIE MACs, which are medium term bearer securities, and
National Mortgage Market Bonds. NMMC is a private company which is owned
partially by the Government of the State of Victoria and partially by private
institutions. Both AUSSIE MACs and National Mortgage Bonds are rated by
Australian Ratings.

         "Notice of Redemption" has the meaning specified in paragraph 5(a)
below.

                                       18

<PAGE>

         "Officer" means the Chairman of the Board, the President, any Vice
President, the Treasurer, the Secretary, any Assistant Treasurer, any Assistant
Secretary or Assistant Controller of the Corporation.

         "Officers' Certificate" means a certificate signed by an Officer of the
Corporation.

         "Other AMPS" means the auction market preferred stock or remarketed
preferred stock or similar adjustable rate preferred stock of the Corporation
other than the AMPS.

         "Other Permitted Assets" means Australian Corporate Bonds, Australian
Short Term Securities, New Zealand Securities, FANMAC Certificates, NMMC
Securities, MTCs, MMSs, ANNIE MAEs, GNMA Multifamily Securities and Corporate
Bonds.

         "Paying Agent" means Manufacturers Hanover Trust Company and its
successors or any other paying agent appointed by the Corporation to perform the
functions performed by the Paying Agent.

         "Person" means an individual, a corporation, a company, a voluntary
association, a partnership, a trust, an unincorporated organization or a
government or any agency, instrumentality or political subdivision thereof.

         "Preferred Stock" means the preferred stock of the Corporation
including the AMPS.

         "Portfolio Calculation" shall have the meaning specified in paragraph
7(b)(ii).

         "Portfolio Valuation Report" means a report executed by the Corporation
and delivered to the Auction Agent and the Rating Agencies with respect to the
valuation (in U.S. dollars) of the Eligible Portfolio Property, as described in
paragraph 7 hereof; provided, that all or any portion of any such report may be
prepared by the custodian for the Eligible Portfolio Property, EquitiLink
Australia Limited, The Prudential Insurance Company of America, Prudential
Mutual Fund Management, Inc. and/or EquitiLink International Management Limited;
provided further that such Portfolio Valuation Report may be delivered to the
Auction Agent and the Rating Agencies in summary form, however, the Corporation
shall retain a copy of the full Portfolio Valuation Report in its files and make
such report available to its Independent Accountants and the Rating Agencies
upon their request.

         "Projected Dividend Amount" for the AMPS and other Preferred Stock, if
any, shall mean, if the date of determination is a Valuation Date, the amount of
dividends, based on the number of shares of AMPS and other Preferred Stock, if
any, outstanding on such Valuation Date, projected to accumulate on such shares
from the next succeeding Dividend Payment Date or Dates until the 63rd day after
such Valuation Date, at the following dividend rates:

                  (a) if the Valuation Date is the Date of Original issue or a
         Dividend Payment Date, for the period beginning on (and including) the
         first following Dividend Payment Dates and ending on (and including)
         the 63rd day following such Valuation Date, the product of 2.40 and (x)
         the Maximum Applicable Rate on the Date of Original Issue (in the case
         of the Date of Original Issue) or (y) the Maximum Applicable Rate as of
         the last occurring Auction Date (in the case of any Dividend Payment
         Date); and

                                       19

<PAGE>

                  (b) if such Valuation Date is not the Date of Original issue
         or a Dividend Payment Date, (i) for the period beginning on (and
         including) the first following Dividend Payment Dates and ending on
         (but not including) the sooner of the second following Dividend Payment
         Date for such shares or the 64th day following such Valuation Date, the
         product of 2.40 and (x) the Maximum Applicable Rate on the Date of
         Original Issue (in the case of a Valuation Date occurring prior to the
         first Auction Date) or (y) the Maximum Applicable Rate on the last
         occurring Auction Date (in the case of any other Valuation Date), (ii)
         for the period, if any, beginning on (and including) the second
         following Dividend Payment Date and ending on (but not including) the
         64th day following such Valuation Date, the product of 2.40 and the
         rate specified in clause (x) or (y) above and (iii) for the period, if
         any, beginning on (and including) the third following Dividend Payment
         Date and ending on (but not including) the 64th day following such
         Valuation Date, the product of 2.94 and the rate specified in clause
         (x) or (y) above.

         If the date of determination is not a Valuation Date, then the
Projected Dividend Amount on such date of determination shall equal the
Projected Dividend Amount therefor on the immediately preceding Valuation Date,
adjusted to reflect any decrease in the number of shares of AMPS outstanding.
The calculation of the Projected Dividend Amount may be made on bases other than
those set forth above if the Board of Directors determines and the Rating
Agencies shall have advised the Corporation in writing that the revised
calculation of the Projected Dividend Amount would not adversely affect their
respective then-current ratings of the AMPS.

         "Purchaser's Letter" shall mean a letter in which a prospective
purchaser agrees, among other things, that ownership of shares of AMPS will be
maintained in book entry form by the Securities Depository for such prospective
purchaser's Agent Member, and which is required to be executed by each purchaser
of shares of AMPS.

         "Quarterly Valuation Date" means, so long as any shares of AMPS are
outstanding, the last Valuation Date of January, April, July and October of each
year, commencing April 1989.

         "Rating Agencies" means Moody's and S&P or their successors so long as
such rating agency is then rating the AMPS.

         "Reporting Date," with respect to any price referred to in the
definition of the Market Value of an item of Eligible Portfolio Property, shall
mean the date as of which the Market Value of such item of Eligible Portfolio
Property is to be determined or, if no such price is available as provided above
for such date, the next closest prior date as of which such price is so
available; provided, that no such price shall be deemed to be available as of
Reporting Date if such price is not available as of a date within one Business
Day next preceding the date as of which the determination of such Market Value
is to be made.

         "Securities Depository" means The Depository Trust Company and any
successor thereto.

         "Scheduled Payment Day" has the meaning specified in paragraph 3(b)
below.

                                       20

<PAGE>

         "Short Term Money Market Instruments" means the following kinds of
instruments, if on the date of purchase or other acquisition by the Corporation
of such instrument the remaining term to maturity thereof is not more than 30
days:

                  (a) demand deposits in, certificates of deposit of, and
         bankers' acceptances issued by, any depository institution, the
         deposits of which are insured by the Federal Deposit Insurance
         Corporation or the Federal Savings and Loan Insurance Corporation,
         provided that, at the time of the Corporation's investment therein, the
         commercial paper or other unsecured short-term debt obligations of such
         depository institution are rated Prime-1 by Moody's and A-1+ by S&P and
         are issued by institutions whose long-term debt obligations are rated
         at least A-2 by Moody's;

                  (b) repurchase obligations with respect to a U.S. Government
         Obligation, FNMA Certificate, FHLMC Certificate or GNMA Certificate
         entered into with a depository institution, (x) the deposits of which
         are insured by the Federal Deposit Insurance Corporation or the Federal
         Savings and Loan Insurance Corporation, (y) the commercial paper or
         other unsecured short-term debt obligations of which are rated Prime-1
         by Moody's and A-1+ by S&P, and (z) the long-term debt obligations of
         which are rated at least A-2 by Moody's, which securities must be
         repurchased within one Business Day from the date such repurchase
         obligation was entered into; and

                  (c) commercial paper rated at the time of the Corporation's
         investment therein Prime-1 by Moody's and A-1+ by S&P and issued by
         institutions whose long-term debt obligations are rated at least A-2 by
         Moody's.

         "S&P" means Standard & Poor's Corporation or any successor thereto.

         "Stock Books" means the stock transfer books of the Corporation
maintained by the Paying Agent with respect to the shares of AMPS.

         "Subsequent Dividend Period" has the meaning specified in paragraph
3(b) below.

         "Substitute Commercial Paper Dealers" means such substitute commercial
paper dealer or dealers as the Corporation may from time to time appoint or, in
lieu of any thereof, their respective affiliates or successors.

         "Substitute Rating Agency" and "Substitute Rating Agencies" mean a
nationally recognized securities rating agency or two nationally recognized
securities rating agencies, respectively, selected by Merrill Lynch, Pierce,
Fenner & Smith Incorporated, or its affiliate or successor, in consultation with
the Corporation to act as the substitute rating agency or substitute rating
agencies, as the case may be, to determine the credit ratings of the shares of
AMPS.

         "Type I Corporate Bonds" as of any date means Corporate Bonds whose
Moody's rating is Aaa and whose S&P rating is AAA as of such date.

         "Type II Corporate Bonds" as of any date means Corporate Bonds whose
Moody's rating is at least Aa and whose S&P rating is at least AA+ to AA- as of
such date.

                                       21

<PAGE>

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

         "Valuation Date" means each Friday of each month or, if such day is not
a Business Day, the next preceding Business Day, provided, that the first
Valuation Date may occur on any other date established by the Corporation;
provided, further, that such date shall not be earlier than 4 Business Days
prior to, and not later than, the Date of Original Issue.

         "Voting Period" has the meaning specified in paragraph 6(b) below.

         "1940 Act AMPS Asset Coverage Ratio" means, as of the date of
determination, the ratio of the Fund's net assets to its senior securities
representing indebtedness plus the liquidation value of its Preferred Stock,
including the shares of AMPS.

         "1940 Act AMPS Asset Coverage Requirement" means the requirement that
the Corporation maintain, with respect to shares of AMPS, as of the last Friday
of each month in which any shares of AMPS are outstanding, asset coverage of at
least 200% with respect to senior securities representing indebtedness plus the
liquidation value of its Preferred Stock, including the shares of AMPS (or such
other asset coverage as may in the future be specified in or under the
Investment Company Act as the minimum asset coverage for senior securities which
are stock of a closed-end investment company as a condition of paying dividends
on its common stock).

         "1940 Act Cure Date," with respect to the failure by the Corporation to
maintain the 1940 Act AMPS Asset Coverage Requirement (as required by paragraph
7(a) hereof) as of the last Valuation Date of each month, means the last
Valuation Date of the following month.

         2. Fractional Shares. No fractional shares of AMPS shall be issued.

         3. Dividends.

            (a) Holders of shares of AMPS shall be entitled to receive, when,
         as, and if declared by the Board of Directors, out of funds legally
         available therefor, cumulative cash dividends at the Applicable Rate
         per annum (determined as set forth below) payable on the respective
         dates set forth below.

            (b) Dividends on the shares of AMPS shall accumulate from the Date
         of Original Issue. Accumulated dividends shall be payable commencing on
         February 14, 1989 (the 27th day after the Date of Original Issue), with
         respect to the Auction Market Preferred Stock, Series A; on February
         22, 1989 (the 35th day after the Date of Original Issue), with respect
         to the Auction Market Preferred Stock, Series B; and on February 28,
         1989 (the 41st day after the Date of Original Issue), with respect to
         the Auction Market Preferred Stock, Series C (hereinafter, with respect
         to a series of AMPS such date is referred to as the "Initial Dividend
         Payment Date") and on each day thereafter which is the last day of each
         succeeding 28-day period after such date. If any such last day (the
         "Scheduled Payment Day") is not a Business Day or, unless the
         Securities Depository

                                       22

<PAGE>

         shall make dividend payments in same-day funds, the day succeeding the
         Scheduled Payment Day is not a Business Day, dividends payable on such
         Scheduled Payment Day shall be paid on the first Business Day
         succeeding such Scheduled Payment Day that is next succeeded by a day
         which is also a Business Day; provided, however, that if the Securities
         Depository shall make dividend payments with respect to the shares of
         AMPS in same-day funds, such next succeeding day need not be a Business
         Day. Any date on which a dividend on the AMPS is payable pursuant to
         this paragraph 3(b) is herein called a "Dividend Payment Date". The
         period beginning on (and including) the Date of Original Issue and
         ending on (but not including) the Initial Dividend Payment Date for a
         series is referred to herein as the "Initial Dividend Period" for such
         series. Each successive period commencing on, and including, the
         Dividend Payment Date for the previous Dividend Period and ending on
         and including the calendar day preceding the next succeeding Dividend
         Payment Date is referred to herein as a "Subsequent Dividend Period"
         and the Initial Dividend Period and each Subsequent Dividend Period
         together are sometimes referred to herein as "Dividend Periods". The
         record date for the payment of dividends on each series of AMPS will be
         the Auction Date for such series immediately preceding the Dividend
         Payment Date.

                  (c) (i) The Applicable Rate for the Auction Market Preferred
                  Stock, Series A shall be 9.4% per annum for the Initial
                  Dividend Period; for the Auction Market Preferred Stock,
                  Series B shall be 9.4% per annum for the Initial Dividend
                  Period; and for the Auction Market Preferred Stock, Series C
                  shall be 9.4% per annum for the Initial Dividend Period. For
                  the purpose of calculating the rate of dividends per annum
                  payable on shares of AMPS (the "Applicable Rate") for each
                  Subsequent Dividend Period the Corporation shall enter into an
                  agreement with the Auction Agent (the "Auction Agent
                  Agreement"). The Applicable Rate on the shares of AMPS for
                  each Subsequent Dividend Period shall be determined by the
                  Auction Agent in accordance with the Auction Agent Agreement,
                  which shall provide that the Auction Agent will follow the
                  Auction Procedures described in paragraph 8 hereof to
                  determine the Applicable Rate. In the event there is no
                  Auction Agent on the Business Day prior to the first day of a
                  Dividend Period, the Applicable Rate for such Dividend Period
                  shall be equal to the Maximum Applicable Rate that could have
                  resulted pursuant to the Auction Procedures, as determined by
                  the Corporation, on such Business Day. If no Auction is held
                  on any Auction Date for any other reason, the Applicable Rate
                  for the Dividend Period beginning on the Business Day
                  following such Auction Date shall be equal to the Maximum
                  Applicable Rate that could have resulted pursuant to the
                  Auction Procedures, as determined by the Auction Agent (or, if
                  there is no Auction Agent, by the Corporation), on such
                  Business Day. The Corporation shall exercise its best efforts
                  to maintain an Auction Agent pursuant to an agreement
                  containing terms no less favorable to the Corporation than the
                  terms of the Auction Agent Agreement.

                          (ii) The amount of dividends per share payable on
                  shares of AMPS for each Dividend Period or part thereof shall
                  be determined by the Corporation and shall be an amount equal
                  to $100,000 per share of AMPS multiplied by the product of (1)
                  the Applicable Rate for such Dividend Period and

                                       23

<PAGE>

                  (2) a fraction the numerator of which shall be the actual
                  number of days in such Dividend Period or part thereof and the
                  denominator of which shall be 360. All dollar amounts used in
                  or resulting from such calculations will be rounded to the
                  nearest cent (with 0.5 cents being rounded up).

                         (iii) If the Corporation fails to deposit, in same-day
                  funds, with the Paying Agent by 12:00 noon, New York City
                  time, (A) on any Dividend Payment Date for any series of AMPS
                  an amount sufficient to pay the dividends (whether or not
                  earned or declared) payable on such Dividend Payment Date or
                  (B) on any redemption date for any series of AMPS an amount
                  sufficient to redeem on such date fixed for redemption the
                  shares of such series as to which notice of redemption has
                  been given (including an amount equal to dividends thereon,
                  whether or not earned or declared, accumulated but unpaid to
                  such redemption date), then, in either case, beginning with
                  the Dividend Payment Date or redemption date, as the case may
                  be, on which such failure occurs and continuing until the
                  Dividend Payment Date that is or immediately follows the date
                  the Corporation remedies such failure as provided in the third
                  sentence of this paragraph, the Applicable Rate for each
                  Dividend Period for the series to which such Dividend Payment
                  Date or such redemption date relates shall be equal to 275% of
                  the "AA" Composite Commercial Paper Rate in effect on the
                  second Business Day preceding the first day of such Dividend
                  Period. Notwithstanding the foregoing, if the Corporation
                  remedies such failure by depositing, in same-day funds, with
                  the Paying Agent by 12:00 noon, New York City time, on the
                  first, second or third Business Day following such Dividend
                  Payment Date or date fixed for redemption, as the case may be,
                  an amount equal to (x) the unpaid dividends or unpaid
                  redemption payments plus (y) a late charge computed at an
                  annual rate of 275% of the "AA" Composite Commercial Paper
                  Rate in effect on the second Business Day preceding the date
                  of such failure applied to the amount of such unpaid dividends
                  or unpaid redemption payments based on the number of days
                  elapsed from the applicable Dividend Payment Date or date
                  fixed for redemption to the date on which funds for such
                  dividends or redemption payments are deposited with the Paying
                  Agent divided by 360, then the Applicable Rate for the
                  then-current Dividend Period will be that established on the
                  immediately preceding Auction Date. If, subsequent to the
                  three-Business Day grace period referred to in the preceding
                  sentence, the Corporation remedies such failure to pay
                  dividends or the redemption payments by depositing with the
                  Paying Agent all amounts required by the first sentence of
                  this paragraph plus all dividends (computed at the rate
                  specified in the first sentence of this paragraph) accumulated
                  (whether or not earned or declared) but unpaid to the Dividend
                  Payment Date that is or immediately precedes the date of such
                  remedy, then the Applicable Rate in respect of each Dividend
                  Period commencing after such remedy will be determined in
                  accordance with the Auction Procedures until such time as
                  there is another failure to pay either dividends or the
                  redemption payments with respect to shares of AMPS of such
                  series. In the event of any such remedy described in the
                  preceding sentence, the Corporation will, not more than 30 nor
                  less than five Business Days prior to the next Action Date for
                  such series, notify

                                       24

<PAGE>

                  the Auction Agent, all Holders and the Securities Depository
                  in writing of the date of the next Auction.

                  (d) (i) The Corporation will not issue any other series or
                  class of stock which is senior to the AMPS. The Corporation
                  will not issue any series or class of stock which is on a
                  parity with the shares of AMPS unless it has been advised in
                  writing by the Rating Agencies that such issuance will not
                  adversely affect their respective then-current ratings of the
                  AMPS. No Holders of shares of AMPS shall be entitled to any
                  dividends, whether payable in cash, property or stock, in
                  excess of full cumulative dividends, as provided in this
                  paragraph 3, on shares of AMPS. No interest, or sum of money
                  in lieu of interest, shall be payable in respect of any
                  dividend payments on any shares of AMPS that may be in
                  arrears.

                         (ii)  For so long as shares of AMPS are outstanding,
                  the Corporation shall not declare, pay or set apart for
                  payment any dividend or other distribution in respect of the
                  Common Stock or any other stock of the Corporation ranking
                  junior to the shares of AMPS as to dividends or upon
                  liquidation, or call for redemption, redeem, purchase or
                  otherwise acquire for consideration any shares of Common Stock
                  or any other stock of the Corporation ranking junior to the
                  shares of AMPS as to dividends or upon liquidation (except by
                  conversion into or exchange for stock of the Corporation
                  ranking junior to the shares of AMPS as to dividends and upon
                  liquidation), unless, in each case, immediately thereafter,
                  (A) the AMPS Basic Maintenance Amount would be met, (B) the
                  1940 Act AMPS Assets Coverage Requirement would be met, (C)
                  all mandatory redemptions of shares of Preferred Stock
                  pursuant to paragraph 5(b) hereof have been completed, (D) the
                  Minimum Liquidity Level would be met and (E) all accumulated
                  and unpaid dividends for all past dividend periods for all
                  Preferred Stock shall have been or are contemporaneously paid
                  in full (or declared and sufficient Deposit Securities have
                  been set apart for their payment). Prior to the payment of any
                  such dividend or other distribution, the Corporation will
                  provide the Auction Agent and the Rating Agencies with a
                  Portfolio Valuation Report (which may be the regular weekly
                  report) and a certificate demonstrating compliance with the
                  foregoing conditions.

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

                         (iv)  For so long as any shares of AMPS are
                  outstanding, the Corporation shall not 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
                  (collectively "Liens") upon any of its Eligible Portfolio
                  Property, except for (A) Liens the validity of which are being
                  contested in good faith by appropriate proceedings,

                                       25

<PAGE>

                  (B) Liens for taxes that are not then due and payable or that
                  can be paid thereafter without penalty, (C) Liens to secure
                  payment for services rendered by the Auction Agent in
                  connection with the AMPS and (D) Liens otherwise incurred in
                  connection with borrowings made in the ordinary course of
                  business in accordance with the Corporation's stated
                  investment objective, policies and restrictions.

                  (e) Not later than 12:00 noon, New York City time, on the
         Business Day next preceding each Dividend Payment Date, the Corporation
         shall deposit with the Paying Agent Deposit Securities constituting
         immediately available funds in an amount sufficient to pay the
         dividends that are payable on such Dividend Payment Date. The
         Corporation may direct the Paying Agent with respect to the investment
         of any such Deposit Securities, provided that the proceeds of any such
         investment will be available at the opening of business on such
         Dividend Payment Date in immediately available funds.

                  (f) Dividends in arrears for any past Dividend Period may be
         declared and paid to the Holders at any time, without reference to any
         regular Dividend Payment Date.

                  (g) For dividends paid in respect of any fiscal year of the
         Corporation, any dividends declared on the AMPS shall be paid first
         from earned surplus, to the extent thereof, and then from any other
         legally available source, and any dividends declared on the Common
         Stock shall be paid from earned surplus or other sources to the extent
         not distributed to the Existing Holders. Further, for dividends paid in
         respect of any fiscal year of the Corporation, any dividends declared
         on AMPS shall be paid from current and accumulated earnings and profits
         (within the meaning of the Internal Revenue Code of 1986, as amended
         (the "Code")) to the extent available, pro rata from investment company
         taxable income (as that term is defined in section 852(b)(2) of the
         Code and before taking into account the deduction for dividends paid)
         and from net capital gain (as that term is defined in Code section
         1222(11)). To the extent current and accumulated earnings and profits
         remain after satisfying the Existing Holders, dividends paid in respect
         of any fiscal year of the Corporation declared on the Common Stock
         shall be paid from current and accumulated earnings and profits, from
         investment company taxable income (before the deduction for dividends
         paid) and from net capital gain, to the extent not distributed to
         Existing Holders. Distributions of net capital gain of the Corporation
         for a taxable year to Existing Holders and holders of Common Stock
         shall be designated by the Corporation as capital gain dividends (under
         Code section 852(b)(3)) in the same proportion as net capital gain of
         the Corporation for the taxable year in respect of which the
         distribution is made is distributed to such Existing Holders and
         holders of Common Stock. Designations of foreign taxes deemed paid by
         stockholders (pursuant to Code section 853) shall be made in the same
         proportion as income subject to such taxes is distributed to
         stockholders for the taxable year in respect of which the distribution
         is made. The Board of Directors or any duly authorized Committee
         thereof may change the allocation of income and/or designations
         described herein if, in its sole judgment, it deems it advisable to do
         so for the purpose of maintaining the qualification of the Corporation
         as a regulated investment company for federal income tax purposes
         and/or to avoid tax consequences which, in the sole judgment of the
         Board of Directors, would be adverse to the Corporation or its
         stockholders.

                                       26

<PAGE>

         4.       Liquidation Rights

                  (a) In the event of any liquidation, dissolution or winding up
         of the Corporation, whether voluntary or involuntary, the Holders of
         shares of AMPS shall be entitled to receive out of the assets of the
         Corporation available for distribution to stockholders, but before any
         distribution or payment shall be made in respect of the Common Stock or
         any other stock of the Corporation ranking junior to the AMPS as to
         liquidation payments, a liquidation distribution in the amount of
         $100,000 per share, plus an amount equal to all unpaid dividends
         accumulated to and including the date fixed for such distribution or
         payment (whether or not earned or declared by the Corporation, but
         excluding interest thereon), 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.

                  (b) If, upon any such liquidation, dissolution or winding up
         of the Corporation, whether voluntary or involuntary, the assets of the
         Corporation available for distribution among the Holders of all
         outstanding shares of AMPS 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 shares
         of Preferred Stock, including the AMPS, 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.

                  (c) Neither the consolidation or merger of the Corporation
         with or into any other corporation or corporations, nor the sale, lease
         or exchange by the Corporation of all or substantially all of its
         property and assets, shall be deemed to be a voluntary or involuntary
         liquidation, dissolution or winding up of the Corporation for purposes
         of this paragraph 4.

         5.       Redemption.

         Shares of the AMPS shall be redeemable by the Corporation as provided
         below:

                  (a) To the extent permitted under the Investment Company Act
         and Maryland law, the Corporation at its option, upon filing with the
         Commission, mailing and publishing a Notice of Redemption as described
         in paragraph 5(e) hereof, may redeem shares of AMPS, in whole or in
         part, on the next succeeding scheduled Dividend Payment Dates for those
         shares of AMPS called for redemption, out of funds legally available
         therefor, at a redemption price equal to $100,000 per share plus an
         amount equal to dividends thereon (whether or not earned or declared)
         accumulated to but unpaid through the date fixed for redemption. The
         Corporation may not give a Notice of Redemption relating to an optional
         redemption as described in this paragraph unless, at the time of giving
         such Notice of Redemption, 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 due to Holders of shares of AMPS by reason of the
         redemption of their shares on such redemption date.

                                       27

<PAGE>

                  (b) The Corporation shall redeem, at a redemption price of
         $100,000 per share plus accumulated but unpaid dividends through the
         date of redemption, shares of AMPS to the extent permitted under the
         Investment Company Act and Maryland law, on the next succeeding
         scheduled Dividend Payment Dates applicable to those shares of AMPS
         called for redemption, if the Corporation fails to maintain the AMPS
         Basic Maintenance Amount or 1940 Act AMPS Asset Coverage Requirement,
         as the case may be, and such failure is not cured on or before the Cure
         Date as reflected in a Portfolio Valuation Report delivered to the
         Auction Agent and the Rating Agencies and confirmed by the
         Corporation's Independent Accountants. The number of shares to be
         redeemed shall be equal to the lesser of (i) the minimum number of
         shares of AMPS the redemption of which, if deemed to have occurred
         immediately prior to the opening of business on the Cure Date, together
         with all shares of other Preferred Stock subject to redemption or
         retirement, would result in the satisfaction of the AMPS Basic
         Maintenance Amount or the 1940 Act AMPS Asset Coverage Requirement, as
         the case may be, on such Cure Date (provided that, if there is no such
         minimum number of shares the redemption of which would have such
         result, all shares of AMPS together with all shares of other Preferred
         Stock subject to redemption or retirement then outstanding shall be
         redeemed), and (ii) the maximum number of shares of AMPS together with
         all shares of other Preferred Stock subject to redemption or retirement
         that can be redeemed out of funds expected to be legally available
         therefor on such redemption date. In determining the number of shares
         of AMPS required to be redeemed in accordance with the foregoing, the
         Corporation shall allocate the amount required to achieve (x) the 1940
         Act AMPS Asset Coverage Requirement, pro rata among the AMPS and any
         other Preferred Stock and (y) the AMPS Basic Maintenance Amount, pro
         rata, among the AMPS and any Other AMPS. The Corporation shall effect
         such redemption not later than 45 days after such Cure Date, except
         that if the Corporation does not have funds legally available for the
         redemption of all the required number of shares of AMPS which are
         subject to mandatory redemption, the next Dividend Payment Date with
         respect to any share to be redeemed is more than 45 days after such
         Cure Date or the Corporation otherwise is unable to effect such
         redemption on or prior to such Cure Date, the Corporation shall redeem
         those shares of AMPS which it was unable to redeem on the earliest
         practicable date on which it is able to effect such redemption.

                  (c) Notwithstanding the other provisions of this paragraph 5,
         no shares of AMPS may be redeemed other than as specified below, unless
         all accumulated and unpaid dividends on all outstanding shares of AMPS
         and other Preferred Stock for all past dividend periods shall have been
         or are contemporaneously paid or declared and Deposit Securities
         maturing on or prior to the date fixed for redemption are set apart for
         the payment of such dividends; provided, however, that the Corporation
         without regard to such limitations, (x) may redeem, purchase or
         otherwise acquire shares of AMPS (A) with other Preferred Stock as a
         whole, pursuant to an optional redemption or (B) pursuant to a purchase
         or exchange offer made for all of the outstanding shares of AMPS and
         other Preferred Stock, and (y) shall redeem, purchase or otherwise
         acquire shares of AMPS with other Preferred Stock as a whole pursuant
         to a mandatory redemption, to the extent permitted under the Investment
         Company Act, Maryland law and the Articles of Incorporation.

                                       28

<PAGE>

                  (d) If fewer than all the outstanding shares of AMPS are to be
         redeemed, the shares to be redeemed shall be identified by the Board of
         Directors by lot, on a pro rata basis, or in such other manner as will
         not discriminate unfairly against any record holder of shares of such
         AMPS.

                  (e) Whenever shares of AMPS are to be redeemed, the
         Corporation shall, not fewer than 30 days prior to the applicable
         redemption date, file with the Commission as required under the
         Investment Company Act, a written notice of redemption (a "Notice of
         Redemption"). The Notice of Redemption shall be (i) mailed by
         first-class mail, postage prepaid, to each holder of shares of AMPS to
         be redeemed, and (ii) published by the Corporation in an Authorized
         Newspaper, not fewer than 15 nor more than 20 days prior to such
         redemption date. Not fewer than five nor more than 10 days before such
         mailing date, the Corporation shall mail the Notice of Redemption to
         the Paying Agent. Each Notice of Redemption shall state (A) the series
         of AMPS to be redeemed, (B) the redemption date, (C) the redemption
         price, (D) the place or places where such AMPS are to be redeemed, (E)
         that dividends on the shares to be redeemed will cease to accumulate on
         such redemption date, (F) the provision of these Articles Supplementary
         under which the redemption is being made, (G) if less than all the
         outstanding shares of AMPS are to be redeemed, the number of shares to
         be redeemed and the basis upon which the shares to be redeemed are to
         be selected and (H) the CUSIP number or numbers of the shares to be
         redeemed. No defect in the Notice of Redemption or in the mailing or
         publication thereof shall affect the validity of the redemption
         proceedings, except as required by applicable law.

                  (f) On each redemption date, the Securities Depository shall
         surrender the certificate evidencing the shares of AMPS. Each Holder of
         shares of AMPS that were called for redemption shall then be entitled
         to receive payment of the redemption price for each share. If fewer
         than all of the shares represented by such certificate are to be
         redeemed, the Corporation shall issue a new certificate for the shares
         not redeemed.

                  (g) If the Corporation shall give a Notice of Redemption, then
         by 12:00 noon, New York City time, on the Business Day next preceding
         the date fixed for redemption the Corporation shall deposit with the
         Paying Agent Deposit Securities constituting immediately available
         funds in an amount sufficient to redeem the shares of AMPS to be
         redeemed. In such event the Corporation shall give the Paying Agent
         irrevocable instructions and authority to pay the redemption price to
         the holders of the shares of AMPS called for redemption upon the
         redemption date. The Corporation may direct the Paying Agent with
         respect to the investment of any Deposit Securities so deposited
         provided that the proceeds of any such investment will be available at
         the opening of business on such redemption date. The Deposit Securities
         deposited with the Paying Agent pursuant to the immediately preceding
         sentence and the shares of AMPS to be redeemed and funds deposited with
         a paying agent with irrevocable instructions to pay the redemption
         price with respect to any other shares of Preferred Stock for which a
         notice of redemption has been duly given shall be excluded from the
         calculation of the AMPS Basic Maintenance Amount, the 1940 Act AMPS
         Asset Coverage Ratio, and the 1940 Act AMPS Asset Coverage Requirement.
         Upon the date of such deposit, or if no such deposit is made, then upon
         such date fixed for redemption (unless the Corporation

                                       29

<PAGE>

         shall default in making payment of the redemption price), all rights of
         the Holders of the shares of AMPS so called for redemption shall cease
         and terminate except the right of the Holders thereof to receive the
         redemption price thereof inclusive of accumulated but unpaid dividends,
         but without any interest, and such shares shall no longer be deemed
         outstanding for any purpose. The Corporation shall be entitled to
         receive, promptly after the date fixed for redemption, any cash in
         excess of the aggregate redemption price of the shares of AMPS called
         for redemption on such date and any remaining Deposit Securities. Any
         assets so deposited which are unclaimed at the end of one year from
         such redemption date shall, to the extent permitted by law, be repaid
         to the Corporation, after which the Holders of the shares of AMPS so
         called for redemption shall look only to the Corporation for payment
         thereof. The Corporation shall be entitled to receive, from time to
         time after the date fixed for redemption, any interest on the Deposit
         Securities so deposited.

              (h) Shares of AMPS that have been redeemed, purchased or otherwise
         acquired by the Corporation may not be reissued, shall not be deemed
         outstanding, and shall be retired and cancelled. Shares with respect to
         which a Notice of Redemption has been given as provided in paragraph
         5(e) above shall not be deemed outstanding for purposes of the Auction
         Procedures set forth in paragraph 8 hereof.

              (i) In addition to redemption rights expressly established under
         these Articles Supplementary, the Corporation may repurchase shares of
         AMPS to the extent nor or hereafter permitted by the laws of the State
         of Maryland and by the Investment Company Act.

              (j) If the Corporation shall not have funds legally available for
         the redemption of all the shares of the AMPS to be redeemed on any
         redemption date (or is otherwise legally unable to effect such
         redemption), the Corporation shall redeem on such redemption date the
         number of shares of AMPS as it shall be legally able to redeem, ratably
         from each Existing Holder whose shares are to be redeemed and the
         remainder of the shares of the AMPS required to be redeemed shall be
         redeemed, as provided in paragraph 5(b) above.

         6.   Voting Rights.

              (a) General. Each holder of AMPS shall be entitled to one vote for
         each share held on each matter on which the holders of the AMPS are
         entitled to vote and, except as otherwise provided in the Articles of
         Incorporation, these Articles Supplementary or by law, the holders of
         the AMPS and the Common Stock shall vote together as one class on all
         matters submitted to the stockholders; provided, however, that at any
         meeting of stockholders of the Corporation at which directors are to be
         elected, the holders of Preferred Stock of all series, voting
         separately as a single class, shall be entitled to elect two members of
         the Board of Directors, and the holders of Common Stock, voting
         separately as a single class, shall be entitled to elect the balance of
         the members of the Board of Directors; provided, further, however, that
         the identity of the two directors representing the holders of
         outstanding shares of Preferred Stock may be designated by

                                       30

<PAGE>

         the Board of Directors until the first meeting of the Corporation's
         stockholders at which holders of shares of Preferred Stock shall be
         entitled to vote for the election of directors.

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

                   (i) During any period in which (A) dividends on any
              outstanding Preferred Stock of any series shall be due and unpaid
              in an amount equal to two full years' dividends; or (B) the
              Corporation fails to redeem any shares of Preferred Stock that are
              required to be redeemed pursuant to paragraph 5(b) above or that
              would have been so redeemed but for the requirement that
              redemption be made out of legally available funds, or (C) holders
              of any other shares of Preferred Stock are entitled to elect a
              majority of the directors of the Corporation (the "Voting
              Period"), the number of directors constituting the Board of
              Directors shall automatically be increased by the smallest number
              that, when added to the two directors elected by the holders of
              Preferred Stock pursuant to paragraph 6(a) above, will constitute
              a majority of the total number of directors so increased; and at a
              special meeting of stockholders, which shall be called and held as
              soon as practicable, and at all subsequent meetings at which
              directors are to be elected, the holders of Preferred Stock of all
              series voting separately as a single class shall be entitled to
              elect the smallest number of additional directors of the
              Corporation who, together with the two directors elected by the
              holders of Preferred Stock pursuant to paragraph 6(a) above, will
              constitute a majority of the total number of directors of the
              Corporation so increased. The terms of office of the persons who
              are directors at the time of that election shall continue.

                       (ii) If the Corporation thereafter shall pay, or declare
              and set apart for payment, in full all dividends payable on all
              outstanding shares of Preferred Stock of all series for all past
              dividend periods and if the Corporation has remedied any failure
              to redeem shares of Preferred Stock that are required to be
              redeemed pursuant to paragraph 5(b) above, and holders of no other
              series of Preferred Stock are entitled to elect a majority of the
              directors of the Corporation the Voting Period and the voting
              rights stated in this paragraph 6(b) shall cease, and the terms of
              office of all additional directors elected by the holders of
              Preferred Stock (but not of the directors elected by the holders
              of Common Stock or the two directors regularly elected by the
              holders of Preferred Stock as provided in paragraph 6(a) shall
              terminate automatically, subject always, however, to the revesting
              of such voting rights in the holders of shares of Preferred Stock
              upon the further occurrence of any of the events described in
              clauses (A), (B) or (C) of paragraph 6(b)(i).

                   (c) Voting Procedures.

                       (i)  As soon as practicable after the accrual of any
              right of the holders of shares of Preferred Stock to elect
              directors pursuant to paragraph 6(b), the Corporation shall call a
              special meeting of, and mail a notice to, such holders of shares
              of Preferred Stock. Such special meeting shall be held not less
              than 10 nor more than 80 days after the date of mailing of such
              notice. If the Corporation

                                       31

<PAGE>

              fails to send such notice, the meeting may be called by any holder
              of shares of Preferred Stock on like notice. The record date for
              determining the holders of shares of Preferred Stock 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 given. At any such special meeting and at each
              meeting at which directors are elected held during a Voting
              Period, the holders of shares of Preferred Stock, voting together
              as a class (to the exclusion of the holders of shares of Common
              Stock), shall be entitled to elect the number of directors
              prescribed in paragraph 6(b) above 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,
              present in person or by proxy or any officer of the Corporation
              present entitled to preside or act as Secretary of such meeting
              shall have the power to adjourn the meeting without further notice
              to a date not more than 120 days after the original record date
              for such meeting.

                       (ii)  For purposes of determining any rights of the
              holders of shares of Preferred Stock to vote on any matter,
              whether such right is created by the Articles of Incorporation,
              these Articles Supplementary by statute or otherwise, no holder of
              shares of Preferred Stock shall be entitled to vote and no share
              of Preferred Stock shall be deemed to be "outstanding" for the
              purpose of voting or determining the number of shares required to
              constitute a quorum, if prior to or concurrently with the time of
              determination of shares entitled to vote or shares deemed
              outstanding for quorum purposes, as the case may be, such share
              shall have been redeemed or called for redemption as provided in
              paragraph 5(e) and sufficient Deposit Securities with maturities
              on or prior to the redemption date shall have been deposited in
              trust with the Paying Agent to effect such redemption.

                       (iii) The directors elected by the holders of shares of
              Preferred Stock pursuant to paragraph 6(b) shall (subject to the
              provisions of any applicable law) be subject to removal only by
              the vote of the holders of a majority of shares of Preferred Stock
              outstanding. Any vacancy on the Board of Directors occurring by
              reason of such removal or otherwise (in the case of directors
              subject to election by the holders of shares of Preferred Stock)
              may be filled only by vote of the holders of at least a majority
              of shares of Preferred Stock outstanding, and if not so filled
              such vacancy shall (subject to the provisions of any applicable
              law) be filled by a majority of the remaining directors (or the
              remaining director) who were elected by the holders of shares of
              Preferred Stock. Any other vacancy on the Board of Directors
              during a Voting Period shall be filled as provided in the
              Corporation's By-Laws.

                       (iv)  At any time when the holders of shares of Preferred
              Stock become entitled to elect additional directors pursuant to
              paragraph 6(b), the maximum number of directors fixed by the
              By-Laws of the Corporation or otherwise shall automatically be
              increased by the number of such additional directors if required;
              and at such time as the holders of shares of Preferred Stock shall
              no longer be entitled to elect directors pursuant to paragraph
              6(b), such exact

                                       32

<PAGE>

              number shall automatically be decreased by the number by which
              they were increased by reason of this provision.

              (d)  Certain Corporate Acts. So long as any shares of AMPS are
         outstanding, the Corporation shall not, subject to the requirements of
         the Investment Company Act and Maryland law, without the affirmative
         vote or consent of the holders of at least two-thirds of the votes of
         the shares of AMPS outstanding at the time, either in person or by
         proxy, either in writing or at a meeting (voting separately as one
         class) in addition to any vote required by Article Fifth of the
         Articles of Incorporation: (x) amend, alter or repeal the provisions of
         the Articles of Incorporation including these Articles Supplementary,
         whether by merger, consolidation or otherwise, so as to materially and
         adversely affect any right, preference, privilege or voting power of
         such shares of AMPS or the Holders thereof, or (y) create, authorize,
         issue, incur or suffer to exist any indebtedness for borrowed money or
         any direct or indirect guarantee of any such indebtedness, provided,
         however, that the Corporation may authorize the issuance of
         indebtedness for borrowed money, for temporary or emergency purposes or
         for the clearance of transactions, in an aggregate amount not to exceed
         the lesser of $10,000,000 or 10% of the aggregate liquidation
         preference of the shares of AMPS outstanding at any one time without
         any such consent or approval, provided that, with or without the
         consent or approval of the holders, such action would not result in the
         lowering of the then-current rating of the shares of AMPS by the Rating
         Agencies (as evidenced in writing by the Rating Agencies); provided
         that any increase in the amount of the authorized AMPS or the creation
         and issuance of other series of Preferred Stock, or any increase in the
         amount of authorized shares of such series or of any other series of
         Preferred Stock, in each case ranking on a parity with or junior to the
         AMPS will not be deemed to materially and adversely affect such rights,
         preferences, privileges or voting powers unless such issuance would
         cause the Corporation not to satisfy the 1940 Act AMPS Asset Coverage
         Requirement or the AMPS Basic Maintenance Amount.

         The foregoing voting provisions shall not apply if, at or prior to the
time when the act with respect to which such vote would otherwise be required
shall be effected, all outstanding shares of AMPS shall have been redeemed, or
called for redemption and sufficient funds shall have been deposited in trust to
effect such redemption.

              (e)  Exclusive Remedy. Unless otherwise required by law, the
         Holders 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 an dividends on the shares of
         AMPS or the Corporation fails to redeem any shares of 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, the exclusive remedy of the Holders shall be the right
         to vote for directors pursuant to the provisions of this paragraph 6.
         In no event shall the Holders 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.

              (f)  Notification to Rating Agencies. In the event a vote of
         holders of AMPS is required pursuant to the provisions of Section 13(a)
         of the Investment Company Act,

                                       33

<PAGE>

         the Corporation shall, not later than ten business days prior to the
         date on which such vote is to be taken, notify the Rating Agencies that
         such vote is to be taken and the nature of the action with respect to
         which such vote is to be taken.

         7.   Asset and Liquidity Coverage.

              (a)  1940 Act AMPS Asset Coverage Requirement.

                   The Corporation shall maintain, as of the last Valuation Date
         of each month in which any share of AMPS is outstanding, the 1940 Act
         AMPS Asset Coverage Requirement. The calculation of the 1940 Act AMPS
         Asset Coverage Ratio shall be included in each Portfolio Valuation
         Report.

              (b)  AMPS Basic Maintenance Amount.

                   (i)   For so long as any shares of AMPS are outstanding, the
              Corporation will maintain, on each Valuation Date, Eligible
              Portfolio Property having an aggregate Discounted Value at least
              equal to the AMPS Basic Maintenance Amount, each as of such
              Valuation Date.

                   (ii)  On the Date of Original Issue and on or before 10:00
              A.M., New York City time, on the fourth Business Day after any
              other Valuation Date thereafter, the Corporation shall complete
              and deliver to the Auction Agent a summary Portfolio Valuation
              Report, which will be deemed to have been delivered to the Auction
              Agent (A) if the Auction Agent receives a copy or telecopy, telex
              or other electronic transcription thereof, or (B) if the Auction
              Agent receives a telecopy, telex or other electronic transcription
              setting forth at least the applicable Discounted Value of the
              aggregate of all Eligible Portfolio Property (the "Portfolio
              Calculation") and the AMPS Basic Maintenance Amount each as of the
              relevant Valuation Date and on the same day the Corporation mails
              to the Auction Agent for delivery on the next Business Day the
              summary Portfolio Valuation Report. A failure by the Corporation
              to deliver a Portfolio Valuation Report to the Auction Agent under
              this paragraph 7(b)(ii) shall be deemed to be delivery of a
              Portfolio Valuation Report indicating a Discounted Value for all
              Eligible Portfolio Property of less than the AMPS Basic
              Maintenance Amount, as of the relevant Valuation Date. The
              Corporation shall also deliver promptly copies of each Portfolio
              Valuation Report to each of the Rating Agencies.

                   (iii) Within seven Business Days after the date of delivery
              to the Auction Agent of the first Portfolio Valuation Report and
              each Portfolio Valuation Report in accordance with paragraph
              7(b)(ii) above relating to a Quarterly Valuation Date, the
              Corporation shall deliver to the Auction Agent and the Rating
              Agencies a report or reports (the "Accountant's Confirmation")
              reviewing the Portfolio Calculation, prepared by the Corporation's
              Independent Accountants, relating to such Portfolio Valuation
              Report (and reviewing the Portfolio Calculation relating to any
              other Portfolio Valuation Report, randomly

                                       34

<PAGE>

              selected by the Independent Accountants, that was delivered by the
              Corporation during the quarter ending on such Quarterly Valuation
              Date) substantially to the effect that (A) the Independent
              Accountants have read such Portfolio Valuation Reports (each, a
              "Report"); (B) with respect to the 1940 Act AMPS Asset Coverage
              Ratio, AMPS Basic Maintenance Amount and Minimum Liquidity Level,
              the results of the calculations set forth in each Report have been
              recalculated and are numerically correct; (C) with respect to the
              excess or deficiency of the Discounted Value amount when compared
              to the AMPS Basic Maintenance Amount, the results of the
              calculation set forth in each Report have been recalculated and
              are numerically correct; (D) with respect to the excess or
              deficiency of the Dividend Coverage Assets amount when compared to
              the Minimum Liquidity Level, the results of the calculation set
              forth in each Report have been recalculated and are numerically
              correct; (E) with respect to the lower of two bid prices provided
              to the Corporation for purposes of valuing securities in the
              portfolio, the Independent Accountants have traced the price used
              in each Report to the lower of the two bid prices listed in the
              Report and verified that such information agrees (in the event
              such information does not agree, the Independent Accountants will
              provide a listing in their report of such differences); (F) that
              the assets listed in each Report conform with the definition of
              Eligible Portfolio Property; and (G) the calculations used by the
              Corporation in calculating the 1940 Act AMPS Asset Coverage Ratio,
              the AMPS Basic Maintenance Amount and the Minimum Liquidity Level
              are in compliance with the format set forth in the form of
              Portfolio Valuation Report attached as an exhibit to the Auction
              Agent Agreement. If any letter reviewing the Portfolio Calculation
              delivered pursuant to this paragraph shows that an error was made
              in the Portfolio Valuation Report for such Quarterly Valuation
              Date, or shows that a lower aggregate Discounted Value for the
              aggregate of all Eligible Portfolio Property was determined by the
              Independent Accounts, the calculation or determination made by
              such Independent Accounts shall be final and conclusive and shall
              be binding on the Corporation, and the Corporation shall promptly
              amend the Portfolio Valuation Report and deliver the amended
              Portfolio Valuation Report to the Auction Agent.

              (c)  Liquidity Coverage.

                   (i) As of each Valuation Date as long as any shares of AMPS
              are outstanding, the Corporation shall determine (A) the Market
              Value of the Dividend Coverage Assets owned by the Corporation as
              of that Valuation Date, (B) the Dividend Coverage Amount on that
              Valuation Date, and (C) whether the Minimum Liquidity Level is met
              as of that Valuation Date. The calculations of the Dividend
              Coverage Assets, the Dividend Coverage Amount and whether the
              Minimum Liquidity Level is met shall be set forth in a certificate
              (a "Certificate of Minimum Liquidity") dated as of the Valuation
              Date. The Portfolio Valuation Report and the Certificate of
              Minimum Liquidity may be combined in one certificate. The
              Corporation shall cause the Certificate of Minimum Liquidity to be
              delivered to the Auction Agent not later than the close of
              business on the third Business Day after the Valuation Date. The
              Minimum Liquidity Level shall be deemed to be met as of any date
              of determination if the Corporation has timely

                                       35

<PAGE>

     delivered a Certificate of Minimum Liquidity relating to such date, which
     states that the same has been met and which is not manifestly inaccurate.
     In the event that a Certificate of Minimum Liquidity is not delivered to
     the Auction Agent when required, the Minimum Liquidity Level shall be
     deemed not to have been met as of the applicable date.

           (ii)   If the Minimum Liquidity Level is not met as of any Valuation
     Date, then the Corporation shall purchase or otherwise acquire Dividend
     Coverage Assets (with the proceeds from the liquidation of Eligible
     Portfolio Property or otherwise) to the extent necessary so that the
     Minimum Liquidity Level is met as of the fifth Business Day following such
     Valuation Date. The Corporation shall, by such fifth Business Day, provide
     to the Auction Agent a Certificate of Minimum Liquidity setting forth the
     calculations of the Dividend Coverage Assets and the Dividend Coverage
     Amount and showing that the Minimum Liquidity Level is met as of such fifth
     Business Day together with a report of the custodian of the Corporation's
     assets confirming the amount of the Corporation's Dividend Coverage Assets
     as of such fifth Business Day.

     (d)   Calculation of AMPS Basic Maintenance Amount; Accounting Treatment.

           (i)    Eligible Portfolio Property of the Corporation shall be
     determined on an accrual basis in accordance with customary practice under
     which Eligible Portfolio Property purchased and not yet received are so
     reflected as Eligible Portfolio Property.

           (ii)   Dividends on the Common Stock which are payable in Common
     Stock shall, after the effective date of any election by a holder of Common
     Stock to receive such dividend, be excluded from current liabilities.

           (iii)  Withholding taxes with respect to interest earned on any asset
     of the Corporation if such interest is not included in Eligible Portfolio
     Property, shall be excluded from current liabilities.

           (iv)   With respect to Eligible Portfolio Property sold by the
     Corporation as of or prior to the Valuation Date, (x) if the determination
     is being made for Moody's, the sales price of such property will be
     reflected as Cash or Australian Currency, as appropriate, in Eligible
     Portfolio Property, to the extent that such receivable is due and payable
     within 5 Business Days (determined as for a Valuation Date) and is not
     subject to any dispute and (y) if the determination is being made for S&P,
     the Market Value of such property will be reflected in Eligible Portfolio
     Property and will be discounted at the appropriate Discount Factor.

     (e)   Other Permitted Assets. In addition to Eligible Portfolio Property,
the Corporation may own Other Permitted Assets and may also own other
securities, if the inclusion of any such type of other securities is deemed by
the Board of Directors to be in the best interest of the Corporation. Other
Permitted Assets and such other securities

                                       36

<PAGE>

     may be included in Eligible Portfolio Property if the Rating Agencies have
     advised the Corporation in writing that the inclusion of such Other
     Permitted Assets or other securities in Eligible Portfolio Property would
     not adversely affect their respective then-current ratings of the shares of
     AMPS.

           (f)    Failure to Satisfy AMPS Basic Maintenance Amount. Within ten
     Business Days after the date of delivery to the Auction Agent of a
     Portfolio Valuation Report in accordance with paragraph 7(b) above relating
     to any Valuation Date on which the Corporation failed to satisfy the AMPS
     Basic Maintenance Amount, and relating to the Cure Date with respect to
     such failure to satisfy the AMPS Basic Maintenance Amount, the Independent
     Accountants will provide to the Auction Agent and the Rating Agencies an
     Accountant's Confirmation as to such Portfolio Valuation Report.

     8.    Auction Procedures.

           (a)    Certain Definitions.

                  Capitalized terms not defined in this paragraph 8(a) shall
     have the respective meanings specified in paragraph 1. As used in this
     paragraph 8, the following terms shall have the following meanings, unless
     the context otherwise requires:

                  (i)    "Affiliate" shall mean any Person known to the Auction
           Agent to be controlled by, in control of, or under common control
           with, the Corporation.

                  (ii)   "Agent Member" shall mean the member of the Securities
           Depository that will act on behalf of an Existing Holder or a
           Potential Holder and is identified as such in such holder's
           Purchaser's Letter.

                  (iii)  "AMPS" shall man the shares of AMPS being auctioned
           pursuant to this paragraph 8.

                  (iv)   "Auction" shall mean the periodic operation of the
           procedures set forth in this paragraph 8.

                  (v)    "Auction Date' shall mean the first Business Day next
           preceding the first day of a Dividend Period.

                  (vi)   "Available AMPS" shall have the meaning specified in
           paragraph 8(d)(i) below.

                  (vii)  "Bid" and "Bids" shall have the respective meanings
           specified in paragraph 8(b)(i) below.

                  (viii) "Bidder" and "Bidders" shall have the respective
           meanings specified in paragraph 8(b)(i) below.

                  (ix)   "Broker-Dealers" shall mean any broker-dealer, or other
           entity permitted by law to perform the functions required of a
           Broker-Dealer in this

                                       37

<PAGE>

           paragraph 8, that has been selected by the Corporation and has
           entered into a Broker-Dealer Agreement with the Auction Agent that
           remains effective.

                  (x)     "Broker-Dealer Agreement" shall mean an agreement
           between the Auction Agent and a Broker-Dealer pursuant to which such
           Broker-Dealer agrees to follow the procedures specified in this
           paragraph 8.

                  (xi)    "Existing Holder", when used with respect to shares of
           AMPS, shall mean a Person who has signed a Purchaser's Letter and is
           listed as the beneficial owner of such shares of AMPS in the records
           of the Auction Agent.

                  (xii)   "Hold Order" and "Hold Orders" shall have the
           respective meanings specified in paragraph 8(b)(i) below.

                  (xiii)  "Order" shall have the meaning specified in paragraph
           8(b)(i) below.

                  (xiv)   "Outstanding" shall mean, as of any date, shares of
           AMPS theretofore issued by the Corporation except, without
           duplication, (A) any shares of AMPS theretofore cancelled or
           delivered to the Auction Agent for cancellation, or redeemed by the
           Corporation, or as to which a Notice of Redemption shall have been
           given and moneys shall have been deposited in trust by the
           Corporation pursuant to paragraph 5(g) and (B) any shares of AMPS as
           to which the Corporation or any Affiliate thereof shall be an
           Existing Holder.

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

                  (xvi)   "Potential Holder" shall mean any Person, including
           any Existing Holder, (A) who shall have executed a Purchaser's Letter
           and (B) who may be interested in acquiring shares of AMPS (or, in the
           case of an Existing Holder, additional shares of AMPS).

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

                  (xviii) "Sell Order" and "Sell Orders" shall have the
           respective meanings specified in paragraph 8(b)(i) below.

                  (xix)   "Submission Deadline" shall mean 12:30 P.M., New York
           City time, on any Auction Date or such other time on any Auction Date
           (as may be specified by the Auction Agent from time to time) as the
           time by which each Broker-Dealer must submit to the Auction Agent in
           writing all Orders obtained by it for the Auction to be conducted on
           such Auction Date.

                                       38

<PAGE>

                  (xx)    "Submitted Bid" and "Submitted Bids" shall have the
           respective meanings specified in paragraph 8(d)(I) below.

                  (xxi)   "Submitted Hold Order" and "Submitted Hold Orders"
           shall have the respective meanings specified in paragraph 8(d)(i)
           below.

                  (xxii)  "Submitted Order and "Submitted Orders" shall have the
           respective meanings specified in paragraph 8(d)(i) below.

                  (xxiii) "Submitted Sell Order" and "Submitted Sell Orders"
           shall have the respective meanings specified is paragraph 8(d)(i)
           below.

                  (xxiv)  "Sufficient Clearing Bids" shall have the meaning
           specified in paragraph 8(d)(i) below.

                  (xxv)   "Winning Bid Rate" shall have the meaning specified in
           paragraph 8(d)(i) below.

           (b)    Orders by Existing Holders and Potential Holders.

                  (i)     On or prior to the Submission Dead-line on each
           Auction Date:

                          (A)   each Existing Holder may submit to a
                  Broker-Dealer information as to:

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

                                (2)  the number of Outstanding shares, if any,
                          of AMPS held by such Existing Holder which such
                          Existing Holder desires to continue to hold, provided
                          that the Applicable Rate for the next succeeding
                          Dividend Period shall not be less than the rate per
                          annum then specified by such Existing Holder; and/or

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

           (B)    each Broker-Dealer, using a list of Potential Holders that
           shall be maintained in good faith for the purposes of conducting a
           competitive Auction, shall contact potential Holders, including
           Persons that are not Existing Holders, on such list to determine the
           number of Outstanding shares, if any, of AMPS which each such
           Potential Holder offers to purchase provided that the Applicable Rate
           for the next succeeding Dividend Period shall not be less than the
           rate per annum specified by such Potential holder.

                                       39

<PAGE>

                 For the purposes hereof, the communication to a Broker-Dealer
           of information referred to in clause (A) or (B) of this paragraph
           8(b)(i) is hereinafter referred to as an "Order" and collectively as
           "Orders" and each Existing Holder and each Potential Holder placing
           an Order is hereinafter referred to as a "Bidder" and collectively as
           "Bidders"; an Order containing the information referred to in clause
           (A)(l) of this paragraph 8(b) is hereinafter referred to as a "Hold
           Order" and collectively as "Hold Orders"; an Order containing the
           information referred to in clause (A)(2) or (B) of this paragraph
           8(b) is hereinafter referred to as a "Bid" and collectively as
           "Bids"; and an Order containing the information referred to in clause
           (A)(3) of this paragraph 8(b) is hereinafter referred to as a "Sell
           Order" and collectively as "Sell Orders".

                             (ii) (A)  A Bid by an Existing Holder shall
                 constitute an irrevocable offer to sell;

                                  (1)  the number of Outstanding shares of AMPS
                       specified in such Bid if the Applicable Rate determined
                       on such Auction Date shall be less than the rate per
                       annum specified in such Bid;

                                  (2)  such number or a lesser number of
                       Outstanding shares of AMPS to be determined as set forth
                       in paragraph 8(e)(i)(D) if the Applicable Rate determined
                       on such Auction Date shall be equal to the rate per annum
                       specified therein; or

                                  (3)  a lesser number of Outstanding shares of
                       AMPS to be determined as set forth in paragraph
                       8(e)(ii)(C) if such specified rate, per annum, shall be
                       higher than the Maximum Applicable Rate and Sufficient
                       Clearing Bids do not exist.

                 (B)   A Sell Order by an Existing Holder shall constitute an
           irrevocable offer to sell:

                             (1)  the number of Outstanding shares of AMPS
                       specified in such Sell Order; or

                             (2)  such number or a lesser number of Outstanding
                       shares of AMPS to be determined as set forth in paragraph
                       8(e)(ii) (C) if Sufficient Clearing Bids do not exist.

                 (C)   A Bid by a Potential Holder shall constitute an
           irrevocable offer to purchase:

                             (1)  the number of Outstanding shares of AMPS
                       specified in such Bid if the Applicable Date determined
                       on such Auction Date shall be higher than the rate per
                       annum specified in such Bid; or

                             (2)  such number or a lesser number of Outstanding
                       shares of AMPS to be determined as set forth in paragraph
                       8(e)(i)(E) if the

                                       40

<PAGE>

            Applicable Rate determined on such Auction Date shall be equal to
            the rate per annum specified therein.

            (c)  Submission of Orders by Broker-Dealers to Auction Agent.

                 (i)    Each Broker-Dealer shall submit in writing to the
      Auction Agent prior to the Submission Deadline on each Auction Date all
      Orders obtained by such Broker-Dealer specifying with respect to each
      Order:

                        (A)    the name of the Bidder placing such Order;

                        (B)    the aggregate number of Outstanding shares of
            AMPS that are the subject of such Order;

                        (C)    to the extent that such Bidder is an Existing
            Holder:

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

                               (2)  the number of Outstanding shares, if any, of
            AMPS subject to any Bid placed by such Existing Holder and the rate
            per annum specified in such Bid; and

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

            (D)  to the extent such Bidder is a Potential Holder the rate per
      annum specified in such Potential Holder's Bid.

                 (ii)   If any rate per annum 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%.

                 (iii)  If an Order or Orders covering all of the Outstanding
      shares of AMPS held by an 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 or behalf of such Existing Holder
      covering the number of Outstanding shares of AMPS held by such Existing
      Holder and not subject to Orders submitted to the Auction Agent.

                 (iv)   If one or more Orders on behalf of an Existing Holder
      covering in the aggregate more than the number of Outstanding shares of
      AMPS held by an Existing Holder are submitted to the Auction Agent, such
      Orders shall be considered valid as follows and in the following order of
      priority:

            (A)  any Hold Order submitted on behalf of such Existing Holder
      shall be considered valid up to and including the number of Outstanding
      shares of AMPS held by such Existing Holder; provided that if more than
      one Hold Order

                                       41

<PAGE>

           is submitted on behalf of such Existing Holder and the number of
           shares of AMPS subject to such Hold Orders exceeds the number of
           Outstanding shares of AMPS held by such Existing Holder, the number
           of shares of AMPS subject to each of such Hold Orders shall be
           reduced pro rata so that such Hold Orders, in the aggregate, cover
           the number of Outstanding shares of AMPS held by such Existing
           Holder;

                (B) any Bids submitted on behalf of such Existing Holder shall
           be considered valid, in the ascending order of their respective rates
           per annum if more than one Bid is submitted on behalf of such
           Existing Holder, up to and including the excess of the number of
           Outstanding shares of AMPS held by such Existing Holder over the
           number of shares of AMPS subject to any Hold Order referred to in
           paragraph 8(c)(iv)(A) above (and if more than one Bid submitted on
           behalf of such Existing Holder specifies the same rate per annum and
           together they cover more than the remaining number of shares than can
           be the subject of valid Bids after application of paragraph
           8(c)(iv)(A) above and of the foregoing portion of this paragraph
           8(c)(iv)(B) to any Bid or Bids specifying a lower rate or rates per
           annum, the number of shares subject to each of such Bids shall be
           reduced pro rata so that such Bids, in the aggregate, cover exactly
           such remaining number of shares); and the number of shares, if any,
           subject to Bids not valid under this paragraph 8(c)(iv)(B) shall be
           treated as the subject of a Bid by a Potential Holder; and

                (C) any Sell Order shall be considered valid up to and including
           the excess of the number of Outstanding shares of AMPS held by such
           Existing Holder over the number of shares of AMPS subject to Hold
           Orders referred to in paragraph 8(c)(iv)(A) and Bids referred to in
           paragraph 8(c)(iv)(B), provided that if more than one Sell Order is
           submitted on behalf of any Existing Holder and the number of shares
           of AMPS subject to such Sell Orders is greater than such excess, the
           number of shares of AMPS subject to each of such Sell Orders shall be
           reduced pro rata so that such Sell Orders, in the aggregate, cover
           exactly the number of shares of AMPS equal to such excess.

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

                (d) Determination of Sufficient Clearing Bids, Winning Bid Rate
and Applicable Rate.

                    (i) Not earlier than the Submission Deadline on each Auction
           Date, the Auction Agent shall assemble all Orders submitted or deemed
           submitted to it by the Broker-Dealers (each such Order as submitted
           or deemed submitted by a Broker-Dealer being hereinafter referred to
           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

                                       42

<PAGE>

           Bids" or "Submitted Sell Orders," as the case may be, or as
           "Submitted Orders") and shall determine:

                (A) the excess of the total number of Outstanding shares of AMPS
           over the number of Outstanding shares of AMPS that are the subject of
           Submitted Hold Orders (such excess being hereinafter referred to as
           the "Available AMPS");

                (B) from the Submitted Orders whether the number of Outstanding
           shares of AMPS that are the subject of Submitted Bids by Potential
           Holders specifying one or more rates per annum equal to or lower than
           the Maximum Applicable Rate exceeds or is equal to the sum of:

                    (1) the number of Outstanding shares of AMPS that are the
                subject of Submitted Bids by Existing solders specifying one or
                more rates per annum higher than the Maximum Applicable Rate;
                and

                    (2) the number of Outstanding shares of AMPS that are
                subject to Submitted Sell Orders

           (if such excess or such equality exists (other than because the
           number of Outstanding shares of AMPS in clauses (1) and (2) above are
           each zero because all of the Outstanding shares of AMPS are the
           subject of Submitted Hold Orders), such Submitted Bids by Potential
           Holders being hereinafter referred to collectively as "Sufficient
           Clearing Bids"); and

                (C) if Sufficient Clearing Bids exist, the lowest rate per annum
           specified in the Submitted Bids (the "Winning Bid Rate") that if:

                    (1) each Submitted Bid from Existing Holders specifying the
                Winning Bid Rate and all other Submitted Bids from Existing
                Holders specifying lower rates per annum were rejected, thus
                entitling such Existing Holders to continue to hold the shares
                of AMPS that are the subject of such Submitted Bids, and

                    (2) each Submitted Bid from Potential Holders specifying the
                Winning Bid Rate and all other Submitted Bids from Potential
                Holders specifying lower rates per annum were accepted, thus
                entitling those Potential Holders to purchase the shares of AMPS
                that are the subject of such Submitted Bids, would result in the
                number of shares subject to all Submitted Bids specifying the
                Winning Bid Rate or a lower rate per annum being at least equal
                to the Available AMPS.

                        (ii) Promptly after the Auction Agent has made the
           determinations pursuant to paragraph 8(d)(i), the Auction Agent shall
           advise the Corporation of the Maximum Applicable Rate and, based on
           all such determinations, the Applicable Rate for the next succeeding
           Dividend Period as follows:

                                       43

<PAGE>

                (A) if Sufficient Clearing Bids exist, that the Applicable Rate
           for the next succeeding Dividend Period shall be equal to the Winning
           Bid Rate;

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

                (C) if all the shares of AMPS are the subject of Submitted Hold
           Orders, that the Applicable Rate for the next succeeding Dividend
           Period shall be equal to ___% of the 30-day "AA" Composite Commercial
           Paper Rate on the date of the Auction.

                (e) Acceptance and Rejection of Submitted Bids and Submitted
Sell Orders and Allocations of Shares.

                Based on the determinations made pursuant to paragraph 8(d)(i),
the Submitted Bids and Submitted Sell Orders shall be accepted or rejected and
the Auction Agent shall take such other action as set forth below:

                    (i) If Sufficient Clearing Bids have been made, subject to
           the provisions of paragraphs 8(e)(iii) and 8(e)(iv), Submitted Bids
           and Submitted Sell Orders shall be accepted or rejected in the
           following order of priority and all other Submitted Bids shall be
           rejected:

                        (A) the Submitted Sell Orders of Existing Holders shall
                be accepted and the Submitted Bid of each of the Existing
                Holders specifying any rate per annum that is higher than the
                Winning Bid Rate shall be accepted, thus requiring each such
                Existing Holder to sell the Outstanding shares of AMPS that are
                the subject of such Submitted Sell Order or Submitted Bid;

                        (B) the Submitted Bid of each of the Existing Holders
                specifying any rate per annum that is lower than the Winning Bid
                Rate shall be accepted, thus entitling each such Existing Holder
                to continue to hold the Outstanding shares of AMPS that are the
                subject of such Submitted Bid;

                        (C) the Submitted Bid of each of the Potential Holders
                specifying any rate per annul that is lower than the Winning Bid
                Rate shall be accepted;

                        (D) the Submitted Bid of each of the Existing Holders
                specifying a rate per annum that is equal to the Winning Bid
                Rate shall be rejected, thus entitling such Existing Holder to
                continue to hold the Outstanding shares of AMPS that are the
                subject of such Submitted Bid, unless the number of Outstanding
                shares of AMPS subject to all such Submitted Bids shall be
                greater than the number of Outstanding shares of

                                       44

<PAGE>

                    AMPS (Remaining Shares") equal to the excess of the
                    Available AMPS over the number of Outstanding shares of AMPS
                    subject to Submitted Bids described in paragraphs 8(e)(i)(B)
                    and 8(e)(i)C), in which event the Submitted Bids of each
                    such Existing Holder shall be accepted, and each such
                    Existing Holder shall be required to sell Outstanding shares
                    of AMPS, but only in an amount equal to the difference
                    between (1) the number of Outstanding shares of AMPS then
                    held by such Existing Holder subject to such Submitted Bid
                    and (2) the number of shares of AMPS obtained by multiplying
                    (x) the number of Remaining Shares by (y) a fraction the
                    numerator of which shall be the number of Outstanding shares
                    of AMPS held by such Existing Holder subject to such
                    Submitted Bid and the denominator of which shall be the sum
                    of the numbers of Outstanding shares of AMPS subject to such
                    Submitted Bids made by all such Existing Holders that
                    specified a rate per annum equal to the Winning Bid Rate;
                    and

                              (E) the Submitted Bid of each of the Potential
                    Holders specifying a rate per annum that is equal to the
                    Winning Bid Rate shall be accepted, but only in an amount
                    equal to the number of Outstanding shares of AMPS obtained
                    by multiplying (x) the difference between the Available AMPS
                    and the number of shares of AMPS subject to Submitted Bids
                    described in paragraphs 8(e)(i)(B), 8(e)(i)(C) and
                    8(e)(i)(D) by (y) a fraction the numerator of which shall be
                    the number of Outstanding shares of AMPS subject to such
                    Submitted Bids and the denominator of which shall be the sum
                    of the numbers of Outstanding shares of AMPS subject to such
                    Submitted Bids made by all such Potential Holders that
                    specified rates per annum equal to the Winning Bid Rate.

                        (ii)  If Sufficient Clearing Bids have not been made
           (other than because all of the Outstanding shares of AMPS are subject
           to Submitted Hold Orders), subject to the provisions of paragraph
           8(e)-(iii), Submitted Orders shall be accepted or rejected as follows
           in the following order of priority and all other Submitted Bids shall
           be rejected:

                              (A) the Submitted Bid of each Existing Holder
                    specifying any rate per annum that is equal to or lower than
                    the Maximum Applicable Rate shall be rejected, thus
                    entitling such Existing Holder to continue to hold the
                    Outstanding shares of AMPS that are the subject of such
                    Submitted Bid;

                              (B) the Submitted Bid of each Potential Holder
                    specifying any rate per annum that is equal to or lower than
                    the Maximum Applicable Rate shall be accepted, thus
                    requiring such Potential Holder to purchase the Outstanding
                    shares of AMPS that are the subject of such Submitted Bid;
                    and

                                       45

<PAGE>

                          (C)  the Submitted Bid of each Existing Holder
                specifying any rate per annum that is higher than the Maximum
                Applicable Rate shall be accepted, thus requiring each such
                Existing Holder to sell the shares of AMPS that are the subject
                of such Submitted Bid, and the Submitted Sell Order of each
                Existing Holder shall be accepted, in both cases only in an
                amount equal to the difference between (1) the number of
                Outstanding shares of AMPS then held by such Existing Holder
                subject to such Submitted Bid or Submitted Sell Order and (2)
                the number of Outstanding shares of AMPS obtained by multiplying
                (x) the difference between the Available AMPS and the aggregate
                number of Outstanding shares of AMPS subject to Submitted Bids
                described in paragraphs 8(e)-(ii)(A) and 8(e)(ii)(B) by (y) a
                fraction the numerator of which shall be the number of
                Outstanding shares of AMPS held by such Existing Holder subject
                to such Submitted Bid or Submitted Sell Order and the
                denominator of which shall be the number of Outstanding shares
                of AMPS subject to all such Submitted Bids and Submitted Sell
                Orders.

                    (iii) If, as a result of the procedures described in
           paragraphs 8(e)(i) or 8(e)(ii), 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 AMPS on any Auction
           Date, the Auction Agent shall, in such manner as in its sole
           discretion it shall determine round up or down the number of shares
           of AMPS to be purchased or sold by any Existing Holder or Potential
           Holder on such Auction Date so that each Outstanding share of AMPS
           purchased or sold by each Existing Holder or Potential Holder on such
           Auction Date shall be a whole share of AMPS.

                    (iv)  If, as a result of the procedures described in
           paragraph 8(e)(i), any Potential Holder would be entitled or required
           to purchase less than a whole share of AMPs on any Auction Date, the
           Auction Agent shall, in such manner as in its sole discretion it
           shall determine, allocate shares of AMPS for purchase among Potential
           Holders so that only whole shares of AMPS are purchased on such
           Auction Date by any Potential Holder, even if such allocation results
           in one or more of such Potential Holders not purchasing any shares of
           AMPS on such Auction Date.

                    (v)   Based on the results of each Auction, the Auction
           Agent shall determine, with respect to each Broker-Dealer that
           submitted Bids or Sell Orders on behalf of Existing Holders or
           Potential Holders, the aggregate number of Outstanding shares of AMPS
           to be purchased and the aggregate number of Outstanding shares of
           AMPS to be sold by such Potential Holders and Existing Holders and,
           to the extent that such aggregate number of Outstanding shares to be
           sold differ, the Auction Agent shall determine to which other
           Broker-Dealer or Broker-Dealers acting for one or more purchasers
           such Broker-Dealer shall deliver, or from which other Broker-Dealer
           or Broker-Dealers acting for one or more sellers such Broker-Dealer
           shall receive, as the case may be, Outstanding shares of AMPS.

                                       46

<PAGE>

                (f) Participation in Auctions.

     Neither the corporation nor any Affiliate of the Corporation may submit an
Order in any Auction.

     9.   Miscellaneous.

                (a) To the extent permitted by applicable law, the Board of
Directors may interpret or adjust the provisions hereof to resolve any
inconsistency or ambiguity, remedy any formal defect or make any other change or
modification which does not adversely affect the rights of Holders of shares of
AMPS and if such inconsistency or ambiguity reflects an incorrect provision
hereof then the Board of Directors may authorize the filing of a Certificate of
Amendment or a Certificate of Correction, as the case may be.

                (b) If there is a Securities Depository, one certificate for all
of the shares of AMPS of any series shall be issued to the Securities Depository
and registered in the name of the Securities Depository or its nominee. Such
certificate shall bear a legend to the effect that such certificate is issued
subject to the provisions contained in these Articles Supplementary and each
Purchaser's Letter. The Corporation will also issue stop-transfer instructions
to the Paying Agent for the shares of AMPS. Except as provided in paragraph (c)
below, the Securities Depository or its nominee will be the Holder, and no
beneficial owner shall receive certificates representing its ownership interest
in such shares.

                (c) If there is no Securities Depository, the Corporation may at
its option issue one or more new certificates with respect to such shares
(without the legend referred to in paragraph 9(b) registered in the names of the
beneficial owners or their nominees and rescind the stop-transfer instruction
referred to in paragraph 9(b) with respect to such shares.

                (d) The Corporation shall exercise its best efforts to maintain
an Auction Agent pursuant to an agreement containing terms not materially less
favorable to the Corporation than the terms of the Auction Agent Agreement first
entered into by the Corporation pursuant to the resolutions adopted by the Board
of Directors on December 13, 1988.

                (e) The Corporation shall use its best efforts to maintain a
rating of the AMPS from each of the Rating Agencies.

                (f) All notices or communications, unless otherwise specified in
the By-laws of the Corporation or these Articles Supplementary, shall be
sufficiently given if in writing and delivered in person or mailed by
first-class mail, postage pre-paid. Notice shall be deemed given on the earlier
of the date received or the date seven days after which such notice is mailed.

                (g) So long as any shares of AMPS shall be outstanding, the
Corporation shall not engage in "short sales" or "hedging" or enter into
"futures contracts" or "option contracts" with respect to the Eligible Portfolio
Property.

                                       47

<PAGE>

     IN WITNESS WHEREOF, THE FIRST AUSTRALIA PRIME INCOME FUND, INC., has caused
these presents to be signed in its name and on its behalf by its President and
its corporate seal to be hereunder affixed and attested by its Secretary on this
17/th/ day of January 1989, and its President acknowledges that these Articles
Supplementary are the act and deed of The First Australia Prime Income Fund,
Inc., and, under the penalties of perjury, that the matters and facts set forth
herein with respect to authorization and approval are true in all material
respects to the best of his knowledge, information and belief.

                                             THE FIRST AUSTRALIA PRIME INCOME
                                             FUND, INC.



                                             By:  /s/ Brian Sherman
                                                  ---------------------------
                                                  President

ATTEST:


  /s/ RM Randall
--------------------------
         Secretary


                                       48

</TEXT>
</DOCUMENT>
