<PAGE> PAGE 1
000 A000000 06/30/98
000 C000000 0000804116
000 D000000 N
000 E000000 NF
000 F000000 Y
000 G000000 N
000 H000000 N
000 I000000 3.0.a
000 J000000 A
001 A000000 ROYCE VALUE TRUST, INC.
001 B000000 811-4875
001 C000000 2123557311
002 A000000 1414 AVENUE OF THE AMERICAS
002 B000000 NEW YORK
002 C000000 NY
002 D010000 10019
003 000000 N
004 000000 N
005 000000 N
006 000000 N
007 A000000 N
007 B000000 0
007 C010100 1
007 C010200 2
007 C010300 3
007 C010400 4
007 C010500 5
007 C010600 6
007 C010700 7
007 C010800 8
007 C010900 9
007 C011000 10
008 A000001 ROYCE & ASSOCIATES, INC.
008 B000001 A
008 C000001 801-8268
008 D010001 NEW YORK
008 D020001 NY
008 D030001 10019
012 A000001 STATE STREET BANK AND TRUST COMPANY
012 B000001 84-00896
012 C010001 N. QUINCY
012 C020001 MA
012 C030001 02171
013 A000001 TAIT, WELLER & BAKER
013 B010001 PHILADELPHIA
013 B020001 PA
013 B030001 19103
013 B040001 2108
015 A000001 STATE STREET BANK AND TRUST COMPANY
015 B000001 C
015 C010001 QUINCY
<PAGE> PAGE 2
015 C020001 MA
015 C030001 02170
015 E010001 X
015 A000002 CANADA TRUSTCO MORTGAGE COMPANY
015 B000002 S
015 C010002 TORONTO
015 D010002 CANADA
015 E040002 X
018 000000 Y
019 A000000 Y
019 B000000 16
019 C000000 ROYCEFUNDS
020 A000001 INSTINET
020 B000001 13-2596491
020 C000001 48
020 A000002 WILLIAM O'NEIL & CO., INC.
020 B000002 95-2269163
020 C000002 23
020 A000003 ROBINSON HUMPHREY
020 B000003 58-1472560
020 C000003 18
020 A000004 D.A. DAVIDSON & CO.
020 B000004 81-0139474
020 C000004 17
020 A000005 GEORGE K. BAUM & CO.
020 B000005 43-1661917
020 C000005 14
020 A000006 MORGAN STANLEY & CO.
020 B000006 13-2655998
020 C000006 13
020 A000007 JEFFERIES & COMPANY, INC.
020 B000007 95-2622900
020 C000007 8
020 A000008 STANDARD AND POOR'S SECURITIES, INC.
020 B000008 13-1026995
020 C000008 8
020 A000009 HAMBRECHT & QUIST
020 B000009 94-3246636
020 C000009 8
020 A000010 DOWLING & PARTNERS SECURITIES
020 B000010 06-1400223
020 C000010 8
021 000000 266
022 A000001 STATE STREET BANK & TRUST COMPANY
022 B000001 04-1867445
022 C000001 4303600
022 D000001 0
022 A000002 EVEREN SECURITIES INC.
022 B000002 36-3223831
022 C000002 30
022 D000002 10294
<PAGE> PAGE 3
022 A000003 SMITH BARNEY, HARRIS UPHAM
022 B000003 13-1912900
022 C000003 3515
022 D000003 5895
022 A000004 JEFFERIES & COMPANY, INC.
022 B000004 95-2622900
022 C000004 5791
022 D000004 1850
022 A000005 MERRILL LYNCH, PIERCE, FENNER & SMITH
022 B000005 13-5674085
022 C000005 2798
022 D000005 4397
022 A000006 BEAR STEARNS SECURITIES
022 B000006 13-3299429
022 C000006 2811
022 D000006 982
022 A000007 LAZARD FRERES & COMPANY
022 B000007 13-5545100
022 C000007 3227
022 D000007 0
022 A000008 COWEN & COMPANY
022 B000008 13-5616116
022 C000008 1112
022 D000008 2110
022 A000009 GOLDMAN SACHS & CO.
022 B000009 13-5108980
022 C000009 2490
022 D000009 484
022 A000010 ALEX BROWN & SONS, INC.
022 B000010 52-1319768
022 C000010 2450
022 D000010 224
023 C000000 4327824
023 D000000 26236
024 000000 N
025 D000001 0
025 D000002 0
025 D000003 0
025 D000004 0
025 D000005 0
025 D000006 0
025 D000007 0
025 D000008 0
026 A000000 N
026 B000000 Y
026 C000000 N
026 D000000 Y
026 E000000 N
026 F000000 N
026 G010000 N
026 G020000 N
<PAGE> PAGE 4
027 000000 N
028 A010000 0
028 A020000 0
028 A030000 0
028 A040000 0
028 B010000 0
028 B020000 0
028 B030000 0
028 B040000 0
028 C010000 0
028 C020000 0
028 C030000 0
028 C040000 0
028 D010000 0
028 D020000 0
028 D030000 0
028 D040000 0
028 E010000 0
028 E020000 0
028 E030000 0
028 E040000 0
028 F010000 0
028 F020000 0
028 F030000 0
028 F040000 0
028 G010000 0
028 G020000 0
028 G030000 0
028 G040000 0
028 H000000 0
030 A000000 0
030 B000000 0.00
030 C000000 0.00
031 A000000 0
031 B000000 0
032 000000 0
033 000000 0
035 000000 0
036 B000000 0
038 000000 0
042 A000000 0
042 B000000 0
042 C000000 0
042 D000000 0
042 E000000 0
042 F000000 0
042 G000000 0
042 H000000 0
043 000000 0
044 000000 0
045 000000 Y
<PAGE> PAGE 5
046 000000 N
047 000000 N
048 000000 0.000
048 A010000 0
048 A020000 0.000
048 B010000 0
048 B020000 0.000
048 C010000 0
048 C020000 0.000
048 D010000 0
048 D020000 0.000
048 E010000 0
048 E020000 0.000
048 F010000 0
048 F020000 0.000
048 G010000 0
048 G020000 0.000
048 H010000 0
048 H020000 0.000
048 I010000 0
048 I020000 0.000
048 J010000 0
048 J020000 0.000
048 K010000 0
048 K020000 0.000
049 000000 N
050 000000 N
051 000000 Y
052 000000 N
053 A000000 Y
053 B000000 Y
053 C000000 N
054 A000000 N
054 B000000 N
054 C000000 N
054 D000000 N
054 E000000 N
054 F000000 N
054 G000000 N
054 H000000 Y
054 I000000 N
054 J000000 Y
054 K000000 N
054 L000000 N
054 M000000 Y
054 N000000 N
054 O000000 N
055 A000000 N
055 B000000 N
056 000000 Y
057 000000 N
<PAGE> PAGE 6
058 A000000 N
059 000000 Y
060 A000000 Y
060 B000000 Y
061 000000 0
062 A000000 N
062 B000000 0.0
062 C000000 0.0
062 D000000 0.0
062 E000000 0.0
062 F000000 0.0
062 G000000 0.0
062 H000000 0.0
062 I000000 0.0
062 J000000 0.0
062 K000000 0.0
062 L000000 0.0
062 M000000 0.0
062 N000000 0.0
062 O000000 0.0
062 P000000 0.0
062 Q000000 0.0
062 R000000 0.0
063 A000000 0
063 B000000 0.0
066 A000000 Y
066 B000000 N
066 C000000 Y
066 D000000 N
066 E000000 N
066 F000000 N
066 G000000 N
067 000000 N
068 A000000 N
068 B000000 N
069 000000 N
070 A010000 Y
070 A020000 Y
070 B010000 Y
070 B020000 N
070 C010000 Y
070 C020000 N
070 D010000 N
070 D020000 N
070 E010000 N
070 E020000 N
070 F010000 N
070 F020000 N
070 G010000 N
070 G020000 N
070 H010000 N
<PAGE> PAGE 7
070 H020000 N
070 I010000 N
070 I020000 N
070 J010000 N
070 J020000 N
070 K010000 N
070 K020000 N
070 L010000 Y
070 L020000 Y
070 M010000 N
070 M020000 N
070 N010000 N
070 N020000 N
070 O010000 Y
070 O020000 N
070 P010000 Y
070 P020000 Y
070 Q010000 N
070 Q020000 N
070 R010000 N
070 R020000 N
071 A000000 100297
071 B000000 99621
071 C000000 602859
071 D000000 17
072 A000000 6
072 B000000 1575
072 C000000 4045
072 D000000 0
072 E000000 0
072 F000000 2534
072 G000000 0
072 H000000 130
072 I000000 22
072 J000000 66
072 K000000 55
072 L000000 62
072 M000000 28
072 N000000 0
072 O000000 1
072 P000000 1
072 Q000000 0
072 R000000 18
072 S000000 14
072 T000000 0
072 U000000 0
072 V000000 64
072 W000000 99
072 X000000 3094
072 Y000000 0
072 Z000000 2526
<PAGE> PAGE 8
072AA000000 36612
072BB000000 0
072CC010000 11251
072CC020000 0
072DD010000 0
072DD020000 0
072EE000000 0
073 A010000 0.0000
073 A020000 0.0000
073 B000000 0.0000
073 C000000 0.0000
074 A000000 76
074 B000000 87600
074 C000000 0
074 D000000 21886
074 E000000 3230
074 F000000 603835
074 G000000 0
074 H000000 0
074 I000000 0
074 J000000 682
074 K000000 0
074 L000000 1012
074 M000000 133
074 N000000 718454
074 O000000 1667
074 P000000 425
074 Q000000 0
074 R010000 0
074 R020000 0
074 R030000 0
074 R040000 660
074 S000000 160000
074 T000000 555702
074 U010000 31687
074 U020000 0
074 V010000 17.54
074 V020000 0.00
074 W000000 0.0000
074 X000000 2468
074 Y000000 0
075 A000000 0
075 B000000 548591
076 000000 16.50
077 A000000 Y
077 B000000 N
077 C000000 Y
077 D000000 N
077 E000000 N
077 F000000 N
077 G000000 N
<PAGE> PAGE 9
077 H000000 N
077 I000000 N
077 J000000 N
077 K000000 Y
077 L000000 N
077 M000000 N
077 N000000 N
077 O000000 N
077 P000000 N
077 Q010000 Y
077 Q020000 N
077 Q030000 N
078 000000 N
080 A000000 ICI MUTUAL INSURANCE COMPANY
080 C000000 6200
081 A000000 Y
081 B000000 14
082 A000000 Y
082 B000000 50
083 A000000 N
083 B000000 0
084 A000000 N
084 B000000 0
085 A000000 Y
085 B000000 N
086 A010000 2978
086 A020000 41421
086 B010000 0
086 B020000 0
086 C010000 4000
086 C020000 96484
086 D010000 0
086 D020000 0
086 E010000 0
086 E020000 0
086 F010000 2091
086 F020000 27058
087 A010000 COMMON STOCK
087 A020000 780910105
087 A030000 RVT
087 B010000 CUMULATIVE PREFERRED STOCK
087 B020000 780910204
087 B030000 RVTPFD
087 C010000 TAX-ADVANTAGED CUMULATIVE PREFERRED STOCK
087 C020000 780910303
087 C030000 RVT.PRA
088 A000000 Y
088 B000000 N
088 C000000 N
088 D000000 Y
<PAGE> PAGE 10
SIGNATURE JOHN DENNEEN
TITLE SECRETARY
ROYCE VALUE TRUST, INC.
Form N-SAR attachment for period ending 6/30/98
Item 77Q1(a)
- ------------
ARTICLES SUPPLEMENTARY
CREATING AND FIXING THE RIGHTS OF
7.30% TAX-ADVANTAGED CUMULATIVE PREFERRED STOCK OF
ROYCE VALUE TRUST, INC.
ROYCE VALUE TRUST, INC., a Maryland corporation, having its principal
office in Baltimore City, Maryland (hereinafter called the "Corporation"),
hereby certifies to the State Department of Assessments and Taxation of Maryland
that:
FIRST: Pursuant to authority expressly vested in the Board of Directors of
the Corporation by Article FIFTH of the Charter of the Corporation, the Board of
Directors has authorized the issuance of a series of 10,000,000 shares of
preferred stock, par value $.001 per share, of the Corporation designated as the
"7.30% Tax-Advantaged Cumulative Preferred Stock" (the "Cumulative Preferred
Stock") and has provided for the issuance of shares of such series.
SECOND: The preferences, voting powers, rights, restrictions, limitations
as to dividends, qualifications and terms and conditions of redemption of shares
of the Cumulative Preferred Stock of the Corporation, as set by the Board of
Directors, are as follows:
ARTICLE I.
DEFINITIONS
Unless the context or use indicates another or different meaning or intent,
the following terms when used in these Articles Supplementary shall have the
meanings set forth below, whether such terms are used in the singular or plural
and regardless of their tense:
"Accountant's Confirmation"* means a letter from an Independent Accountant
delivered to Moody's with respect to certain Basic Maintenance Reports
substantially to the effect that:
(i) the Independent Accountant has read the Basic Maintenance Report
for the current Quarterly Valuation Date and a randomly selected Basic
Maintenance Report prepared by the Corporation during the quarter
ending on such Quarterly Valuation Date (the "Reports");
(ii) with respect to the issue size compliance, issuer
diversification and industry diversification calculations, such
calculations and the resulting Market Value of Moody's Eligible Assets
and Portfolio Calculation are numerically correct;
(iii) with respect to the calculation of the Basic Maintenance
Amount, such calculation has been compared with the definition of
Basic Maintenance Amount in these Articles Supplementary and is
calculated in accordance with such definition and the results of such
calculation have been recalculated and are numerically correct;
<PAGE>
(iv) with respect to the excess or deficiency of the Portfolio
Calculation when compared to the Basic Maintenance Amount calculated
for Moody's, the results of the calculation set forth in the Reports
have been recalculated and are numerically correct;
(v) with respect to the Moody's and S&P ratings on corporate bonds,
convertible corporate bonds and preferred stock, issuer name, issue
size and coupon or dividend rate listed in the Reports, that
information has been traced and agrees with the information listed in
the applicable guides of the respective rating agencies (in the event
such information does not agree or such information is not listed in
the applicable guides of the respective rating agencies, the
Independent Accountant will inquire of the rating agencies what such
information is, and provide a listing in its letter of such
differences, if any);
(vi) with respect to the lower of two bid prices (or alternative
permissible factors used in calculating the Market Value as provided
by these Articles Supplementary) provided by the custodian of the
Corporation's assets for purposes of valuing securities in the
portfolio, the Independent Accountant has traced the price used in the
Reports to the lower of the two bid prices listed in the report
provided by such custodian and verified that such information agrees
(in the event such information does not agree, the Independent
Accountant will provide a listing in its letter of such differences);
and
(vii) with respect to the description of each security included in
the Reports, the description of Moody's Eligible Assets has been
compared to the definition of Moody's Eligible Assets contained in
these Articles Supplementary, and the description as appearing in the
Reports agrees with the definition of Moody's Eligible Assets as
described in these Articles Supplementary.
Each such letter may state: such Independent Accountant has made no
independent verification of the accuracy of the description of the investment
securities listed in the Reports or the Market Value of those securities nor
have they performed any procedures other than those specifically outlined above
for the purposes of issuing such letter; unless otherwise stated in the letter,
the procedures specified therein were limited to a comparison of numbers or a
verification of specified computations applicable to numbers appearing in the
Reports and the schedule(s) thereto; the foregoing procedures do not constitute
an examination in accordance with generally accepted auditing standards and the
Reports discussed in the letter do not extend to any of the Corporation's
financial statements taken as a whole; such Independent Accountant does not
express an opinion as to whether such procedures would enable such Independent
Accountant to determine that the methods followed in the preparation of the
Reports would correctly determine the Market Value or Discounted Value of the
investment portfolio; accordingly, such Independent Accountant expresses no
opinion as to the information set forth in the Reports or in the schedule(s)
thereto and make no representation as to the sufficiency of the procedures
performed for the purposes of these Articles Supplementary.
<PAGE>
Such letter shall also state that the Independent Accountant is a
"independent accountant" with respect to the Corporation within the meaning of
the Securities Act of 1933, as amended, and the related published rules and
regulations thereunder.
"Adviser" means Royce & Associates, Inc., a New York corporation.
"Asset Coverage" means asset coverage, as defined in Section 18(h) of the
1940 Act, of at least 200%, or such higher percentage as may be required under
the 1940 Act, with respect to all outstanding senior securities of the
Corporation which are stock, including all outstanding shares of Cumulative
Preferred Stock.
"Asset Coverage Cure Date" means, with respect to the failure by the
Corporation to maintain the Asset Coverage (as required by paragraph 5(a)(i) of
Article II hereof) as of the last Business Day of each March, June, September
and December of each year, 60 calendar days following such Business Day.
"Basic Maintenance Amount"* means, as of any Valuation Date, the dollar
amount equal to (i) the sum of (A) the product of the number of shares of
Cumulative Preferred Stock outstanding on such Valuation Date multiplied by the
Liquidation Preference; (B) to the extent not included in (A), the aggregate
amount of cash dividends (whether or not earned or declared) that will have
accumulated for each outstanding share of Cumulative Preferred Stock from the
most recent Dividend Payment Date to which dividends have been paid or duly
provided for (or, in the event the Basic Maintenance Amount is calculated on a
date prior to the initial Dividend Payment Date with respect to the Cumulative
Preferred Stock, then from the Date of Original Issue) through the Valuation
Date plus all dividends to accumulate on the Cumulative Preferred Stock then
outstanding during the 70 days following such Valuation Date; (C) the amount
referred to in clauses (i)(A) plus (i)(B) of the definition of "Basic
Maintenance Amount" in Article I of the 7.80% Preferred Articles; (D) the
Corporation's other liabilities due and payable as of such Valuation Date
(except that dividends and other distributions payable by the Corporation by the
issuance of Common Stock shall not be included as a liability) and such
liabilities projected to become due and payable by the Corporation during the 90
days following such Valuation Date (excluding liabilities for investments to be
purchased and for dividends and other distributions not declared as of such
Valuation Date); (E) any current liabilities of the Corporation as of such
Valuation Date to the extent not reflected in any of (i)(A) through (i)(D)
(including, without limitation, and immediately upon determination, any amounts
due and payable by the Corporation pursuant to reverse repurchase agreements and
any payables for assets purchased as of such Valuation Date) less (ii) (A) the
Discounted Value of any of the Corporation's assets and/or (B) the face value of
any of the Corporation's assets if, in the case of both (ii)(A) and (ii)(B),
such assets are either cash or securities which mature prior to or on the date
of redemption or repurchase of Cumulative Preferred Stock and/or 7.80% Preferred
or payment of another liability and are either U.S. Government Obligations or
securities which have a rating assigned by Moody's of at least Aaa, P-1, VMIG-1
or MIG-1 or by S&P of at least AAA, SP-1+ or A-1+, in both cases irrevocably
held by the Corporation's custodian bank in a segregated account or deposited by
the Corporation with the Paying Agent for the payment of the amounts needed to
redeem or repurchase Cumulative Preferred Stock and/or 7.80% Preferred subject
to redemption or repurchase or, without duplication, any of (i)(B) through
(i)(E) and provided that in the event the Corporation has repurchased Cumulative
Preferred Stock at a price
<PAGE>
of less than the Liquidation Preference thereof and/or 7.80% Preferred at a
price of less than the Liquidation Preference thereof as defined in the 7.80%
Preferred Articles and irrevocably segregated or deposited assets as described
above with its custodian bank or the Paying Agent for the payment of the
repurchase price the Corporation may deduct 100% of the Liquidation Preference
of such Cumulative Preferred Stock to be repurchased and/or 100% of the
Liquidation Preference of such 7.80% Preferred to be repurchased from (i) above.
"Basic Maintenance Amount Cure Date"* means 14 calendar days following a
Valuation Date, such date being the last day upon which the Corporation's
failure to comply with paragraph 5(a)(ii)(A) of Article II hereof could be
cured.
"Basic Maintenance Report"* means a report signed by the President, the
Treasurer or any Vice President of the Corporation which sets forth, as of the
related Valuation Date, the assets of the Corporation, the Market Value and
Discounted Value thereof (seriatim and in the aggregate), and the Basic
Maintenance Amount.
"Board of Directors" means the Board of Directors of the Corporation.
"Business Day" means a day on which the New York Stock Exchange is open for
trading and that is neither a Saturday, Sunday nor any other day on which banks
in the City of New York are authorized by law to close.
"Charter" means the Articles of Incorporation, as amended and supplemented
(including these Articles Supplementary and the 7.80% Preferred Articles), of
the Corporation on file in the State Department of Assessments and Taxation of
Maryland.
"Common Stock" means the Common Stock, par value $.001 per share, of the
Corporation.
"Corporation" shall mean Royce Value Trust, Inc., a Maryland corporation.
"Cumulative Preferred Stock" means the 7.30% Tax-Advantaged Cumulative
Preferred Stock, par value $.001 per share, of the Corporation.
"Date of Original Issue" shall have the meaning set forth in paragraph 1(a)
of Article II hereof.
"Deposit Securities" means cash, Short-Term Money Market Instruments and
U.S. Government Obligations. Except for determining whether the Corporation has
a Portfolio Calculation equal to or greater than the Basic Maintenance Amount,
each Deposit Security shall be deemed to have a value equal to its principal or
face amount payable at maturity plus any interest payable thereon after delivery
of such Deposit Security but only if payable on or prior to the applicable
payment date in advance of which the relevant deposit is made.
"Discounted Value"* means, with respect to a Moody's Eligible Asset, the
quotient of (A) in the case of non-convertible fixed income securities, the
lower of the principal amount and the Market Value thereof, or (B) in the case
of any other Moody's Eligible Assets, the Market Value thereof, divided by the
applicable Moody's Discount Factor.
<PAGE>
"Dividend Payment Date" with respect to the Cumulative Preferred Stock,
means any date on which dividends are payable thereon pursuant to the provisions
of paragraph 1(a) of Article II hereof.
"Dividend Period" shall have the meaning set forth in paragraph 1(a) of
Article II hereof.
"Independent Accountant"* means a nationally recognized accountant, or firm
of accountants, that is with respect to the Corporation an independent public
accountant or firm of independent public accountants under the Securities Act of
1933, as amended.
"Liquidation Preference" shall have the meaning set forth in paragraph 2(a)
of Article II hereof with respect to the Cumulative Preferred Stock and
paragraph 2(a) of Article II of the 7.80% Preferred Articles with respect to the
7.80% Preferred.
"Market Value"* means the amount determined by State Street Bank and Trust
Company (so long as prices are provided to it by Telekurs N.A., Inc. or another
pricing service approved by Moody's in writing), or, if Moody's agrees in
writing, the then bank custodian of the Corporation's assets or such other party
approved by Moody's in writing, with respect to specific Moody's Eligible Assets
of the Corporation, as follows: Securities listed on an exchange or on the
Nasdaq System shall be valued on the basis of the last reported sale on the
Valuation Date or, if no sale is reported for such Valuation Date, then at their
electronically-reported bid price for such day for exchange-listed securities
and at the average of their electronically-reported bid and asked prices for
such Valuation Date for Nasdaq System securities. Quotations shall be taken
from the market where the security is primarily traded. Bonds and other fixed
income securities may be valued by reference to other securities with comparable
ratings, interest rates and maturities, using established independent pricing
services.
Notwithstanding the foregoing, "Market Value" may, at the option of the
Corporation, mean the amount determined with respect to specific Moody's
Eligible Assets of the Corporation in the manner set forth below:
(a) as to any corporate bond or convertible corporate bond which is a
Moody's Eligible Asset, (i) the product of (A) the unpaid principal balance of
such bond as of the Valuation Date and (B)(1) if the bond is traded on a
national securities exchange or quoted on the NASDAQ System, the last sales
price reported on the Valuation Date or (2) if there was no reported sales
price on the Valuation Date or if the bond is not traded on a national
securities exchange or quoted on the NASDAQ System, the lower of two bid prices
for such bond provided by two recognized securities dealers with a minimum
capitalization of $25,000,000 (or otherwise approved for such purpose by
Moody's) or by one such securities dealer and any other source (provided that
the utilization of such source would not adversely affect Moody's then-current
rating of the Cumulative Preferred Stock) to the custodian of the Corporation's
assets, at least one of which shall be provided in writing or by telecopy,
telex, other electronic transcription, computer obtained quotation reducible to
written form or similar means, and in turn provided to the Corporation by any
such means by such custodian, plus (ii) accrued interest on such bond or, if two
bid prices cannot be obtained, such Moody's Eligible Asset shall have a Market
Value of zero;
<PAGE>
(b) as to any common or preferred stock which is a Moody's Eligible
Asset, (i) if the stock is traded on a national securities exchange or quoted
on the NASDAQ System, the last sales price reported on the Valuation Date or
(ii) if there was no reported sales price on the Valuation Date, the lower of
two bid prices for such stock provided by two recognized securities dealers
with a minimum capitalization of $25,000,000 (or otherwise approved for such
purpose by Moody's) or by one such securities dealer and any other source
(provided that the utilization of such source would not adversely affect Moody's
then-current rating of the Cumulative Preferred Stock) to the custodian of the
Corporation's assets, at least one of which shall be provided in writing or by
telecopy, telex, other electronic transcription, computer obtained quotation
reducible to written form or similar means, and in turn provided to the
Corporation by any such means by such custodian, or, if two bid prices cannot
be obtained, such Moody's Eligible Asset shall have a Market Value of zero;
(c) the product of (i) as to U.S. Government Obligations, Short Term
Money Market Instruments (other than demand deposits, federal funds, bankers'
acceptances and next Business Day's repurchase agreements) and other commercial
paper, the face amount or aggregate principal amount of such U.S. Government
Obligations, Short Term Money Market Instruments or other commercial paper, as
the case may be, and (ii) the lower of the bid prices for the same kind of
securities or instruments, as the case may be, having, as nearly as practicable,
comparable interest rates and maturities provided by two recognized securities
dealers having minimum capitalization of $25,000,000 (or otherwise approved for
such purpose by Moody's) or by one such securities dealer and any other source
(provided that the utilization of such source would not adversely affect Moody's
then-current rating of the Cumulative Preferred Stock) to the custodian of the
Corporation's assets, at least one of which shall be provided in writing or by
telecopy, telex, other electronic transcription, computer obtained quotation
reducible to written form or similar means, and in turn provided to the
Corporation by any such means by such custodian, or, if two bid prices cannot be
obtained, such Moody's Eligible Asset will have a Market Value of zero;
(d) as to cash, demand deposits, federal funds, bankers' acceptances
and next Business Day's repurchase agreements included in Short Term Money
Market Instruments, the face value thereof.
"Moody's" means Moody's Investors Service, Inc., or its successor.
"Moody's Discount Factor"* means, with respect to a Moody's Eligible Asset
specified below, the following applicable number:
<PAGE>
Moody's
Type of Moody's Eligible Asset: Discount Factor:
- ------------------------------ ---------------
Moody's Short-Term Money Market Instruments
(other than U.S. Government Obligations
set forth below) and other commercial
paper:
Demand or time deposits,
certificates of deposit and bankers'
acceptances includible in Moody's 1.00
Short-Term Money Market Instruments
Commercial paper rated P-1 by Moody's
maturing in 30 days or less 1.00
Commercial paper rated P-1 by Moody's
maturing in more than 30 days but in 270 1.15
days or less
Commercial paper rated A-1+ by S&P
maturing in 270 days or less 1.25
Repurchase obligations includible in Moody's
Short-Term Money Market Instruments if
term is less than 30 days and 1.00
counterparty is rated at least A2
Other repurchase obligations Discount Factor
applicable to
underlying
assets
Common stocks 3.00
<PAGE>
Preferred stocks:
Auction rate preferred stocks 3.50
Other preferred stocks issued by issuers
in the financial and industrial 2.35
industries
Other preferred stocks issued by issuers 1.60
in the utilities industry
U.S. Government Obligations (other than U.S.
Treasury Securities Strips set forth
below) with remaining terms to maturity
of:
1.08
1 year or less 1.15
2 years or less 1.20
3 years or less 1.26
4 years or less 1.31
5 years or less 1.40
7 years of less 1.48
10 years or less 1.54
15 years or less 1.61
20 years or less 1.63
30 years or less
U.S. Treasury Securities Strips with
remaining terms to maturity of:
1 year or less 1.08
2 years or less 1.16
3 years or less 1.23
4 years or less 1.30
5 years or less 1.37
7 years or less 1.51
10 years or less 1.69
15 years or less 1.99
20 years or less 2.28
30 years or less 2.56
<PAGE>
Corporate bonds:
Corporate bonds rated Aaa with remaining
terms to maturity of:
1 year or less 1.14
2 years or less 1.21
3 years or less 1.26
4 years or less 1.32
5 years or less 1.38
7 years or less 1.47
10 years or less 1.55
15 years or less 1.62
20 years or less 1.69
30 years or less 1.71
Corporate bonds rated Aa with remaining
terms to maturity of:
1 year or less 1.19
2 years or less 1.26
3 years or less 1.32
4 years or less 1.38
5 years or less 1.44
7 years or less 1.54
10 years or less 1.63
15 years or less 1.69
20 years or less 1.77
30 years or less 1.79
Corporate bonds rated A with remaining terms
to maturity of:
1 year or less 1.24
2 years or less 1.32
3 years or less 1.38
4 years or less 1.45
5 years or less 1.51
7 years or less 1.61
10 years or less 1.70
15 years or less 1.77
20 years or less 1.85
30 years or less 1.87
<PAGE>
Convertible corporate bonds with senior debt
securities rated Aa issued by the
following types of issuers:
1.80
Utility 2.97
Industrial 2.92
Financial 4.27
Transportation
Convertible corporate bonds with senior debt
securities rated A issued by the
following types of issuers:
1.85
Utility 3.02
Industrial 2.97
Financial 4.32
Transportation
Convertible corporate bonds with senior debt
securities rated Baa issued by the
following types of issuers:
2.01
Utility 3.18
Industrial 3.13
Financial 4.48
Transportation
Convertible corporate bonds with senior debt
securities rated Ba issued by the
following types of issuers:
2.02
Utility 3.19
Industrial 3.14
Financial 4.49
Transportation
Convertible corporate bonds with senior debt
securities rated B1 or B2 issued by the
following types of issuers:
Utility 2.12
Industrial 3.29
Financial 3.24
Transportation 4.59
"Moody's Eligible Assets"* means:
(i) cash (including, for this purpose, receivables for
investments sold to a counterparty whose senior debt securities
are rated at least Baa3 by Moody's or a counterparty approved by
Moody's and payable within five Business Days following such
Valuation Date and dividends and interest receivable within 70
days on investments);
<PAGE>
(ii) Short-Term Money Market Instruments;
(iii) commercial paper that is not includible as a Short-Term Money
Market Instrument having on the Valuation Date a rating from Moody's
of at least P-1 and maturing within 270 days;
(iv) preferred stocks (A) which either (1) are issued by issuers
whose senior debt securities are rated at least Baa1 by Moody's or (2)
are rated at least "baa3" by Moody's (or in the event an issuer's
senior debt securities or preferred stock is not rated by Moody's,
which either (1) are issued by an issuer whose senior debt securities
are rated at least A by S&P or (2) are rated at least A by S&P and for
this purpose have been assigned a Moody's equivalent rating of at
least "baa3"), (B) of issuers which have (or, in the case of issuers
which are special purpose corporations, whose parent companies have)
common stock listed on the New York Stock Exchange or the American
Stock Exchange, (C) which have a minimum issue size (when taken
together with other of the issuer's issues of similar tenor) of
$50,000,000, (D) which have paid cash dividends consistently during
the preceding three-year period (or, in the case of new issues without
a dividend history, are rated at least "a1" by Moody's or, if not
rated by Moody's, are rated at least AA by S&P), (E) which pay
cumulative cash dividends in U.S. dollars, (F) which are not
convertible into any other class of stock and do not have warrants
attached, (G) which are not issued by issuers in the transportation
industry and (H) in the case of auction rate preferred stocks, which
are rated at least "aa" by Moody's, or if not rated by Moody's, AAA by
S&P or are otherwise approved in writing by Moody's and have never had
a failed auction; provided, however, that for this purpose the
aggregate Market Value of the Company's holdings of any issue of
preferred stock shall not be less than $500,000 nor more than
$5,000,000; notwithstanding the foregoing, preferred stock which is
currently convertible into common stock which is a Moody's Eligible
Asset pursuant to clause (v) below is a Moody's Eligible Asset to the
extent of the aggregate Market Value of the number of shares of common
stock into which the preferred stock is convertible;
(v) common stocks (A) (i) which are traded in the United States on
a national securities exchange or in the over-the-counter market,
(ii) which, if cash dividend paying, pay cash dividends in U.S.
dollars, and (iii) which may be sold without restriction by the
Corporation; provided, however, that (1) common stock which, while a
Moody's Eligible Asset owned by the Corporation, ceases paying
any regular cash dividend will no longer be considered a Moody's
Eligible Asset until 71 days after the date of the announcement of
such cessation, unless the issuer of the common stock has senior
debt securities rated at least A3 by
Moody's, (2) the aggregate Market Value of the Corporation's
holdings of the common stock of any issuer shall not exceed 4% in
the case of utility common stock and 6% in the case of non-utility
common stock of the number of outstanding shares times the Market
Value of such common stocks, and (B) which are securities
denominated in any currency other than the U.S. dollar or
securities of issuers formed under the laws of jurisdictions
other than the United States, its states, commonwealths,
<PAGE>
territories and possessions, including the District of Columbia, for
which there are dollar-denominated American Depository Receipts
("ADRs") which are traded in the United States on a national
securities exchange or in the over-the-counter market and are issued
by banks formed under the laws of the United States, its states,
commonwealths, territories and possessions, including the District of
Columbia; provided, however, that the aggregate Market Value of the
Corporation's holdings of securities denominated in currencies other
than the U.S. dollar and ADRs in excess of (i) 6% of the aggregate
market value of the outstanding shares of common stock and ADRs of the
issuer thereof or (ii) 10% of the Market Value of Moody's Eligible
Assets with respect to issuers formed under the laws of any single
such non-U.S. jurisdiction , other than Australia, Belgium, Canada,
Denmark, Finland, France, Germany, Ireland, Italy, Japan, the
Netherlands, New Zealand, Norway, Spain, Sweden, Switzerland and the
United Kingdom, shall not be a Moody's Eligible Asset;
(vi) U.S. Government Obligations;
(vii) corporate bonds (A) which may be sold without restriction by
the Corporation and are rated at least B3 (Caa subordinate) by Moody's
(or, in the event the bond is not rated by Moody's, the bond is rated
at least BB- by S&P and which for this purpose is assigned a Moody's
equivalent rating of one full rating category lower), with such rating
confirmed on each Valuation Date, (B) which have a minimum issue size
of at least (x) $100,000,000 if rated at least Baa3 or (y) $50,000,000
if rated B or Ba3, (C) which are U.S. dollar denominated and pay
interest in cash in U.S. dollars, (D) which are not convertible or
exchangeable into equity of the issuing corporation and have a
maturity of not more than 30 years, (E) for which, if rated below
Baa3, the aggregate Market Value of the Corporation's holdings do not
exceed 10% of the aggregate Market Value of any individual issue of
corporate bonds calculated at the time of original issuance, (F) the
cash flow from which must be controlled by an indenture trustee and
(G) which are not issued in connection with a reorganization under any
bankruptcy law;
(viii) convertible corporate bonds (A) which are issued by issuers
whose senior debt securities are rated at least B2 by Moody's (or,
in the event an issuer's senior debt securities are not rated by
Moody's, which are issued by issuers whose senior debt securities
are rated at least BB by S&P and which for
this purpose is assigned a Moody's equivalent rating of one full
rating category lower), (B) which are convertible into common
stocks which are traded on the New York Stock Exchange or the
American Stock Exchange or are quoted on the NASDAQ
National Market System and (C) which, if cash dividend paying,
pay cash dividends in U.S. dollars; provided, however, that once
convertible corporate bonds have been converted into common stock,
the common stock issued upon conversion must satisfy the criteria
set forth in clause (v) above and other
relevant criteria set forth in this definition in order to be a
Moody's Eligible Asset;
<PAGE>
PROVIDED, HOWEVER, that the Corporation's investment in preferred
stock, common stock, corporate bonds and convertible corporate bonds
described above must be within the following diversification
requirements (utilizing Moody's Industry and Sub-industry Categories)
in order to be included in Moody's Eligible Assets:
Issuer:
- ------
Non-Utility Maximum Utility Maximum
Moody's Rating (1)(2) Single Issuer (3)(4) Single Issuer (3)(4)
- --------------------- -------------------- --------------------
"aaa", Aaa 100% 100%
"aa", Aa 20% 20%
"a", A 10% 10%
CS/CB, "baa", Baa(5) 6% 4%
Ba 4% 4%
B1/B2 3% 3%
B3 (Caa subordinate) 2% 2%
Industry and State:
- -------------------
Non-Utility Utility Maximum Utility Maximum
Moody's Maximum Single Single State(3)
Rating(1) Single Sub-Industry(3)(6)
Industry(3)
- --------- ----------- ------------------ ---------------
"aaa", Aaa 100% 100% 100%
"aa", Aa 60% 60% 20%
"a", A 40% 50% 10%(7)
CS/CB, "baa", Baa(5) 20% 50% 7%(7)
Ba 12% 12% N/A
B1/B2 8% 8% N/A
B3 (Caa subordinate) 5% 5% N/A
(1) The equivalent Moody's rating must be lowered one full rating category for
preferred stocks, corporate bonds and convertible corporate bonds rated by
S&P but not by Moody's.
(2) Corporate bonds from issues ranging $50,000,000 to $100,000,000 are limited
to 20% of Moody's Eligible Assets.
(3) The referenced percentages represent maximum cumulative totals only for the
related Moody's rating category and each lower Moody's rating category.
(4) Issuers subject to common ownership of 25% or more are considered as one
name.
(5) CS/CB refers to common stock and convertible corporate bonds, which are
diversified independently from the rating level.
(6) In the case of utility common stock, utility preferred stock, utility bonds
and utility convertible bonds, the definition of industry refers to sub-
industries (electric, water, hydro power, gas, diversified). Investments in
other sub-industries are eligible only to the extent that the combined sum
represents a percentage position of the Moody's
<PAGE>
Eligible Assets less than or equal to the percentage limits in the
diversification tables above.
(7) Such percentage shall be 15% in the case of utilities regulated by
California, New York and Texas.
; and PROVIDED, FURTHER, that the Corporation's investments in auction rate
preferred stocks described in clause (iv) above shall be included in Moody's
Eligible Assets only to the extent that the aggregate Market Value of such
stocks does not exceed 10% of the aggregate Market Value of all of the
Corporation's investments meeting the criteria set forth in clauses (i) through
(viii) above less the aggregate Market Value of those investments excluded from
Moody's Eligible Assets pursuant to the immediately preceding proviso; and (ix)
no assets which are subject to any lien or irrevocably deposited by the
Corporation for the payment of amounts needed to meet the obligations described
in clauses (i)(A) through (i)(E) of the definition of "Basic Maintenance Amount"
may be includible in Moody's Eligible Assets.
"Moody's Industry and Sub-Industry Categories"* means as set forth below:
Aerospace and Defense: Major Contractor, Subsystems, Research, Aircraft
Manufacturing, Arms, Ammunition
Automobile: Automotive Equipment, Auto-Manufacturing, Auto Parts
Manufacturing, Personal Use Trailers, Motor Homes, Dealers
Banking: Bank Holding, Savings and Loans, Consumer Credit, Small Loan,
Agency, Factoring, Receivables
Beverage, Food and Tobacco: Beer and Ale, Distillers, Wines and Liquors,
Distributors, Soft Drink Syrup, Bottlers, Bakery, Mill Sugar, Canned Foods,
Corn Refiners, Dairy Products, Meat Products, Poultry Products, Snacks,
Packaged Foods, Distributors, Candy, Gum, Seafood, Frozen Food, Cigarettes,
Cigars, Leaf/Snuff, Vegetable Oil
Buildings and Real Estate: Brick, Cement, Climate Controls, Contracting,
Engineering, Construction, Hardware, Forest Products (building-related
only), Plumbing, Roofing, Wallboard, Real Estate, Real Estate Development,
REITs, Land Development
Chemicals, Plastics and Rubber: Chemicals (non-agriculture), Industrial
Gases, Sulfur, Plastics, Plastic Products, Abrasives, Coatings, Paints,
Varnish, Fabricating
Containers, Packaging and Glass: Glass, Fiberglass, Containers made of:
Glass, Metal, Paper, Plastic, Wood, or Fiberglass
Personal and Non Durable Consumer Products (Manufacturing Only): Soaps,
Perfumes, Cosmetics, Toiletries, Cleaning Supplies, School Supplies
Diversified/Conglomerate Manufacturing
Diversified/Conglomerate Service
<PAGE>
Diversified Natural Resources, Precious Metals and Minerals: Fabricating,
Distribution, Mining and Sales
Ecological: Pollution Control, Waste Removal, Waste Treatment, Waste
Disposal
Electronics: Computer Hardware, Electric Equipment, Components,
Controllers, Motors, Household Appliances, Information Service
Communication Systems, Radios, Televisions, Tape Machines, Speakers,
Printers, Drivers, Technology
Finance: Investment Brokerage, Leasing, Syndication, Securities
Farming and Agriculture: Livestock, Grains, Produce; Agricultural
Chemicals, Agricultural Equipment, Fertilizers
Grocery: Grocery Stores, Convenience Food Stores
Healthcare, Education and Childcare: Ethical Drugs, Proprietary Drugs,
Research, Health Care Centers, Nursing Homes, HMOs, Hospitals, Hospital
Supplies, Medical Equipment
Home and Office Furnishings, Housewares, and Durable Consumer Products:
Carpets, Floor Coverings, Furniture, Cooking, Ranges
Hotels, Motels, Inns and Gaming
Insurance: Life, Property and Casualty, Broker, Agent, Surety
Leisure, Amusement, Motion Pictures, Entertainment: Boating, Bowling,
Billiards, Musical Instruments, Fishing, Photo Equipment, Records, Tapes,
Sports, Outdoor Equipment (Camping), Tourism, Resorts, Games, Toy
Manufacturing, Motion Picture Production Theaters, Motion Picture
Distribution
Machinery (Non-Agriculture, Non-Construction, Non-Electronic): Industrial,
Machine Tools, Steam Generators
Mining, Steel, Iron and Non Precious Metals: Coal, Copper, Lead, Uranium,
Zinc, Aluminum, Stainless Steel, Integrated Steel, Ore Production,
Refractories, Steel Mill Machinery, Mini-Mills, Fabricating, Distribution
and Sales
Oil and Gas: Crude Producer, Retailer, Well Supply, Service and Drilling
Personal, Food and Miscellaneous Services
Printing, Publishing and Broadcasting: Graphic Arts, Paper, Paper Products,
Business Forms, Magazines, Books, Periodicals, Newspapers, Textbooks,
Radio, TV, Cable Broadcasting Equipment
<PAGE>
Cargo Transport: Rail, Shipping, Railroads, Rail-Car Builders, Ship
Builders, Containers, Container Builders, Parts, Overnight Mail, Trucking,
Truck Manufacturing, Trailer Manufacturing, Air Cargo, Transport
Retail Stores: Apparel, Toy, Variety, Drugs, Department, Mail Order
Catalog, Showroom
Telecommunications: Local, Long Distance, Independent, Telephone,
Telegraph, Satellite, Equipment, Research, Cellular
Textiles and Leather: Producer, Synthetic Fiber, Apparel Manufacturer,
Leather Shoes
Personal Transportation: Air, Bus, Rail, Car Rental
Utilities: Electric, Water, Hydro Power, Gas, Diversified
Sovereigns: Semi-sovereigns, Canadian Provinces, Supra-national agencies
"1940 Act" means the Investment Company Act of 1940, as amended.
"Notice of Redemption" has the meaning set forth in paragraph 3(c)(i) of
Article II hereof.
"Officers' Certificate" means a certificate signed by any two of the
President, a Vice President, the Treasurer or the Secretary of the Corporation
or by any one of the foregoing and an Assistant Treasurer or Assistant Secretary
of the Corporation.
"Paying Agent" means State Street Bank and Trust Company and its successors
or any other paying agent appointed by the Corporation with respect to the
Cumulative Preferred Stock and/or any other Preferred Stock.
"Portfolio Calculation"* means the aggregate Discounted Value of all
Moody's Eligible Assets.
"Preferred Stock" means the preferred stock, par value $.001 per share, of
the Corporation, and includes the Cumulative Preferred Stock and the 7.80%
Preferred.
"Quarterly Valuation Date"* means the last Valuation Date in March, June,
September and December of each year, commencing June 26, 1998.
"Redemption Price" has the meaning set forth in paragraph 3(a) of Article
II hereof.
"7.80% Preferred" means, so long as any shares of such series are issued
and outstanding, the 7.80% Cumulative Preferred Stock, par value $.001 per
share, of the Corporation.
"7.80% Preferred Articles" means, so long as any shares of the 7.80%
Preferred are issued and outstanding, the Articles Supplementary, dated August
19, 1996, as amended and supplemented from time to time, creating and fixing the
rights of the 7.80% Preferred.
<PAGE>
"Short-Term Money Market Instruments" means the following types of
instruments if, on the date of purchase or other acquisition thereof by the
Corporation (or, in the case of an instrument specified by clauses (i) and (ii)
below, on the Valuation Date), the remaining terms to maturity thereof are not
in excess of 90 days:
(i) U.S. Government Obligations;
(ii) commercial paper that is rated at the time of purchase or
acquisition and the Valuation Date at least P-1 by Moody's and is
issued by an issuer (or guaranteed or supported by a person or entity
other than the issuer) whose long-term unsecured debt obligations are
rated at least Aa by Moody's;
(iii) demand or time deposits in, or certificates of deposit of, or
banker's acceptances issued by (A) a depository institution or trust
company incorporated under the laws of the United States of America or
any state thereof or the District of Columbia or (B) a United States
branch office or agency of a foreign depository institution (provided
that such branch office or agency is subject to banking regulation
under the laws of the United States, any state thereof or the District
of Columbia) if, in each case, the commercial paper, if any, and the
long-term unsecured debt obligations (other than such obligations the
ratings of which are based on the credit of a person or entity other
than such depository institution or trust company) of such depository
institution or trust company at the time of purchase or acquisition
and the Valuation Date, have (1) credit ratings from Moody's of at
least P-1 in the case of commercial paper and (2) credit ratings from
Moody's of at least Aa in the case of long-term unsecured debt
obligations; provided, however, that in the case of any such
investment that matures in no more than one Business Day from the date
of purchase or other acquisition by the Corporation, all of the
foregoing requirements shall be applicable except that the required
long-term unsecured debt credit rating of such depository institution
or trust company from Moody's shall be at least A2; and provided,
further, however, that the foregoing credit rating requirements shall
be deemed to be met with respect to a depository institution or trust
company if (1) such depository institution or trust company is the
principal depository institution in a holding company system, (2) the
commercial paper, if any, of such depository institution or trust
company is not rated below P-1 by Moody's and (3) the holding company
shall meet all of the foregoing credit rating requirements (including
the preceding proviso in the case of investments that mature in no
more than one Business Day from the date of purchase or other
acquisition by the Corporation);
(iv) repurchase obligations with respect to any U.S. Government
Obligation entered into with a depository institution, trust company
or securities dealer (acting as principal) which is rated (A) at least
Aa3 if the maturity is three months or less, (B) at least A1 if the
maturity is two months or less and (C) at least A2 if the maturity is
one month or less; and
(v) Eurodollar demand or time deposits in, or certificates of
deposit of, the head office or the London branch office of a
depository institution or trust company
<PAGE>
meeting the credit rating requirements of commercial paper and long-
term unsecured debt obligations specified in clause (iii) above,
provided that the interest receivable by the Corporation shall be
payable in U.S. dollars and shall not be subject to any withholding or
similar taxes.
"S&P" means Standard & Poor's, a division of The McGraw-Hill Companies,
Inc., or its successors.
"U.S. Government Obligations" means direct non-callable 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 and U.S. Treasury Securities Strips, provide for
the periodic payment of interest and the full payment of principal at maturity.
"Valuation Date"* means every Friday or, if such day is not a Business Day,
the immediately preceding Business Day.
"Voting Period" shall have the meaning set forth in paragraph 4(b) of
Article II hereof.
Those of the foregoing definitions which are marked with an asterisk have
been adopted by the Board of Directors of the Corporation in order to obtain a
"aaa" rating from Moody's on the shares of Cumulative Preferred Stock on their
Date of Original Issue; and the Board of Directors of the Corporation shall have
the authority, without stockholder approval, to amend, alter or repeal from time
to time the foregoing definitions and the restrictions and guidelines set forth
thereunder if Moody's advises the Corporation in writing that such amendment,
alteration or repeal will not adversely affect their then current rating on the
Cumulative Preferred Stock. Furthermore, if the Board of Directors determines
not to continue to comply with the provisions of paragraphs 5(a)(ii), 5(c) and 6
of Article II hereof as provided in paragraph 7 of Article II hereof, then such
definitions marked with an asterisk, unless the context otherwise requires,
shall have no meaning for these Articles Supplementary.
<PAGE>
ARTICLE II.
CUMULATIVE PREFERRED STOCK
1. Dividends.
(a) Holders of shares of Cumulative Preferred Stock 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 annual
rate of 7.30% per share (computed on the basis of a 360-day year consisting
of twelve 30-day months) of the initial Liquidation Preference of $25.00 per
share on the Cumulative Preferred Stock and no more, payable quarterly on
March 23, June 23, September 23 and December 23 in each year (each, a
"Dividend Payment Date"), commencing June 23, 1998 (or, if any such day
is not a Business Day, then on the next succeeding Business Day), to holders
of record of Cumulative Preferred Stock as they appear on the stock register
of the Corporation at the close of business on the preceding March 6, June 6,
September 6 and December 6 (or, if any such day is not a Business Day, then
on the next succeeding Business Day), as the case may be, in preference to
dividends on shares of Common Stock and any other capital stock of the
Corporation ranking junior to the Cumulative Preferred Stock in payment of
dividends. Dividends on shares of Cumulative Preferred Stock shall
accumulate from the date on which the first such shares of
Cumulative Preferred Stock are originally issued ("Date of Original Issue").
Each period beginning on and including a Dividend Payment Date (or the Date of
Original Issue, in the case of the first dividend period after issuance of such
shares) and ending on but excluding the next succeeding Dividend Payment Date is
referred to herein as a "Dividend Period." Dividends on account of arrears for
any past Dividend Period may be declared and paid at any time, without reference
to any Dividend Payment Date, to holders of record on such date, not exceeding
30 days preceding the payment date thereof, as shall be fixed by the Board of
Directors.
(b) (i) No dividends shall be declared or paid or set apart for
payment on any shares of Cumulative Preferred Stock for any Dividend Period
or part thereof unless full cumulative dividends have been or contemporaneously
are declared and paid on all outstanding shares of Cumulative Preferred Stock
through the most recent Dividend Payment Date therefor. If full cumulative
dividends are not declared and paid on the shares of Cumulative Preferred Stock,
any dividends on the shares of Cumulative Preferred Stock shall be declared
and paid pro rata on all outstanding shares of Cumulative Preferred Stock.
No holders of shares of Cumulative Preferred Stock shall be entitled to any
dividends, whether payable in cash, property or stock, in excess of full
cumulative dividends as provided in this paragraph 1(b)(i) on shares of
Cumulative Preferred Stock. No interest or sum of money in lieu of interest
shall be payable in respect of any dividend payments on any shares of
Cumulative Preferred Stock that may be in arrears.
(ii) For so long as shares of Cumulative Preferred Stock are
outstanding, the Corporation shall not declare, pay or set apart for payment
any dividend or other distribution (other than a dividend or distribution paid
in shares of, or options, warrants or rights to subscribe for or purchase
shares of, Common Stock or other stock, if any, ranking junior to the
Cumulative Preferred Stock as to dividends or upon liquidation) in respect of
the Common Stock or any other stock of the Corporation ranking junior to or on
parity with the Cumulative Preferred Stock as to
<PAGE>
dividends or upon liquidation, or call for redemption, redeem, purchase or
otherwise acquire for consideration any shares of Common Stock or any other
stock of the Corporation ranking junior to the Cumulative Preferred Stock as to
dividends or upon liquidation (except by conversion into or exchange for stock
of the Corporation ranking junior to or on parity with the Cumulative Preferred
Stock as to dividends and upon liquidation), unless, in each case, (A)
immediately thereafter, the Corporation shall have a Portfolio Calculation at
least equal to the Basic Maintenance Amount and the Corporation shall maintain
the Asset Coverage, (B) full cumulative dividends on all shares of Cumulative
Preferred Stock due on or prior to the date of the transaction have been
declared and paid (or shall have been declared and sufficient funds for the
payment thereof deposited with the Paying Agent) and (C) the Corporation has
redeemed the full number of shares of Cumulative Preferred Stock required to be
redeemed by any provision contained herein for mandatory redemption.
(iii) Any dividend payment made on the shares of Cumulative
Preferred Stock shall first be credited against the dividends accumulated with
respect to the earliest Dividend Period for which dividends have not been paid.
(c) Not later than the Business Day next preceding each Dividend
Payment Date, the Corporation shall deposit with the Paying Agent Deposit
Securities having an initial combined value sufficient to pay the dividends
that are payable on such Dividend Payment Date, which Deposit Securities shall
mature on or prior to such Dividend Payment Date. The Corporation may direct
the Paying Agent with respect to the investment of any such Deposit Securities,
provided that such investment consists exclusively of Deposit Securities and
provided further that the proceeds of any such investment will be available
at the opening of business on such Dividend Payment Date.
(d) The Board of Directors may declare an additional dividend on the
Cumulative Preferred Stock each year in order to permit the Corporation to
distribute its income in accordance with Section 855 (or any successor
provision) of the Internal Revenue Code of 1986, as amended (the "Code"),
and the other rules and regulations under Subchapter M of the Code. Any
such additional dividend shall be payable to holders of the Cumulative
Preferred Stock on the next Dividend Payment Date, shall be part of a regular
quarterly dividend for the year of declaration payable to holders of record
pursuant to paragraph 1(a) hereof and shall not result in any increase in the
amount of cash dividends payable for such year pursuant to paragraph 1(a)
hereof.
(e) The 7.80% Preferred will rank on parity with the Cumulative
Preferred Stock as to payment of dividends.
2. Liquidation Rights.
(a) In the event of any liquidation, dissolution or winding up of the
affairs of the Corporation, whether voluntary or involuntary, the holders of
shares of Cumulative Preferred Stock shall be entitled to receive out of the
assets of the Corporation available for distribution to stockholders, after
claims of creditors but before any distribution or payment shall be made in
respect of the Common Stock or any other stock of the Corporation ranking
junior to the Cumulative Preferred Stock as to liquidation payments, a
liquidation distribution in the amount
<PAGE>
of $25.00 per share plus an amount equal to all unpaid dividends thereon
accumulated to and including the date fixed for such distribution or payment
(whether or not earned or declared by the Corporation, but excluding interest
thereon) (the "Liquidation Preference"), and such holders shall be entitled to
no further participation in any distribution or payment in connection with any
such liquidation, dissolution or winding up.
(b) If, upon any liquidation, dissolution or winding up of the
affairs of the Corporation, whether voluntary or involuntary, the assets of
the Corporation available for distribution among the holders of all outstanding
shares of Cumulative Preferred Stock and any other outstanding class or series
of Preferred Stock of the Corporation ranking on a parity with the Cumulative
Preferred Stock as to payment upon liquidation, shall be insufficient to permit
the payment in full to such holders of Cumulative Preferred Stock of the
Liquidation Preference and the amounts due upon liquidation with respect to
such other Preferred Stock, then such available assets shall be distributed
among the holders of shares of Cumulative Preferred Stock and such other
Preferred Stock ratably in proportion to the respective preferential amounts to
which they are entitled. Unless and until the Liquidation Preference has been
paid in full to the holders of shares of Cumulative Preferred Stock, no
dividends or distributions shall be made to holders of the Common Stock or any
other stock of the Corporation ranking junior to the Cumulative Preferred Stock
as to liquidation.
(c) The 7.80% Preferred will rank on parity with the Cumulative
Preferred Stock as to payment upon liquidation.
3. Redemption.
Shares of the Cumulative Preferred Stock shall be redeemed or redeemable by
the Corporation as provided below:
(a) Mandatory Redemptions.
If the Corporation is required to redeem any shares of Cumulative Preferred
Stock pursuant to paragraphs 5(b) or 5(c) of Article II hereof, then the
Corporation shall, to the extent permitted by the 1940 Act, Maryland law and any
agreement in respect of indebtedness of the Corporation to which it may be a
party or by which it may be bound, by the close of business on such Asset
Coverage Cure Date or Basic Maintenance Amount Cure Date (herein collectively
referred to as a "Cure Date"), as the case may be, fix a redemption date and
proceed to redeem shares as set forth in paragraph 3(c) hereof. On such
redemption date, the Corporation shall redeem, out of funds legally available
therefor, the number of shares of Cumulative Preferred Stock and/or other
Preferred Stock equal to the minimum number of shares the redemption of which,
if such redemption had occurred immediately prior to the opening of business on
such Cure Date, would have resulted in the Asset Coverage having been satisfied
or the Corporation having a Portfolio Calculation equal to or greater than the
Basic Maintenance Amount, as the case may be, immediately prior to the opening
of business on such Cure Date or, if the Asset Coverage or a Portfolio
Calculation equal to or greater than the Basic Maintenance Amount, as the case
may be, cannot be so restored, all of the shares of Cumulative Preferred Stock,
at a price equal to $25.00 per share plus accumulated but unpaid dividends
thereon (whether or not earned
<PAGE>
or declared by the Corporation) through the date of redemption (the "Redemption
Price"). In the event that shares of Cumulative Preferred Stock are redeemed
pursuant to paragraph 5(b) of Article II hereof, the Corporation may, but shall
not be required to, redeem a sufficient number of shares of Cumulative Preferred
Stock pursuant to this paragraph 3(a) in order that the "asset coverage" of a
class of senior security which is stock, as defined in Section 18(h) of the 1940
Act, of the remaining outstanding shares of Cumulative Preferred Stock and any
other Preferred Stock after redemption is up to 275%.
(b) Optional Redemptions.
Prior to June 22, 2003, the Corporation may, at its option, redeem shares
of Cumulative Preferred Stock at the Redemption Price per share only if and to
the extent that any such redemption is necessary, in the judgment of the
Corporation, to maintain the Corporation's status as a regulated investment
company under Subchapter M of the Code. Commencing June 22, 2003, and at any
time and from time to time thereafter, the Corporation may, at its option, to
the extent permitted by the 1940 Act, Maryland law and any agreement in respect
of indebtedness of the Corporation to which it may be a party or by which it may
be bound, redeem the Cumulative Preferred Stock in whole or in part at the
Redemption Price per share.
(c) Procedures for Redemption.
(i) If the Corporation shall determine or be required to redeem
shares of Cumulative Preferred Stock pursuant to this paragraph 3, it shall mail
a written notice of redemption ("Notice of Redemption") with respect to such
redemption by first class mail, postage prepaid, to each holder of the shares to
be redeemed at such holder's address as the same appears on the stock books of
the Corporation on the record date in respect of such redemption established by
the Board of Directors. Each such Notice of Redemption shall state: (A) the
redemption date, which shall be not fewer than 30 days nor more than 45 days
after the date of such notice; (B) the number of shares of Cumulative Preferred
Stock to be redeemed; (C) the CUSIP number(s) of such shares; (D) the Redemption
Price; (E) the place or places where the certificate(s) for such shares
(properly endorsed or assigned for transfer, if the Board of Directors shall so
require and the Notice of Redemption shall so state) are to be surrendered for
payment in respect of such redemption; (F) that dividends on the shares to be
redeemed will cease to accumulate on such redemption date; and (G) the
provisions of this paragraph 3 under which such redemption is made. If fewer
than all shares of Cumulative Preferred Stock held by any holder are to be
redeemed, the Notice of Redemption mailed to such holder also shall specify the
number of shares to be redeemed from such holder. No defect in the Notice of
Redemption or the mailing thereof shall affect the validity of the redemption
proceedings, except as required by applicable law.
(ii) If the Corporation shall give a Notice of Redemption, then by
the close of business on the Business Day preceding the redemption date
specified in the Notice of Redemption the Corporation shall (A) deposit with
the Paying Agent Deposit Securities having an initial combined value sufficient
to effect the redemption of the shares of Cumulative Preferred Stock to be
redeemed, which Deposit Securities shall mature on or prior to such redemption
date, and (B) give the Paying Agent irrevocable instructions and authority to
pay the Redemption Price to the holders of the shares of Cumulative Preferred
Stock called for
<PAGE>
redemption on the redemption date. The Corporation may direct the Paying Agent
with respect to the investment of any Deposit Securities so deposited, provided
that the proceeds of any such investment will be available at the opening of
business on such redemption date. Upon the date of such deposit (unless the
Corporation shall default in making payment of the Redemption Price), all rights
of the holders of the shares of Cumulative Preferred Stock so called for
redemption shall cease and terminate except the right of the holders thereof to
receive the Redemption Price thereof, and such shares shall no longer be deemed
outstanding for any purpose. The Corporation shall be entitled to receive,
promptly after the date fixed for redemption, any cash in excess of the
aggregate Redemption Price of the shares of Cumulative Preferred Stock called
for redemption on such date and any remaining Deposit Securities. Any assets so
deposited that are unclaimed at the end of two years from such redemption date
shall, to the extent permitted by law, be repaid to the Corporation, after which
the holders of the shares of Cumulative Preferred Stock so called for redemption
shall look only to the Corporation for payment thereof. The Corporation shall
be entitled to receive, from time to time after the date fixed for redemption,
any interest on the Deposit Securities so deposited.
(iii) On or after the redemption date, each holder of shares
of Cumulative Preferred Stock that are subject to redemption shall surrender the
certificate evidencing such shares to the Corporation at the place designated in
the Notice of Redemption and shall then be entitled to receive the cash
Redemption Price, without interest.
(iv) In the case of any redemption of less than all of the shares of
Cumulative Preferred Stock pursuant to these Articles Supplementary, such
redemption shall be made pro rata from each holder of shares of Cumulative
Preferred Stock in accordance with the respective number of shares held by each
such holder on the record date for such redemption.
(v) Notwithstanding the other provisions of this paragraph 3, the
Corporation shall not redeem shares of Cumulative Preferred Stock or any other
Preferred Stock unless all accumulated and unpaid dividends on all outstanding
shares of Cumulative Preferred Stock for all applicable past Dividend Periods
(whether or not earned or declared by the Corporation) shall have been or are
contemporaneously paid or declared and Deposit Securities for the payment of
such dividends shall have been deposited with the Paying Agent as set forth in
paragraph 1(c) of Article II hereof.
(vi) If the Corporation shall not have funds legally available for the
redemption of, or is otherwise unable to redeem, all the shares of the
Cumulative Preferred Stock to be redeemed on any redemption date, the
Corporation shall redeem on such redemption date the number of shares of
Cumulative Preferred Stock as it shall have legally available funds, or is
otherwise able, to redeem ratably from each holder whose shares are to be
redeemed, and the remainder of the shares of the Cumulative Preferred Stock
required to be redeemed shall be redeemed on the earliest practicable date on
which the Corporation shall have funds legally available for the redemption of,
or is otherwise able to redeem, such shares.
<PAGE>
4. Voting Rights.
(a) General.
Except as otherwise provided by law or as specified in the Charter or By-
Laws, each holder of shares of Cumulative Preferred Stock shall be entitled to
one vote for each share held on each matter submitted to a vote of stockholders
of the Corporation, and the holders of outstanding shares of Preferred Stock,
including Cumulative Preferred Stock, and of shares of Common Stock shall vote
together as a single class; provided that, at any meeting of the stockholders of
the Corporation held for the election of directors, the holders of outstanding
shares of Preferred Stock, including Cumulative Preferred Stock, shall be
entitled, as a class, to the exclusion of the holders of all other securities
and classes of capital stock of the Corporation, to elect two directors of the
Corporation. Subject to paragraph 4(b) of Article II hereof, the holders of
outstanding shares of capital stock of the Corporation, including the holders of
outstanding shares of Preferred Stock (including the Cumulative Preferred
Stock), voting as a single class, shall elect the balance of the directors.
(b) Right to Elect Majority of Board of Directors.
During any period in which any one or more of the conditions described
below shall exist (such period being referred to herein as a "Voting Period"),
the number of directors constituting the Board of Directors shall be
automatically increased by the smallest number that, when added to the two
directors elected exclusively by the holders of shares of Preferred Stock, would
constitute a majority of the Board of Directors as so increased by such smallest
number; and the holders of shares of Preferred Stock shall be entitled, voting
separately as one class (to the exclusion of the holders of all other securities
and classes of capital stock of the Corporation), to elect such smallest number
of additional directors, together with the two directors that such holders are
in any event entitled to elect. A Voting Period shall commence:
(i) if at any time accumulated dividends (whether or not earned
or declared, and whether or not funds are then legally available
in an amount sufficient therefor) on the outstanding shares of
Cumulative Preferred Stock equal to at least two full years'
dividends shall be due and unpaid and sufficient Deposit
Securities shall not have been deposited with the Paying Agent
for the payment of such accumulated dividends; or
(ii) if at any time holders of any other shares of Preferred
Stock are entitled to elect a majority of the directors of the
Corporation under the 1940 Act.
Upon the termination of a Voting Period, the voting rights described in
this paragraph 4(b) shall cease, subject always, however, to the reverting of
such voting rights in the holders of Preferred Stock upon the further occurrence
of any of the events described in this paragraph 4(b).
(c) Right to Vote with Respect to Certain Other Matters.
(i) So long as any shares of Cumulative Preferred Stock are
outstanding, the Corporation shall not, without the affirmative vote of the
holders of two-thirds of the shares
<PAGE>
of Cumulative Preferred Stock outstanding at the time, voting separately as one
class, amend, alter or repeal the provisions of the Charter, whether by merger,
consolidation or otherwise, so as to materially adversely affect any of the
contract rights expressly set forth in the Charter of holders of shares of
Cumulative Preferred Stock. The Corporation shall notify Moody's ten Business
Days prior to any such vote described above. Unless a higher percentage is
provided for under the Charter, the affirmative vote of the holders of a
majority of the outstanding shares of Preferred Stock, including Cumulative
Preferred Stock, voting together as a single class, will be required to approve
any plan of reorganization adversely affecting such shares or any action
requiring a vote of security holders under Section 13(a) of the 1940 Act. For
purposes of the preceding sentence, the phrase "vote of the holders of a
majority of the outstanding shares of Preferred Stock" shall have the meaning
set forth in the 1940 Act. The class vote of holders of shares of Preferred
Stock, including Cumulative Preferred Stock, described above will be in addition
to a separate vote of the requisite percentage of shares of Common Stock and
shares of Preferred Stock, including Cumulative Preferred Stock, voting together
as a single class, necessary to authorize the action in question. An increase
in the number of authorized shares of Preferred Stock pursuant to the Charter or
the issuance of additional shares of any series of Preferred Stock (including
Cumulative Preferred Stock) pursuant to the Charter shall not in and of itself
be considered to adversely affect the contract rights of the holders of
Cumulative Preferred Stock.
(ii) Notwithstanding the foregoing, and except as otherwise
required by the 1940 Act, (i) holders of outstanding shares of the Cumulative
Preferred Stock will be entitled as a series, to the exclusion of the holders
of all other securities, including other Preferred Stock, Common Stock and
other classes of capital stock of the Corporation, to vote on matters
affecting the Cumulative Preferred Stock that do not materially adversely
affect any of the contract rights of holders of
such other securities, including other Preferred Stock, Common Stock and other
classes of capital stock, as expressly set forth in the Charter, and (ii)
holders of outstanding shares of Cumulative Preferred Stock will not be entitled
to vote on matters affecting any other Preferred Stock that do not materially
adversely affect any of the contract rights of holders of the Cumulative
Preferred Stock, as expressly set forth in the Charter.
(d) Voting Procedures.
(i) As soon as practicable after the accrual of any right of the holders
of shares of Preferred Stock to elect additional directors as described in
paragraph 4(b) above, the Corporation shall call a special meeting of such
holders and instruct the Paying Agent to mail a notice of such special meeting
to such holders, such meeting to be held not less than 10 nor more than 20 days
after the date of mailing of such notice. If the Corporation fails to send such
notice to the Paying Agent or if the Corporation does not call such a special
meeting, it may be called by any such holder on like notice. The record date
for determining the holders entitled to notice of and to vote at such special
meeting shall be the close of business on the fifth Business Day preceding the
day on which such notice is mailed. At any such special meeting and at each
meeting held during a Voting Period, such holders of Preferred Stock, voting
together as a class (to the exclusion of the holders of all other securities and
classes of capital stock of the Corporation), shall be entitled to elect the
number of directors prescribed in paragraph 4(b) above. At any such meeting or
adjournment thereof in the absence of a quorum, a majority of such holders
present in person or by proxy shall have the power to adjourn the meeting
without
<PAGE>
notice, other than by an announcement at the meeting, to a date not more than
120 days after the original record date.
(ii) For purposes of determining any rights of the holders of Cumulative
Preferred Stock to vote on any matter or the number of shares required to
constitute a quorum, whether such right is created by these Articles
Supplementary, by the other provisions of the Charter, by statute or otherwise,
a share of Cumulative Preferred Stock which is not outstanding shall not be
counted.
(iii) The terms of office of all persons who are directors of the
Corporation at the time of a special meeting of holders of Preferred Stock,
including Cumulative Preferred Stock, to elect directors shall continue,
notwithstanding the election at such meeting by such holders of the number of
directors that they are entitled to elect, and the persons so elected by such
holders, together with the two incumbent directors elected by the holders of
Preferred Stock, including Cumulative Preferred Stock, and the remaining
incumbent directors elected by the holders of the Common Stock and Preferred
Stock, shall constitute the duly elected directors of the Corporation.
(iv) Simultaneously with the expiration of a Voting Period, the term of
office of the additional directors elected by the holders of Preferred Stock,
including Cumulative Preferred Stock, pursuant to paragraph 4(b) above shall
terminate, the remaining directors shall constitute the directors of the
Corporation and the voting rights of such holders of Preferred Stock, including
Cumulative Preferred Stock, to elect additional directors pursuant to paragraph
4(b) above shall cease, subject to the provisions of the last sentence of
paragraph 4(b).
(e) Exclusive Remedy.
Unless otherwise required by law, the holders of shares of Cumulative
Preferred Stock shall not have any rights or preferences other than those
specifically set forth herein. The holders of shares of Cumulative Preferred
Stock shall have no preemptive rights or rights to cumulative voting. In the
event that the Corporation fails to pay any dividends on the shares of
Cumulative Preferred Stock, the exclusive remedy of the holders shall be the
right to vote for directors pursuant to the provisions of this paragraph 4.
(f) Notification to Moody's.
In the event a vote of holders of Cumulative Preferred Stock is required
pursuant to the provisions of Section 13(a) of the 1940 Act, as long as the
Cumulative Preferred Stock is rated by Moody's, the Corporation shall, not later
than ten Business Days prior to the date on which such vote is to be taken,
notify Moody's that such vote is to be taken and the nature of the action with
respect to which such vote is to be taken and, not later than ten Business Days
after the date on which such vote is taken, notify Moody's of the result of such
vote.
5. Coverage Tests.
(a) Determination of Compliance.
For so long as any shares of Cumulative Preferred Stock are outstanding,
the Corporation shall make the following determinations:
<PAGE>
(i) Asset Coverage. The Corporation shall maintain, as of the last
Business Day of each March, June, September and December of each year in which
any shares of Cumulative Preferred Stock are outstanding, the Asset Coverage.
(ii) Basic Maintenance Amount Requirement.
(A) For so long as any shares of Cumulative Preferred Stock are
outstanding, the Corporation shall maintain, on each Valuation Date, a Portfolio
Calculation at least equal to the Basic Maintenance Amount, each as of such
Valuation Date. Upon any failure to maintain the required Portfolio
Calculation, the Corporation shall use its best efforts to reattain a Portfolio
Calculation at least equal to the Basic Maintenance Amount on or prior to the
Basic Maintenance Amount Cure Date, by altering the composition of its portfolio
or otherwise.
(B) The Corporation shall prepare a Basic Maintenance Report relating to
each Valuation Date. On or before 5:00 P.M., New York City time, on the third
Business Day after the first Valuation Date following the Date of Original Issue
of the Cumulative Preferred Stock and after each (A) Quarterly Valuation Date,
(B) Valuation Date on which the Corporation fails to satisfy the requirements of
paragraph 5(a)(ii)(A) above, (C) Basic Maintenance Amount Cure Date following a
Valuation Date on which the Corporation fails to satisfy the requirements of
paragraph 5(a)(ii)(A) above and (D) Valuation Date and any immediately
succeeding Business Day on which the Portfolio Calculation exceeds the Basic
Maintenance Amount by 5% or less, the Corporation shall complete and deliver to
Moody's a Basic Maintenance Report, which will be deemed to have been delivered
to Moody's if Moody's receives a copy or telecopy, telex or other electronic
transcription setting forth at least the Portfolio Calculation and the Basic
Maintenance Amount each as of the relevant Valuation Date and on the same day
the Corporation mails to Moody's for delivery on the next Business Day the full
Basic Maintenance Report. The Corporation also shall provide Moody's with a
Basic Maintenance Report relating to any other Valuation Date on Moody's
specific request. A failure by the Corporation to deliver a Basic Maintenance
Report under this paragraph 5(a)(ii)(B) shall be deemed to be delivery of a
Basic Maintenance Report indicating a Portfolio Calculation less than the Basic
Maintenance Amount, as of the relevant Valuation Date.
(C) Within ten Business Days after the date of delivery to Moody's of a
Basic Maintenance Report in accordance with paragraph 5(a)(ii)(B) above relating
to a Quarterly Valuation Date, the Corporation shall deliver to Moody's an
Accountant's Confirmation relating to such Basic Maintenance Report and any
other Basic Maintenance Report, randomly selected by the Independent
Accountants, that was prepared by the Corporation during the quarter ending on
such Quarterly Valuation Date. Also, within ten Business Days after the date of
delivery to Moody's of a Basic Maintenance Report in accordance with paragraph
5(a)(ii)(B) above relating to a Valuation Date on which the Corporation fails to
satisfy the requirements of paragraph 5(a)(ii)(A) and any Basic Maintenance
Amount Cure Date, the Corporation shall deliver to Moody's an Accountant's
Confirmation relating to such Basic Maintenance Report. If any Accountant's
Confirmation delivered pursuant to this paragraph 5(a)(ii)(C) shows that an
error was made in the Basic Maintenance Report for such Quarterly Valuation
Date, or shows that a lower Portfolio Calculation was determined by the
Independent Accountants, the calculation or determination made by such
Independent Accountants shall be final and conclusive and shall be binding on
the Corporation, and the Corporation shall accordingly amend the Basic
Maintenance
<PAGE>
Report and deliver the amended Basic Maintenance Report to Moody's promptly
following Moody's receipt of such Accountant's Confirmation.
(D) In the event the Portfolio Calculation shown in any Basic Maintenance
Report prepared pursuant to paragraph 5(a)(ii)(B) above is less than the
applicable Basic Maintenance Amount, the Corporation shall have until the Basic
Maintenance Amount Cure Date to achieve a Portfolio Calculation at least equal
to the Basic Maintenance Amount, and upon such achievement (and not later than
such Basic Maintenance Amount Cure Date) the Corporation shall inform Moody's of
such achievement in writing by delivery of a revised Basic Maintenance Report
showing a Portfolio Calculation at least equal to the Basic Maintenance Amount
as of the date of such revised Basic Maintenance Report, together with an
Officers' Certificate to such effect.
(E) On or before 5:00 P.M., New York City time, on the first Business Day
after shares of Common Stock are repurchased by the Corporation, the Corporation
shall complete and deliver to Moody's a Basic Maintenance Report as of the close
of business on such date that Common Stock is repurchased. A Basic Maintenance
Report delivered as provided in paragraph 5(a)(ii)(B) above also shall be deemed
to have been delivered pursuant to this paragraph 5(a)(ii)(E).
(b) Failure to Meet Asset Coverage.
If the Asset Coverage is not satisfied as provided in paragraph 5(a)(i)
hereof and such failure is not cured as of the related Asset Coverage Cure Date,
the Corporation shall give a Notice of Redemption as described in paragraph 3 of
Article II hereof with respect to the redemption of a sufficient number of
shares of Cumulative Preferred Stock and/or proceed to redeem a sufficient
number of shares of any other Preferred Stock to enable it to meet the
requirements of paragraph 5(a)(i) above, and, at the Corporation's discretion,
such additional number of shares of Cumulative Preferred Stock in order that the
"asset coverage" of a class of senior security which is stock, as defined in
Section 18(h) of the 1940 Act, of the remaining outstanding shares of Cumulative
Preferred Stock and any other Preferred Stock is up to 275%, and deposit with
the Paying Agent Deposit Securities having an initial combined value sufficient
to effect the redemption of any shares of Cumulative Preferred Stock to be
redeemed, as contemplated by paragraph 3(a) of Article II hereof, and/or any
other Preferred Stock to be redeemed, as contemplated by its terms.
(c) Failure to Maintain a Portfolio Calculation At Least Equal to the
Basic Maintenance Amount.
If a Portfolio Calculation for Moody's at least equal to the Basic
Maintenance Amount is not maintained as provided in paragraph 5(a)(ii)(A) above
and such failure is not cured by the related Basic Maintenance Amount Cure Date,
the Corporation shall give a Notice of Redemption as described in paragraph 3 of
Article II hereof with respect to the redemption of a sufficient number of
shares of Cumulative Preferred Stock and/or proceed to redeem a sufficient
number of shares of any other Preferred Stock to enable it to meet the
requirements of paragraph 5(a)(ii)(A) above, and, at the Corporation's
discretion, such additional number of shares of Cumulative Preferred Stock in
order that the Portfolio Calculation exceeds the Basic
<PAGE>
Maintenance Amount of the remaining outstanding shares of Cumulative Preferred
Stock and any other Preferred Stock by up to 10%, and deposit with the Paying
Agent Deposit Securities having an initial combined value sufficient to effect
the redemption of any shares of Cumulative Preferred Stock to be redeemed, as
contemplated by paragraph 3(a) of Article II hereof, and/or any other Preferred
Stock to be redeemed, as contemplated by its terms.
(d) Status of Shares Called for Redemption.
For purposes of determining whether the requirements of paragraphs 5(a)(i)
and 5(a)(ii)(A) hereof are satisfied, (i) no share of the Cumulative Preferred
Stock and/or any other Preferred Stock shall be deemed to be outstanding for
purposes of any computation if, prior to or concurrently with such
determination, sufficient Deposit Securities to pay the full Redemption Price
for such share of Cumulative Preferred Stock and/or the applicable redemption
price for such share of any other Preferred Stock shall have been deposited in
trust with the Paying Agent and the requisite Notice of Redemption and/or
applicable notice of redemption for shares of any other Preferred Stock shall
have been given, and (ii) such Deposit Securities deposited with the Paying
Agent shall not be included in determining whether the requirements of
paragraphs 5(a)(i) and 5(a)(ii)(A) hereof are satisfied.
6. Certain Other Restrictions.
(a) For so long as the Cumulative Preferred Stock is rated by Moody's,
the Corporation will not, and will cause the Adviser not to, (i) knowingly and
willfully purchase or sell a portfolio security for the specific purpose of
causing, and with the actual knowledge that the effect of such purchase or sale
will be to cause, the Portfolio Calculation as of the date of the purchase or
sale to be less than the Basic Maintenance Amount as of such date, (ii) in the
event that, as of the immediately preceding Valuation Date, the Portfolio
Calculation exceeded the Basic Maintenance Amount by 5% or less, alter the
composition of the Corporation's portfolio securities in a manner reasonably
expected to reduce the Portfolio Calculation, unless the Corporation shall have
confirmed that, after giving effect to such alteration, the Portfolio
Calculation exceeded the Basic Maintenance Amount or (iii) declare or pay any
dividend or other distribution on any shares of Common Stock or repurchase any
shares of Common Stock, unless the Corporation shall have confirmed that, after
giving effect to such declaration, other distribution or repurchase, the
Corporation continues to satisfy the requirements of paragraph 5(a)(ii)(A) of
Article II hereof.
(b) For so long as the Cumulative Preferred Stock is rated by Moody's,
the Corporation shall not (a) acquire or otherwise invest in (i) future
contracts or (ii) options on futures contracts, (b) engage in reverse
repurchase agreements, (c) engage in short sales, (d) overdraw any bank account,
(e) write options on portfolio securities other than call options on securities
held in the Corporation's portfolio or that the Corporation has an immediate
right to acquire through conversion or exchange of securities held in its
portfolio, or (f) borrow money, except for the purpose of clearing and/or
settling transactions in portfolio securities (which borrowings shall under any
circumstances be limited to the lesser of $10,000,000 and an amount equal to 5%
of the Market Value of the Corporation's assets at the time of such borrowings
and which borrowings shall be repaid within 60 days and not be extended or
renewed), unless in any such case, the Corporation shall have received written
confirmation from Moody's that such
<PAGE>
investment activity will not adversely affect Moody's then current rating of the
Cumulative Preferred Stock. Furthermore, for so long as the Cumulative Preferred
Stock is rated by Moody's, unless the Corporation shall have received the
written confirmation from Moody's referred to in the preceding sentence, the
Corporation may engage in the lending of its portfolio securities only in an
amount of up to 5% of the Corporation's total assets, provided that the
Corporation receives cash collateral for such loaned securities which is
maintained at all times in an amount equal to at least 100% of the current
market value of the loaned securities and, if invested, is invested only in
money market mutual funds meeting the requirements of Rule 2a-7 under the 1940
Act that maintain a constant $1.00 per share net asset value. In determining
the Portfolio Calculation, the Corporation shall use the Moody's Discount Factor
applicable to the loaned securities rather than the Moody's Discount Factor
applicable to the collateral.
(c) For so long as the Cumulative Preferred Stock is rated by Moody's,
the Corporation shall not consolidate the Corporation with, merge the
Corporation into, sell or otherwise transfer all or substantially all of the
Corporation's assets to another entity or adopt a plan of liquidation of the
Corporation, in each case without providing prior written notification to
Moody's.
7. Termination of Rating Agency Provisions.
(a) The Board of Directors may determine that it is not in the best
interests of the Corporation to continue to comply with the provisions of
paragraphs 5(a)(ii), 5(c) and 6 of Article II hereof with respect to Moody's,
in which case the Corporation will no longer be required to comply with any of
the provisions of paragraphs 5(a)(ii), 5(c) and 6 of Article II hereof with
respect to Moody's, provided that (i) the Corporation has given the Paying
Agent, Moody's and holders of the Cumulative Preferred Stock at least 20
calendar days written notice of such termination of compliance, (ii) the
Corporation is in compliance with the provisions of paragraphs 5(a)(i),
5(a)(ii), 5(c) and 6 of Article II hereof at the time the notice required
in clause (i) hereof is given and at the time of the termination of compliance
with the provisions of paragraphs 5(a)(ii), 5(c) and 6 of Article II hereof
with respect to Moody's, (iii) at the time the notice required in clause (i)
hereof is given and at the time of termination of compliance with the provisions
of paragraphs 5(a)(ii), 5(c) and 6 of Article II hereof with respect to Moody's
the Cumulative Preferred Stock is listed on the New York Stock Exchange or on
another exchange registered with the Securities and Exchange Commission as a
national securities exchange and (iv) at the time of termination of compliance
with the provisions of paragraphs 5(a)(ii), 5(c) and 6 of Article II hereof
with respect to Moody's, the cumulative cash dividend rate payable on a share
of the Cumulative Preferred Stock pursuant to paragraph 1(a) of Article II
hereof shall be increased by .375% per annum.
(b) On the date that the notice is given in paragraph 7(a) above and
on the date that compliance with the provisions of paragraphs 5(a)(ii), 5(c)
and 6 of Article II hereof with respect to Moody's is terminated, the
Corporation shall provide the Paying Agent and Moody's with an Officers'
Certificate as to the compliance with the provisions of paragraph 7(a) hereof,
and the provisions of paragraphs 5(a)(ii), 5(c) and 6 of Article II hereof with
respect to Moody's shall terminate on such later date and thereafter have no
force or effect.
<PAGE>
8. Limitation on Issuance of Additional Preferred Stock.
So long as any shares of Cumulative Preferred Stock are outstanding, the
Corporation may issue and sell additional shares of Cumulative Preferred Stock
authorized hereby and/or shares of one or more other series of Preferred Stock
constituting a series of a class of senior securities of the Corporation
representing stock under Section 18 of the 1940 Act in addition to the shares of
Cumulative Preferred Stock, provided that (i) immediately after giving effect to
the issuance and sale of such additional Preferred Stock and to the
Corporation's receipt and application of the proceeds thereof, the Corporation
will maintain the Asset Coverage of the shares of Cumulative Preferred Stock and
all other Preferred Stock of the Corporation then outstanding, and (ii) no such
additional Preferred Stock shall have any preference or priority over any other
Preferred Stock of the Corporation upon the distribution of the assets of the
Corporation or in respect of the payment of dividends.
ARTICLE III
ABILITY OF BOARD OF DIRECTORS TO MODIFY THE ARTICLES SUPPLEMENTARY
To the extent permitted by law, the Board of Directors, without the vote of
the holders of the Cumulative Preferred Stock or any other capital stock of the
Corporation, may amend the provisions of these Articles Supplementary to resolve
any inconsistency or ambiguity or to remedy any formal defect so long as the
amendment does not materially adversely affect any of the contract rights of
holders of the Cumulative Preferred Stock or any other capital stock of the
Corporation, as expressly set forth in the Charter, or, if the Corporation has
not previously terminated compliance with the provisions hereof with respect to
Moody's pursuant to paragraph 7 of Article II hereof, adversely affect the then
current rating on the Cumulative Preferred Stock by Moody's.
<PAGE>
IN WITNESS WHEREOF, ROYCE VALUE TRUST, INC. has caused these presents to be
signed in its name and on its behalf by a duly authorized officer, and its
corporate seal to be hereunto affixed and attested by its Secretary, and the
said officers of the Corporation further acknowledge said instrument to be the
corporate act of the Corporation, and state under the penalties of perjury that
to the best of their knowledge, information and belief the matters and facts
herein set forth with respect to approval are true in all material respects, all
on May 20, 1998.
ROYCE VALUE TRUST, INC.
By /s/ Dan O'Byrne
Name: Dan O'Byrne
Title: Vice President
Attest:
/s/ John E. Denneen
Name: John E. Denneen
Title: Secretary
ROYCE VALUE TRUST, INC.
Form N-SAR attachment for period ending 6/30/98
Item 77Q1(a)
- ------------
<PAGE>
AMENDED AND RESTATED
BYLAWS
OF
ROYCE VALUE TRUST, INC.
A Maryland Corporation
ARTICLE I
STOCKHOLDERS
SECTION 1. Annual Meetings. The annual meeting of the
stockholders of Royce Value Trust, Inc. (the "Corporation") shall
be held on a date fixed from time to time by the Board of Directors
within the thirty-one (31) day period ending on April 30 of each
calendar year. An annual meeting may be held at any place in the
United States, in or out of the State of Maryland, as may be
determined by the Board of Directors, and shall be designated in
the notice of the meeting, and at the time specified by the Board
of Directors. Unless otherwise provided by statute, the
Corporation's Articles of Incorporation or these Bylaws, any
business of the Corporation may be transacted at an annual meeting
without being specifically designated in the notice.
SECTION 2. Special Meetings. Special meetings of the
stockholders for any purpose or purposes, unless otherwise
prescribed by statute or by the Corporation's Articles of
Incorporation, may be held at any place within the United States,
and may be called at any time by the Board of Directors or by the
President, and shall be called by the President or Secretary at the
request in writing of a majority of the Board of Directors or at
the request in writing of stockholders entitled to cast at least a
majority of the votes entitled to be cast at the meeting upon
payment by such stockholders to the Corporation of the reasonably
estimated cost of preparing and mailing a notice of the meeting
(which estimated cost shall be provided to such stockholders by the
Secretary of the Corporation).
SECTION 3. Notice of Meetings. Written or printed
notice of the purpose or purposes, in the case of a special
meeting, and of the time and place of every meeting of the
stockholders shall be given by the Secretary of the Corporation to
each stockholder of record entitled to vote at the meeting, by
placing the notice in the mail at least ten (10) days, but not more
than ninety (90) days, prior to the date designated for the
meeting, addressed to each stockholder at his address appearing on
the books of the Corporation or supplied by the stockholder to the
Corporation for the purpose of notice. The notice of any meeting
of stockholders may be accompanied by a form of proxy approved by
the Board of Directors in favor of the actions or persons as the
Board of Directors may select. Notice of any meeting of
stockholders shall be deemed waived by any stockholder who attends
the meeting in person or by proxy, or who before or after the
meeting submits a signed waiver of notice that is filed with the
records of the meeting.
<PAGE>
SECTION 4. Quorum. The presence in person or by proxy
of stockholders of the Corporation entitled to cast at least a
majority of the votes entitled to be cast shall constitute a quorum
at each meeting of the stockholders, and all questions shall be
decided by a majority of the votes cast on the question (except
with respect to the election of directors, which shall be by
plurality of the votes cast), unless otherwise required by the laws
of the State of Maryland, the Investment Company Act of 1940, as
amended, or the Corporation's Articles of Incorporation. In the
absence of a quorum, the stockholders present in person or by proxy
at the meeting, by majority vote and without notice other than by
announcement at the meeting, may adjourn the meeting from time to
time as provided in Section 5 of this Article I until a quorum
shall attend. The stockholders present at any duly organized
meeting may continue to do business until adjournment,
notwithstanding the withdrawal of enough stockholders to leave less
than a quorum. The lack of presence at any meeting in person or by
proxy of holders of the number of shares of stock of the
Corporation of the proportion that may be required by the laws of
the State of Maryland, the Investment Company Act of 1940, as
amended, or other applicable statute, the Corporation's Articles of
Incorporation or these Bylaws, for action upon any given matter
shall not prevent action at the meeting on any other matter or
matters that may properly come before the meeting, so long as there
are present, in person or by proxy, holders of the number of shares
of stock of the Corporation required for action upon the other
matter or matters.
SECTION 5. Adjournment. Any meeting of the stockholders
may be adjourned from time to time, without notice other than by
announcement at the meeting at which the adjournment is taken. At
any adjourned meeting at which a quorum shall be present, any
action may be taken that could have been taken at the meeting
originally called. A meeting of the stockholders may not be
adjourned to a date more than one hundred twenty (120) days after
the original record date, unless a new record date is set by the
Board of Directors and further notice is provided to the
stockholders.
SECTION 6. Organization. At every meeting of the
stockholders, the President, or in his absence or inability to act,
a Vice President, or in the absence or inability to act of the
President and all the Vice Presidents, a chairman chosen by the
stockholders, shall act as chairman of the meeting. The Secretary,
or in his absence or inability to act, a person appointed by the
chairman of the meeting, shall act as secretary of the meeting and
keep the minutes of the meeting.
SECTION 7. Order of Business. The order of business at
all meetings of the stockholders shall be as determined by the
chairman of the meeting.
SECTION 8. Voting. Except as otherwise provided by
statute or the Corporation's Articles of Incorporation, each holder
of record of shares of stock of the Corporation having voting power
shall be entitled at each meeting of the stockholders to one (1)
vote for every full share of stock, and proportional voting rights
for fractional shares of stock, standing in his name on the records
of the Corporation as of the record date determined pursuant to
Section 9 of this Article I.
Each stockholder entitled to vote at any meeting of
stockholders may authorize another person or persons to act for him
by a proxy signed by the stockholder or his attorney-in-fact. A
stockholder may authorize another person or persons to act as proxy
by transmitting, or
<PAGE>
authorizing the transmission of, a telegram, cablegram, datagram or
other means of electronic transmission to the person or persons
authorized to act as proxy or to a proxy solicitation firm, proxy
support service organization or other person authorized by the
person or persons who will act as proxy to receive the
transmission. No proxy shall be valid after the expiration of
eleven (11) months from the date thereof, unless otherwise provided
in the proxy. Every proxy shall be revocable at the pleasure of
the stockholder executing it, except in those cases in which the
proxy states that it is irrevocable and in which an irrevocable
proxy is permitted by law.
SECTION 9. Fixing of Record Date for Determining
Stockholders Entitled to Notice and to Vote at Meeting. The Board
of Directors may set a record date for the purpose of determining
stockholders entitled to notice of, and to vote at, any meeting of
the stockholders. The record date for a particular meeting shall
be not more than ninety (90) nor fewer than ten (10) days before
the date of the meeting. All persons who were holders of record of
shares as of the record date of a meeting, and no others, shall be
entitled to vote at such meeting and any adjournment thereof.
SECTION 10. Inspectors. The Board of Directors may, in
advance of any meeting of stockholders, appoint one (1) or more
inspectors to act at the meeting or at any adjournment of the
meeting. If the inspectors shall not be so appointed or if any of
them shall fail to appear or act, the chairman of the meeting may
appoint inspectors. Each inspector, before entering upon the
discharge of his duties, shall, if required by the chairman of the
meeting, take and sign an oath to execute faithfully the duties of
inspector of the meeting with strict impartiality and according to
the best of his ability. The inspectors shall determine the number
of shares outstanding and the voting power of each share, the
number of shares represented at the meeting, the existence of a
quorum and the validity and effect of proxies, and shall receive
votes, ballots or consents, hear and determine all challenges and
questions arising in connection with the right to vote, count and
tabulate all votes, ballots or consents, determine the result and
do those acts as are proper to conduct the election or vote with
fairness to all stockholders. On request of the chairman of the
meeting or any stockholder entitled to vote at the meeting, the
inspectors shall make a report in writing of any challenge, request
or matter determined by them and shall execute a certificate of any
fact found by them. No director or candidate for the office of
director shall act as inspector of an election of directors.
Inspectors need not be stockholders of the Corporation.
SECTION 11. Consent of Stockholders in Lieu of Meeting.
Except as otherwise provided by statute or the Corporation's
Articles of Incorporation, any action required to be taken at any
annual or special meeting of stockholders, or any action that may
be taken at any annual or special meeting of the stockholders, may
be taken without a meeting, without prior notice and without a
vote, if the following are filed with the records of stockholders'
meetings: (a) a unanimous written consent that sets forth the
action and is signed by each stockholder entitled to vote on the
matter and (b) a written waiver of any right to dissent signed by
each stockholder entitled to notice of the meeting but not entitled
to vote at the meeting.
SECTION 12. Nominations of Directors. Only persons who
are nominated in accordance with the following procedures shall be
eligible for election as directors. Nominations of persons for
election to the Board of Directors may be made at a meeting of
stockholders by or at the direction of the Board of Directors, by
any nominating committee or person appointed by
<PAGE>
the Board of Directors or by any stockholder entitled to vote for
the election of directors at the meeting who complies with the
notice procedures set forth in this Section 12. Such nominations,
other than those made by or at the direction of the Board of
Directors, shall be made pursuant to timely notice in writing to
the Secretary. To be timely, a stockholder's notice shall be
delivered to or mailed and received at the Corporation's principal
executive office not less than fifteen (15) days nor more than
sixty (60) days prior to the meeting; provided, however, that in
the event that less than thirty (30) days' notice or prior public
disclosure of the date of the meeting is given or made to
stockholders, notice by the stockholder to be timely must be so
received no later than the close of business on the tenth (10th)
day following the day on which such notice of the date of the
meeting was mailed or such public disclosure was made. Such
stockholder's notice shall set forth: (a) as to each person who
the stockholder proposes to nominate for election or re-election as
a director, (i) the name, age, business address and residence
address of the person, (ii) the person's principal occupation or
employment, (iii) the class, series (if any) and number of shares
of stock of the Corporation which are beneficially owned by the
person and (iv) any other information relating to the person that
is required to be disclosed in solicitations for proxies for
election of directors pursuant to Regulation 14A under the
Securities Exchange Act of 1934 or any successor rule or regulation
thereto; and (b) as to the stockholder giving the notice, (i) the
stockholder's name and record address and (ii) the class, series
(if any) and number of shares of stock of the Corporation which are
beneficially owned by the stockholder. The Corporation may require
any proposed nominee to furnish such other information as may
reasonably be required by the Corporation to determine such
proposed nominee's eligibility to serve as a director. No person
shall be eligible for election as a director unless nominated in
accordance with the procedures set forth herein.
The presiding officer at the meeting shall, if the facts
warrant, determine and declare to the meeting that a nomination was
not made in accordance with the foregoing procedures, and if he
should so determine, he shall so declare to the meeting and the
defective nomination shall be disregarded.
SECTION 13. Business at Annual Meeting. At an annual
meeting of the stockholders, only such business shall be conducted
as shall have been properly brought before the meeting. To be
properly brought before an annual meeting, business must be
specified in the notice of the meeting (or any supplement thereto)
given by or at the direction of the Board of Directors, otherwise
be properly brought before the meeting by or at the direction of
the Board of Directors or otherwise be properly brought before the
meeting by a stockholder. In addition to any other applicable
requirements, for business to be properly brought before an annual
meeting by a stockholder, the stockholder must have given timely
notice thereof in writing to the Secretary. To be timely, a
stockholder's notice must be delivered to or mailed and received at
the Corporation's principal executive office not less than fifteen
(15) days nor more than sixty (60) days prior to the meeting (or,
with respect to a proposal required to be included in the
Corporation's proxy statement pursuant to Rule 14a-8 of Regulation
14A under the Securities Exchange Act of 1934 or its successor
provision, the earlier date such proposal was received); provided,
however, that in the event that less than thirty (30) days' notice
or prior public disclosure of the date of the meeting is given or
made to stockholders, notice by the stockholder to be timely must
be so received no later than the close of business on the tenth
(10th) day following the day on which such notice of the date of
the annual meeting was mailed or such
<PAGE>
public disclosure was made. A stockholder's notice to the
Secretary shall set forth, as to each matter the stockholder
proposes to bring before the annual meeting, (a) a brief
description of the business desired to be brought before the annual
meeting and the reason(s) for conducting such business at the
annual meeting, (b) the name and record address of the stockholder
proposing such business, (c) the class, series (if any) and number
of shares of the Corporation which are beneficially owned by the
stockholder and (d) any material interest of the stockholder in
such business.
Notwithstanding anything in the Bylaws to the contrary, no
business shall be conducted at the annual meeting except in
accordance with the procedures set forth in this Section 13;
provided, however, that nothing in this Section 13 shall be deemed
to preclude discussion by any stockholder of any business properly
brought before the annual meeting in accordance with such
procedures.
The presiding officer at the meeting shall, if the facts
warrant, determine and declare to the meeting that business was not
properly brought before the meeting in accordance with the
provisions of this Section 13, and if he should so determine, he
shall so declare to the meeting and any such business not properly
brought before the meeting shall not be transacted.
ARTICLE II
BOARD OF DIRECTORS
SECTION 1. General Powers. Except as otherwise provided
in the Corporation's Articles of Incorporation, the business and
affairs of the Corporation shall be managed under the direction of
the Board of Directors. All powers of the Corporation may be
exercised by or under authority of the Board of Directors except as
conferred on or reserved to the stockholders by law, by the
Corporation's Articles of Incorporation or by these Bylaws.
SECTION 2. Number, Election and Term of Directors. The
number of directors shall be fixed from time to time by resolution
of the Board of Directors adopted by a majority of the directors
then in office; provided, however, that the number of directors
shall in no event be fewer than three (3) nor, subject to the
charter of the Corporation, more than eleven (11). Directors shall
hold office for one year or until the first annual election
following their election and until their successors are duly
elected and qualify. The directors shall be elected at the annual
meeting of the stockholders, except as provided in Section 5 of
this Article, and each director elected shall hold office until his
successor shall have been elected and shall have qualified, until
his death or until he shall have resigned or have been removed as
provided in these Bylaws, or as otherwise provided by statute or
the Corporation's Articles of Incorporation. Any vacancy created
by an increase in directors may be filled in accordance with
Section 5 of this Article II. No reduction in the number of
directors shall have the effect of removing any director from
office prior to the expiration of his term unless the director is
specifically removed pursuant to Section 4 of this Article II at
the time of the decrease. A director need not be a stockholder of
the Corporation, a citizen of the United States or a resident of
the State of Maryland.
<PAGE>
SECTION 3. Resignation. A director of the Corporation
may resign at any time by giving written notice of his resignation
to the Board of Directors or to the President or the Secretary of
the Corporation. Any resignation shall take effect at the time
specified in it or, should the time when it is to become effective
not be specified in it, immediately upon its receipt. Unless the
resignation states otherwise, acceptance of a resignation shall not
be necessary to make it effective.
SECTION 4. Removal of Directors. Any director of the
Corporation may be removed by the stockholders, with or without
cause, by a vote of a majority of the votes entitled to be cast for
the election of directors.
SECTION 5. Vacancies. Subject to the provisions of the
Investment Company Act of 1940, as amended, any vacancies in the
Board of Directors, whether arising from death, resignation,
removal or any other cause except an increase in the number of
directors, shall be filled by a vote of the majority of the
directors then in office even though that majority is less than a
quorum, provided that no vacancy or vacancies shall be filled by
action of the remaining directors if, after the filling of the
vacancy or vacancies, fewer than two-thirds of the directors then
holding office shall have been elected by the stockholders of the
Corporation. A majority of the entire Board in office at the time
of the increase may fill a vacancy that results from an increase in
the number of directors. In the event that at any time a vacancy
exists in any office of a director that may not be filled by the
remaining directors, a special meeting of the stockholders shall be
held as promptly as possible and in any event within sixty (60)
days, for the purpose of filling the vacancy or vacancies. Any
director appointed by the Board of Directors to fill a vacancy
shall hold office only until the next annual meeting of
stockholders of the Corporation and until a successor has been
elected and qualifies or until his earlier death, resignation or
removal.
SECTION 6. Place of Meetings. Meetings of the Board of
Directors may be held at any place that the Board of Directors may
from time to time determine or that is specified in the notice of
the meeting.
SECTION 7. Regular Meetings. Regular meetings of the
Board of Directors may be held without notice at the time and place
determined by the Board of Directors.
SECTION 8. Special Meetings. Special meetings of the
Board of Directors may be called by a majority of the directors of
the Corporation or by the President.
SECTION 9. Annual Meeting. The annual meeting of the
Board of Directors shall be held as soon as practicable after the
meeting of stockholders at which the directors were elected. No
notice of such annual meeting shall be necessary if held
immediately after the adjournment, and at the site, of the meeting
of stockholders. If not so held, notice shall be given as
hereinafter provided for special meetings of the Board of
Directors.
SECTION 10. Notice of Special Meetings. Notice of each
special meeting of the Board of Directors shall be given by the
Secretary or the President as hereinafter provided. Each notice
shall state the time and place of the meeting and shall be
delivered to each director, either personally or by telephone or
other standard form of telecommunication, at least twenty-four (24)
hours before the time at which the meeting is to be held, or by
first-class mail, postage prepaid,
<PAGE>
addressed to the director at his residence or usual place of
business, and mailed at least three (3) days before the day on
which the meeting is to be held.
SECTION 11. Waiver of Notice of Meetings. Notice of any
special meeting need not be given to any director who shall, either
before or after the meeting, sign a written waiver of notice that
is filed with the records of the meeting or who shall attend the
meeting.
SECTION 12. Quorum and Voting. One-third (1/3) of the
members of the entire Board of Directors shall be present in person
at any meeting of the Board so as to constitute a quorum for the
transaction of business at the meeting, and, except as otherwise
expressly required by statute, the Corporation's Articles of
Incorporation, these Bylaws, the Investment Company Act of 1940, as
amended, or any other applicable statute, the act of a majority of
the directors present at any meeting at which a quorum is present
shall be the act of the Board. In the absence of a quorum at any
meeting of the Board, a majority of the directors present may
adjourn the meeting to another time and place, and notice of any
adjourned meeting shall be given to the directors who were not
present at the time of the adjournment and, unless the time and
place were announced at the meeting at which the adjournment was
taken, to the other directors. At any adjourned meeting at which a
quorum is present, any business may be transacted that might have
been transacted at the meeting as originally called.
SECTION 13. Organization. The President or, in his
absence or inability to act, another director chosen by a majority
of the directors present shall act as chairman of the meeting and
preside at the meeting. The Secretary (or, in his absence or
inability to act, any person appointed by the chairman) shall act
as secretary of the meeting and keep the minutes of the meeting.
SECTION 14. Committees. The Board of Directors may
designate one (1) or more committees of the Board of Directors,
each consisting of one (1) or more directors. To the extent
provided in the resolution and permitted by law, the committee or
committees shall have and may exercise the powers of the Board of
Directors in the management of the business and affairs of the
Corporation. Any committee or committees shall have the name or
names determined from time to time by resolution adopted by the
Board of Directors. Each committee shall keep regular minutes of
its meetings and provide those minutes to the Board of Directors
when required. The members of a committee present at any meeting,
whether or not they constitute a quorum, may appoint a director to
act in the place of an absent member.
SECTION 15. Written Consent of Directors in Lieu of a
Meeting. Subject to the provisions of the Investment Company Act
of 1940, as amended, any action required or permitted to be taken
at any meeting of the Board of Directors or of any committee of the
Board may be taken without a meeting if all members of the Board or
committee, as the case may be, consent thereto in writing, and the
writing or writings are filed with the minutes of the proceedings
of the Board or committee.
SECTION 16. Telephone Conference. Members of the Board
of Directors or any committee of the Board may participate in any
Board or committee meeting by means of a conference telephone or
similar communications equipment by means of which all persons
<PAGE>
participating in the meeting can hear each other at the same time.
Participation by such means shall constitute presence in person at
the meeting.
SECTION 17. Compensation. Each director shall be
entitled to receive such compensation, if any, as may from time to
time be fixed by the Board of Directors, including a fee for each
meeting of the Board or any committee thereof, regular or special,
he attends. Directors may also be reimbursed by the Corporation
for all reasonable expenses incurred in traveling to and from the
place of a Board or committee meeting.
ARTICLE III
OFFICERS, AGENTS AND EMPLOYEES
SECTION 1. Number and Qualifications. The officers of
the Corporation shall be a President, a Secretary and a Treasurer,
each of whom shall be elected by the Board of Directors. The Board
of Directors may elect or appoint one (1) or more Vice Presidents
and may also appoint any other officers, agents and employees it
deems necessary or proper. Any two (2) or more offices may be held
by the same person, except the office of President and Vice
President, but no officer shall execute, acknowledge or verify in
more than one capacity any instrument required by law to be
executed, acknowledged or verified in more than one capacity.
Officers shall be elected by the Board of Directors each year at
its first meeting held after the annual meeting of stockholders,
each to hold office until the meeting of the Board following the
next annual meeting of the stockholders and until his successor
shall have been duly elected and shall have qualified, until his
death or until he shall have resigned or have been removed, as
provided by these Bylaws. The Board of Directors may from time to
time elect such officers (including one or more Assistant Vice
Presidents, one or more Assistant Treasurers and one or more
Assistant Secretaries) and may appoint, or delegate to the
President the power to appoint, such agents as may be necessary or
desirable for the business of the Corporation. Such other officers
and agents shall have such duties and shall hold their offices for
such terms as may be prescribed by the Board or by the appointing
authority.
SECTION 2. Resignations. Any officer of the Corporation
may resign at any time by giving written notice of his resignation
to the Board of Directors, the President or the Secretary. Any
resignation shall take effect at the time specified therein or, if
the time when it shall become effective is not specified therein,
immediately upon its receipt. Unless otherwise stated in the
resignation, the acceptance of a resignation shall not be necessary
to make it effective.
SECTION 3. Removal of Officer, Agent or Employee. Any
officer, agent or employee of the Corporation may be removed by the
Board of Directors, with or without cause, at any time if the Board
of Directors in its judgment finds that the best interests of the
Corporation will be served thereby, and the Board may delegate the
power of removal as to agents and employees not elected or
appointed by the Board of Directors. Removal shall be without
prejudice to the person's contract rights, if any, but the
appointment of any person as an officer, agent or employee of the
Corporation shall not of itself create contract rights.
<PAGE>
SECTION 4. Vacancies. A vacancy in any office, whether
arising from death, resignation, removal or any other cause, may be
filled for the unexpired portion of the term of the office that
shall be vacant, in the manner prescribed in these Bylaws for the
regular election or appointment to the office.
SECTION 5. Compensation. The compensation of the
officers of the Corporation shall be fixed by the Board of
Directors, but this power may be delegated to any officer with
respect to other officers under his control.
SECTION 6. Bonds or Other Security. If required by the
Board, any officer, agent or employee of the Corporation shall give
a bond or other security for the faithful performance of his
duties, in an amount and with any surety or sureties as the Board
may require.
SECTION 7. President. The President shall be the chief
executive officer of the Corporation and shall preside at all
meetings of the stockholders and of the Board of Directors. The
President shall, subject to the control of the Board of Directors,
have general charge of the business and affairs of the Corporation
and may employ and discharge employees and agents of the
Corporation, except those elected or appointed by the Board, and he
may delegate these powers.
SECTION 8. Vice President. Each Vice President shall
have the powers and perform the duties that the Board of Directors
or the President may from time to time prescribe.
SECTION 9. Treasurer. Subject to the provisions of any
contract that may be entered into with any custodian pursuant to
authority granted by the Board of Directors, the Treasurer shall
have charge of all receipts and disbursements of the Corporation
and shall have or provide for the custody of the Corporation's
funds and securities; he shall have full authority to receive and
give receipts for all money due and payable to the Corporation, and
to endorse checks, drafts and warrants, in its name and on its
behalf, and to give full discharge for the same; he shall deposit
all funds of the Corporation, except those that may be required for
current use, in such banks or other places of deposit as the Board
of Directors may from time to time designate; and he shall, in
general, perform all duties incident to the office of Treasurer and
such other duties as may from time to time be assigned to him by
the Board of Directors or the President.
SECTION 10. Secretary. The Secretary shall:
(a) Keep or cause to be kept, in one or more books
provided for the purpose, the minutes of all meetings of the Board
of Directors, the committees of the Board and the stockholders;
(b) See that all notices are duly given in
accordance with the provisions of these Bylaws and as required by
law;
(c) Be custodian of the records and the seal of the
Corporation and affix and attest the seal to all stock certificates
of the Corporation (unless the seal of the Corporation on such
certificates shall be a facsimile, as hereinafter provided) and
affix and attest the seal to all other documents to be executed on
behalf of the Corporation under its seal;
<PAGE>
(d) See that the books, reports, statements,
certificates and other documents and records required by law to be
kept and filed are properly kept and filed; and
(e) In general, perform all the duties incident to
the office of Secretary and such other duties as from time to time
may be assigned to him by the Board of Directors or the President.
SECTION 11. Delegation of Duties. In case of the
absence of any officer of the Corporation, or for any other reason
that the Board of Directors may deem sufficient, the Board may
confer for the time being the powers or duties, or any of them, of
such officer upon any other officer or upon any director.
ARTICLE IV
STOCK
SECTION 1. Stock Certificates. To the extent provided
by the Board of Directors, each holder of stock of the Corporation
shall be entitled to have a certificate or certificates
representing shares of stock of the Corporation owned by him. Such
certificates shall be in a form approved by the Board, signed by or
in the name of the Corporation by the President or a Vice President
and by the Secretary or an Assistant Secretary or the Treasurer or
an Assistant Treasurer and sealed with the seal of the Corporation.
Any or all of the signatures or the seal on the certificate may be
facsimiles. In case any officer, transfer agent or registrar who
has signed or whose facsimile signature has been placed upon a
certificate shall have ceased to be such officer, transfer agent or
registrar before the certificate is issued, it may nevertheless be
issued by the Corporation with the same effect as if the officer,
transfer agent or registrar was still in office at the date of
issue.
SECTION 2. Stock Ledger. There shall be maintained a
stock ledger containing the name and address of each stockholder
and the number of shares of stock of each class the stockholder
holds. The stock ledger may be in written form or any other form
which can be converted within a reasonable time into written form
for visual inspection. The original or a duplicate of the stock
ledger shall be kept at the principal office of the Corporation, at
the office of the transfer agent for such shares or at any other
office or agency specified by the Board of Directors.
SECTION 3. Transfers of Shares. Transfers of shares of
stock of the Corporation shall be made on the stock records of the
Corporation only by the registered holder of the shares, or by his
attorney thereunto authorized by power of attorney duly executed
and filed with the Secretary or with a transfer agent or transfer
clerk, and on surrender of the certificate or certificates, if
issued, for the shares properly endorsed or accompanied by a duly
executed stock transfer power and the payment of all taxes thereon.
Except as otherwise provided by law, the Corporation shall be
entitled to recognize the exclusive right of a person in whose name
any share or shares stand on the record of stockholders as the
owner of the share or shares for all purposes, including, without
<PAGE>
limitation, the rights to receive dividends or other distributions
and to vote as the owner, and the Corporation shall not be bound to
recognize any equitable or legal claim to or interest in any such
share or shares on the part of any other person.
SECTION 4. Regulations. The Board of Directors may
authorize the issuance of uncertificated securities if permitted by
law. If stock certificates are issued, the Board of Directors may
make any additional rules and regulations, not inconsistent with
these Bylaws, as it may deem expedient concerning the issue,
transfer and registration of certificates for shares of stock of
the Corporation. The Board may appoint, or authorize any officer
or officers to appoint, one or more transfer agents or one or more
transfer clerks and one or more registrars and may require all
certificates for shares of stock to bear the signature or
signatures of any of them.
SECTION 5. Lost, Destroyed or Mutilated Certificates.
The holder of any certificate representing shares of stock of the
Corporation shall immediately notify the Corporation of its loss,
destruction or mutilation, and the Corporation may issue a new
certificate of stock in the place of any certificate issued by it
that has been alleged to have been lost or destroyed or that shall
have been mutilated. The Board may, in its absolute discretion,
require the owner (or his legal representative) of a lost,
destroyed or mutilated certificate to give to the Corporation a
bond in a sum, limited or unlimited, and form and with any surety
or sureties, as the Board in its absolute discretion shall
determine, to indemnify the Corporation against any claim that may
be made against it on account of the alleged loss or destruction of
any such certificate or issuance of a new certificate. Anything
herein to the contrary notwithstanding, the Board of Directors may,
in its absolute discretion, refuse to issue any such new
certificate, except pursuant to legal proceedings under the laws of
the State of Maryland.
SECTION 6. Fixing of Record Date for Dividends,
Distributions, etc. The Board may fix, in advance, a date not more
than ninety (90) days preceding the date fixed for the payment of
any dividend or the making of any distribution or the allotment of
rights to subscribe for securities of the Corporation, or for the
delivery of evidences of rights or evidences of interests arising
out of any change, conversion or exchange of common stock or other
securities, as the record date for the determination of the
stockholders entitled to receive any such dividend, distribution,
allotment, rights or interests, and in such case only the
stockholders of record at the time so fixed shall be entitled to
receive such dividend, distribution, allotment, rights or
interests.
SECTION 7. Information to Stockholders and Others. Any
stockholder of the Corporation or his agent may, during the
Corporation's usual business hours, inspect and copy the
Corporation's Bylaws, minutes of the proceedings of its
stockholders, annual statements of its affairs and voting trust
agreements on file at its principal office.
ARTICLE V
INDEMNIFICATION AND INSURANCE
SECTION 1. Indemnification of Directors and Officers.
Any person who was or is a party or is threatened to be made a
party in any threatened, pending or completed action, suit or
<PAGE>
proceeding, whether civil, criminal, administrative or
investigative, by reason of the fact that such person is a current
or former director or officer of the Corporation, or is or was
serving while a director or officer of the Corporation at the
request of the Corporation as a director, officer, partner,
trustee, employee, agent or fiduciary of another domestic or
foreign corporation, partnership, joint venture, trust, enterprise
or employee benefit plan shall be indemnified by the Corporation
against judgments, penalties, fines, excise taxes, settlements and
reasonable expenses (including attorneys' fees) actually incurred
by such person in connection with such action, suit or proceeding
to the fullest extent permissible under the Maryland General
Corporation Law and the Investment Company Act of 1940, as amended,
as those statutes are now or hereafter in force, except that such
indemnity shall not protect any such person against any liability
to the Corporation or any stockholder thereof to which such person
would otherwise be subject by reason of willful misfeasance, bad
faith, gross negligence or reckless disregard of the duties
involved in the conduct of his office ("disabling conduct").
SECTION 2. Advances. Any current or former director or
officer of the Corporation claiming indemnification within the
scope of this Article V shall be entitled to advances from the
Corporation for payment of the reasonable expenses incurred by him
in connection with proceedings to which he is a party in the manner
and to the fullest extent permissible under the Maryland General
Corporation Law and the Investment Company Act of 1940, as amended,
as those statutes are now or hereafter in force; provided, however,
that the person seeking indemnification shall provide to the
Corporation a written affirmation of his good faith belief that the
standard of conduct necessary for indemnification by the
Corporation has been met and a written undertaking to repay any
such advance, if it should ultimately be determined that the
standard of conduct has not been met, and provided further that at
least one (1) of the following additional conditions is met: (a)
the person seeking indemnification shall provide a security in form
and amount acceptable to the Corporation for his undertaking; (b)
the Corporation is insured against losses arising by reason of the
advance; or (c) a majority of a quorum of directors of the
Corporation who are neither "interested persons" as defined in
Section 2(a)(19) of the Investment Company Act of 1940, as amended,
nor parties to the proceeding ("disinterested non-party
directors"), or independent legal counsel, in a written opinion,
shall determine, based on a review of facts readily-available to
the Corporation at the time the advance is proposed to be made,
that there is reason to believe that the person seeking
indemnification will ultimately be found to be entitled to
indemnification.
SECTION 3. Procedure. At the request of any current or
former director or officer, or any employee or agent whom the
Corporation proposes to indemnify, the Board of Directors shall
determine, or cause to be determined, in a manner consistent with
the Maryland General Corporation Law and the Investment Company Act
of 1940, as amended, as those statutes are now or hereafter in
force, whether the standards required by this Article V and Section
2-418 of the Maryland General Corporation Law have been met;
provided, however, that indemnification shall be made only
following: (a) a final decision on the merits by a court or other
body before whom the proceeding was brought that the person to be
indemnified was not liable by reason of disabling conduct or (b) in
the absence of such a decision, a reasonable determination, based
upon a review of the facts, that the person to be indemnified was
not liable by reason of disabling conduct, by (i) the vote of a
majority of a quorum of disinterested non-party directors or (ii)
an independent legal counsel in a written opinion.
<PAGE>
SECTION 4. Indemnification of Employees and Agents.
Employees and agents who are not officers or directors of the
Corporation may be indemnified, and reasonable expenses may be
advanced to such employees or agents, in accordance with the
procedures set forth in this Article V to the extent permissible
under the Maryland General Corporation Law and the Investment
Company Act of 1940, as amended, as those statutes are now or
hereafter in force, and to such further extent, consistent with the
foregoing, as may be provided by action of the Board of Directors
or by contract.
SECTION 5. Other Rights. The indemnification provided
by this Article V shall not be deemed exclusive of any other right,
with respect to indemnification or otherwise, to which those
seeking such indemnification may be entitled under any insurance or
other agreement, vote of stockholders or disinterested directors or
otherwise, both as to action by a director or officer of the
Corporation in his capacity as such and as to action by such person
in another capacity while holding such office or position, and
shall continue as to a person who has ceased to be a director or
officer and shall inure to the benefit of the heirs, executors and
administrators of such a person.
SECTION 6. Insurance. The Corporation shall have the
power to purchase and maintain insurance on behalf of any person
who is or was a director, officer, employee or agent of the
Corporation, or who, while a director, officer, employee or agent
of the Corporation, is or was serving at the request of the
Corporation as a director, officer, partner, trustee, employee,
agent or fiduciary of another domestic or foreign corporation,
partnership, joint venture, trust, enterprise or employee benefit
plan, against any liability asserted against and incurred by him in
any such capacity or arising out of his status as such, whether or
not the Corporation would have the power to indemnify him against
such liability.
ARTICLE VI
SEAL
The seal of the Corporation shall be circular in form and
shall bear the name of the Corporation, the year of its
incorporation, the words "Corporate Seal" and "Maryland" and any
emblem or device approved by the Board of Directors. The seal may
be used by causing it or a facsimile to be impressed or affixed or
in any other manner reproduced, or by placing the word "(Seal)"
adjacent to the signature of the authorized officer of the
Corporation.
ARTICLE VII
FISCAL YEAR
SECTION 1. Fiscal Year. The Corporation's fiscal year
shall be fixed by the Board of Directors.
<PAGE>
SECTION 2. Accountant.
(a) The Corporation shall employ an independent
public accountant or a nationally-recognized firm of independent
public accountants as its Accountant to examine the accounts of the
Corporation and to certify financial statements of the Corporation.
The Accountant's certificates and reports shall be addressed both
to the Board of Directors and to the stockholders. The employment
of the Accountant shall be conditioned upon the right of the
Corporation to terminate the employment forthwith without any
penalty by vote of a majority of the outstanding voting securities
at any stockholders' meeting called for that purpose.
(b) A majority of the members of the Board of
Directors who are not "interested persons" (as such term is defined
in the Investment Company Act of 1940, as amended) of the
Corporation shall select the Accountant at any meeting held within
thirty (30) days before or after the beginning of the fiscal year
of the Corporation or before the annual stockholders' meeting in
that year. Such selection shall be submitted for ratification or
rejection at the next succeeding annual stockholders' meeting. If
such meeting shall reject such selection, the Accountant shall be
selected by majority vote of the Corporation's outstanding voting
securities, either at the meeting at which the rejection occurred
or at a subsequent meeting of stockholders called for that purpose.
(c) Any vacancy occurring between annual meetings,
due to the resignation of the Accountant, may be filled by the vote
of a majority of the members of the Board of Directors who are not
"interested persons" of the Corporation, as that term is defined in
the Investment Company Act of 1940, at a meeting called for the
purpose of voting on such action.
ARTICLE VIII
CUSTODY OF SECURITIES
SECTION 1. Employment of a Custodian. The Corporation
shall place and at all times maintain in the Custodian (including
any sub-custodian for the Custodian) all funds, securities and
similar investments owned by the Corporation. The Custodian (and
any sub-custodian) shall be an institution conforming to the
requirements of Section 17(f) of the Investment Company Act of
1940, as amended, and the rules of the Securities and Exchange
Commission thereunder. The Custodian shall be appointed from time
to time by the Board of Directors, which shall fix its
remuneration.
Subject to such rules, regulations and orders as the
Securities and Exchange Commission may adopt, the Corporation may
direct the Custodian to deposit all or any part of the securities
owned by the Corporation in a system for the central handling of
securities established by a national securities exchange or a
national securities association registered with the Securities and
Exchange Commission, or otherwise in accordance with the Investment
Company Act of 1940, as amended, pursuant to which system all
securities of any particular class of any issuer deposited within
the system are treated as fungible and may be transferred or
pledged by bookkeeping entry without physical delivery of such
securities, provided that all such deposits shall be subject to
withdrawal only upon the order of the Corporation or the Custodian.
<PAGE>
SECTION 2. Termination of Custodian Agreement. Upon
termination of the Custodian Agreement or inability of the
Custodian to continue to serve, the Board of Directors shall
promptly appoint a successor Custodian, but in the event that no
successor Custodian can be found who has the required
qualifications and is willing to serve, the Board of Directors
shall call as promptly as possible a special meeting of the
stockholders to determine whether the Corporation shall function
without a Custodian or shall be liquidated. If so directed by vote
of the holders of a majority of the outstanding shares of stock
entitled to vote of the Corporation, the Custodian shall deliver
and pay over all property of the Corporation held by it as
specified in such vote.
ARTICLE IX
AMENDMENTS
These Bylaws may be amended or repealed by the
affirmative vote of a majority of the Board of Directors at any
regular or special meeting of the Board of Directors, subject to
the requirements of the Investment Company Act of 1940, as amended.
Dated: June 18, 1998
ROYCE VALUE TRUST, INC.
Form N-SAR attachment for period ending 6/30/98
Item 77(K)
- ----------
At the 1998 Annual Meeting of Stockholders of the Registrant held on
April 28, 1998, the stockholders ratified the selection by the Registrant's
Board of Directors, including a majority of such directors who were not
"interested persons" (as such term is defined in the Investment Company Act
of 1940), of Tait, Weller & Baker, independent public accountants, to serve
as the Registrant's auditors for the year ending December 31, 1998.
The Board's selection of Tait, Weller & Baker was based on a consideration
of its expertise and cost efficiency, and did not involve any dispute with
Ernst & Young LLP or a decision by Ernst & Young LLP not to stand for
re-election as auditors. The reports of Ernst & Young LLP on the financial
statements of the Registrant as of December 31, 1997 and 1996, and for the years
then ended did not contain an adverse opinion or disclaimer of opinion and were
not qualified or modified as to uncertainty, audit scope or accounting
principles.
Tait, Weller & Baker has informed the Registrant that neither Tait,
Weller & Baker nor any of its partners has any direct or indirect financial
interest in the Registrant except as auditors and independent public
accountants.
ROYCE VALUE TRUST, INC.
Form N-SAR attachment for period ending 6/30/98
Item 77(C)
- ----------
At a Special Meeting of Stockholders adjourned to and held on March 2 and 16,
1998, the Fund's stockholders approved (a) various amendments Supplementary
for the Fund's 7.80% Cumulative Preferred Stock to increase the frequency of
dividend payments from annual to quarterly, reduce the annual dividend rate
from 8.00% to 7.80% and extend the optional call protection period from August
15, 2001 to August 15, 2003, and (b) amendments concerning nonsubstantive
stockholder voting rights and Board modifications. In addition, at the 1998
Annual Meeting of Stockholders held on April 28, 1998, the Fund's stockholders:
(i) elected the board of directors, consisting of (a) Charles M. Royce,
(b) Richard M. Galkin, (c) Stephen L. Isaacs, (d) John D. Diederich and
(e) David L. Meister and (ii) ratified the selection of Tait, Weller & Baker
as independent accountants.
<TABLE>
<CAPTION>
Common Stock Common Stock Common Stock
and Preferred and Preferred and Preferred
Stock Voting Stock Voting Stock Voting Preferred Stock Preferred Stock Preferred Stock
Together As A Together As A Together As A Voting As A Voting As A Voting As A
Single Class - Single Class - Single Class - Separate Class - Separate Class - Separate Class -
Votes For Votes Against Votes Abstained Votes For Votes Against Votes Abstained
------------- -------------- --------------- ---------------- --------------- ----------------
<S> <C> <C> <C> <C> <C> <C>
March 2 and 16, 1998 Special Meeting
- ------------------------------------
(a) 18,440,939 1,229,397 517,382 1,644,994 58,612 49,533
(b) 17,432,485 1,552,041 664,331 1,601,273 91,584 86,872
April 28, 1998 Annual Meeting
- -----------------------------
(i)
(a) 26,677,343 N/A 298,820 N/A N/A N/A
(b) 26,626,342 N/A 349,821 N/A N/A N/A
(c) 26,616,551 N/A 359,612 N/A N/A N/A
(d) N/A N/A N/A 2,164,132 N/A 6,060
(e) N/A N/A N/A 2,164,132 N/A 6,060
(ii) 26,575,665 212,127 188,371 N/A N/A N/A
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<RESTATED>
<CIK> 0000804116
<NAME> ROYCE VALUE TRUST
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> JUN-30-1998
<INVESTMENTS-AT-COST> 525313906
<INVESTMENTS-AT-VALUE> 716550943
<RECEIVABLES> 1693833
<ASSETS-OTHER> 75706
<OTHER-ITEMS-ASSETS> 133224
<TOTAL-ASSETS> 718453706
<PAYABLE-FOR-SECURITIES> 1667366
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1084745
<TOTAL-LIABILITIES> 2752111
<SENIOR-EQUITY> 160000000
<PAID-IN-CAPITAL-COMMON> 344061447
<SHARES-COMMON-STOCK> 31687
<SHARES-COMMON-PRIOR> 28709
<ACCUMULATED-NII-CURRENT> 4662005
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 15709419
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 191237037
<NET-ASSETS> 715701595
<DIVIDEND-INCOME> 4044660
<INTEREST-INCOME> 1575174
<OTHER-INCOME> 0
<EXPENSES-NET> 3094154
<NET-INVESTMENT-INCOME> 2525680
<REALIZED-GAINS-CURRENT> 36612095
<APPREC-INCREASE-CURRENT> 11250575
<NET-CHANGE-FROM-OPS> 50388350
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 26822930
<NUMBER-OF-SHARES-SOLD> 123298113
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 14607138
<NET-CHANGE-IN-ASSETS> 161470671
<ACCUMULATED-NII-PRIOR> 2136325
<ACCUMULATED-GAINS-PRIOR> 5920254
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 2548459
<INTEREST-EXPENSE> 1390
<GROSS-EXPENSE> 3108295
<AVERAGE-NET-ASSETS> 548591180
<PER-SHARE-NAV-BEGIN> 16.91
<PER-SHARE-NII> .07
<PER-SHARE-GAIN-APPREC> 1.56
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> .86
<RETURNS-OF-CAPITAL> .14
<PER-SHARE-NAV-END> 17.54
<EXPENSE-RATIO> 1.14
<AVG-DEBT-OUTSTANDING> 2892320
<AVG-DEBT-PER-SHARE> .09
</TABLE>
