<DOCUMENT>
<TYPE>EX-99.77Q1 OTHR EXHB
<SEQUENCE>7
<FILENAME>nea77q1a1013npx.txt
<TEXT>
<PAGE>


                      NUVEEN AMT-FREE MUNICIPAL INCOME FUND

                      STATEMENT ESTABLISHING AND FIXING THE
                       RIGHTS AND PREFERENCES OF SERIES 1
                      VARIABLE RATE DEMAND PREFERRED SHARES

      (Relating to the issuance of Series 1 VRDP by the above-named fund in
 exchange for the outstanding Series 2 Variable Rate Demand Preferred Shares of
             Nuveen Premium Income Municipal Opportunity Fund (NPX))

                           Effective Date: May 6, 2013

<PAGE>


                                Table of Contents
                                -----------------

<TABLE>
<CAPTION>
                                                                                                      Page
                                                                                                      ----
<S>     <C>                                                                                           <C>
DESIGNATION OF SERIES 1 VRDP.............................................................................4

DEFINITIONS..............................................................................................5

PART I..................................................................................................19

   1.   Number of Authorized Shares.....................................................................19

   2.   Dividends.......................................................................................19

        (a)   Ranking...................................................................................19
        (b)   Cumulative Cash Dividends.................................................................19
        (c)   Dividends Cumulative from Date of Original Issue..........................................19
        (d)   Dividend Payment Dates and Adjustment Thereof.............................................19
        (e)   Applicable Rates and Calculation of Dividends.............................................20
        (f)   Curing a Failure to Deposit...............................................................21
        (g)   Dividend Payments by Fund to Tender and Paying Agent......................................21
        (h)   Tender and Paying Agent as Trustee of Dividend Payments by Fund...........................22
        (i)   Dividends Paid to Holders.................................................................22
        (j)   Dividends Credited Against Earliest Accumulated But Unpaid Dividends......................22
        (k)   Dividends Designated as Exempt-Interest Dividends.........................................22

   3.   Gross-Up Payments...............................................................................22

   4.   Designation of Special Rate Periods.............................................................23

        (a)   Length of and Preconditions for Special Rate Period.......................................23
        (b)   Adjustment of Length of Special Rate Period...............................................23
        (c)   Notice of Proposed Special Rate Period....................................................23
        (d)   Notice of Special Rate Period.............................................................24
        (e)   Failure to Deliver Notice of Special Rate Period..........................................24
        (f)   Other Special Rate Period Provisions......................................................24

   5.   Voting Rights...................................................................................25

        (a)   One Vote Per VRDP Share...................................................................25
        (b)   Voting for Additional Trustees............................................................25
        (c)   Holders of VRDP Shares to Vote on Certain Other Matters...................................26
        (d)   Board May Take Certain Actions Without Shareholder Approval...............................27
        (e)   Voting Rights Set Forth Herein are Sole Voting Rights.....................................28
        (f)   No Preemptive Rights or Cumulative Voting.................................................28
        (g)   Voting for Trustees Sole Remedy for Fund's Failure to Pay Dividends.......................28
        (h)   Holders Entitled to Vote..................................................................28

   6.   Minimum VRDP Asset Coverage.....................................................................29

   7.   VRDP Basic Maintenance Amount...................................................................29

   8.   Restrictions on Dividends and Other Distributions...............................................29

        (a)   Dividends on Preferred Shares.............................................................29
        (b)   Dividends and Other Distributions With Respect to Common Shares Under the 1940 Act........29
        (c)   Other Restrictions on Dividends and Other Distributions...................................30

   9.   Short-Term Ratings..............................................................................30

   10.  Redemption......................................................................................30
</TABLE>

                                        2

<PAGE>


<TABLE>
<S>     <C>                                                                                           <C>
        (a)   Optional Redemption.......................................................................30
        (b)   Mandatory Redemption......................................................................31
        (c)   Notice of Redemption......................................................................35
        (d)   No Redemption Under Certain Circumstances.................................................36
        (e)   Absence of Funds Available for Redemption.................................................36
        (f)   Tender and Paying Agent as Trustee of Redemption Payments by Fund.........................36
        (g)   Deposit with the Tender and Paying Agent; Shares for Which Notice of Redemption Has
              Been Given Are No Longer Outstanding......................................................36
        (h)   Compliance With Applicable Law............................................................37
        (i)   Only Whole VRDP Shares May Be Redeemed....................................................37
        (j)   Modification of Redemption Procedures.....................................................37

   11.  Liquidation Rights..............................................................................37

        (a)   Ranking...................................................................................37
        (b)   Distributions Upon Liquidation............................................................37
        (c)   Pro Rata Distributions....................................................................38
        (d)   Rights of Junior Shares...................................................................38
        (e)   Certain Events Not Constituting Liquidation...............................................38

   12.  Purchase Obligation.............................................................................38

   13.  Miscellaneous...................................................................................40

        (a)   Amendment of or Supplements to this Statement.............................................40
        (b)   No Fractional Shares......................................................................40
        (c)   Status of VRDP Shares Redeemed, Exchanged or Otherwise Acquired by the Fund...............40
        (d)   Purchase Obligation Part of VRDP Shares...................................................40
        (e)   Treatment of VRDP Shares as Stock.........................................................40
        (f)   Board May Resolve Ambiguities.............................................................40
        (g)   Headings Not Determinative................................................................40
        (h)   Notices...................................................................................40

PART II.................................................................................................41

   1.   Remarketing Procedures..........................................................................41

   2.   Remarketing Schedule............................................................................42

   3.   Determination of Applicable Rate................................................................44

   4.   Failed Remarketing Condition....................................................................45

   5.   Purchase of VRDP Shares by Remarketing Agent....................................................45

   6.   Notification of Allocations.....................................................................45

   7.   Transfers.......................................................................................46

   8.   Global Certificate..............................................................................46
</TABLE>

                                        3

<PAGE>


                      NUVEEN AMT-FREE MUNICIPAL INCOME FUND

                      STATEMENT ESTABLISHING AND FIXING THE
                       RIGHTS AND PREFERENCES OF Series 1
                      VARIABLE RATE DEMAND PREFERRED SHARES

         NUVEEN AMT-FREE  MUNICIPAL INCOME FUND, a Massachusetts  business trust
(the "Fund"), hereby certifies that:

         FIRST:  Pursuant to authority expressly vested in the Board of Trustees
of the Fund by  Article  IV of the  Fund's  Declaration  of Trust,  the Board of
Trustees has, by resolution,  authorized the issuance of preferred shares,  $.01
par value per share,  classified as Variable Rate Demand Preferred Shares with a
liquidation  preference  of $100,000 per share in such one or more series as may
be  authorized  and issued  from time to time (each,  a "Series,"  and each such
Series  being  referred  to herein as a "Series of VRDP," and shares of all such
Series being referred to herein  individually as a "VRDP Share" and collectively
as "VRDP Shares" or "VRDP");

         SECOND:  The preferences  (including  liquidation  preference),  voting
powers, restrictions, limitations as to dividends, qualifications, and terms and
conditions  of  redemption,  of the shares of the Series 1 Variable  Rate Demand
Preferred Shares designated below are as follows or as set forth in an amendment
or supplement hereto; and

         THIRD:  The Fund has  outstanding  on the date  hereof  two  Series  of
Preferred  Shares,  and,  concurrently with the initial issuance of the Series 1
VRDP Shares  designated  below,  the Fund is issuing a Series of VRDP designated
Series 2; each  series of  Preferred  Shares is issued  pursuant  to a  separate
statement  establishing  the rights and preferences of Preferred  Shares of such
series, as the same may be amended or supplemented from time to time.

                          DESIGNATION OF SERIES 1 VRDP

         Series 1: A series of  preferred  shares,  par  value  $.01 per  share,
liquidation  preference  $100,000 per share, is hereby authorized and designated
"Series 1 Variable  Rate Demand  Preferred  Shares,"  also referred to herein as
"Series 1 VRDP" or "Series 1 VRDP  Shares." Each share of Series 1 VRDP shall be
issued on a date  determined by the Board of Trustees of the Fund or pursuant to
their  delegated  authority;  and have such other  preferences,  voting  powers,
limitations  as  to  dividends,  qualifications  and  terms  and  conditions  of
redemption,  in addition to those  required by applicable law or as set forth in
the  Declaration,  as set forth in Parts I and II of this  Statement (as defined
below).  With  respect to the initial  issuance of Series 1 VRDP,  each share of
Series 1 VRDP shall have an Applicable  Rate equal to the rate determined by the
Remarketing Agent on the Acquired Fund VRDP (as defined below) on Wednesday, May
1, 2013, for the Initial Rate Period from,  and including,  the Date of Original
Issue to, and  including,  May 8, 2013 and an initial  Dividend  Payment Date of
June 3, 2013. The Series 1 VRDP shall  constitute a separate series of preferred
shares of the Fund and each share of Series 1 VRDP shall be identical.

         The  number of Series 1 VRDP  Shares  which the Board of  Trustees  has
initially authorized for issuance is 2,190. The Board of Trustees may, from time
to time, authorize the issuance of additional Series 1 VRDP Shares in accordance
with the terms hereof.

         One share of Series 1 VRDP initially  authorized for issuance as stated
above  shall be issued  and  distributed  in  respect  of each share of Series 2
Variable  Rate  Demand  Preferred  Shares of  Nuveen  Premium  Income  Municipal
Opportunity  Fund  (the  "Acquired  Fund  VRDP")  outstanding  on  the  date  of
distribution  in connection  with the  reorganization  of Nuveen  Premium Income
Municipal Opportunity Fund (the "Acquired Fund") as described in the Information
Memorandum (as defined below).

                                        4

<PAGE>


                                   DEFINITIONS

         The  following  terms  shall have the  following  meanings  (with terms
defined in the singular having  comparable  meanings when used in the plural and
vice versa), unless the context otherwise requires:

                  (a)      "Agent  Member" means a Person with an account at the
Securities  Depository  that holds one or more Series 1 VRDP Shares  through the
Securities Depository,  directly or indirectly,  for a Beneficial Owner and that
will be authorized and instructed, directly or indirectly, by a Beneficial Owner
to disclose information to the Remarketing Agent and the Tender and Paying Agent
with respect to such Beneficial Owner.

                  (b)      "Alternate   VRDP  Purchase   Agreement"   means  any
agreement  with a  successor  Liquidity  Provider  replacing  the VRDP  Purchase
Agreement (or any replacement  therefor) upon its termination in accordance with
its terms and containing a Purchase  Obligation  substantially  identical to the
Purchase Obligation therein as determined by the Fund.

                  (c)      "Applicable  Base Rate"  means (i) with  respect to a
Rate Period of fewer than 49 days,  the greater of (a) the SIFMA  Municipal Swap
Index Rate or (b) the LIBOR Rate,  and (ii) with  respect to a Rate Period of 49
or more days, the LIBOR Rate.

                  (d)      "Applicable  Percentage"  shall have the  meaning set
forth in the definition of the Maximum Rate.

                  (e)      "Applicable  Rate" means the dividend  rate per annum
on any  Series  1 VRDP  Shares  for a Rate  Period  determined  as set  forth in
paragraph  (e)(i) of Section 2 of Part I of this  Statement or in the definition
of "Maximum Rate."

                  (f)      "Applicable Rate  Determination"  means each periodic
operation of the process of  determining  the  Applicable  Rate for the Series 1
VRDP  Shares for a  Subsequent  Rate  Period,  as  provided  in the  Remarketing
Agreement and Part II of this Statement.

                  (g)      "Applicable  Spread"  means,  in connection  with the
Maximum Rate for any Rate Period (and subject to  adjustment as described in the
definition  of  Maximum  Rate)  (i)  when  there  is  not a  Failed  Remarketing
Condition,  200  basis  points  (2.00%),  and (ii)  while a  Failed  Remarketing
Condition has occurred or is continuing, 200 basis points (2.00%) (up to 59 days
of a continued Failed Remarketing Condition),  225 basis points (2.25%) (60 days
but fewer than 90 days of a continued Failed Remarketing  Condition),  250 basis
points  (2.50%)  (90  days  but  fewer  than  120  days  of a  continued  Failed
Remarketing  Condition),  275 basis points  (2.75%) (120 days but fewer than 150
days of a continued Failed Remarketing Condition), 300 basis points (3.00%) (150
days but fewer than 180 days of a continued Failed Remarketing  Condition),  and
400 basis  points  (4.00%) (180 days or more of a continued  Failed  Remarketing
Condition);  provided,  that, if at any time when the  Applicable  Spread is 225
basis points (2.25%),  250 basis points (2.50%),  275 basis points (2.75%),  300
basis  points  (3.00%)  or 400  basis  points  (4.00%)  the  Failed  Remarketing
Condition no longer exists due to the  successful  remarketing  of all Purchased
VRDP  Shares,  such  Applicable  Spread of 225 basis points  (2.25%),  250 basis
points (2.50%),  275 basis points (2.75%), 300 basis points (3.00%) or 400 basis
points  (4.00%) will continue to be the  Applicable  Spread in  connection  with
determining the Maximum Rate in effect for each Rate Period  commencing with the
first  Subsequent Rate Period after the Failed  Remarketing  Condition no longer
exists through and including the first Subsequent Rate Period ending on or after
the 45th day after the day the Failed  Remarketing  Condition no longer  exists;
provided further, that (i) if a new Failed Remarketing Condition occurs prior to
the end of such  period  and the  Applicable  Spread  is then 225  basis  points
(2.25%), the date such new Failed Remarketing Condition occurs will be deemed to
be the 60th  day of a  continued  Failed  Remarketing  Condition,  (ii) if a new
Failed  Remarketing  Condition  occurs  prior to the end of such  period and the
Applicable  Spread is then 250 basis  points  (2.50%),  the date such new Failed
Remarketing  Condition  occurs  will be deemed to be the 90th day of a continued
Failed Remarketing Condition, (iii) if a new Failed Remarketing Condition occurs
prior to the end of such  period  and the  Applicable  Spread  is then 275 basis
points (2.75%),  the date such new Failed  Remarketing  Condition occurs will be
deemed to be the 120th day of a continued Failed Remarketing Condition,  (iv) if
a new Failed  Remarketing  Condition  occurs prior to the end of such period and
the Applicable Spread is then 300 basis points (3.00%), the date such new Failed
Remarketing  Condition  occurs will be deemed to be the 150th day of a continued
Failed  Remarketing  Condition,

                                        5

<PAGE>


and (v) if a new Failed  Remarketing  Condition  occurs prior to the end of such
period and the Applicable Spread is then 400 basis points (4.00%), the date such
new Failed Remarketing  Condition occurs will be deemed to be the 180th day of a
continued Failed  Remarketing  Condition,  in each case,  solely for purposes of
determining the Applicable Spread.

                  (h)      "Beneficial  Owner"  means a  Person  in  whose  name
Series 1 VRDP Shares are recorded as beneficial owner of such VRDP Shares by the
Securities Depository,  an Agent Member or other securities  intermediary on the
records of such Securities Depository,  Agent Member or securities intermediary,
as the case may be, or such Person's subrogee,  including the Liquidity Provider
to the  extent it is at any time the  Beneficial  Owner of Series 1 VRDP  Shares
(irrespective  of any  assignment or transfer by the  Liquidity  Provider of its
voting rights).

                  (i)      "Board of  Trustees"  means the Board of  Trustees of
the Fund or any duly authorized committee thereof.

                  (j)      "Business  Day"  means a day (a) other  than a day on
which  commercial  banks in The City of New  York,  New  York  are  required  or
authorized  by law or  executive  order to close  and (b) on which  the New York
Stock Exchange is not closed.

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

                  (l)      "Common Shares" means the common shares of beneficial
interest, par value $.01 per share, of the Fund.

                  (m)      "Cure  Date"  means the VRDP Basic  Maintenance  Cure
Date or the Minimum VRDP Asset Coverage Cure Date, as the case may be.

                  (n)      "Custodian"  means  a bank,  as  defined  in  Section
2(a)(5) of the 1940 Act, that has the  qualifications  prescribed in paragraph 1
of Section  26(a) of the 1940 Act,  or such other  entity as shall be  providing
custodian  services  to the  Fund as  permitted  by the  1940  Act or any  rule,
regulation,  or  order  thereunder,  and  shall  include,  as  appropriate,  any
similarly qualified sub-custodian duly appointed by the Custodian.

                  (o)      "Date of Original  Issue," with respect to any Series
1 VRDP Share,  means the date on which the Fund  initially  issued such Series 1
VRDP Share.

                  (p)      "Declaration"  means, the Declaration of Trust of the
Fund, as it may be amended from time to time in accordance  with the  provisions
thereof.

                  (q)      "Deposit  Securities"  means,  as of  any  date,  any
United  States  dollar-denominated  security  or  other  investment  of  a  type
described  below that  either (i) is a demand  obligation  payable to the holder
thereof on any Business Day or (ii) has a maturity  date,  mandatory  redemption
date or  mandatory  payment  date,  on its face or at the option of the  holder,
preceding  the relevant  payment date in respect of which such security or other
investment has been deposited or set aside as a Deposit Security:

                  (1)      cash or any cash equivalent;

                  (2)      any U.S. Government Security;

                  (3)      any  Municipal  Obligation  that has a credit  rating
                           from  at  least  one  NRSRO   that  is  the   highest
                           applicable rating generally ascribed by such NRSRO to
                           Municipal   Obligations  with  substantially  similar
                           terms  as of the  date of  this  Statement  (or  such
                           rating's future  equivalent),  including (A) any such
                           Municipal  Obligation  that has been  pre-refunded by
                           the  issuer   thereof   with  the  proceeds  of  such
                           refunding having been irrevocably  deposited in trust
                           or escrow for the repayment  thereof and (B) any such
                           fixed or  variable  rate

                                        6

<PAGE>


                           Municipal  Obligation  that  qualifies as an eligible
                           security under Rule 2a-7 under the 1940 Act;

                  (4)      any  investment  in any money market fund  registered
                           under  the 1940 Act that  qualifies  under  Rule 2a-7
                           under the 1940 Act,  or  similar  investment  vehicle
                           described  in Rule  12d1-1(b)(2)  under the 1940 Act,
                           that invests principally in Municipal  Obligations or
                           U.S.   Government   Securities  or  any   combination
                           thereof; or

                  (5)      any letter of credit  from a bank or other  financial
                           institution  that has a credit  rating  from at least
                           one  NRSRO  that  is the  highest  applicable  rating
                           generally  ascribed by such NRSRO to bank deposits or
                           short-term  debt of similar banks or other  financial
                           institutions  as of the  date of this  Statement  (or
                           such rating's future equivalent).

                  (r)      "Discounted  Value," as of any Valuation Date, means,
(i) with  respect to a Fitch  Eligible  Asset,  the quotient of the Market Value
thereof  divided by the applicable  Fitch Discount  Factor,  or as otherwise set
forth in the Fitch Guidelines as then used by the Fund, (ii) (a) with respect to
a Moody's  Eligible  Asset that is not currently  callable as of such  Valuation
Date at the option of the  issuer  thereof,  the  quotient  of the Market  Value
thereof divided by the applicable  Moody's Discount Factor,  or as otherwise set
forth in the Moody's Guidelines as then used by the Fund, or (b) with respect to
a Moody's Eligible Asset that is currently callable as of such Valuation Date at
the option of the issuer  thereof,  the quotient of (1) the lesser of the Market
Value or call price  thereof,  including  any call  premium,  divided by (2) the
applicable  Moody's  Discount  Factor,  or as otherwise set forth in the Moody's
Guidelines  as then used by the Fund,  (iii)  with  respect  to an S&P  Eligible
Asset,  the quotient of the Market Value thereof  divided by the  applicable S&P
Discount Factor, or as otherwise set forth in the S&P Guidelines as then used by
the Fund, and (iv) with respect to any Other Rating Agency,  as set forth in the
Other Rating Agency Guidelines as then used by the Fund.

                  (s)      "Dividend Payment Date," except as otherwise provided
in paragraph (d) of Section 2 of Part I of this  Statement,  means the date that
is the first Business Day of each calendar month on which dividends on shares of
Series 1 VRDP are paid to Holders.

                  (t)      "Dividend  Period,"  with  respect  to Series 1 VRDP,
means the period from,  and  including,  the Date of Original Issue of shares of
such Series to, but excluding,  the initial  Dividend Payment Date for shares of
such Series and any period thereafter from, and including,  one Dividend Payment
Date for shares of such Series to, but excluding,  the next succeeding  Dividend
Payment Date for shares of such Series.

                  (u)      "Effective Leverage Ratio" shall have the meaning set
forth in the VRDP Fee Agreement.

                  (v)      "Effective Leverage Ratio Cure Period" shall have the
meaning set forth in the VRDP Fee Agreement.

                  (w)      "Electronic   Means"   means   email    transmission,
facsimile  transmission  or other  similar  electronic  means  of  communication
providing evidence of transmission (but excluding online communications  systems
covered  by a  separate  agreement)  acceptable  to the  sending  party  and the
receiving party, in any case if operative as between any two parties, or, if not
operative,  by  telephone  (promptly  confirmed by any other method set forth in
this definition),  which, in the case of notices to the Tender and Paying Agent,
shall be sent by such  means as set  forth in  Section  7.02 of the  Tender  and
Paying Agent Agreement or as specified in the related notice.

                  (x)      "Exchange Act" means the U.S. Securities Exchange Act
of 1934, as amended.

                  (y)      "Extraordinary  Corporate  Event"  means  as  to  the
Liquidity Provider, (i) the consolidation,  amalgamation with, or merger with or
into or the transfer of all or  substantially  all of the  Liquidity  Provider's
assets to  another  entity,  or (ii) the  dissolution,  for any  reason,  of the
Liquidity Provider other than in connection with the consolidation, amalgamation
with,  or  merger  with  or  into  another  entity  or  the  transfer  of all or
substantially all of the Liquidity Provider's assets;  provided,  however,  that
with respect to (i) above, an

                                        7

<PAGE>


Extraordinary  Corporate  Event does not include  any of the listed  occurrences
where (x) the surviving entity, or transferee of all or substantially all of the
Liquidity Provider's assets, (a) assumes all of the obligations of the Liquidity
Provider  under the terms of the VRDP Purchase  Agreement and (b) has short-term
debt  ratings in one of the two highest  rating  categories  from the  Requisite
NRSROs or such other  short-term  debt  ratings as may be required  for the VRDP
Shares to satisfy the  eligibility  criteria  under Rule 2a-7 under the 1940 Act
and (y) the  Liquidity  Provider  has  provided  notice in  writing  to the Fund
confirming  the  information  described  in (x) at  least  10 days  prior to the
scheduled date of the applicable listed occurrence in (i) above.

                  (z)      "Failed   Remarketing   Condition"   means  a  Failed
Remarketing   Condition--Purchased   VRDP   Shares   or  a  Failed   Remarketing
Condition--Unpurchased VRDP Shares.

                  (aa)     "Failed Remarketing Condition--Purchased VRDP Shares"
means that the Liquidity  Provider  acquires and continues to be the  beneficial
owner for federal  income tax purposes of any Series 1 VRDP Shares in connection
with purchases made pursuant to the Purchase  Obligation (whether as a result of
an  unsuccessful  Remarketing  or a Mandatory  Purchase)  on any  Purchase  Date
including  Series 1 VRDP  Shares  the  Liquidity  Provider  continues  to be the
beneficial  owner of for federal  income tax purposes  after the  expiration  or
termination of the VRDP Purchase Agreement.

                  (bb)     "Failed Remarketing  Condition--Purchased VRDP Shares
Redemption"  means  redemption  by the  Fund,  at a  Redemption  Price  equal to
$100,000 per share plus accumulated but unpaid dividends thereon (whether or not
earned or declared) to, but  excluding,  the date fixed by the Board of Trustees
for redemption,  of Series 1 VRDP Shares that the Liquidity  Provider shall have
acquired pursuant to the Purchase  Obligation and continued to be the beneficial
owner of for federal income tax purposes for a period of six months during which
such VRDP Shares cannot be successfully  remarketed (i.e., a Failed  Remarketing
Condition--Purchased  VRDP Shares shall have occurred and be continuing for such
period of time with respect to such VRDP  Shares),  determined  by the Fund on a
first-in,  first-out  basis, in accordance with and subject to the provisions of
the VRDP Fee Agreement and this Statement.

                  (cc)     "Failed   Remarketing   Condition--Unpurchased   VRDP
Shares" means that a Beneficial Owner (other than the Liquidity  Provider or its
affiliates) continues to hold Series 1 VRDP Shares, that were subject to a valid
Tender,  after any  Purchase  Date as a result of the  failure by the  Liquidity
Provider  for any reason to purchase  such VRDP Shares  pursuant to the Purchase
Obligation  (whether as a result of an  unsuccessful  Remarketing or a Mandatory
Purchase)  ("Unpurchased  VRDP  Shares"),  until  such  time as all  Outstanding
Unpurchased VRDP Shares are (i) successfully  Remarketed,  (ii) purchased by the
Liquidity  Provider  pursuant  to  the  Purchase  Obligation,  or  (iii)  if not
successfully  Remarketed or purchased by the Liquidity  Provider pursuant to the
Purchase Obligation,  the subject of a validly tendered Notice of Revocation (or
any  combination of the  foregoing);  and any  Unpurchased  VRDP Shares shall be
deemed  tendered for  Remarketing  until the earliest to occur of the  foregoing
events (i), (ii) or (iii) with respect to such Unpurchased VRDP Shares.

                  (dd)     "Failure to Deposit" means, with respect to shares of
Series 1 VRDP, a failure by the Fund to pay to the Tender and Paying Agent,  not
later than 12:00 noon, New York City time,  (A) on the Business Day  immediately
preceding  any  Dividend  Payment  Date  for  shares  of such  Series,  in funds
available on such Dividend  Payment Date in The City of New York,  New York, the
full amount of any  dividend  (whether or not earned or  declared) to be paid on
such  Dividend  Payment  Date on any share of such Series or (B) on the Business
Day  immediately  preceding  any  redemption  date in  funds  available  on such
redemption date for shares of such Series in The City of New York, New York, the
Redemption Price to be paid on such redemption date for any share of such Series
after Notice of Redemption  is provided  pursuant to paragraph (c) of Section 10
of Part 1 of this Statement;  provided,  however,  that the foregoing clause (B)
shall not apply to the Fund's failure to pay the Redemption  Price in respect of
Series 1 VRDP  Shares  when the  related  Notice  of  Redemption  provides  that
redemption of such shares is subject to one or more conditions precedent and any
such condition  precedent shall not have been satisfied at the time or times and
in the manner specified in such Notice of Redemption.

                  (ee)     "Final Notice of Purchase"  means, in connection with
an Optional Tender or a Mandatory Tender, a Notice of Purchase  delivered by the
Tender and Paying Agent to the Liquidity  Provider (or directly to the Liquidity
Provider by Beneficial Owners or their Agent Members, in the case of an Optional
Tender, or Holders, in the case of a Mandatory Tender, if there is no Tender and
Paying  Agent or for any reason the Tender

                                        8

<PAGE>


and  Paying  Agent  does not  perform  its  obligations)  on the  Purchase  Date
indicating  the  number of Series 1 VRDP  Shares  to be  purchased  on such date
pursuant  to the  Purchase  Obligation,  or,  in  connection  with  a  Mandatory
Purchase,  the Mandatory Purchase Notice delivered by the Fund or the Tender and
Paying Agent on behalf of the Fund.

                  (ff)     "Fitch"  means Fitch,  Inc., a Delaware  corporation,
and its successors.

                  (gg)     "Fitch  Discount  Factor" means the discount  factors
set forth in the Fitch Guidelines for use in calculating the Discounted Value of
the Fund's assets in connection with Fitch's ratings of Series 1 VRDP Shares.

                  (hh)     "Fitch Eligible  Assets" means assets of the Fund set
forth in the Fitch  Guidelines  as eligible  for  inclusion in  calculating  the
Discounted  Value of the Fund's  assets in  connection  with Fitch's  ratings of
Series 1 VRDP Shares.

                  (ii)     "Fitch  Guidelines"  means the guidelines,  as may be
amended from time to time,  applied by Fitch in connection  with Fitch's ratings
of Series 1 VRDP Shares.

                  (jj)     "Gross-up  Payment"  means  payment  to a  Beneficial
Owner of an amount  which,  when taken  together  with the  aggregate  amount of
Taxable Allocations made to such Beneficial Owner to which such Gross up Payment
relates, would cause such Beneficial Owner's dividends in dollars (after regular
federal income tax consequences) from the aggregate of such Taxable  Allocations
and the  related  Gross  up  Payment  to be equal to the  dollar  amount  of the
dividends which would have been received by such Beneficial  Owner if the amount
of such aggregate Taxable  Allocations would have been excludable from the gross
income of such Beneficial Owner.

                  Such  Gross-up   Payment  shall  be  calculated   (i)  without
consideration  being  given to the time value of money;  (ii) only  taking  into
account the regular  federal income tax with respect to dividends  received from
the Fund  (that is,  without  giving  effect to any other  federal  tax based on
income,  such as (A) the  alternative  minimum tax or (B) in the case of taxable
years beginning after December 31, 2012, the "Medicare tax," which is imposed at
the rate of 3.8% on the net investment  income (which includes taxable dividends
and net capital gains) of certain  individuals,  trusts and estates);  and (iii)
assuming that each Taxable  Allocation and each Gross up Payment  (except to the
extent such Gross up Payment is designated as an exempt interest  dividend under
Section  852(b)(5) of the Code or successor  provisions) would be taxable in the
hands  of  each  Beneficial  Owner  at  the  maximum  marginal  regular  federal
individual  income tax rate  applicable to ordinary income or net capital gains,
as applicable, or the maximum marginal regular federal corporate income tax rate
applicable to ordinary income or net capital gains, as applicable,  whichever is
greater, in effect at the time such Gross up Payment is made.

                  (kk)     "Holder" means a Person in whose name a Series 1 VRDP
Share is  registered  in the  registration  books of the Fund  maintained by the
Tender and Paying Agent.

                  (ll)     "Information Memorandum" means the proxy statement of
the Acquired Fund and the other fund specified therein,  dated November 9, 2012,
and  the  information  memorandum  attached  thereto,  as  amended,  revised  or
supplemented from time to time, including in connection with any Remarketing, if
applicable.

                  (mm)     "Initial  Rate Period," with respect to Series 1 VRDP
Shares,  means the period commencing on and including the Date of Original Issue
in connection  with the initial  issuance  thereof and ending on, and including,
May 8, 2013, the next succeeding  Wednesday,  as set forth under "Designation of
Series 1 VRDP" above.

                  (nn)     "Investment Adviser" shall mean Nuveen Fund Advisors,
LLC, or any successor company or entity.

                  (oo)     "Late  Charge"  shall have the meaning  specified  in
paragraph (e)(i)(C) of Section 2 of Part I of this Statement.

                                        9

<PAGE>


                  (pp)     "LIBOR  Dealer" means  Citigroup  Global Markets Inc.
and such other dealer or dealers as the Fund from time to time may appoint or in
lieu of any thereof, their respective affiliates and successors.

                  (qq)     "LIBOR Rate" means, on any Rate  Determination  Date,
(i) the rate for deposits in U.S. dollars for the designated Rate Period,  which
appears on Reuters display page LIBOR01 ("Page  LIBOR01") (or such other page as
may replace that page on that service,  or such other service as may be selected
by the LIBOR Dealer or its  successors  that are LIBOR Dealers) as of 11:00 a.m.
London  time,  on the day that is the London  Business  Day  preceding  the Rate
Determination Date (the "LIBOR  Determination  Date"), or (ii) if such rate does
not appear on Page LIBOR01 or such other page as may replace such Page  LIBOR01,
(A) the  LIBOR  Dealer  shall  determine  the  arithmetic  mean  of the  offered
quotations  of the  Reference  Banks to leading  banks in the  London  interbank
market for deposits in U.S.  dollars for the designated Rate Period in an amount
determined  by such LIBOR Dealer by reference to requests for  quotations  as of
approximately 11:00 a.m. (London time) on such date made by such LIBOR Dealer to
the Reference  Banks,  (B) if at least two of the  Reference  Banks provide such
quotations,  the LIBOR Rate shall equal such arithmetic mean of such quotations,
(C) if only one or none of the  Reference  Banks  provide such  quotations,  the
LIBOR Rate shall be deemed to be the arithmetic  mean of the offered  quotations
that leading  banks in The City of New York  selected by the LIBOR Dealer (after
obtaining the Fund's  approval) are quoting on the relevant LIBOR  Determination
Date for deposits in U.S.  dollars for the  designated  Rate Period in an amount
determined by the LIBOR Dealer (after  obtaining  the Fund's  approval)  that is
representative of a single  transaction in such market at such time by reference
to the principal London offices of leading banks in the London interbank market;
provided,  however,  that if one of the  LIBOR  Dealers  does  not  quote a rate
required to determine  the LIBOR Rate,  the LIBOR Rate will be determined on the
basis of the quotation or quotations furnished by any Substitute LIBOR Dealer or
Substitute  LIBOR Dealers selected by the Fund to provide such rate or rates not
being supplied by the LIBOR Dealer;  provided further,  that if the LIBOR Dealer
and  Substitute  LIBOR  Dealers are  required  but unable to determine a rate in
accordance with at least one of the procedures  provided  above,  the LIBOR Rate
shall be the LIBOR Rate as determined on the previous Rate  Determination  Date.
If the number of days in a Rate Period shall be (i) seven or more but fewer than
21 days,  such rate shall be the seven-day LIBOR Rate; (ii) 21 or more but fewer
than 49 days, such rate shall be the one-month LIBOR rate;  (iii) 49 or more but
fewer than 77 days, such rate shall be the two-month LIBOR rate; (iv) 77 or more
but fewer than 112 days, such rate shall be the three-month  LIBOR rate; (v) 112
or more but fewer than 140 days such rate shall be the  four-month  LIBOR  rate;
(vi) 140 or more but fewer  than 168 days,  such  rate  shall be the  five-month
LIBOR  rate;  (vii) 168 or more but fewer than 189 days,  such rate shall be the
six-month  LIBOR  rate;  (viii) 189 or more but fewer  than 217 days,  such rate
shall be the  seven-month  LIBOR rate; (ix) 217 or more but fewer than 252 days,
such rate shall be the  eight-month  LIBOR rate;  (x) 252 or more but fewer than
287 days,  such rate shall be the  nine-month  LIBOR rate;  (xi) 287 or more but
fewer than 315 days, such rate shall be the ten-month  LIBOR rate;  (xii) 315 or
more but fewer than 343 days,  such rate shall be the  eleven-month  LIBOR rate;
and  (xiii)  343 or more  but  fewer  than  365  days,  such  rate  shall be the
twelve-month LIBOR rate.

                  (rr)     "Liquidation  Preference,"  with  respect  to a given
number of Series 1 VRDP Shares, means $100,000 times that number.

                  (ss)     "Liquidity   Account   Investments"   means   Deposit
Securities or any other  security or investment  owned by the Fund that is rated
at least investment grade by each NRSRO then rating such security or investment.

                  (tt)     "Liquidity   Provider"   means  any  entity  in  such
capacity pursuant to a VRDP Purchase Agreement,  initially,  Deutsche Bank Trust
Company Americas.

                  (uu)     "Liquidity   Provider   Ratings   Event"   means  the
Liquidity Provider shall fail to maintain at any time short-term debt ratings in
one of the two highest  ratings  categories  from the  Requisite  NRSROs or such
other short-term debt ratings,  if any, as may be required for the Series 1 VRDP
Shares to satisfy the eligibility criteria under Rule 2a-7 under the 1940 Act.

                  (vv)     "Liquidity  Provider Ratings Event  Termination Date"
means  the  date  established  by the  Tender  and  Paying  Agent,  acting  upon
instructions of the Fund pursuant to the Tender and Paying Agent Agreement,  for
termination  of the VRDP Purchase  Agreement  upon the occurrence of a Liquidity
Provider Ratings

                                       10

<PAGE>


Event, which date shall be not less than 16 days nor more than 30 days following
such Liquidity Provider Ratings Event.

                  (ww)     "London   Business   Day"  means  any  day  on  which
commercial banks are generally open for business in London.

                  (xx)     "Mandatory  Purchase" means the mandatory purchase of
Outstanding  Series 1 VRDP Shares by the Liquidity Provider pursuant to the VRDP
Purchase Agreement in connection with a Mandatory Purchase Event.

                  (yy)     "Mandatory Purchase Date" means the Purchase Date for
a Mandatory  Purchase in  accordance  with this  Statement and the VRDP Purchase
Agreement.

                  (zz)     "Mandatory  Purchase  Event" means (i) in  connection
with the termination of the VRDP Purchase  Agreement due to its expiration as of
a Scheduled  Termination  Date, by the fifteenth day prior to any such Scheduled
Termination  Date,  (a) the  Liquidity  Provider  shall  not have  agreed  to an
extension or further  extension of the Scheduled  Termination Date to a date not
earlier than 180 days from the Scheduled  Termination  Date of the VRDP Purchase
Agreement then in effect, and (b) the Fund shall not have obtained and delivered
to the Tender and Paying  Agent an  Alternate  VRDP  Purchase  Agreement  with a
termination  date not earlier than 180 days from the Scheduled  Termination Date
of the VRDP Purchase  Agreement being  replaced,  or (ii) in connection with the
termination of the VRDP Purchase  Agreement due to a Liquidity  Provider Ratings
Event or Related  Party  Termination  Event,  by the  fifteenth day prior to the
Liquidity  Provider Ratings Event  Termination Date or Related Party Termination
Date,  as the case may be, the Fund shall not have obtained and delivered to the
Tender and Paying Agent an Alternate VRDP Purchase  Agreement with a termination
date not  earlier  than  180 days  from the  Liquidity  Provider  Ratings  Event
Termination Date or Related Party  Termination  Date, as the case may be, of the
VRDP Purchase  Agreement being replaced.  The Mandatory  Purchase Event shall be
deemed to occur on such fifteenth day prior to any Scheduled  Termination  Date,
Liquidity  Provider Ratings Event  Termination Date or Related Party Termination
Date, as the case may be.

                  (aaa)    "Mandatory Purchase Notice" means, in connection with
the Mandatory  Purchase of Series 1 VRDP Shares,  a notice delivered by the Fund
or the  Tender  and Paying  Agent on behalf of the Fund to the  Holders  and the
Liquidity Provider specifying a Mandatory Purchase Date.

                  (bbb)    "Mandatory  Tender,"  with  respect  to  a  Mandatory
Tender Event,  means the mandatory tender of all Series 1 VRDP Shares by Holders
for  Remarketing  or, in the event (i) no  Remarketing  occurs on or before  the
Purchase Date or (ii) pursuant to an attempted Remarketing, Series 1 VRDP Shares
remain  unsold and the  Remarketing  Agent does not purchase for its own account
the unsold  Series 1 VRDP  Shares  tendered  to the Tender and Paying  Agent for
Remarketing (provided, that the Remarketing Agent may seek to sell such Series 1
VRDP  Shares  in a  subsequent  Remarketing  prior to the  Purchase  Date),  for
purchase by the Liquidity  Provider at the Purchase  Price pursuant to Section 1
of Part II of this Statement and the VRDP Purchase Agreement.

                  (ccc)    "Mandatory  Tender  Event"  means (a) each failure by
the Fund to make a scheduled payment of dividends on any Series 1 VRDP Share, on
a Dividend  Payment Date;  (b) the  occurrence of a Liquidity  Provider  Ratings
Event  (which  shall  constitute  a  single  Mandatory  Tender  Event  upon  the
occurrence of such Liquidity  Provider Ratings Event,  whether or not continuing
and  whether or not such  Liquidity  Provider  Ratings  Event also  results in a
Mandatory Purchase Event; provided that, a subsequent Liquidity Provider Ratings
Event,  following  restoration of the  short-term  debt ratings to the requisite
level,  shall  constitute  a new  Mandatory  Tender  Event);  (c) with the prior
written consent of the Liquidity  Provider with respect to its classification as
a Mandatory Tender Event, each failure by the Fund to pay the Liquidity Provider
the  applicable  fee due in advance under the terms of the VRDP Fee Agreement by
seven  Business  Days prior to the  beginning of the month to which such payment
relates;  (d) the eighth day prior to the scheduled date of the occurrence of an
Extraordinary Corporate Event; (e) the Fund shall have obtained and delivered to
the  Tender  and  Paying  Agent an  Alternate  VRDP  Purchase  Agreement  by the
fifteenth  day  prior to the  Scheduled  Termination  Date,  Liquidity  Provider
Ratings Event  Termination Date or Related Party  Termination  Date, as the case
may be, of the VRDP Purchase Agreement being replaced;  (f) the occurrence of an
Optional Early  Replacement  Event; (g) the Fund shall have provided a Notice of
Proposed  Special Rate Period in accordance with this  Statement;  or (h) in the
event of a breach by the Fund of its

                                       11

<PAGE>


Effective  Leverage Ratio  covenant with the Liquidity  Provider in the VRDP Fee
Agreement  and the failure to cure such  breach  within 60 days from the date of
such breach (which 60-day period would include the Effective Leverage Ratio Cure
Period),  to the extent that the  Liquidity  Provider  (in its sole  discretion)
thereafter  provides  written notice to the Fund that the failure to timely cure
such breach  constitutes  a Mandatory  Tender Event  (subject to the Fund curing
such  breach  prior to the  delivery  date of such  notice  from  the  Liquidity
Provider).

                  (ddd)    "Mandatory  Tender Notice" means,  in connection with
the Mandatory  Tender of Series 1 VRDP Shares, a notice delivered by the Fund or
the  Tender  and  Paying  Agent on  behalf  of the Fund to the  Holders  and the
Liquidity Provider specifying a Mandatory Tender Event and Purchase Date.

                  (eee)    "Market  Value"  of any  asset of the Fund  means the
market value thereof  determined by an independent  third-party  pricing service
designated from time to time by the Board of Trustees. Market Value of any asset
shall include any interest accrued thereon. The pricing service values portfolio
securities  at the mean  between  the  quoted  bid and asked  price or the yield
equivalent  when  quotations  are  readily   available.   Securities  for  which
quotations  are not readily  available are valued at fair value as determined by
the pricing  service using methods  which  include  consideration  of: yields or
prices of municipal bonds of comparable quality, type of issue, coupon, maturity
and rating; indications as to value from dealers; and general market conditions.
The pricing service may employ electronic data processing techniques or a matrix
system, or both, to determine valuations.

                  (fff)    "Maximum  Rate,"  means,  for Series 1 VRDP Shares on
any  Rate  Determination  Date  or in  respect  of the  occurrence  of a  Failed
Remarketing  Condition for shares of such Series,  the Applicable  Percentage of
the Applicable Base Rate plus the Applicable Spread. The Maximum Rate for Series
1 VRDP Shares will depend on the long-term  rating assigned to the Series 1 VRDP
Shares,  the  length of the Rate  Period  and  whether or not the Fund has given
notification  prior to the  Applicable  Rate  Determination  for the Rate Period
pursuant  to  Section 6 of Part II hereto  that any  ordinary  income or capital
gains will be  included  in the  dividend  on Series 1 VRDP Shares for that Rate
Period. The Applicable Percentage of the Applicable Base Rate is as follows:

          -------------------------------------------------------
                                         Applicable Percentage of
                   Long-Term*            Applicable Base Rate--No
                    Ratings                    Notification
          -------------------------------------------------------
             Moody's       Fitch/S&P
             -------       ---------
           Aa3 to Aaa     AA- to AAA               100%
           Baa3 to A1     BBB- to A+               110%
          Below Baa3**   Below BBB- **             135%
          ------
          *   And/or the  equivalent  ratings of an Other  Rating
              Agency   then  rating  the  Series  1  VRDP  Shares
              utilizing  the higher of the  ratings of the Rating
              Agencies then rating the Series 1 VRDP Shares.
          **  Includes  unrated,  if no  Rating  Agency  is  then
              rating the Series 1 VRDP Shares.

                  provided,  however,  that in the  event  the  Fund  has  given
notification  prior to the  Applicable  Rate  Determination  for the Rate Period
pursuant  to Section 6 of Part II hereof  that any  ordinary  income and capital
gains will be  included  in the  dividend  on Series 1 VRDP Shares for that Rate
Period, the Applicable Percentage in the foregoing table shall be divided by the
quantity 1 minus the maximum  marginal  regular federal personal income tax rate
applicable to ordinary income or the maximum marginal regular federal  corporate
income tax rate applicable to ordinary income, whichever is greater.

                  The Applicable  Percentage as so determined and the Applicable
Spread may be subject to upward (and if previously  adjusted upward,  subsequent
downward) adjustment as provided in the Remarketing Agreement,  provided,  that,
notwithstanding any provision to the contrary in the Remarketing Agreement,  the
Maximum Rate is equal to or higher than the rates determined as set forth above,
and  immediately  following any such  increase,  the Fund would be in compliance
with the Minimum VRDP Asset  Coverage and the VRDP Basic  Maintenance  Amount in
the Rating  Agency  Guidelines  (if  applicable).  Furthermore,  in the event of
Special Rate  Periods of greater than 364 days,  the Maximum Rate may be subject
to upward adjustment as provided in the Remarketing Agreement,

                                       12

<PAGE>


provided, that, notwithstanding any provision to the contrary in the Remarketing
Agreement,  immediately  following  any  such  increase,  the  Fund  would be in
compliance  with the Minimum VRDP Asset Coverage and the VRDP Basic  Maintenance
Amount (if applicable).

                  A Maximum  Rate in effect in respect  of a Failed  Remarketing
Condition will continue to be the Applicable Rate (i) until the first day of the
next succeeding  Subsequent Rate Period after a Failed Remarketing  Condition no
longer  exists in the case of a Minimum  Rate Period or a Special Rate Period of
28 Rate  Period  Days or  fewer,  and  (ii)  until  the  first  day of the  next
succeeding Dividend Period after a Failed Remarketing Condition no longer exists
in the case of a Special Rate Period of greater than 28 Rate Period Days.

                  Notwithstanding   any   provision   to  the  contrary  in  the
Remarketing Agreement,  in no event shall the Maximum Rate exceed 15%; provided,
however,  that in the  event  the  Fund  has  given  notification  prior  to the
Applicable Rate  Determination for the Rate Period pursuant to Section 6 of Part
II hereof  that any  ordinary  income or capital  gains will be  included in the
dividend on Series 1 VRDP Shares for that Rate  Period,  the Maximum  Rate shall
not exceed 15%  divided by the  quantity 1 minus the  maximum  marginal  regular
federal  personal  income tax rate  applicable to ordinary income or the maximum
marginal  regular  federal  corporate  income tax rate  applicable  to  ordinary
income, whichever is greater.

                  (ggg)    "Minimum   Rate   Period"   means  any  Rate   Period
consisting  of seven Rate Period  Days,  as adjusted to reflect any changes when
the regular day that is a Rate Determination Date is not a Business Day.

                  (hhh)    "Minimum VRDP Asset  Coverage"  means asset coverage,
as  defined  in  Section  18(h)  of the  1940 Act as of the date of the VRDP Fee
Agreement with such changes  thereafter as agreed with the prior written consent
of the  Liquidity  Provider,  of at  least  200% or such  higher  percentage  as
required and specified in the VRDP Fee  Agreement,  but, in any event,  not more
than 250%, with respect to all outstanding  senior  securities of the Fund which
are stock,  including all Outstanding  VRDP Shares (or, in each case, if higher,
such other asset coverage as may in the future be specified in or under the 1940
Act as the minimum  asset  coverage for senior  securities  which are stock of a
closed-end  investment  company as a condition  of  declaring  dividends  on its
common shares or stock).

                  (iii)    "Minimum VRDP Asset  Coverage Cure Date" means,  with
respect to the failure by the Fund to maintain the Minimum  VRDP Asset  Coverage
as of the close of business on a Business  Day (as required by Section 6 of Part
I of this Statement),  the date that is thirty (30) calendar days following such
Business Day.

                  (jjj)    "Moody's" means Moody's Investors Service, a Delaware
corporation, and its successors.

                  (kkk)    "Moody's  Discount Factor" means the discount factors
set forth in the Moody's  Guidelines for use in calculating the Discounted Value
of the Fund's assets in connection with Moody's ratings of Series 1 VRDP Shares.

                  (lll)    "Moody's  Eligible  Assets"  means assets of the Fund
set forth in the Moody's Guidelines as eligible for inclusion in calculating the
Discounted  Value of the Fund's  assets in  connection  with Moody's  ratings of
Series 1 VRDP Shares.

                  (mmm)    "Moody's Guidelines" means the guidelines,  as may be
amended from time to time, in connection  with Moody's  ratings of Series 1 VRDP
Shares.

                  (nnn)    "Municipal Obligations" means municipal securities as
described in the Information Memorandum.

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

                  (ppp)    "Notice of Proposed  Special Rate  Period"  means any
notice with  respect to a proposed  Special  Rate Period of Series 1 VRDP Shares
pursuant to paragraph (c) of Section 4 of Part I of this Statement.

                                       13

<PAGE>


                  (qqq)    "Notice of Purchase" means, as the context  requires,
a  Preliminary  Notice of Purchase or a Final Notice of Purchase,  in each case,
substantially in the form attached to the VRDP Purchase Agreement.

                  (rrr)    "Notice of Redemption"  means any notice with respect
to the  redemption of Series 1 VRDP Shares  pursuant to paragraph (c) of Section
10 of Part I of this Statement.

                  (sss)    "Notice of Revocation"  means, in connection with the
revocation by a Beneficial  Owner or its Agent Member of its Notice of Tender, a
notice,  substantially  in the form  attached  to the Tender  and  Paying  Agent
Agreement, delivered by a Beneficial Owner or its Agent Member to the Tender and
Paying Agent  indicating an intention to revoke the tender of some or all of the
Series 1 VRDP Shares for sale on a Purchase  Date  pursuant to Section 1 of Part
II of this Statement.

                  (ttt)    "Notice of Special Rate Period" means any notice with
respect to a Special Rate Period of VRDP Shares pursuant to paragraph  (d)(i) of
Section 4 of Part I of this Statement.

                  (uuu)    "Notice  of  Tender"  means,  in  connection  with an
Optional Tender, a notice,  substantially in the form attached to the Tender and
Paying Agent  Agreement,  delivered by a Beneficial Owner or its Agent Member to
the Tender and Paying  Agent,  indicating  an intention to tender  Series 1 VRDP
Shares  for sale on a  Purchase  Date  pursuant  to Section 1 of Part II of this
Statement.

                  (vvv)    "NRSRO"  means a "nationally  recognized  statistical
rating  organization" within the meaning of Section 3(a)(62) of the Exchange Act
that is not an  "affiliated  person" (as defined in Section  2(a)(3) of the 1940
Act) of the Fund or the  Liquidity  Provider,  including,  at the  date  hereof,
Fitch, Moody's and S&P.

                  (www)    "Optional  Early  Replacement  Event"  means the Fund
shall have  obtained  and  delivered to the Tender and Paying Agent an Alternate
VRDP  Purchase   Agreement  and  provided  notice  thereof  (which  notice  also
designates  an Optional  Early  Termination  Date) to Holders and the  Liquidity
Provider in accordance  with the Tender and Paying Agent  Agreement given at any
time prior to the 30th  calendar day  preceding  the  then-prevailing  Scheduled
Termination  Date. The date of the occurrence of the Optional Early  Replacement
Event shall be the date of such notice.

                  (xxx)    "Optional  Early  Termination  Date"  means  the date
established by the Tender and Paying Agent, acting upon instructions of the Fund
pursuant to the Tender and Paying Agent  Agreement,  for termination of the VRDP
Purchase  Agreement upon the occurrence of an Optional Early Replacement  Event,
which date shall be not less than 16 days nor more than 30 days  following  such
Optional Early Replacement Event.

                  (yyy)    "Optional  Tender"  means any tender of Series 1 VRDP
Shares by a Beneficial Owner or its Agent Member to the Tender and Paying Agent,
other  than  a  Mandatory  Tender,  for  Remarketing  or,  in the  event  (i) no
Remarketing  occurs on or before  the  Purchase  Date,  or (ii)  pursuant  to an
attempted  Remarketing  Series 1 VRDP Shares remain  unsold and the  Remarketing
Agent does not  purchase  for its own  account  the unsold  Series 1 VRDP Shares
tendered  to the Tender  and Paying  Agent for  Remarketing  (provided  that the
Remarketing  Agent may seek to sell such  Series 1 VRDP  Shares in a  subsequent
Remarketing prior to the Purchase Date), for purchase by the Liquidity  Provider
pursuant  to  Section  1 of Part  II of this  Statement  and the  VRDP  Purchase
Agreement.

                  (zzz)    "Other Rating Agency" means each NRSRO, if any, other
than Fitch,  Moody's or S&P then providing a rating for the Series 1 VRDP Shares
pursuant to the request of the Fund.

                  (aaaa)   "Other Rating Agency Eligible Assets" means assets of
the Fund set  forth in the  Other  Rating  Agency  Guidelines  as  eligible  for
inclusion in calculating the Discounted Value of the Fund's assets in connection
with Other Rating Agency ratings of Series 1 VRDP Shares.

                  (bbbb)   "Other Rating Agency Guidelines" means the guidelines
provided by each Other Rating  Agency,  as may be amended from time to time,  in
connection with the Other Rating Agency's rating of Series 1 VRDP Shares.

                                       14

<PAGE>


                  (cccc)   "Other Special Rate Period Provisions" shall have the
meaning specified in paragraph (f) of Section 4 of Part I of this Statement.

                  (dddd)   "Outstanding"  means,  as of any date with respect to
VRDP  Shares of any  Series,  the  number of shares of such  Series  theretofore
issued by the Fund except,  without  duplication,  (i) any shares of such Series
theretofore  cancelled  or  delivered  to the Tender and Paying  Agent (or other
relevant tender and paying agent) for cancellation or redeemed by the Fund, (ii)
any shares of such  Series with  respect to which,  in the case of Series 1 VRDP
Shares, the Fund has given a Notice of Redemption and irrevocably deposited with
the Tender and Paying Agent  sufficient  Deposit  Securities to redeem such VRDP
Shares,  pursuant to Section 10 of Part I of this  Statement  or, in the case of
VRDP Shares of any other Series,  the Fund has taken the equivalent action under
the statement  applicable to such shares,  (iii) any shares of such Series as to
which the Fund shall be a Beneficial  Owner,  and (iv) any shares of such Series
represented  by any  certificate  in lieu of  which a new  certificate  has been
executed and delivered by the Fund;  provided,  however,  with respect to clause
(ii), any Series 1 VRDP Share will be deemed to be  Outstanding  for purposes of
the VRDP Purchase Agreement until redeemed by the Fund.

                  (eeee)   "Person"   means  and  includes  an   individual,   a
partnership,  a corporation,  a trust, an  unincorporated  association,  a joint
venture or other entity or a government  or any agency or political  subdivision
thereof.

                  (ffff)   "Preferred  Shares" means the preferred shares of the
Fund, and includes the VRDP Shares of each Series.

                  (gggg)   "Preliminary  Notice  of  Purchase"  shall  have  the
meaning specified in paragraph (b) of Section 2 of Part II of this Statement.

                  (hhhh)   "Purchase  Date,"  with  respect to any  purchase  of
Series 1 VRDP Shares,  means (i) in connection with an Optional Tender, the date
specified in a Notice of Tender, which date shall be no earlier than the seventh
day (or, if such day is not a Business  Day, the next  succeeding  Business Day)
following delivery to the Tender and Paying Agent of the Notice of Tender,  (ii)
in  connection  with a Mandatory  Tender,  the date  specified in the  Mandatory
Tender  Notice  (or,  if such day is not a  Business  Day,  the next  succeeding
Business Day), subject to the immediately succeeding sentence below, or (iii) in
connection with a Mandatory  Purchase,  the Mandatory Purchase Date specified in
the Mandatory  Purchase  Notice (or, if such day is not a Business Day, the next
succeeding  Business  Day).  The Purchase Date in respect of a Mandatory  Tender
Event shall be not later than seven days  following the date a Mandatory  Tender
Notice is sent to Holders by Electronic Means; provided,  that: (A) the Purchase
Date in connection with the failure of the Fund to pay the applicable fee to the
Liquidity Provider may not be later than the last Business Day of the month such
payment was due; (B) the Purchase Date in connection  with the  occurrence of an
Extraordinary Corporate Event may not be later than the Business Day immediately
preceding  the  occurrence  of the  Extraordinary  Corporate  Event (and,  if no
earlier  Purchase Date is specified in a Mandatory Tender Notice with respect to
such Extraordinary  Corporate Event, the Business Day immediately  preceding the
occurrence  of the  Extraordinary  Corporate  Event  shall be  deemed  to be the
Purchase  Date  irrespective  of the  failure to have given or sent a  Mandatory
Tender  Notice);  (C) the Purchase Date in connection with the Fund obtaining an
Alternate  VRDP  Purchase  Agreement  may not be  later  than the  Business  Day
immediately  preceding  the  termination  of the VRDP Purchase  Agreement  being
replaced;  and (D) the  Purchase  Date in  connection  with a Notice of Proposed
Special Rate Period may not be later than the first day of such proposed Special
Rate Period.

                  (iiii)   "Purchase  Obligation"  means the  unconditional  and
irrevocable obligation of the Liquidity Provider during the term and pursuant to
the terms of the VRDP Purchase  Agreement to purchase  Outstanding Series 1 VRDP
Shares on any Purchase Date at the Purchase Price from Beneficial Owners, in the
case of any Optional Tender,  and Holders,  in the case of any Mandatory Tender,
in each case  following  delivery of a Notice of Purchase  with  respect to such
Series 1 VRDP Shares, and Holders, in the case of any Mandatory Purchase.

                  (jjjj)   "Purchase   Price"  means  an  amount  equal  to  the
Liquidation Preference of any Series 1 VRDP Shares to be purchased on a Purchase
Date, plus any accumulated but unpaid  dividends  thereon (whether or not earned
or declared), if any, to, but excluding, the relevant Purchase Date.

                                       15

<PAGE>


                  (kkkk)   "Purchased  VRDP  Shares"  means  all  Series  1 VRDP
Shares  purchased  by the  Liquidity  Provider  pursuant  to the  VRDP  Purchase
Agreement,  so long as such  Series 1 VRDP  Shares  are  owned by the  Liquidity
Provider.

                  (llll)   "Rate  Determination Date" means, with respect to any
Series 1 VRDP Shares,  the last day of a Rate Period for such Series or, if such
day is not a Business Day, the next succeeding Business Day; provided,  however,
that the next  succeeding  Rate  Determination  Date will be the day of the week
that is the regular Rate Determination Date if such day is a Business Day.

                  (mmmm)   "Rate  Period," with respect to Series 1 VRDP,  means
the Initial Rate Period and any  Subsequent  Rate Period,  including any Special
Rate Period, for shares of such Series.

                  (nnnn)   "Rate Period  Days," for any Rate  Period,  means the
number of days that would constitute such Rate Period but for the application of
paragraph  (d) of  Section 2 of Part I of this  Statement  or  paragraph  (b) of
Section 4 of Part I of this Statement.

                  (oooo)   "Rating Agency" means each of Fitch (if Fitch is then
rating Series 1 VRDP  Shares),  Moody's (if Moody's is then rating Series 1 VRDP
Shares),  S&P (if S&P is then rating Series 1 VRDP Shares), and any Other Rating
Agency.

                  (pppp)   "Rating Agency Certificate" has the meaning specified
in paragraph (b) of Section 7 of Part I of this Statement.

                  (qqqq)   "Rating Agency Eligible  Assets" means Fitch Eligible
Assets,  Moody's  Eligible  Assets,  S&P Eligible Assets and Other Rating Agency
Eligible Assets, as applicable.

                  (rrrr)   "Rating Agency  Guidelines"  means Fitch  Guidelines,
Moody's Guidelines, S&P Guidelines and any Other Rating Agency Guidelines.

                  (ssss)   "Redemption  Price" means the  applicable  redemption
price  specified  in  paragraph  (a) or  (b) of  Section  10 of  Part I of  this
Statement.

                  (tttt)   "Reference  Banks"  means  four  major  banks  in the
London interbank  market selected by the Remarketing  Agent or its affiliates or
successors or such other party as the Fund may from time to time appoint.

                  (uuuu)   "Related Party" means a related party for purposes of
Section 267(b) or Section 707(b) of the Code, as such  provisions may be amended
from time to time.

                  (vvvv)   "Related Party  Termination Date" means the effective
date of the Related Party Termination Event.

                  (wwww)   "Related Party  Termination  Event" means termination
of the VRDP Purchase  Agreement by its terms as of the Related Party Termination
Date in the event of the Liquidity Provider becoming a Related Party of the Fund
other than through the acquisition of Series 1 VRDP Shares pursuant to the terms
of the VRDP Purchase Agreement.

                  (xxxx)   "Remarketing"  means the remarketing of Series 1 VRDP
Shares by the Remarketing  Agent on behalf of Beneficial Owners thereof pursuant
to an  Optional  Tender  or on  behalf  of the  Holders  thereof  pursuant  to a
Mandatory Tender,  as provided in the Remarketing  Agreement and Part II of this
Statement.

                  (yyyy)   "Remarketing  Agent"  means the entity  appointed  as
such with  respect  to  Series 1 VRDP  Shares  by a  resolution  of the Board of
Trustees and any additional or successor  companies or entities appointed by the
Board of Trustees which have entered into a Remarketing Agreement with the Fund.

                                       16

<PAGE>


                  (zzzz)   "Remarketing   Agreement"   means   the   Remarketing
Agreement  with respect to the Series 1 VRDP Shares,  by and among the Fund, the
Investment  Adviser  and the  Remarketing  Agent,  which  provides,  among other
things, that the Remarketing Agent will follow the Applicable Rate Determination
procedures for purposes of determining  the Applicable Rate for shares of Series
1 VRDP and the Remarketing Procedures, as amended, modified or supplemented from
time to time.

                  (aaaaa)  "Remarketing Notice" shall have the meaning specified
in paragraph (b) of Section 2 of Part II of this Statement.

                  (bbbbb)  "Remarketing  Procedures"  means the  procedures  for
conducting Remarketings set forth in Part II of this Statement.

                  (ccccc)  "Requisite NRSROs" means (i) any two NRSROs that have
issued a rating with  respect to a security or class of debt  obligations  of an
issuer;  or (ii) if only one  NRSRO has  issued a rating  with  respect  to such
security  or class of debt  obligations  of an  issuer  at the time a  purchaser
Acquires (as such term is defined in Rule 2a-7 under the 1940 Act) the security,
that NRSRO.

                  (ddddd)  "S&P" means  Standard & Poor's  Ratings  Services,  a
Standard & Poor's Financial Services LLC business, and its successors.

                  (eeeee)  "S&P Discount  Factor" means the discount factors set
forth in the S&P Guidelines for use in calculating  the Discounted  Value of the
Fund's assets in connection with S&P's ratings of VRDP Shares.

                  (fffff)  "S&P  Eligible  Assets"  means assets of the Fund set
forth in the S&P  Guidelines  as  eligible  for  inclusion  in  calculating  the
Discounted  Value of the Fund's assets in connection  with S&P's ratings of VRDP
Shares.

                  (ggggg)  "S&P  Guidelines"  means  the  guidelines,  as may be
amended from time to time, in connection with S&P's ratings of VRDP Shares.

                  (hhhhh)  "Scheduled  Termination  Date" means August 29, 2013,
or any  succeeding  date to which  the term of the VRDP  Purchase  Agreement  is
extended.

                  (iiiii)  "SEC" means the Securities and Exchange Commission.

                  (jjjjj)  "Securities Act" means the Securities Act of 1933, as
amended.

                  (kkkkk)  "Securities  Depository"  means The Depository  Trust
Company,  New York,  New  York,  and any  substitute  for or  successor  to such
securities  depository  that shall maintain a book-entry  system with respect to
the VRDP Shares.

                  (lllll)  "SIFMA  Municipal  Swap  Index"  means,  on any  Rate
Determination  Date, the Securities  Industry and Financial Markets  Association
Municipal Swap Index, produced and made available by Municipal Market Data as of
3:00 p.m., New York City time, on the Rate Determination Date.

                  (mmmmm)  "SIFMA  Municipal Swap Index Rate" means, on any Rate
Determination  Date,  (i) the  SIFMA  Municipal  Swap  Index  produced  and made
available  on such  date,  or (ii) if such index is not made  available  by 3:00
p.m., New York City time, on such date,  the SIFMA  Municipal Swap Index Rate as
in effect on the previous Rate Determination Date.

                  (nnnnn)  "Special  Rate Period," with respect to Series 1 VRDP
Shares, means a Rate Period that is not a Minimum Rate Period and is established
in accordance with paragraph (a) of Section 4 of Part I of this Statement.

                                       17

<PAGE>


                  (ooooo)  "Special   Redemption   Provisions"  shall  have  the
meaning specified in paragraph (a)(i) of Section 10 of Part I of this Statement.

                  (ppppp)  "Statement"  means this  statement  establishing  and
fixing the rights and preferences of Series 1 VRDP Shares,  as it may be amended
or supplemented from time to time.

                  (qqqqq)  "Subsequent  Rate  Period," with respect to shares of
Series 1 VRDP, means the period from, and including, the first day following the
Initial  Rate Period of shares of such Series to, and  including,  the next Rate
Determination Date for shares of such Series and any period thereafter from, and
including,  the first day following a Rate Determination Date for shares of such
Series to, and including, the next succeeding Rate Determination Date for shares
of such Series; provided,  however, that if any Subsequent Rate Period is also a
Special Rate Period, such term shall mean the period commencing on the first day
of such  Special Rate Period and ending on, and  including,  the last day of the
last Dividend Period thereof;  except for Special Rate Periods,  each Subsequent
Rate Period will be a Minimum Rate Period.

                  (rrrrr)  "Substitute  LIBOR  Dealer"  means any  LIBOR  Dealer
selected by the Fund;  provided that none of such entities  shall be an existing
LIBOR Dealer.

                  (sssss)  "Taxable Allocation" shall have the meaning specified
in paragraph (a) of Section 3 of Part I of this Statement.

                  (ttttt)  "Tender"  means  an  Optional   Tender  or  Mandatory
Tender, as applicable.

                  (uuuuu)  "Tender and Paying  Agent" means The Bank of New York
Mellon,  or any successor  Person,  which has entered into an agreement with the
Fund to act in  such  capacity  as the  Fund's  tender  agent,  transfer  agent,
registrar,   dividend  disbursing  agent,  paying  agent  and  redemption  price
disbursing  agent  and  calculation  agent in  connection  with the  payment  of
regularly scheduled dividends with respect to the Series 1 VRDP Shares.

                  (vvvvv)  "Tender and Paying Agent  Agreement" means the Tender
and Paying Agent  Agreement  with  respect to the Series 1 VRDP Shares,  entered
into between the Fund and the Tender and Paying Agent,  as amended,  modified or
supplemented from time to time, or any similar agreement with a successor Tender
and Paying Agent.

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

                  (xxxxx)  "Valuation  Date" means,  for purposes of determining
whether the Fund is maintaining the VRDP Basic Maintenance Amount, each Business
Day commencing with the Date of Original Issue.

                  (yyyyy)  "Voting  Period" shall have the meaning  specified in
paragraph (b)(i) of Section 5 of Part I of this Statement.

                  (zzzzz)  "VRDP Basic Maintenance  Amount," as of any Valuation
Date, shall have the meaning set forth in the Rating Agency Guidelines.

                  (aaaaaa) "VRDP Basic  Maintenance  Cure Date," with respect to
the  failure  by the Fund to  satisfy  the VRDP  Basic  Maintenance  Amount  (as
required  by  paragraph  (a) of Section 7 of Part I of this  Statement)  as of a
given  Valuation  Date,  shall have the meaning  set forth in the Rating  Agency
Guidelines,  but in no event shall it be longer than 10 calendar days  following
such Valuation Date.

                  (bbbbbb) "VRDP  Basic  Maintenance   Report"  shall  have  the
meaning set forth in the Rating Agency Guidelines.

                                       18

<PAGE>


                  (cccccc) "VRDP Fee  Agreement"  means the Variable Rate Demand
Preferred  Shares  (VRDP) Fee  Agreement  with  respect to Series 1 VRDP Shares,
dated  as of May 6,  2013,  between  the  Fund and the  Liquidity  Provider,  as
amended,  modified or  supplemented  from time to time or any similar  agreement
with a successor Liquidity Provider.

                  (dddddd) "VRDP  Purchase  Agreement"  means the Variable  Rate
Demand Preferred Shares (VRDP) Purchase  Agreement with respect to Series 1 VRDP
Shares,  dated as of May 6, 2013,  between  the Tender and Paying  Agent and the
Liquidity Provider, as amended, modified or supplemented,  or any Alternate VRDP
Purchase Agreement.

                                     PART I

         1.       Number of Authorized Shares.

                  The initial number of authorized shares  constituting Series 1
VRDP is as set forth above under the title "Designation of Series 1 VRDP."

         2.       Dividends.

                  (a)      Ranking.  The shares of Series 1 VRDP shall rank on a
parity with each other,  with shares of any other Series of VRDP and with shares
of any other  series of  Preferred  Shares as to the payment of dividends by the
Fund.

                  (b)      Cumulative  Cash  Dividends.  The Holders of Series 1
VRDP Shares shall be entitled to receive,  when, as and if declared by the Board
of Trustees,  out of funds legally  available  therefor in  accordance  with the
Declaration and applicable law, cumulative cash dividends at the Applicable Rate
for shares of such  Series,  determined  as set forth in  paragraph  (e) of this
Section 2, and no more (except to the extent set forth in Section 3 of Part I of
this  Statement  and  Section 6 of Part II of this  Statement),  payable  on the
Dividend Payment Dates with respect to shares of such Series determined pursuant
to paragraph (d) of this Section 2. Holders of Series 1 VRDP Shares shall not be
entitled to any dividend, whether payable in cash, property or shares, in excess
of full cumulative  dividends,  as herein provided,  on Series 1 VRDP Shares. No
interest,  or sum of money in lieu of  interest,  shall be payable in respect of
any  dividend  payment  or  payments  on  Series 1 VRDP  Shares  which may be in
arrears,  and no  additional  sum of money  shall be  payable in respect of such
arrearage,  except  that the Fund  shall pay as a  supplemental  dividend a Late
Charge (as defined below in paragraph (e)(i)(C) of this Section 2) on account of
a  Failure  to  Deposit,  if any,  in  respect  of each day  during  the  period
commencing on the day a Failure to Deposit  occurs through and including the day
immediately preceding the earlier of (i) the day the Failure to Deposit is cured
and (ii) the third Business Day next  succeeding the day on which the Failure to
Deposit occurred.

                  (c)      Dividends  Cumulative  from Date of  Original  Issue.
Dividends on Series 1 VRDP Shares shall be declared  daily and accumulate at the
Applicable  Rate for  shares  of such  Series  from the Date of  Original  Issue
thereof.

                  (d)      Dividend  Payment Dates and Adjustment  Thereof.  The
Dividend  Payment  Date with  respect to Series 1 VRDP Shares shall be the first
Business Day of each calendar month; provided, however, that:

                           (i)      notwithstanding  the foregoing,  the Fund in
         its discretion may establish more frequent  Dividend Payment Dates than
         monthly in respect of any Minimum Rate Period, and the Dividend Payment
         Date for the  Dividend  Period prior to the  commencement  of a Special
         Rate Period shall be the Business Day  immediately  preceding the first
         day of such Special Rate Period; and

                           (ii)     notwithstanding  the foregoing,  the Fund in
         its discretion  may establish the Dividend  Payment Dates in respect of
         any Special  Rate Period for Series 1 VRDP  Shares  consisting  of more
         than seven Rate Period Days; provided,  however,  that such dates shall
         be set forth in the Notice of Proposed  Special  Rate Period and Notice
         of Special  Rate  Period  relating  to such  Special  Rate  Period,  as
         delivered to the Remarketing  Agent,  which Notice of Proposed  Special
         Rate Period and Notice of Special

                                       19

<PAGE>


         Rate Period shall be filed with the Secretary of the Fund;  and further
         provided  that (1) any such  Dividend  Payment Date shall be a Business
         Day and (2) the last  Dividend  Payment Date in respect of such Special
         Rate Period shall be the Business Day  immediately  following  the last
         day  thereof,  as  such  last  day is  determined  in  accordance  with
         paragraph (b) of Section 4 of Part I of this Statement.

                  (e)      Applicable Rates and Calculation of Dividends.

                           (i)      Applicable   Rates.  The  dividend  rate  on
         Series 1 VRDP Shares  during the Initial  Rate Period shall be equal to
         the rate per  annum  specified  under  "Designation  of  Series 1 VRDP"
         above.  Except for Special Rate Periods,  each  Subsequent  Rate Period
         will be a Minimum  Rate  Period.  For each  Subsequent  Rate  Period of
         shares of such Series  thereafter,  the dividend rate on shares of such
         Series  shall be equal to the rate  per  annum  that  results  from the
         Applicable  Rate  Determination  for shares of such  Series on the Rate
         Determination  Date immediately  preceding such Subsequent Rate Period;
         provided, however, that:

                                    (A)      if an Applicable Rate Determination
                  for any such Subsequent Rate Period is not held for any reason
                  other than as described  below, the dividend rate on shares of
                  such Series for such  Subsequent  Rate Period will be adjusted
                  to the  Maximum  Rate for  shares  of such  Series on the Rate
                  Determination Date therefor;

                                    (B)      in   the    event   of   a   Failed
                  Remarketing Condition,  the Applicable Rate as of the close of
                  business  on the day the Failed  Remarketing  Condition  first
                  occurs  will  be  adjusted  to  the  Maximum  Rate  (with  the
                  Applicable  Spread  subject to  adjustment as set forth in the
                  definition  of Applicable  Spread),  and the Maximum Rate will
                  continue to be the Applicable  Rate (i) until the first day of
                  the next  succeeding  Subsequent  Rate  Period  after a Failed
                  Remarketing  Condition  no  longer  exists  in the  case  of a
                  Minimum Rate Period or a Special Rate Period of 28 Rate Period
                  Days or  fewer,  and  (ii)  until  the  first  day of the next
                  succeeding   Dividend   Period  after  a  Failed   Remarketing
                  Condition  no  longer  exists  in the case of a  Special  Rate
                  Period of greater than 28 Rate Period Days;

                                    (C)      if any  Failure  to  Deposit  shall
                  have occurred with respect to shares of such Series during any
                  Dividend  Period  thereof,  but, prior to 12:00 noon, New York
                  City time, on the third Business Day next  succeeding the date
                  on which such  Failure to Deposit  occurred,  such  Failure to
                  Deposit shall have been cured in accordance with paragraph (f)
                  of this  Section 2, and the Fund shall have paid to the Tender
                  and  Paying  Agent as a late  charge  ("Late  Charge"),  daily
                  supplemental  dividends  equal in the  aggregate to the sum of
                  (1) if such Failure to Deposit consisted of the failure timely
                  to pay to the  Tender  and  Paying  Agent  the full  amount of
                  dividends with respect to any Dividend Period of the shares of
                  such  Series,  an  amount  computed  by  multiplying  (x)  the
                  Applicable  Rate for the Rate Period during which such Failure
                  to  Deposit  occurs  on the  Dividend  Payment  Date  for such
                  Dividend Period plus 2.00% by (y) a fraction, the numerator of
                  which  shall be the number of days for which  such  Failure to
                  Deposit has not been cured in accordance with paragraph (f) of
                  this  Section 2  (including  the day such  Failure  to Deposit
                  occurs and excluding the day such Failure to Deposit is cured)
                  and the  denominator  of which shall be 360,  and applying the
                  rate obtained against the aggregate Liquidation  Preference of
                  the  outstanding  shares of such  Series  (with the amount for
                  each  individual  day that such  Failure to Deposit  occurs or
                  continues uncured being declared as a supplemental dividend on
                  that day) and (2) if such Failure to Deposit  consisted of the
                  failure  timely  to pay to the  Tender  and  Paying  Agent the
                  Redemption  Price of the  shares,  if any,  of such Series for
                  which  Notice  of  Redemption  has been  provided  by the Fund
                  pursuant  to  paragraph  (c) of  Section  10 of Part I of this
                  Statement, an amount computed by multiplying, (x) for the Rate
                  Period  during  which such  Failure  to Deposit  occurs on the
                  redemption  date,  the  Applicable  Rate  plus  2.00% by (y) a
                  fraction,  the  numerator of which shall be the number of days
                  for which such  Failure to Deposit is not cured in  accordance
                  with  paragraph (f) of this Section 2 (including  the day such
                  Failure to Deposit  occurs and  excluding the day such Failure
                  to  Deposit is cured) and the  denominator  of which  shall be
                  360,  and  applying the rate  obtained  against the  aggregate
                  Liquidation  Preference  of the  outstanding  shares  of  such
                  Series to be redeemed (with the amount for each individual day
                  that such Failure to

                                       20

<PAGE>


                  Deposit  occurs  or  continues  uncured  being  declared  as a
                  supplemental   dividend   on   that   day),   and  if  a  Rate
                  Determination Date occurs on the date on which such Failure to
                  Deposit  occurred  or on  either  of  the  two  Business  Days
                  succeeding  that date, and the Failure to Deposit has not been
                  cured  on such  Rate  Determination  Date in  accordance  with
                  paragraph   (f)  of  this  Section  2,  no   Applicable   Rate
                  Determination will be held in respect of shares of such Series
                  for  the  Subsequent   Rate  Period   relating  to  such  Rate
                  Determination  Date and the  dividend  rate for shares of such
                  Series for such  Subsequent  Rate  Period  will be the Maximum
                  Rate for shares of such Series on the Rate  Determination Date
                  for such Subsequent Rate Period; or

                                    (D)      if any  Failure  to  Deposit  shall
                  have occurred with respect to shares of such Series during any
                  Dividend  Period  thereof,  and, prior to 12:00 noon, New York
                  City time, on the third Business Day next  succeeding the date
                  on which such  Failure to Deposit  occurred,  such  Failure to
                  Deposit shall not have been cured in accordance with paragraph
                  (f) of this  Section  2 or the Fund  shall  not have  paid the
                  applicable  Late  Charge to the Tender and  Paying  Agent,  no
                  Applicable Rate  Determination will occur in respect of shares
                  of such Series for the first  Subsequent  Rate Period  thereof
                  thereafter (or for any Rate Period  thereof  thereafter to and
                  including  the Rate Period  during  which (1) such  Failure to
                  Deposit  is cured in  accordance  with  paragraph  (f) of this
                  Section 2 and (2) the Fund pays the applicable  Late Charge to
                  the Tender and Paying Agent,  in each case no later than 12:00
                  noon, New York City time, on the fourth  Business Day prior to
                  the end of such Rate Period), and the dividend rate for shares
                  of such Series for each such Subsequent Rate Period shall be a
                  rate per annum  equal to the  Maximum  Rate for shares of such
                  Series on the Rate Determination Date for such Subsequent Rate
                  Period  (but with the  prevailing  rating  for  shares of such
                  Series,  for purposes of determining  such Maximum Rate, being
                  deemed to be "below 'Baa3'/'BBB-'").

                  Each  dividend  rate   determined  in  accordance   with  this
paragraph  (e)(i)  of  Section  2 of  Part  I of  this  Statement  shall  be  an
"Applicable Rate."

                           (ii)     Calculation  of  Dividends.  The  amount  of
         dividends  per share payable on shares of Series 1 VRDP on any Dividend
         Payment Date shall be computed by multiplying  the Applicable  Rate for
         shares of such Series for each Rate Period in effect for such  Dividend
         Period or Dividend Periods or part thereof for which dividends have not
         been paid by a fraction,  the numerator of which shall be the number of
         days in such  Dividend  Period or Dividend  Periods or part thereof for
         which each  Applicable  Rate is in effect and the  denominator of which
         shall  be the  actual  number  of days in the year  (365 or  366),  and
         applying each such rate obtained against $100,000.

                  (f)      Curing a Failure  to  Deposit.  A Failure  to Deposit
with  respect to shares of Series 1 VRDP shall have been cured (if such  Failure
to  Deposit is not  solely  due to the  willful  failure of the Fund to make the
required  payment to the Tender and Paying  Agent) with  respect to any Dividend
Period of shares of such Series if, within the respective time periods described
in  paragraph  (e)(i) of this  Section 2, the Fund shall have paid to the Tender
and Paying  Agent (A) all  accumulated  but unpaid  dividends  on shares of such
Series and (B) without duplication,  the Redemption Price for shares, if any, of
such  Series  for  which  Notice of  Redemption  has been  provided  by the Fund
pursuant to paragraph (c) of Section 10 of Part I of this  Statement;  provided,
however,  that the foregoing clause (B) shall not apply to the Fund's failure to
pay the Redemption  Price in respect of VRDP Shares when the related  Redemption
Notice  provides  that  redemption  of such  shares  is  subject  to one or more
conditions  precedent  and any such  condition  precedent  shall  not have  been
satisfied  at the time or times and in the manner  specified  in such  Notice of
Redemption.

                  (g)      Dividend Payments by Fund to Tender and Paying Agent.
In connection with each Dividend Payment Date for Series 1 VRDP Shares, the Fund
shall pay to the Tender and Paying  Agent,  not later than 12:00 noon,  New York
City time, on the earlier of (i) the third Business Day next succeeding the Rate
Determination Date immediately  preceding the Dividend Payment Date and (ii) the
Business Day  immediately  preceding  the Dividend  Payment  Date,  an aggregate
amount of Deposit Securities equal to the dividends to be paid to all Holders of
shares of such Series on such Dividend  Payment  Date, or as otherwise  provided
for and in connection with designation of a Special Rate Period. If an aggregate
amount of funds  equal to the  dividends  to be paid to all Holders of shares of
such Series on such  Dividend  Payment Date are not  available in New York,  New

                                       21

<PAGE>


York,  by 12:00  noon,  New York City  time,  on the  Business  Day  immediately
preceding  such Dividend  Payment Date,  the Tender and Paying Agent will notify
the Liquidity  Provider by  Electronic  Means of such fact prior to the close of
business on such day.

                  (h)      Tender  and  Paying  Agent  as  Trustee  of  Dividend
Payments by Fund. All Deposit Securities paid to the Tender and Paying Agent for
the payment of  dividends on Series 1 VRDP Shares shall be held in trust for the
payment of such  dividends by the Tender and Paying Agent for the benefit of the
Holders  specified  in  paragraph  (i) of this Section 2. Any moneys paid to the
Tender and Paying Agent in accordance  with the foregoing but not applied by the
Tender  and  Paying  Agent to the  payment  of  dividends  will,  to the  extent
permitted  by law, be repaid to the Fund as soon as  possible  after the date on
which such moneys were so to have been applied upon request of the Fund.

                  (i)      Dividends Paid to Holders.  Each dividend on Series 1
VRDP  Shares  shall be  declared  daily to the  Holders  thereof at the close of
business on each such day and paid on each Dividend  Payment Date to the Holders
thereof at the close of business on the day immediately  preceding such Dividend
Payment  Date.  In  connection  with any transfer of Series 1 VRDP  Shares,  the
transferor as  Beneficial  Owner of Series 1 VRDP Shares shall be deemed to have
agreed  pursuant  to the terms of the Series 1 VRDP  Shares to  transfer  to the
transferee the right to receive from the Fund any dividends  declared and unpaid
for each day prior to the transferee becoming the Beneficial Owner of the Series
1 VRDP Shares in exchange  for payment of the  Purchase  Price for such Series 1
VRDP Shares by the transferee.

                  (j)      Dividends  Credited Against Earliest  Accumulated But
Unpaid  Dividends.  Any  dividend  payment  made on Series 1 VRDP Shares that is
insufficient  to cover the entire  amount of  dividends  payable  shall first be
credited against the earliest  accumulated but unpaid dividends due with respect
to such  shares.  Dividends  in  arrears  for any past  Dividend  Period  may be
declared and paid at any time, without reference to any regular Dividend Payment
Date,  to the Holders as their names  appear on the record  books of the Fund on
such date, not exceeding 15 days  preceding the payment date thereof,  as may be
fixed by the Board of Trustees.

                  (k)      Dividends  Designated as  Exempt-Interest  Dividends.
Dividends  on  Series 1 VRDP  Shares  shall  be  designated  as  exempt-interest
dividends  up to the  amount of  tax-exempt  income of the Fund,  to the  extent
permitted by, and for purposes of, Section 852 of the Code.

         3.       Gross-Up  Payments.  Holders of Series 1 VRDP Shares  shall be
entitled to receive,  when, as and if declared by the Board of Trustees,  out of
funds legally available therefor,  dividends in an amount equal to the aggregate
Gross-up Payments as follows:

                  (a)      If the  Fund  allocates  any  net  capital  gains  or
ordinary  income  taxable for regular  federal income tax purposes to a dividend
paid on Series 1 VRDP Shares  without either having given advance notice thereof
to the Remarketing Agent or  simultaneously  increasing such dividend payment by
an additional amount, both as provided in Section 6 of Part II of this Statement
(such allocation being referred to herein as a "Taxable  Allocation"),  the Fund
shall,  prior to the end of the calendar  year in which such  dividend was paid,
provide notice thereof to the Remarketing Agent and direct the Tender and Paying
Agent to send  such  notice  with a  Gross-up  Payment  to the  Holder  that was
entitled to such  dividend  payment  during such  calendar year at such Holder's
address as the same appears or last appeared on the record books of the Fund.

                  (b)      The  Fund  shall  not be  required  to make  Gross-up
Payments with respect to any net capital gains or ordinary income  determined by
the Internal  Revenue  Service to be allocable  in a manner  different  from the
manner used by the Fund.

         4.       Designation of Special Rate Periods.

                  (a)      Length of and  Preconditions for Special Rate Period.
The Fund, at its option, may designate any succeeding Subsequent Rate Period for
Series 1 VRDP Shares as a Special Rate Period  consisting of a specified  number
of Rate Period Days evenly  divisible by seven and not more than 1,820,  subject
to adjustment as provided in paragraph (b) of this Section 4. A designation of a
Special Rate Period shall be effective only if (A) it is

                                       22

<PAGE>


permitted by applicable law and the  Declaration,  (B) notice thereof shall have
been given in accordance with paragraph (c) and paragraph (d)(i) of this Section
4, (C) no Series 1 VRDP Shares are owned by the Liquidity  Provider  pursuant to
the Purchase  Obligation on either the Rate Determination Date for such proposed
Special  Rate  Period or on the first day of such  Special  Rate Period and full
cumulative  dividends  and any amounts due with respect to  redemptions  payable
prior to such  date  have  been  paid in full,  in each  case,  on Series 1 VRDP
Shares, and (D) if any Notice of Redemption shall have been provided by the Fund
pursuant to paragraph (c) of Section 10 of Part I of this Statement with respect
to any shares of such Series,  the Redemption  Price with respect to such shares
shall have been  deposited  with the Tender and Paying  Agent.  In the event the
Fund wishes to designate any succeeding Subsequent Rate Period for Series 1 VRDP
Shares as a Special Rate Period consisting of more than 28 Rate Period Days, the
Fund shall notify Fitch (if Fitch is then rating shares of such Series), Moody's
(if Moody's is then rating shares of such Series) and S&P (if S&P is then rating
shares of such Series) in advance of the  commencement  of such  Subsequent Rate
Period  that the Fund  wishes to  designate  such  Subsequent  Rate  Period as a
Special Rate Period and shall  provide  Fitch (if Fitch is then rating shares of
such Series),  Moody's (if Moody's is then rating shares of such Series) and S&P
(if S&P is then  rating  shares  of such  Series)  with  such  documents  as the
applicable Rating Agency may request.

                  (b)      Adjustment  of Length of Special Rate Period.  In the
event the Fund wishes to  designate a  Subsequent  Rate Period for Series 1 VRDP
Shares as a Special  Rate Period,  but the day that would  otherwise be the last
day of such Special Rate Period is not a Wednesday  that is a Business Day, then
the Special  Rate Period shall end on the next  Business Day and the  succeeding
Subsequent Rate Period will end on the following Wednesday.

                  (c)      Notice of Proposed  Special Rate Period.  If the Fund
proposes to designate any  succeeding  Subsequent  Rate Period for Series 1 VRDP
Shares as a Special Rate Period pursuant to paragraph (a) of this Section 4, not
less  than 20 (or such  lesser  number  of days as may be agreed to from time to
time by the Remarketing  Agent) nor more than 30 days prior to the date the Fund
proposes to designate as the first day of such Special Rate Period  (which shall
be such day that would  otherwise  be the first day of a Minimum  Rate  Period),
notice  ("Notice of Proposed  Special Rate Period") shall be sent by the Fund by
Electronic Means (or by first-class  mail,  postage prepaid,  where the Series 1
VRDP Shares are in  physical  form) to the Holders of shares of such Series with
copies provided to the Tender and Paying Agent,  the Liquidity  Provider and the
Remarketing  Agent.  Each such notice shall state (A) that the Fund may exercise
its option to  designate a succeeding  Subsequent  Rate Period of shares of such
Series as a Special Rate Period,  specifying the first day thereof, (B) that the
Fund will,  by 11:00  a.m.,  New York City  time,  on the  second  Business  Day
immediately  preceding such date (or by such later time or date, or both, as may
be agreed to by the Remarketing  Agent) notify the  Remarketing  Agent of either
(x) its determination,  subject to certain conditions,  to exercise such option,
or (y) its determination not to exercise such option, (C) the Rate Determination
Date  immediately  prior to the first day of such Special Rate Period,  (D) that
such  Special Rate Period shall not commence if (1) any Series 1 VRDP Shares are
owned by the Liquidity  Provider  pursuant to the Purchase  Obligation on either
the Rate  Determination  Date for such  proposed  Special  Rate Period or on the
first day of such Special Rate Period,  or (2) full cumulative  dividends or any
amounts due with respect to redemptions payable prior to such Rate Determination
Date have not been paid in full, in each case, on Series 1 VRDP Shares,  (E) the
scheduled  Dividend  Payment Dates for shares of such Series during such Special
Rate Period and (F) a description  of the Other Special Rate Period  Provisions,
if any,  applicable  to shares of such  Series in respect of such  Special  Rate
Period.

                  (d)      Notice of Special  Rate  Period.  No later than 11:00
a.m., New York City time, on the second Business Day  immediately  preceding the
first day of any  proposed  Special  Rate  Period for Series 1 VRDP Shares as to
which notice has been given as set forth in paragraph  (c) of this Section 4 (or
such later time or date, or both, as may be agreed to by the Remarketing Agent),
the Fund  shall  deliver to the  Remarketing  Agent and the  Liquidity  Provider
either:

                           (i)      a notice  ("Notice of Special Rate  Period")
         stating  (A)  that  the  Fund  has  determined  to  designate  the next
         succeeding  Rate  Period  of shares  of such  Series as a Special  Rate
         Period,  specifying  the same and the first day  thereof,  (B) the Rate
         Determination  Date immediately  prior to the first day of such Special
         Rate  Period,  (C) that such  Special Rate Period shall not commence if
         (1) any  Series  1 VRDP  Shares  are  owned by the  Liquidity  Provider
         pursuant to the Purchase  Obligation on either such Rate  Determination
         Date or on the  first  day of such  Special  Rate  Period,  or (2) full
         cumulative  dividends  or any

                                       23

<PAGE>


         amounts  due with  respect to  redemptions  payable,  in each case,  on
         Series 1 VRDP Shares,  prior to such Rate  Determination  Date have not
         been paid in full, (D) the scheduled  Dividend Payment Dates for shares
         of such  Series  during  such  Special  Rate  Period  and (E) the Other
         Special Rate Period  Provisions,  if any,  applicable to shares of such
         Series in  respect  of such  Special  Rate  Period,  such  notice to be
         accompanied  by (if then  applicable) a VRDP Basic  Maintenance  Report
         showing that, as of the third Business Day  immediately  preceding such
         proposed  Special Rate Period,  Fitch Eligible Assets (if Fitch is then
         rating the shares of such Series),  Moody's Eligible Assets (if Moody's
         is then rating the shares of such Series) and S&P  Eligible  Assets (if
         S&P is then rating the shares of such  Series)  each have an  aggregate
         Discounted Value at least equal to the VRDP Basic Maintenance Amount as
         of  such   Business  Day   (assuming  for  purposes  of  the  foregoing
         calculation  that  (a) the  Maximum  Rate is the  Maximum  Rate on such
         Business Day as if such Business Day were the Rate  Determination  Date
         for the  proposed  Special Rate  Period,  and (b) the Moody's  Discount
         Factors  applicable  to  Moody's  Eligible  Assets  are  determined  by
         reference  to the first  Exposure  Period (as  defined  in the  Moody's
         Guidelines)  longer than the  Exposure  Period then  applicable  to the
         Fund, as described in the Moody's Guidelines); or

                           (ii)     a   notice   stating   that   the  Fund  has
         determined  not to  exercise  its option to  designate  a Special  Rate
         Period for  shares of such  Series  and that the next  succeeding  Rate
         Period of shares of such Series shall be a Minimum Rate Period.

                  (e)      Failure to Deliver Notice of Special Rate Period.  If
the Fund fails to deliver either of the notices  described in paragraphs  (d)(i)
or  (d)(ii)  of this  Section 4 (and,  in the case of the  notice  described  in
paragraph  (d)(i) of this  Section  4, a VRDP  Basic  Maintenance  Report to the
effect set forth in such paragraph (if Fitch,  Moody's or S&P is then rating the
shares of the  Series in  question))  with  respect  to any  designation  of any
proposed Special Rate Period to the Remarketing Agent and the Liquidity Provider
by 11:00  a.m.,  New York City time,  on the  second  Business  Day  immediately
preceding the first day of such  proposed  Special Rate Period (or by such later
time or date,  or both,  as may be  agreed to by the  Remarketing  Agent and the
Liquidity Provider),  the Fund shall be deemed to have delivered a notice to the
Remarketing  Agent and the Liquidity  Provider with respect to such Special Rate
Period to the effect set forth in  paragraph  (d)(ii) of this  Section 4. In the
event the Fund delivers to the  Remarketing  Agent and the Liquidity  Provider a
notice  described in paragraph (d)(i) of this Section 4, it shall file a copy of
such  notice with the  Secretary  of the Fund,  and the  contents of such notice
shall be binding on the Fund. In the event the Fund delivers to the  Remarketing
Agent and the Liquidity Provider a notice described in paragraph (d)(ii) of this
Section 4, the Fund will  provide  Fitch (if Fitch is then  rating the shares of
the Series in  question),  Moody's  (if Moody's is then rating the shares of the
Series in  question)  and S&P (if S&P is then rating the shares of the Series in
question) a copy of such notice.

                  (f)      Other Special Rate Period Provisions.

                  In connection with any Special Rate Period designated pursuant
to this Section 4, the Fund, without the vote or consent of any Holder of Series
1 VRDP Shares but with prior  written  consent of the  Liquidity  Provider,  may
provide for provisions  relating  solely to such Special Rate Period that differ
from those  provided in this  Statement,  including with respect to the Purchase
Obligation, optional tender provisions,  mandatory tender provisions,  mandatory
purchase provisions,  the dividend rate setting provisions  (including as to the
Maximum Rate),  and, if the dividend may be determined by reference to an index,
formula  or other  method,  the manner in which it will be  determined,  Special
Redemption  Provisions  or  other  redemption  provisions  (other  than  Section
10(b)(i)(A) of this Statement) and modified or new  definitions  ("Other Special
Rate Period Provisions"); provided that such provisions do not affect the parity
ranking of Series 1 VRDP Shares relative to any other series of Preferred Shares
of the Fund then outstanding with respect to dividends or distribution of assets
upon dissolution, liquidation or winding up of the affairs of the Fund.

         5.       Voting Rights.

                  (a)      One Vote Per VRDP Share. Except as otherwise provided
in the  Declaration  or as  otherwise  required by law,  (i) each Holder of VRDP
Shares  shall be entitled to one vote for each VRDP Share held by such Holder on
each  matter  submitted  to a vote of  shareholders  of the  Fund,  and (ii) the
holders of  outstanding  Preferred  Shares,  including  each VRDP Share,  and of
Common Shares shall vote together as a single class; provided, however, that the
holders of outstanding  Preferred  Shares,  including  VRDP Shares,  voting as a
class,  to

                                       24

<PAGE>


the  exclusion of the holders of all other  securities  and classes of shares of
beneficial  interest of the Fund, shall be entitled to elect two trustees of the
Fund at all times,  each Preferred Share,  including each VRDP Share,  entitling
the holder thereof to one vote.  Subject to paragraph (b) of this Section 5, the
holders of  outstanding  Common  Shares and  Preferred  Shares,  including  VRDP
Shares,  voting  together  as a single  class,  shall  elect the  balance of the
trustees.

                  (b)      Voting for Additional Trustees.

                           (i)      Voting  Period.  During  any period in which
         any one or more of the conditions described in subparagraphs (A) or (B)
         of this  paragraph  (b)(i) shall exist (such  period being  referred to
         herein as a "Voting Period"),  the number of trustees  constituting the
         Board of Trustees  shall be  automatically  increased  by the  smallest
         number that, when added to the two trustees elected  exclusively by the
         holders of Preferred Shares,  including VRDP Shares, would constitute a
         majority  of the Board of  Trustees as so  increased  by such  smallest
         number;  and the holders of Preferred  Shares,  including  VRDP Shares,
         shall be entitled,  voting as a class on a one-vote-per-share basis (to
         the  exclusion  of the holders of all other  securities  and classes of
         shares of  beneficial  interest  of the Fund),  to elect such  smallest
         number of additional trustees, together with the two trustees that such
         holders  are in any event  entitled  to elect.  A Voting  Period  shall
         commence:

                                    (A)      if at the close of  business on any
                  Dividend  Payment Date accumulated  dividends  (whether or not
                  earned  or  declared)  on any  outstanding  Preferred  Shares,
                  including  VRDP  Shares,  equal  to at least  two full  years'
                  dividends  shall  be due and  unpaid  and  sufficient  cash or
                  specified  securities  shall not have been  deposited with the
                  Tender and Paying  Agent for the  payment of such  accumulated
                  dividends; or

                                    (B)      if at any time holders of Preferred
                  Shares are entitled  under the 1940 Act to elect a majority of
                  the trustees of the Fund.

                  Upon the  termination  of a Voting  Period,  the voting rights
         described  in  this  paragraph  (b)(i)  shall  cease,  subject  always,
         however,  to the  revesting  of such  voting  rights in the  holders of
         Preferred  Shares  upon the  further  occurrence  of any of the  events
         described in this paragraph (b)(i).

                           (ii)     Notice  of  Special  Meeting.   As  soon  as
         practicable  after the accrual of any right of the holders of Preferred
         Shares to elect additional trustees as described in paragraph (b)(i) of
         this Section 5, the Fund shall call a special  meeting of such holders,
         and the  Fund  shall  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 a special  meeting is not
         called by the Fund, it may be called by any such holder on like notice.
         The record date for determining  the holders  entitled to notice of and
         to vote at such special  meeting  shall be the close of business on the
         fifth Business Day preceding the day on which such notice is mailed. At
         any such  special  meeting and at each  meeting of holders of Preferred
         Shares held during a Voting Period at which trustees are to be elected,
         such  holders,  voting  together  as a class (to the  exclusion  of the
         holders of all other  securities  and  classes of shares of  beneficial
         interest  of the  Fund),  shall be  entitled  to elect  the  number  of
         trustees  prescribed  in  paragraph  (b)(i)  of  this  Section  5  on a
         one-vote-per-share basis.

                           (iii)    Terms of Office of  Existing  Trustees.  The
         terms of office of all persons who are trustees of the Fund at the time
         of a special meeting of Holders and holders of other  Preferred  Shares
         to elect trustees shall continue,  notwithstanding the election at such
         meeting by the Holders and such other holders of other Preferred Shares
         of the number of  trustees  that they are  entitled  to elect,  and the
         persons  so  elected by the  Holders  and such  other  holders of other
         Preferred Shares,  together with the two incumbent  trustees elected by
         the Holders and such other  holders of other  Preferred  Shares and the
         remaining  incumbent  trustees  elected  by the  holders  of the Common
         Shares and Preferred Shares, shall constitute the duly elected trustees
         of the Fund.

                           (iv)     Terms  of  Office  of  Certain  Trustees  to
         Terminate Upon  Termination of Voting Period.  Simultaneously  with the
         termination of a Voting  Period,  the terms of office of the

                                       25

<PAGE>


         additional  trustees  elected  by the  Holders  and  holders  of  other
         Preferred  Shares pursuant to paragraph  (b)(i) of this Section 5 shall
         terminate,  the remaining trustees shall constitute the trustees of the
         Fund and the voting  rights of the  Holders and such other  holders to
         elect additional  trustees pursuant to paragraph (b)(i) of this Section
         5 shall  cease,  subject  to the  provisions  of the last  sentence  of
         paragraph (b)(i) of this Section 5.

                  (c)      Holders  of VRDP  Shares  to Vote  on  Certain  Other
                           Matters.

                           (i)      Increases  in  Capitalization   and  Certain
         Amendments. So long as any VRDP Shares are Outstanding,  the Fund shall
         not, without the affirmative vote or consent of the Holders of at least
         a majority  of the Series 1 VRDP  Shares  outstanding  at the time,  in
         person or by proxy,  either in  writing  or at a  meeting,  voting as a
         separate class:  (a) authorize,  create or issue any class or series of
         shares  ranking  prior to or on a parity with Series 1 VRDP Shares with
         respect to the payment of dividends or the  distribution of assets upon
         dissolution,  liquidation  or winding up of the affairs of the Fund, or
         authorize,  create or issue  additional  shares  of any  Series of VRDP
         Shares  (except  that,  notwithstanding  the  foregoing,  the  Board of
         Trustees,  without  the vote or consent of the Holders of Series 1 VRDP
         Shares,  may from time to time  authorize and create,  and the Fund may
         from time to time  issue  additional  shares  of,  any  Series of VRDP,
         including  Series 1 VRDP,  or  classes  or series of  Preferred  Shares
         ranking  on a parity  with  Series 1 VRDP  Shares  with  respect to the
         payment of dividends and the  distribution of assets upon  dissolution,
         liquidation  or winding up of the  affairs of the Fund),  or (b) amend,
         alter or repeal the provisions of the  Declaration,  or this Statement,
         whether by merger,  consolidation or otherwise, so as to materially and
         adversely  affect any preference,  right or power of such Series 1 VRDP
         Shares or the Holders thereof; provided,  however, that (i) none of the
         actions  permitted  by the  exception  to (a)  above  will be deemed to
         affect such  preferences,  rights or powers,  (ii) a division of a VRDP
         Share will be deemed to affect such preferences,  rights or powers only
         if the terms of such division  adversely affect the Holders of Series 1
         VRDP  Shares and (iii) the  authorization,  creation  and  issuance  of
         classes or series of shares ranking junior to Series 1 VRDP Shares with
         respect to the payment of dividends and the distribution of assets upon
         dissolution,  liquidation or winding up of the affairs of the Fund will
         be deemed to affect  such  preferences,  rights or powers  only if such
         issuance would, at the time thereof,  cause the Fund not to satisfy the
         Minimum VRDP Asset Coverage.  For purposes of the foregoing,  except as
         otherwise  set forth in this  Statement,  no matter  shall be deemed to
         materially and adversely  affect any right,  preference or power of the
         Series 1 VRDP  Shares or the  Holders  thereof  unless  such matter (i)
         alters  or  abolishes  any  preferential  right  of such  Series;  (ii)
         creates, alters or abolishes any right in respect of redemption of such
         Series;  or (iii) creates or alters (other than to abolish or to comply
         with  applicable  law) any  restriction on transfer  applicable to such
         Series.  So long as any Series 1 VRDP Shares are Outstanding,  the Fund
         shall not, without the affirmative vote or consent of the Holders of at
         least 66 2/3% of the Series 1 VRDP Shares  outstanding  at the time, in
         person or by proxy,  either in  writing  or at a  meeting,  voting as a
         separate class,  file a voluntary  application for relief under federal
         bankruptcy law or any similar  application  under state law for so long
         as the Fund is solvent and does not foresee becoming insolvent.  If any
         action set forth  above would  adversely  affect the rights of Series 1
         VRDP in a manner different from any other Series of VRDP, the Fund will
         not approve any such action without the affirmative  vote or consent of
         the  Holders of at least a majority  of the shares of the Series 1 VRDP
         outstanding at the time, in person or by proxy, either in writing or at
         a  meeting   (the   Series  1  VRDP   voting  as  a  separate   class).
         Notwithstanding the foregoing, the Fund, without approval of Holders of
         Series 1 VRDP Shares or other  shareholders  of the Fund, has the right
         to (x) terminate the services of any and all Rating Agencies  providing
         a  long-term  rating for the Series 1 VRDP  Shares,  and such rating or
         ratings, to the extent it or they would have been taken into account in
         any of the provisions in this Statement,  will be disregarded  (for the
         avoidance  of  doubt,  other  than the  effect of the  absence  of such
         ratings for purposes of  determining  the Maximum Rate) and (y) provide
         for Other  Special  Rate Period  Provisions  in  accordance  with,  but
         subject to the limitations set forth in,  paragraph (f) of Section 4 of
         Part I of this Statement.

                           (ii)     1940 Act Matters. Unless a higher percentage
         is provided for in the  Declaration,  (A) the  affirmative  vote of the
         holders of at least a "majority of the Outstanding  Preferred  Shares,"
         including VRDP Shares,  outstanding  at the time,  voting as a separate
         class,  shall be required to approve any  conversion of the Fund from a
         closed-end to an open-end  investment  company and (B) the  affirmative
         vote  of  the  holders  of a  "majority  of the  Outstanding  Preferred
         Shares,"  including VRDP

                                       26

<PAGE>


         Shares,  voting as a separate  class,  shall be required to approve any
         plan of reorganization (as such term is used in the 1940 Act) adversely
         affecting  such  shares.  The  affirmative  vote  of the  holders  of a
         "majority of the Outstanding  Preferred Shares," including VRDP Shares,
         voting as a separate class, shall be required to approve any action not
         described in the first  sentence of this Section  5(c)(ii)  requiring a
         vote of security  holders of the Fund under  Section  13(a) of the 1940
         Act.  For  purposes  of the  foregoing,  "majority  of the  Outstanding
         Preferred  Shares"  means (i) 67% or more of such  shares  present at a
         meeting,  if the holders of more than 50% of such shares are present or
         represented by proxy,  or (ii) more than 50% of such shares,  whichever
         is less.  In the event a vote of  Holders  of  Series 1 VRDP  Shares is
         required  pursuant to the  provisions of Section 13(a) of the 1940 Act,
         the Fund shall,  not later than 10  Business  Days prior to the date on
         which such vote is to be taken,  notify  Fitch (if Fitch is then rating
         the Series 1 VRDP  Shares),  Moody's  (if  Moody's  is then  rating the
         Series 1 VRDP  Shares) and S&P (if S&P is then rating the Series 1 VRDP
         Shares) that such vote is to be taken and the nature of the action with
         respect to which such vote is to be taken.  The Fund  shall,  not later
         than 10  Business  Days  after  the date on which  such  vote is taken,
         notify  Moody's (if Moody's is then rating the Series 1 VRDP Shares) of
         the results of such vote.

                           (iii)    Exclusive Right to Vote on Certain  Matters.
         Notwithstanding the foregoing,  and except as otherwise required by the
         1940  Act,  whenever  a vote of  Holders  of  Series 1 VRDP  Shares  is
         otherwise  required by this  Statement,  the  Declaration or applicable
         law,  (i)  Holders  of  outstanding  shares  of  Series 1 VRDP  will be
         entitled  as a Series,  to the  exclusion  of the  holders of all other
         shares,  including  other  Preferred  Shares,  Common  Shares and other
         classes  of  shares of  beneficial  interest  of the  Fund,  to vote on
         matters  affecting shares of Series 1 VRDP that do not adversely affect
         any of the  rights of holders of such  other  shares,  including  other
         Preferred  Shares,  Common  Shares  and  other  classes  of  shares  of
         beneficial  interest,  as  expressly  set forth in the  Declaration  or
         statement  establishing  and  designating  any  such  shares,  and (ii)
         Holders of outstanding  shares of Series 1 VRDP will not be entitled to
         vote on  matters  affecting  any  other  Preferred  Shares  that do not
         adversely  affect  any of the  rights of  Holders of shares of Series 1
         VRDP, as expressly set forth in the Declaration and this Statement.

                  (d)      Board May Take Certain  Actions  Without  Shareholder
Approval.  The Fund is not required to maintain  any  particular  short-term  or
long-term  ratings for the Series 1 VRDP Shares,  and, subject only to Section 9
of this Part I, the Board of Trustees, without the vote or consent of any holder
of Preferred  Shares,  including any Series of VRDP, or any other shareholder of
the Fund, may from time to time adopt,  amend, alter or repeal any or all of the
definitions  contained herein,  add covenants and other obligations of the Fund,
or confirm  the  applicability  of  covenants  and other  obligations  set forth
herein, in connection with obtaining,  maintaining or changing the rating of any
Rating  Agency  which is then  rating  the  Series 1 VRDP  Shares,  and any such
adoption,  amendment,  alteration  or repeal  will not be  deemed to affect  the
preferences, rights or powers of Series 1 VRDP Shares, or the Holders thereof.

                  Subject  only to  Section  9 of  this  Part I,  the  Board  of
Trustees may, at any time,  replace a Rating Agency or terminate the services of
any Rating Agencies then providing a rating for the Series 1 VRDP Shares without
replacement,  in either  case,  without the approval of Holders of Series 1 VRDP
Shares or other shareholders of the Fund. In the event a Rating Agency ceases to
furnish a long-term  rating for the Series 1 VRDP Shares or the Fund  terminates
the services of a Rating Agency then providing a long-term rating for the Series
1 VRDP Shares,  such rating, to the extent it would have been taken into account
in any of the provisions of the Series 1 VRDP Shares included in this Statement,
will be disregarded,  and only the ratings of the then-designated  Rating Agency
or Agencies,  if any,  will be taken into  account (for the  avoidance of doubt,
other than the effect of the absence of such ratings for purposes of determining
the Maximum Rate).

                  Notwithstanding  anything  herein to the contrary,  the Rating
Agency  Guidelines,  as they may be amended from time to time by the  respective
Rating Agency, will be reflected in a written document and may be amended by the
respective Rating Agency without the vote,  consent or approval of the Fund, the
Board of  Trustees  and any  Holders  of  Series  1 VRDP  Shares,  or any  other
shareholder of the Fund.

                  Notwithstanding  the  foregoing,  nothing in this Section 5 is
intended  in any  way to  limit  the  ability  of (i) the  Fund to make  certain
adjustments  in the  Remarketing  Agreement as provided  under the definition of
"Maximum Rate," subject to the limitations set forth in such definition, or (ii)
the Board of  Trustees  to amend or

                                       27

<PAGE>


alter other  provisions  of this  Statement,  without the vote or consent of any
Holder  of  Series 1 VRDP  Shares,  or any other  shareholder  of the  Fund,  as
otherwise provided in this Statement.

                  (e)      Voting  Rights  Set  Forth  Herein  are  Sole  Voting
Rights.  Unless  otherwise  required by law, the Holders of Series 1 VRDP Shares
shall  not have any  voting  rights,  relative  rights or  preferences  or other
special rights other than those specifically set forth herein.

                  (f)      No  Preemptive  Rights  or  Cumulative   Voting.  The
Holders of Series 1 VRDP  Shares  shall have no  preemptive  rights or rights to
cumulative voting.

                  (g)      Voting for Trustees Sole Remedy for Fund's Failure to
Pay  Dividends.  In the event  that the Fund fails to pay any  dividends  on the
Series 1 VRDP Shares,  the exclusive remedy of the Holders shall be the right to
vote for trustees pursuant to the provisions of this Section 5.

                  (h)      Holders Entitled to Vote. For purposes of determining
any rights of the Holders to vote on any matter,  whether  such right is created
by this Statement,  by the other  provisions of the  Declaration,  by statute or
otherwise,  no Holder  shall be  entitled to vote any Series 1 VRDP Share and no
Series 1 VRDP  Share  shall be deemed to be  "outstanding"  for the  purpose  of
voting or determining  the number of shares  required to constitute a quorum if,
prior to or concurrently  with the time of  determination  of shares entitled to
vote or shares deemed  outstanding for quorum purposes,  as the case may be, the
requisite  Notice of  Redemption  with  respect to such  shares  shall have been
provided as set forth in paragraph (c) of Section 10 of Part I of this Statement
and  Deposit  Securities  in an  amount  equal to the  Redemption  Price for the
redemption of such shares shall have been deposited in trust with the Tender and
Paying  Agent  for  that  purpose.  Series  1  VRDP  Shares  owned  (legally  or
beneficially)  or  controlled by the Fund shall not have any voting rights or be
deemed to be outstanding  for voting or for  calculating  the voting  percentage
required on any other matter or other purposes.

         6.       Minimum VRDP Asset Coverage.  The Fund shall  maintain,  as of
the close of business on each  Business  Day on which any Series 1 VRDP Share is
Outstanding, the Minimum VRDP Asset Coverage.

         7.       VRDP Basic Maintenance Amount.

                  (a)      Subject to paragraph  (c) below,  so long as Series 1
VRDP Shares are  Outstanding,  the Fund shall maintain,  on each Valuation Date,
and shall verify to its  satisfaction  that it is  maintaining on such Valuation
Date, (i) Fitch Eligible Assets having an aggregate Discounted Value equal to or
greater  than the VRDP Basic  Maintenance  Amount  (if Fitch is then  rating the
Series  1 VRDP  Shares),  (ii)  Moody's  Eligible  Assets  having  an  aggregate
Discounted Value equal to or greater than the VRDP Basic Maintenance  Amount (if
Moody's is then  rating the Series 1 VRDP  Shares),  (iii) S&P  Eligible  Assets
having an  aggregate  Discounted  Value equal to or greater  than the VRDP Basic
Maintenance  Amount (if S&P is then rating the Series 1 VRDP  Shares),  and (iv)
Other Rating Agency Eligible Assets having an aggregate  Discounted  Value equal
to or greater than the VRDP Basic Maintenance Amount (if any Other Rating Agency
is then rating the Series 1 VRDP Shares).

                  (b)      Subject  to  paragraph  (c)  below,  the  Fund  shall
deliver to each Rating  Agency which is then rating Series 1 VRDP Shares and any
other party specified in the Rating Agency  Guidelines all certificates that are
set forth in the  respective  Rating Agency  Guidelines  regarding  Minimum VRDP
Asset Coverage, the VRDP Basic Maintenance Amount and/or related calculations at
such times and containing such information as set forth in the respective Rating
Agency  Guidelines (each, a "Rating Agency  Certificate").  Subject to paragraph
(c) below,  a failure by the Fund to deliver a Rating  Agency  Certificate  with
respect to the VRDP Basic Maintenance Amount shall be deemed to be delivery of a
Rating Agency Certificate  indicating the Discounted Value for all assets of the
Fund  is less  than  the  VRDP  Basic  Maintenance  Amount,  as of the  relevant
Valuation Date.

                  (c)      The Fund is not required to maintain  any  particular
long-term ratings for the Series 1 VRDP Shares, and the Rating Agency Guidelines
may be changed or  eliminated  at any time  without  the  approval of Holders of
Series 1 VRDP  Shares  or any  other  shareholders  of the  Fund,  including  in
connection  with the change or elimination of any or all long-term  ratings then
applicable to the Series 1 VRDP Shares.

                                       28

<PAGE>


         8.       Restrictions on Dividends and Other Distributions.

                  (a)      Dividends on Preferred Shares. Except as set forth in
the next  sentence,  no  dividends  shall be  declared  or paid or set apart for
payment on the shares of any class or series of shares of beneficial interest of
the Fund ranking, as to the payment of dividends, on a parity with Series 1 VRDP
Shares  for  any  period  unless  full   cumulative   dividends   have  been  or
contemporaneously  are  declared  and paid on the shares of each  Series of VRDP
through its most recent  dividend  payment date.  When dividends are not paid in
full upon the shares of each Series of VRDP  through  its most  recent  dividend
payment  date or upon the  shares  of any  other  class or  series  of shares of
beneficial  interest  of the Fund  ranking  on a  parity  as to the  payment  of
dividends with VRDP Shares through their most recent respective dividend payment
dates, all dividends declared and paid upon VRDP Shares and any other such class
or series of shares of beneficial interest ranking on a parity as to the payment
of  dividends  with VRDP Shares  shall be declared and paid pro rata so that the
amount of  dividends  declared  and paid per share on VRDP Shares and such other
class or series of shares of beneficial interest shall in all cases bear to each
other the same ratio that accumulated dividends per share on the VRDP Shares and
such other class or series of shares of  beneficial  interest bear to each other
(for purposes of this  sentence,  the amount of dividends  declared and paid per
Series 1 VRDP Share shall be based on the Applicable Rate for such share for the
Dividend Periods during which dividends were not paid in full).

                  (b)      Dividends  and Other  Distributions  With  Respect to
Common  Shares Under the 1940 Act.  The Board of Trustees  shall not declare any
dividend  (except a dividend  payable in Common  Shares),  or declare  any other
distribution, upon the Common Shares, or purchase Common Shares, unless in every
such case the  Preferred  Shares have,  at the time of any such  declaration  or
purchase,  an asset coverage (as defined in and determined  pursuant to the 1940
Act) of at least  200% (or such  other  asset  coverage  as may in the future be
specified  in or under the 1940 Act as the  minimum  asset  coverage  for senior
securities  which are shares or stock of a  closed-end  investment  company as a
condition of declaring  dividends on its common shares or stock) after deducting
the amount of such dividend, distribution or purchase price, as the case may be.

                  (c)      Other    Restrictions    on   Dividends   and   Other
Distributions. For so long as any Series 1 VRDP Share is Outstanding, and except
as set forth in paragraph  (a) of this Section 8 and paragraph (c) of Section 11
of this Part I, (A) the Fund 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 in  options,  warrants  or rights to  subscribe  for or  purchase,
Common  Shares or other  shares,  if any,  ranking  junior to the  Series 1 VRDP
Shares as to the  payment  of  dividends  and the  distribution  of assets  upon
dissolution,  liquidation  or winding up) in respect of the Common Shares or any
other shares of the Fund ranking junior to or on a parity with the Series 1 VRDP
Shares as to the  payment  of  dividends  or the  distribution  of  assets  upon
dissolution, liquidation or winding up, or call for redemption, redeem, purchase
or  otherwise  acquire  for  consideration  any Common  Shares or any other such
junior  shares  (except by  conversion  into or exchange  for shares of the Fund
ranking  junior to the Series 1 VRDP Shares as to the payment of  dividends  and
the distribution of assets upon dissolution,  liquidation or winding up), or any
such parity shares (except by conversion into or exchange for shares of the Fund
ranking  junior to or on a parity with Series 1 VRDP Shares as to the payment of
dividends  and the  distribution  of assets  upon  dissolution,  liquidation  or
winding  up),  unless (i) full  cumulative  dividends on shares of Series 1 VRDP
through its most recently  ended  Dividend  Period shall have been paid or shall
have been declared and sufficient  funds for the payment thereof  deposited with
the Tender and Paying  Agent and (ii) the Fund has  redeemed  the full number of
Series 1 VRDP Shares  required to be redeemed  by any  provision  for  mandatory
redemption  pertaining thereto,  and (B) the Fund 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 in options,  warrants or rights to subscribe
for or purchase, Common Shares or other shares, if any, ranking junior to Series
1 VRDP Shares as to the payment of dividends and the distribution of assets upon
dissolution, liquidation or winding up) in respect of Common Shares or any other
shares of the Fund  ranking  junior to Series 1 VRDP Shares as to the payment of
dividends or the distribution of assets upon dissolution, liquidation or winding
up,  or  call  for  redemption,   redeem,  purchase  or  otherwise  acquire  for
consideration  any Common  Shares or any other  such  junior  shares  (except by
conversion  into or exchange for shares of the Fund  ranking  junior to Series 1
VRDP Shares as to the payment of dividends and the  distribution  of assets upon
dissolution, liquidation or winding up), unless, to the extent any Rating Agency
or Agencies are then providing a long-term  rating for the Series 1 VRDP Shares,
immediately  after  such  transaction  the  Discounted  Value of  Rating  Agency
Eligible  Assets (as determined by each Rating  Agency,  if any, then rating the
Series 1 VRDP Shares) would at least equal the VRDP Basic Maintenance Amount (if
any), if then required by such Rating Agency or Agencies.

                                       29

<PAGE>


         9.       Short-Term  Ratings.  The Fund  will use its  reasonable  best
efforts to maintain at least one short-term  rating on the Series 1 VRDP Shares,
to the extent that the Liquidity Provider then has a short-term debt rating.

         10.      Redemption.

                  (a)      Optional Redemption.

                           (i)      Subject to the  provisions of paragraph (iv)
         of this paragraph (a), shares of Series 1 VRDP may be redeemed,  at the
         option  of the Fund,  at any  time,  as a whole or from time to time in
         part, out of funds legally  available  therefor,  at a Redemption Price
         per  share  equal  to the sum of  $100,000  plus  an  amount  equal  to
         accumulated  but unpaid  dividends  thereon  (whether  or not earned or
         declared)  to,  but not  including,  the  date  fixed  for  redemption;
         provided, however, that (1) shares of Series 1 VRDP may not be redeemed
         in part if after such partial  redemption  fewer than 50 shares of such
         Series  would remain  Outstanding;  (2) shares of Series 1 VRDP are not
         redeemable by the Fund during the Initial Rate Period;  and (3) subject
         to subparagraph  (ii) of this paragraph (a), the Notice of Special Rate
         Period  relating to a Special  Rate Period for shares of Series 1 VRDP,
         as delivered to the  Remarketing  Agent and filed with the Secretary of
         the  Fund,  may  provide  that  shares  of  such  Series  shall  not be
         redeemable  during the whole or any part of such Special Rate Period or
         shall be  redeemable  during the whole or any part of such Special Rate
         Period  only upon  payment of such  redemption  premium or  premiums as
         shall be specified therein ("Special Redemption Provisions").

                           (ii)     A Notice of Special Rate Period  relating to
         Series 1 VRDP for a Special  Rate Period  thereof  may contain  Special
         Redemption  Provisions  only if the  Fund's  Board of  Trustees,  after
         consultation  with the  Remarketing  Agent and the Liquidity  Provider,
         determines  that such  Special  Redemption  Provisions  are in the best
         interest of the Fund.

                           (iii)    If fewer than all of the Outstanding  shares
         of Series 1 VRDP are to be  redeemed  pursuant to  subparagraph  (i) of
         this  paragraph (a), the number of shares of such Series to be redeemed
         shall be  selected  either pro rata from the  Holders of shares of such
         Series in  proportion  to the number of shares of such  Series  held by
         such  Holders  or by lot or in  such  manner  as the  Fund's  Board  of
         Trustees may  determine to be fair and  equitable.  The Fund's Board of
         Trustees  will have the full power and authority to prescribe the terms
         and  conditions  upon which Series 1 VRDP Shares will be redeemed  from
         time to time.

                           (iv)     The Fund  may not on any date  send a Notice
         of  Redemption  pursuant to paragraph (c) of this Section 10 in respect
         of a redemption  contemplated to be effected pursuant to this paragraph
         (a) unless on such date (a) the Fund has available  Deposit  Securities
         with  maturity  or tender  dates not later than the day  preceding  the
         applicable  redemption date and having a value not less than the amount
         (including  any  applicable  premium)  due to  Holders of Series 1 VRDP
         Shares by reason of the  redemption  of such shares on such  redemption
         date and (b) the Discounted Value of Fitch Eligible Assets (if Fitch is
         then rating the Series 1 VRDP Shares),  the Discounted Value of Moody's
         Eligible  Assets (if Moody's is then  rating the Series 1 VRDP  Shares)
         and the Discounted  Value of S&P Eligible Assets (if S&P is then rating
         the  Series  1 VRDP  Shares)  each  at  least  equals  the  VRDP  Basic
         Maintenance Amount, and would at least equal the VRDP Basic Maintenance
         Amount  immediately  subsequent to such  redemption if such  redemption
         were to occur on such date.  For purposes of  determining in clause (b)
         of the  preceding  sentence  whether  the  Discounted  Value of Moody's
         Eligible Assets at least equals the VRDP Basic Maintenance  Amount, the
         Moody's Discount Factors applicable to Moody's Eligible Assets shall be
         determined  by reference to the first  Exposure  Period longer than the
         Exposure  Period  then  applicable  to the Fund,  as  described  in the
         definition of Moody's Discount Factor herein.

                  (b)      Mandatory  Redemption.  (i)(A) The Fund shall  redeem
         all  Outstanding  Series 1 VRDP Shares on June 1, 2040, at a Redemption
         Price equal to $100,000 per share plus accumulated but unpaid dividends
         thereon  (whether or not earned or declared)  to, but  excluding,  such
         date.

                           (B)      Except as otherwise provided below, the Fund
         shall redeem  Preferred  Shares,  if the Fund fails to, if  applicable,
         have Fitch  Eligible  Assets (if Fitch is then rating the Series 1 VRDP
         Shares) with a Discounted Value, Moody's Eligible Assets (if Moody's is
         then rating the Series 1 VRDP Shares)

                                       30

<PAGE>


         with a Discounted Value, S&P Eligible Assets (if S&P is then rating the
         Series 1 VRDP Shares) with a Discounted  Value,  or Other Rating Agency
         Eligible Assets (if any Other Rating Agency is then rating the Series 1
         VRDP Shares) with a Discounted  Value greater than or equal to the VRDP
         Basic  Maintenance  Amount,  and such failure is not cured on or before
         the VRDP Basic  Maintenance  Cure Date.  In the event of failure by the
         Fund to have Rating  Agency  Eligible  Assets with a  Discounted  Value
         greater  than or equal to the VRDP Basic  Maintenance  Amount,  if then
         applicable,  the Fund may seek to cure such  failure on or prior to the
         VRDP Basic  Maintenance Cure Date by complying with the requirements of
         the Rating Agency or Rating Agencies,  if any, then rating the Series 1
         VRDP Shares as in effect at the time of failure.  Alternatively,  on or
         prior to such VRDP Basic  Maintenance Cure Date, the Fund may choose to
         cure by (a) complying with the VRDP Basic Maintenance Amount applicable
         to  long-term  ratings  for the  Series 1 VRDP  Shares  lower  than the
         ratings  prevailing  at the  time of  failure  or (b)  terminating  the
         services of the Rating  Agency or Agencies  then  providing a long-term
         rating of the Series 1 VRDP Shares.  The number of Preferred  Shares to
         be redeemed,  which at the Fund's sole option (to the extent  permitted
         by the 1940  Act and  Massachusetts  law) may  include  any  number  or
         proportion  of  Preferred  Shares of any series,  shall be equal to the
         lesser of (i) the minimum number of Preferred Shares, together with all
         other Preferred Shares subject to retirement,  the redemption of which,
         if deemed to have occurred immediately prior to the opening of business
         on the VRDP Basic  Maintenance  Cure Date,  would  result in the Fund's
         having  each of Fitch  Eligible  Assets  (if Fitch is then  rating  the
         Series 1 VRDP Shares) with a Discounted Value,  Moody's Eligible Assets
         (if Moody's is then rating the Series 1 VRDP  Shares) with a Discounted
         Value,  S&P  Eligible  Assets (if S&P is then  rating the Series 1 VRDP
         Shares) with a Discounted Value and Other Rating Agency Eligible Assets
         (if any Other  Rating  Agency is then rating the Series 1 VRDP  Shares)
         with a  Discounted  Value  greater  than or  equal  to the  VRDP  Basic
         Maintenance  Amount on such VRDP Basic Maintenance Cure Date (provided,
         however,  that, if there is no such minimum number of Preferred  Shares
         the  redemption  or  retirement  of which would have such  result,  all
         Series 1 VRDP Shares and other Preferred Shares then outstanding  shall
         be redeemed), and (ii) the maximum number of Preferred Shares, together
         with all other  Preferred  Shares  subject to  retirement,  that can be
         redeemed out of funds legally available therefor in accordance with the
         Declaration  and  applicable  law. To the extent that the Fund  redeems
         VRDP Shares in accordance  with the foregoing,  the Fund shall allocate
         the number to be redeemed pro rata among each Series of VRDP subject to
         redemption or retirement.  The Fund shall effect such redemption on the
         date fixed by the Fund  therefor,  which date shall not be earlier than
         10 days nor later than 30 days after the VRDP  Basic  Maintenance  Cure
         Date, except that if the Fund does not have funds legally available for
         the  redemption of all of the required  number of VRDP Shares and other
         Preferred  Shares which are subject to  redemption or retirement or the
         Fund  otherwise is unable as a result of applicable  law to effect such
         redemption on or prior to 30 days after the VRDP Basic Maintenance Cure
         Date,  the Fund  shall  redeem  those VRDP  Shares and other  Preferred
         Shares which it was unable to redeem on the earliest  practicable  date
         on which it is able to effect such redemption. The Fund will redeem any
         Series 1 VRDP Shares at a redemption price equal to $100,000 per share,
         plus accumulated but unpaid dividends thereon (whether or not earned or
         declared)  to, but  excluding,  the date fixed by the Board of Trustees
         for redemption.

                           (C)      The Fund shall redeem Preferred  Shares,  if
         the  Fund  fails  to  maintain  the  Minimum  VRDP  Asset  Coverage  in
         accordance  with this  Statement,  and such  failure is not cured on or
         before  the  Minimum  VRDP  Asset  Coverage  Cure  Date.  The number of
         Preferred  Shares to be  redeemed,  which at the Fund's sole option (to
         the extent permitted by the 1940 Act and Massachusetts law) may include
         any number or  proportion of Preferred  Shares of any series,  shall be
         equal to the  lesser of (i) the  minimum  number of  Preferred  Shares,
         together with all other  Preferred  Shares subject to  retirement,  the
         redemption of which,  if deemed to have occurred  immediately  prior to
         the opening of business on the Minimum VRDP Asset  Coverage  Cure Date,
         would result in the Fund's  maintaining the Minimum VRDP Asset Coverage
         on such Minimum VRDP Asset Coverage Cure Date (provided, however, that,
         if there is no such minimum  number of Preferred  Shares the redemption
         or  retirement  of which  would have such  result,  all VRDP Shares and
         other Preferred  Shares then outstanding  shall be redeemed),  and (ii)
         the  maximum  number  of  Preferred  Shares,  together  with all  other
         Preferred  Shares  subject to  retirement,  that can be redeemed out of
         funds legally available therefor in accordance with the Declaration and
         applicable  law.  To the extent  that the Fund  redeems  VRDP Shares in
         accordance with the foregoing, the Fund shall allocate the number to be
         redeemed  pro rata among each Series of VRDP subject to  redemption  or
         retirement.  The Fund shall effect such redemption on the date fixed by
         the Fund therefor, which date shall

                                       31

<PAGE>


         not be earlier  than 10 days nor later  than 30 days after the  Minimum
         VRDP Asset  Coverage  Cure Date,  except that if the Fund does not have
         funds  legally  available  for the  redemption  of all of the  required
         number of VRDP Shares and other  Preferred  Shares which are subject to
         redemption or retirement or the Fund otherwise is unable as a result of
         applicable  law to effect such  redemption on or prior to 30 days after
         the Minimum VRDP Asset  Coverage Cure Date, the Fund shall redeem those
         VRDP Shares and other Preferred Shares which it was unable to redeem on
         the  earliest  practicable  date on  which  it is able to  effect  such
         redemption.  The  Fund  will  redeem  any  Series  1 VRDP  Shares  at a
         redemption  price equal to $100,000  per share,  plus  accumulated  but
         unpaid  dividends  thereon  (whether or not earned or declared) to, but
         excluding, the date fixed by the Board of Trustees for redemption.

                           (D)      Except  in the case of a Failed  Remarketing
         Condition--Purchased  VRDP Shares  Redemption,  as described  below, if
         fewer  than all of the  Outstanding  shares  of Series 1 VRDP are to be
         redeemed  pursuant to this  paragraph (b), the number of shares of such
         Series to be redeemed  shall be redeemed pro rata, by lot or other fair
         method,  from the Holders of shares of such Series in proportion to the
         number of shares of such Series held by such Holders.

                           (ii)     (A)    In accordance with this Statement and
         if then required  pursuant to the VRDP Fee Agreement,  if the Liquidity
         Provider  acquires  any Series 1 VRDP Shares  pursuant to the  Purchase
         Obligation and continues to be the beneficial  owner for federal income
         tax purposes of such  Purchased  VRDP Shares for a period of six months
         during  which  such  Purchased  VRDP  Shares  cannot  be   successfully
         remarketed (i.e., a Failed Remarketing Condition--Purchased VRDP Shares
         shall have  occurred  and be  continuing  for such  period of time with
         respect to such Purchased VRDP Shares),  the Fund shall effect a Failed
         Remarketing  Condition--Purchased  VRDP  Shares  Redemption;  provided,
         that, as of the date of redemption: (i) to the extent any Series 1 VRDP
         Shares are  Outstanding  and held by Persons  other than the  Liquidity
         Provider,  the Purchase  Obligation  of the  Liquidity  Provider  whose
         Series  1  VRDP   Shares  are   subject   to  the  Failed   Remarketing
         Condition--Purchased  VRDP Shares  Redemption  remains in effect to the
         extent required by, and in accordance with, the VRDP Purchase Agreement
         to which such Liquidity Provider is a party, and (ii) to the extent (a)
         any Series 1 VRDP Shares are Outstanding and held by Persons other than
         the Liquidity Provider and (b) the Purchase Obligation of the Liquidity
         Provider  whose  Series  1  VRDP  Shares  are  subject  to  the  Failed
         Remarketing  Condition--Purchased  VRDP  Shares  Redemption  remains in
         effect to the extent  required  by, and in  accordance  with,  the VRDP
         Purchase  Agreement to which such  Liquidity  Provider is a party,  the
         Liquidity Provider whose Series 1 VRDP Shares are subject to the Failed
         Remarketing Condition--Purchased VRDP Shares Redemption shall have made
         written  affirmation  to the  Fund not  later  than  the  Business  Day
         immediately  preceding  the  Redemption  Date to the  effect  that  the
         Liquidity  Provider is in  compliance  with the Purchase  Obligation in
         accordance with its terms.  Notwithstanding the foregoing proviso,  any
         failure or delay by the Liquidity  Provider  whose Series 1 VRDP Shares
         are subject to the Failed Remarketing  Condition--Purchased VRDP Shares
         Redemption  to deliver the  affirmation  referred  to in the  foregoing
         proviso  shall not relieve the Fund of its  obligation  to effectuate a
         Failed  Remarketing  Condition--Purchased  VRDP Shares  Redemption  and
         shall  only  result  in a delay  by the  Fund to  effectuate  a  Failed
         Remarketing  Condition--Purchased  VRDP Shares Redemption until one (1)
         Business Day following the date that such Liquidity  Provider  delivers
         such  affirmation  or  such  affirmation  is no  longer  required.  The
         six-month holding period for Purchased VRDP Shares acquired and held as
         a result of a continuing Failed Remarketing  Condition--Purchased  VRDP
         Shares shall be determined by the Fund on a first-in,  first-out basis.
         The Fund shall effect a Failed  Remarketing  Condition--Purchased  VRDP
         Shares  Redemption on the date fixed by the Fund  therefor,  which date
         shall not be later than three Business Days after the expiration of the
         six-month  period,  except that if the Fund does not have funds legally
         available for the redemption of all of the required number of Purchased
         VRDP   Shares   which   are   subject   to   the   Failed   Remarketing
         Condition--Purchased  VRDP Shares  Redemption or the Fund  otherwise is
         unable as a result of  applicable  law to effect such  redemption on or
         prior to three  Business  Days after the  expiration  of the  six-month
         period,  the Fund shall  redeem those Series 1 VRDP Shares which it was
         unable to redeem on the earliest  practicable  date on which it is able
         to effect such  redemption.  In the event that the  Liquidity  Provider
         receives any Series 1 VRDP Shares in the distribution referred to under
         "Designation  of Series 1 VRDP"  above in respect of shares of Acquired
         Fund VRDP (x) beneficially  owned by the Liquidity Provider for federal
         income tax purposes and that were  acquired  pursuant to the  Liquidity
         Provider's  purchase obligation with respect to the Acquired Fund VRDP,
         (y) continuously  beneficially owned for federal income tax purposes by
         the Liquidity Provider from the

                                       32

<PAGE>


         date of acquisition and (z) not successfully  remarketed,  then (I) the
         Series 1 VRDP Shares so  received  shall be treated as  Purchased  VRDP
         Shares,  (II) a Failed  Remarketing  Condition--Purchased  VRDP  Shares
         shall  be  deemed  to  exist  and  be  continuing  as of  the  date  of
         distribution  of the Series 1 VRDP Shares and to have  commenced on the
         date the  Liquidity  Provider  acquired the related  shares of Acquired
         Fund VRDP pursuant to the Liquidity Provider's purchase obligation with
         respect to the  Acquired  Fund VRDP and (III) any notices  given by the
         Liquidity  Provider in accordance with the VRDP fee agreement  relating
         to the  Acquired  Fund  VRDP  shall be  deemed  to have  been  given in
         accordance  with the VRDP Fee Agreement for purposes of this subsection
         (b)(ii).

                           (B)      Upon the  occurrence  and  continuance  of a
         Failed Remarketing Condition--Purchased VRDP Shares with respect to any
         Series 1 VRDP Shares,  by the fifth Business Day following  delivery of
         notice thereof from the Liquidity  Provider in accordance with the VRDP
         Fee  Agreement,  the Fund shall cause the  Custodian to  segregate,  by
         means  of  appropriate  identification  on its  books  and  records  or
         otherwise in accordance with the Custodian's  normal  procedures,  from
         the other assets of the Fund (a "Liquidity  Account") Liquidity Account
         Investments  with  a  Market  Value  equal  to at  least  110%  of  the
         Liquidation  Preference of such  Purchased  VRDP Shares.  If, while the
         Failed  Remarketing  Condition--Purchased  VRDP Shares with  respect to
         such Purchased VRDP Shares is continuing, the aggregate Market Value of
         the Liquidity Account Investments included in the Liquidity Account for
         such  Purchased VRDP Shares as of the close of business on any Business
         Day is less than 110% of the  Liquidation  Preference of such Purchased
         VRDP Shares, then the Fund shall cause the Custodian and the Investment
         Adviser  to take  all such  necessary  actions,  including  segregating
         additional assets of the Fund as Liquidity Account Investments, so that
         the  aggregate  Market  Value  of  the  Liquidity  Account  Investments
         included in the Liquidity  Account for such Purchased VRDP Shares is at
         least equal to 110% of the  Liquidation  Preference  of such  Purchased
         VRDP Shares not later than the close of business on the next succeeding
         Business  Day.  With  respect  to  assets  of the  Fund  segregated  as
         Liquidity Account Investments, the Investment Adviser, on behalf of the
         Fund,  shall be entitled to instruct the  Custodian  with a copy to the
         Liquidity  Provider  on any  date  to  release  any  Liquidity  Account
         Investments  with  respect  to any  Purchased  VRDP  Shares  from  such
         segregation  and  to  substitute   therefor  other  Liquidity   Account
         Investments,  so long as (x)  the  assets  of the  Fund  segregated  as
         Liquidity  Account  Investments  with  respect to such  Purchased  VRDP
         Shares at the close of business on such date have a Market  Value equal
         to 110% of the Liquidation Preference of such Purchased VRDP Shares and
         (y) the  assets  of the  Fund  designated  and  segregated  as  Deposit
         Securities  at the close of business  on such date have a Market  Value
         equal to the Liquidity  Requirement  (if any)  determined in accordance
         with paragraph (C) below with respect to such Purchased VRDP Shares for
         such date.  The Fund shall cause the  Custodian not to permit any lien,
         security interest or encumbrance to be created or permitted to exist on
         or in respect of any  Liquidity  Account  Investments  included  in the
         Liquidity  Account for any  Purchased  VRDP  Shares,  other than liens,
         security interests or encumbrances  arising by operation of law and any
         lien of the  Custodian  with  respect  to the  payment  of its  fees or
         repayment for its advances.

                           (C)      Subject to notice  having  been  received as
         referred to in  subsection  (B) above,  the Market Value of the Deposit
         Securities held in the Liquidity Account for any Purchased VRDP Shares,
         from and after the day (or if such day is not a Business  Day, the next
         succeeding  Business  Day)  preceding  the  expiration of the six-month
         period  for the Failed  Remarketing  Condition--Purchased  VRDP  Shares
         applicable to such Purchased  VRDP Shares (which,  for the avoidance of
         doubt,  may result in multiple six month periods,  each in respect of a
         Failed  Remarketing  Condition--Purchased  VRDP  Shares in  respect  of
         applicable  Purchased  VRDP  Shares)  specified  in the table set forth
         below,  shall  not be  less  than  the  percentage  of the  Liquidation
         Preference for such Purchased VRDP Shares set forth below opposite such
         day (the "Liquidity Requirement"), but in all cases subject to the cure
         provisions of paragraph (D) below:

                                       33

<PAGE>


            Number of Days*               Value of Deposit Securities
              Preceding            as Percentage of Liquidation Preference
           -----------------      -----------------------------------------
                 135                                20%
                 105                                40%
                  75                                60%
                  45                                80%
                  15                                100%

------------------
*    Or if such day is not a Business Day, the next succeeding Business Day

                           (D)      If the aggregate Market Value of the Deposit
         Securities  included in the Liquidity  Account for any  Purchased  VRDP
         Shares as of the close of business on any Business Day is less than the
         Liquidity Requirement in respect of such Purchased VRDP Shares for such
         Business Day, then the Fund shall cause the  segregation  of additional
         or substitute  Deposit  Securities in respect of the Liquidity  Account
         for such Purchased VRDP Shares,  so that the aggregate  Market Value of
         the  Deposit  Securities  included  in the  Liquidity  Account for such
         Purchased  VRDP Shares is at least equal to the  Liquidity  Requirement
         for such  Purchased VRDP Shares not later than the close of business on
         the next succeeding Business Day.

                           (E)      The  Deposit  Securities   included  in  the
         Liquidity  Account for any Purchased  VRDP Shares may be applied by the
         Fund, in its discretion,  towards  payment of the Redemption  Price for
         such  Purchased  VRDP  Shares.  Upon  the  earlier  to occur of (x) the
         successful  remarketing of the Purchased VRDP Shares or (y) the deposit
         by the  Fund  with  the  Tender  and  Paying  Agent  with  arrangements
         satisfactory to the Liquidity  Provider of Deposit Securities having an
         initial  combined  Market Value  sufficient to effect the redemption of
         such Purchased  VRDP Shares on the  Redemption  Date for such Purchased
         VRDP  Shares,  the  requirement  of the Fund to  maintain  a  Liquidity
         Account for such Purchased VRDP Shares as  contemplated by this Section
         10(b)(ii) shall lapse and be of no further force and effect.

                           (F)      The provisions of paragraphs (A) through (E)
         of this Section  10(b)(ii) may be amended by the Fund, by resolution of
         the Board of Trustees duly  adopted,  without  shareholder  approval in
         order to conform to the terms of a VRDP Fee  Agreement  or as otherwise
         necessary  or  desirable  in the  judgment  of the  Board of  Trustees,
         provided  that the Fund  receives  the  prior  written  consent  of the
         Liquidity Provider.

                           (iii)    At least six months  prior to the  scheduled
         mandatory Redemption Date of June 1, 2040 specified in Section 10(b)(i)
         above,  if any Series 1 VRDP Shares then remain  Outstanding,  the Fund
         shall cause the  Custodian  to  segregate  in a Liquidity  Account (but
         without duplication of any Liquidity Account then in effect pursuant to
         Section 10(b)(ii) above), by means of appropriate identification on its
         books and  records or  otherwise  in  accordance  with the  Custodian's
         normal procedures, from the other assets of the Fund, Liquidity Account
         Investments  with  a  Market  Value  equal  to at  least  110%  of  the
         Liquidation  Preference of the then  Outstanding  Series 1 VRDP Shares.
         The Fund shall  maintain  such  Liquidity  Account in  accordance  with
         Section   10(b)(ii)(B),   (C)  and  (D)  above  and  comply   with  the
         requirements  set forth  therein  with  respect  to  Liquidity  Account
         Investments and the Liquidity Requirement;  provided, that for purposes
         of this Section  10(b)(iii)  all  references  therein to Purchased VRDP
         Shares shall be deemed to be to all  Outstanding  Series 1 VRDP Shares,
         all references therein to the Failed  Remarketing  Condition--Purchased
         VRDP Shares or the related  six-month  period  shall be deemed to be to
         the six-month period preceding the scheduled mandatory  Redemption Date
         of June 1, 2040, and the references to notice by the Liquidity Provider
         shall  not  be  applicable.  The  Deposit  Securities  included  in the
         Liquidity  Account  for the  Outstanding  Series 1 VRDP  Shares  may be
         applied  by  the  Fund,  in  its  discretion,  towards  payment  of the
         Redemption  Price for the  Outstanding  Series 1 VRDP Shares.  Upon the
         deposit by the Fund with the Tender and Paying Agent with  arrangements
         satisfactory to the Liquidity  Provider of Deposit Securities having an
         initial  combined  Market Value  sufficient to effect the redemption of
         the  Outstanding  Series 1 VRDP  Shares on the June 1, 2040  Redemption
         Date for the Outstanding  Series 1 VRDP Shares,  the requirement of the
         Fund to maintain a Liquidity Account for the Outstanding  Series 1 VRDP
         Shares as contemplated by this Section 10(b)(iii) shall lapse and be of
         no further force and effect.

                                       34

<PAGE>


                  (c)      Notice of Redemption.  If the Fund shall determine or
be required to redeem,  in whole or in part, shares of Series 1 VRDP pursuant to
paragraph  (a) or  (b)(i)  of this  Section  10,  the Fund will send a notice of
redemption (the "Notice of Redemption"),  by Electronic Means (or by first class
mail,  postage  prepaid,  in the case  where  the  Series 1 VRDP  Shares  are in
physical form), to Holders thereof and the Liquidity Provider or, in the case of
a  redemption  pursuant  to  paragraph  (b)(ii) of this  Section 10, only to the
Liquidity  Provider,  or request the Tender and Paying  Agent,  on behalf of the
Fund to promptly  do so by  Electronic  Means (or by first  class mail,  postage
prepaid,  in the case where the Series 1 VRDP  Shares are in  physical  form) so
long as the  Notice of  Redemption  is  furnished  by the Fund to the Tender and
Paying Agent in  electronic  format at least five (5) Business Days prior to the
date a Notice of Redemption is required to be delivered to the Holders, unless a
shorter  period of time shall be acceptable  to the Tender and Paying  Agent.  A
Notice of Redemption shall be sent to Holders not less than 10 days prior to the
date fixed for redemption in such Notice of Redemption (the "Redemption  Date").
Each such Notice of Redemption  shall state:  (i) the Redemption  Date; (ii) the
number of Series 1 VRDP Shares to be redeemed and the Series thereof;  (iii) the
CUSIP number for VRDP Shares of such Series;  (iv) the Redemption Price; (v) the
place or places where the certificate(s), if any, for such VRDP Shares (properly
endorsed or assigned  for  transfer,  if the Board of Trustees  requires and the
Notice of Redemption states) are to be surrendered for payment of the Redemption
Price; (vi) that dividends on the Series 1 VRDP Shares to be redeemed will cease
to accumulate from and after such  Redemption  Date; and (vii) the provisions of
this Statement  under which such  redemption is made. If fewer than all Series 1
VRDP  Shares  held by any Holder are to be  redeemed,  the Notice of  Redemption
delivered  to such Holder  shall also specify the number of Series 1 VRDP Shares
to be  redeemed  from  such  Holder.  The  Fund may  provide  in any  Notice  of
Redemption relating to a redemption contemplated to be effected pursuant to this
Statement that such  redemption is subject to one or more  conditions  precedent
and that the Fund shall not be required to effect  such  redemption  unless each
such  condition  has  been  satisfied  at the time or  times  and in the  manner
specified in such Notice of Redemption. No defect in the Notice of Redemption or
delivery thereof shall affect the validity of redemption proceedings,  except as
required by applicable law.

                  (d)      No   Redemption    Under    Certain    Circumstances.
Notwithstanding  the  provisions of paragraphs (a) or (b) of this Section 10, if
any dividends on shares of Series 1 VRDP (whether or not earned or declared) are
in arrears,  no shares of such Series shall be redeemed  unless all  Outstanding
shares  of such  Series  are  simultaneously  redeemed,  and the Fund  shall not
purchase or otherwise acquire any shares of such Series; provided, however, that
the foregoing  shall not prevent the purchase or acquisition of all  Outstanding
shares of such Series  pursuant to the  successful  completion  of an  otherwise
lawful  purchase or exchange  offer made on the same terms to, and  accepted by,
Holders of all Outstanding shares of such Series.

                  (e)      Absence of Funds  Available  for  Redemption.  To the
extent that any  redemption  for which Notice of Redemption has been provided is
not made by reason  of the  absence  of  legally  available  funds  therefor  in
accordance with the  Declaration  and applicable  law, such redemption  shall be
made as soon as practicable to the extent such funds become  available.  Failure
to redeem  Series 1 VRDP  Shares  shall be deemed to exist at any time after the
date specified for redemption in a Notice of Redemption when the Fund shall have
failed,  for any  reason  whatsoever,  to  deposit  in trust with the Tender and
Paying  Agent the  Redemption  Price  with  respect to any shares for which such
Notice of Redemption has been sent; provided,  however, that the foregoing shall
not apply in the case of the Fund's  failure to deposit in trust with the Tender
and Paying Agent the  Redemption  Price with respect to any shares where (1) the
Notice of Redemption  relating to such redemption  provided that such redemption
was  subject  to one or more  conditions  precedent  and (2) any such  condition
precedent  shall not have been  satisfied at the time or times and in the manner
specified in such Notice of Redemption.  Notwithstanding  the fact that the Fund
may not have redeemed  Series 1 VRDP Shares for which a Notice of Redemption has
been  provided,  dividends  may be declared and paid on Series 1 VRDP Shares and
shall include  those Series 1 VRDP Shares for which a Notice of  Redemption  has
been provided.

                  (f)      Tender  and Paying  Agent as  Trustee  of  Redemption
Payments by Fund.  All moneys paid to the Tender and Paying Agent for payment of
the Redemption Price of Series 1 VRDP Shares called for redemption shall be held
in trust by the Tender and Paying  Agent for the benefit of Holders of shares so
to be redeemed.

                  (g)      Deposit with the Tender and Paying Agent;  Shares for
Which Notice of Redemption Has Been Given Are No Longer Outstanding.  Provided a
Notice of Redemption has been provided pursuant to paragraph (c) of this Section
10, not later than 12:00 noon,  New York City time,  on a Business  Day not less
than ten

                                       35

<PAGE>


(10) days preceding the redemption date specified in such notice, the Fund shall
irrevocably  deposit  with the Tender and Paying  Agent an  aggregate  amount of
Deposit  Securities in an amount equal to the Redemption Price to be paid on the
redemption  date for the Series 1 VRDP Shares  that are subject to such  notice.
Provided a Notice of Redemption  has been provided  pursuant to paragraph (c) of
this  Section 10, upon the deposit  with the Tender and Paying  Agent of Deposit
Securities  in an  amount  equal  to the  Redemption  Price  to be  paid  on the
redemption  date for the  Series 1 VRDP  Shares  that  are the  subject  of such
notice,  dividends on such shares shall cease to accumulate,  except as included
in the  Redemption  Price,  and such  shares  shall no  longer  be  deemed to be
Outstanding,  except as noted below with respect to the VRDP Purchase Agreement,
for any  purpose,  and all  rights of the  Holders  of the  shares so called for
redemption  shall  cease and  terminate,  except  the right of such  Holders  to
receive the  Redemption  Price,  but without  any  interest or other  additional
amount,  except as provided in paragraph  (e)(i) of Section 2 of this Part I and
in Section 3 of Part I of this Statement.  Upon surrender in accordance with the
Notice of Redemption of the  certificates  for any shares so redeemed  (properly
endorsed or assigned for transfer, if the Board of Trustees shall so require and
the Notice of Redemption shall so state),  the Redemption Price shall be paid by
the Tender and Paying  Agent to the Holders of Series 1 VRDP  Shares  subject to
redemption.  In the case that fewer than all of the  shares  represented  by any
such certificate are redeemed,  a new certificate shall be issued,  representing
the unredeemed  shares,  without cost to the Holder  thereof.  The Fund shall be
entitled to receive from the Tender and Paying  Agent,  promptly  after the date
fixed for  redemption,  any cash  deposited  with the Tender and Paying Agent in
excess of (i) the aggregate  Redemption Price of the Series 1 VRDP Shares called
for  redemption  on such date and (ii) all other  amounts  to which  Holders  of
Series 1 VRDP  Shares  called  for  redemption  may be  entitled.  Any  funds so
deposited  that are  unclaimed at the end of 90 days from such  redemption  date
shall, to the extent  permitted by law, be repaid to the Fund,  after which time
the  Holders of Series 1 VRDP Shares so called for  redemption  may look only to
the Fund for payment of the Redemption Price and all other amounts to which they
may be entitled.  The Fund shall be entitled to receive, from time to time after
the  date  fixed  for  redemption,  any  interest  on the  funds  so  deposited.
Notwithstanding  the  foregoing,  Series  1 VRDP  Shares  will be  deemed  to be
Outstanding  for purposes of the VRDP Purchase  Agreement  until redeemed by the
Fund.

                  (h)      Compliance  With  Applicable  Law. In  effecting  any
redemption  pursuant to this  Section 10, the Fund shall use its best efforts to
comply with all applicable  conditions  precedent to effecting  such  redemption
under the 1940 Act and any  applicable  Massachusetts  law,  but shall effect no
redemption   except  in  accordance   with  the  1940  Act  and  any  applicable
Massachusetts law.

                  (i)      Only Whole VRDP Shares May Be  Redeemed.  In the case
of any  redemption  pursuant to this Section 10, only whole Series 1 VRDP Shares
shall be redeemed,  and in the event that any provision of the Declaration would
require  redemption of a fractional  share, the Tender and Paying Agent shall be
authorized to round up so that only whole shares are redeemed.

                  (j)      Modification      of      Redemption      Procedures.
Notwithstanding  the  foregoing  provisions of this Section 10, the Fund may, in
its sole  discretion,  modify the  procedures  set forth  above with  respect to
notification  of  redemption  for the Series 1 VRDP Shares,  provided  that such
modification  does not materially and adversely affect the Holders of the Series
1 VRDP  Shares or cause the Fund to violate  any law,  rule or  regulation;  and
provided  further  that  no  such  modification  shall  in  any  way  alter  the
obligations  of the Tender and Paying Agent without its prior  written  consent.
Furthermore,  if in  the  sole  discretion  of  the  Board  of  Trustees,  after
consultation with counsel,  modification of the foregoing redemption  provisions
are permissible  under the rules and regulations or  interpretations  of the SEC
and the Code with respect to the redemption of Series 1 VRDP Shares owned by the
Liquidity Provider, the Fund, without shareholder approval, by resolution of the
Board of Trustees, may modify such redemption procedures.

         11.      Liquidation Rights.

                  (a)      Ranking.  The shares of Series 1 VRDP shall rank on a
parity with each other,  with shares of any other Series of VRDP and with shares
of any other series of Preferred  Shares as to the  distribution  of assets upon
dissolution, liquidation or winding up of the affairs of the Fund.

                  (b)      Distributions Upon Liquidation. Upon the dissolution,
liquidation  or winding  up of the  affairs of the Fund,  whether  voluntary  or
involuntary,  the  Holders of Series 1 VRDP  Shares  then  Outstanding  shall be
entitled to receive and to be paid out of the assets of the Fund  available  for
distribution to its  shareholders,  before

                                       36

<PAGE>


any payment or  distribution  shall be made on the Common Shares or on any other
class of shares of the Fund  ranking  junior to the  Series 1 VRDP  Shares  upon
dissolution,  liquidation  or  winding  up, an amount  equal to the  Liquidation
Preference  with  respect to such shares plus an amount  equal to all  dividends
thereon  (whether or not earned or declared)  accumulated but unpaid to (but not
including) the date of final  distribution in same day funds,  together with any
payments  required to be made pursuant to Section 3 of Part I of this  Statement
in connection with the liquidation of the Fund. After the payment to the Holders
of the Series 1 VRDP Shares of the full  preferential  amounts  provided  for in
this  paragraph  (b),  the Holders of Series 1 VRDP Shares as such shall have no
right or claim to any of the remaining assets of the Fund.

                  (c)      Pro Rata  Distributions.  In the event the  assets of
the Fund available for  distribution to the Holders of Series 1 VRDP Shares upon
any dissolution,  liquidation or winding up of the affairs of the Fund,  whether
voluntary or  involuntary,  shall be  insufficient to pay in full all amounts to
which such Holders are entitled pursuant to paragraph (b) of this Section 11, no
such distribution shall be made on account of Series 1 VRDP or any shares of any
other class or series of Preferred  Shares ranking on a parity with the Series 1
VRDP Shares with respect to the  distribution  of assets upon such  dissolution,
liquidation  or winding up unless  proportionate  distributive  amounts shall be
paid on account of the Series 1 VRDP Shares,  ratably, in proportion to the full
distributable   amounts  for  which  holders  of  all  such  parity  shares  are
respectively entitled upon such dissolution, liquidation or winding up.

                  (d)      Rights of Junior Shares. Subject to the rights of the
holders of shares of any other series or class or classes of shares ranking on a
parity with the Series 1 VRDP Shares with respect to the  distribution of assets
upon  dissolution,  liquidation or winding up of the affairs of the Fund,  after
payment  shall have been made in full to the Holders of the Series 1 VRDP Shares
as provided in  paragraph  (b) of this  Section 11, but not prior  thereto,  any
other series or class or classes of shares  ranking  junior to the Series 1 VRDP
Shares with respect to the distribution of assets upon dissolution,  liquidation
or winding up of the affairs of the Fund shall,  subject to the respective terms
and  provisions  (if any) applying  thereto,  be entitled to receive any and all
assets remaining to be paid or distributed, and the Holders of the Series 1 VRDP
Shares shall not be entitled to share therein.

                  (e)      Certain Events Not Constituting Liquidation.  Neither
the sale of all or  substantially  all the property or business of the Fund, nor
the  merger,  consolidation  or  reorganization  of the  Fund  into or with  any
business  or  statutory  trust,  corporation  or other  entity  nor the  merger,
consolidation or reorganization of any business or statutory trust,  corporation
or other  entity into or with the Fund shall be a  dissolution,  liquidation  or
winding up, whether  voluntary or involuntary,  for the purposes of this Section
11.

         12.      Purchase  Obligation.  As long as  Series  1 VRDP  Shares  are
Outstanding,  except as  otherwise  provided  pursuant to Section 4 of Part I of
this Statement in connection with a Special Rate Period, the Fund shall maintain
a VRDP Purchase Agreement  providing for a Purchase  Obligation with a Liquidity
Provider  with  short-term  debt  ratings  in  one of the  two  highest  ratings
categories from the Requisite NRSROs or such other  short-term debt ratings,  if
any, as may be required for the Series 1 VRDP Shares to satisfy the  eligibility
criteria  under Rule 2a-7  under the 1940 Act on an ongoing  basis to the extent
that the Fund can do so on a commercially  reasonable basis as determined in the
sole discretion of the Board of Trustees.  If the Fund maintains a VRDP Purchase
Agreement providing a Purchase Obligation, the provisions herein relating to the
Liquidity Provider shall be operative and the following shall apply:

                  (a)      The Fund shall notify, or cause the Tender and Paying
Agent to notify,  Holders by Electronic  Means, or by first class mail,  postage
prepaid,  in the case in which Series 1 VRDP Shares are in physical form, (A) in
the event of a Mandatory  Tender Event or Mandatory  Purchase Event, (B) upon at
least seven days' prior notice in the event that there is a substitute Liquidity
Provider  (including,  but not limited  to, as to the  Liquidity  Provider,  its
consolidation, amalgamation with, or merger with or into, another entity, or the
transfer  of all or  substantially  all of the  Liquidity  Provider's  assets to
another entity),  or (C) any downgrade in the rating of the Series 1 VRDP Shares
or the  Liquidity  Provider  by an NRSRO then rating the Series 1 VRDP Shares or
Liquidity Provider.

                  (b)      In the event of a Failed Remarketing  Condition,  the
Fund will require in the Tender and Paying Agent  Agreement  that the Tender and
Paying Agent will notify the Fund and Holders by telephone or

                                       37

<PAGE>


Electronic Means, or by first class mail, postage prepaid,  in the case in which
Series 1 VRDP Shares are in physical form, of such Failed Remarketing Condition.

                  (c)      Each  Series 1 VRDP Share  shall be subject to Tender
to the Tender and Paying Agent for Remarketing on the related  Purchase Date or,
in the  event  (i) no  Remarketing  occurs  or  (ii)  pursuant  to an  attempted
Remarketing shares remain unsold and the Remarketing Agent does not purchase for
its own  account  the unsold  Series 1 VRDP  Shares  tendered  to the Tender and
Paying Agent for Remarketing  (provided that the  Remarketing  Agent may seek to
sell such Series 1 VRDP Shares in a subsequent Remarketing prior to the Purchase
Date), to the Liquidity  Provider for purchase on such Purchase Date pursuant to
a Final Notice of Purchase. If there is no Tender and Paying Agent or the Tender
and Paying Agent does not perform such obligation  pursuant to the VRDP Purchase
Agreement,  Beneficial  Owners and their Agent  Members  shall have the right to
tender their Series 1 VRDP Shares directly to the Liquidity Provider pursuant to
a Final Notice of Purchase.  In the event there is no Tender and Paying Agent or
for any  reason the Tender  and  Paying  Agent  does not,  or in the  reasonable
judgment of the Fund will not,  perform its obligations  under the VRDP Purchase
Agreement,  the Fund (i) upon becoming aware thereof,  shall promptly notify the
Liquidity  Provider,  the Remarketing  Agent and Holders by Electronic  Means of
such  event,  and (ii) so long as such event is  continuing,  shall use its best
efforts  to direct  the  Remarketing  Agent to  forward,  concurrently  with the
delivery  thereof  to the  Liquidity  Provider  or as  promptly  as  practicable
thereafter,  any Remarketing Notice to each Beneficial Owner or Holder tendering
Series 1 VRDP Shares that are the subject of such notice.

                  (d)      The Fund will  require in the Tender and Paying Agent
Agreement that, pursuant to a Tender,  Series 1 VRDP Shares that are not sold in
a  Remarketing  will be tendered by the Tender and Paying Agent to the Liquidity
Provider for payment of the Purchase  Price on the Purchase Date pursuant to the
VRDP Purchase Agreement.

                  (e)      Except as set forth in Section 10(b)(ii) of Part I of
this  Statement  in  connection  with a  mandatory  redemption  of Series 1 VRDP
Shares,  the Fund shall have no  obligation  to  purchase  Series 1 VRDP  Shares
acquired by the Liquidity  Provider  pursuant to the VRDP Purchase  Agreement or
otherwise.

                  (f)      Series  1  VRDP  Shares  are  subject  to   Mandatory
Purchase by the Liquidity  Provider upon the occurrence of a Mandatory  Purchase
Event.  Promptly  following the occurrence of a Mandatory Purchase Event, and in
any event within three (3) Business Days thereafter, the Fund, or the Tender and
Paying Agent at the direction of the Fund (provided,  that the Tender and Paying
Agent may require up to two (2) Business Days prior  notification  by Electronic
Means by the Fund),  shall  provide a Mandatory  Purchase  Notice by  Electronic
Means to Holders and the  Liquidity  Provider,  specifying a Mandatory  Purchase
Date for all Outstanding Series 1 VRDP Shares. The Mandatory Purchase Date shall
not be later than seven days following the date a Mandatory  Purchase  Notice is
sent to Holders by  Electronic  Means,  and in any event shall be not later than
the Business Day  immediately  preceding  the  termination  of the VRDP Purchase
Agreement.  Any  notice  given in  respect of a  Mandatory  Purchase  under this
Statement shall be conclusively presumed to have been duly given, whether or not
the Holders  receive such notice.  Upon the  occurrence of a Mandatory  Purchase
Event, all Outstanding  Series 1 VRDP Shares  automatically  shall be subject to
Mandatory  Purchase  by the  Liquidity  Provider  at the  Purchase  Price on the
Mandatory Purchase Date, including any Series 1 VRDP Shares tendered pursuant to
an Optional Tender and Mandatory  Tender for which the Purchase Date has not yet
occurred.

                  (g)      In the  event  Series 1 VRDP  Shares  are  issued  in
certificated  form and a Holder  fails to deliver  such  Series 1 VRDP Shares to
which a Mandatory Purchase relates,  on or prior to the Mandatory Purchase Date,
the Holder of such  Series 1 VRDP  Shares  will not be  entitled  to any payment
(including any accumulated but unpaid dividends  thereon,  whether or not earned
or declared)  other than the Purchase  Price of such  undelivered  Series 1 VRDP
Shares as of the scheduled  Purchase Date. Any such undelivered VRDP Shares will
be deemed to be  delivered  to the Tender and Paying  Agent,  and the Tender and
Paying Agent will place  stop-transfer  orders against the undelivered  Series 1
VRDP Shares.  Any moneys held by the Tender and Paying Agent for the purchase of
undelivered Series 1 VRDP Shares shall be held in a separate account,  shall not
be invested,  and shall be held for the exclusive  benefit of the Holder of such
undelivered  Series 1 VRDP Shares. The undelivered Series 1 VRDP Shares shall be
deemed to be no longer  Outstanding  (except as to entitlement to payment of the
Purchase Price),  and the Fund will issue to the purchaser  replacement Series 1
VRDP Share certificates in lieu of such undelivered Series 1 VRDP Shares.

                                       38

<PAGE>


                  (h)      The Fund shall use its best  efforts to engage at all
times a Tender  and  Paying  Agent  to  perform  the  duties  specified  in this
Statement, the Tender and Paying Agent Agreement and the VRDP Purchase Agreement
with respect to the Tender and Paying Agent.

                  The  provisions of paragraphs  (a) through (g) of this Section
12 may be amended by the Board of Trustees, by resolution duly adopted,  without
shareholder  approval in order to conform to a VRDP Purchase Agreement providing
a Purchase Obligation.

         13.      Miscellaneous.

                  (a)      Amendment of or  Supplements to this  Statement.  The
Board of Trustees may, by resolution duly adopted,  without shareholder approval
(except as otherwise  provided by this Statement or required by applicable law),
amend or supplement  this Statement to (1) reflect any amendments or supplements
hereto which the Board of Trustees is entitled to adopt pursuant to the terms of
this Statement without  shareholder  approval or (2) provide for the issuance of
additional  shares of  Series 1 VRDP (and  terms  relating  thereto).  Each such
additional  share  of  Series  1 VRDP  shall be  governed  by the  terms of this
Statement as so amended or supplemented.

                  (b)      No Fractional  Shares.  No  fractional  Series 1 VRDP
Shares shall be issued.

                  (c)      Status  of  VRDP  Shares   Redeemed,   Exchanged   or
Otherwise  Acquired  by the  Fund.  Series 1 VRDP  Shares  which  are  redeemed,
exchanged  or  otherwise  acquired  by the Fund  shall  return to the  status of
authorized  and unissued  Preferred  Shares  without  designation  as to series,
provided,  however,  that  any  Series 1 VRDP  Shares  which  are  provisionally
delivered by the Fund to or for the account of an agent of the Fund or to or for
the  account of a  purchaser  of the Series 1 VRDP  Shares,  but for which final
payment is not received by the Fund,  shall  return to the status of  authorized
and unissued Series 1 VRDP Shares.

                  (d)      Purchase  Obligation Part of VRDP Shares. Each Holder
and Beneficial  Owner, by virtue of acquiring Series 1 VRDP Shares, is deemed to
have  agreed,  for U.S.  federal  income  tax  purposes,  to treat the  Purchase
Obligation  as  part of the  Series  1 VRDP  Shares  rather  than as a  separate
property right.

                  (e)      Treatment  of VRDP  Shares as Stock.  Each Holder and
Beneficial Owner, by virtue of acquiring Series 1 VRDP Shares, is deemed to have
agreed, for U.S. federal income tax purposes,  to treat the Series 1 VRDP Shares
as stock in the Fund.

                  (f)      Board  May   Resolve   Ambiguities.   To  the  extent
permitted by  applicable  law, the Board of Trustees may interpret or adjust the
provisions  of this  Statement to resolve any  inconsistency  or ambiguity or to
remedy  any formal  defect,  and may amend this  Statement  with  respect to any
additional shares of Series 1 VRDP prior to the issuance of such shares.

                  (g)      Headings Not Determinative. The headings contained in
this  Statement are for  convenience  of reference only and shall not affect the
meaning or interpretation of this Statement.

                  (h)      Notices.   All  notices  or  communications,   unless
otherwise  specified  in the  By-laws  of the Fund or this  Statement,  shall be
sufficiently given if in writing and delivered in person, by Electronic Means or
mailed by first-class mail, postage prepaid.

                                     PART II

         1.       Remarketing Procedures.

                  (a)      Pursuant to an Optional Tender, Beneficial Owners may
elect to tender  their  Series 1 VRDP Shares (in  denominations  of $100,000 and
integral  multiples  thereof) for purchase at the Purchase Price on the Purchase
Date  designated  in the Notice of Tender (or if such day is not a Business Day,
on the next succeeding Business Day). Each Notice of Tender shall be irrevocable
(except as described below) and effective upon receipt and shall:

                                       39

<PAGE>


                  (i)      be  delivered  by a  Beneficial  Owner,  directly  or
                           through its Agent Member,  by email  transmission (or
                           if  email  transmission  shall  be  unavailable,   by
                           facsimile  transmission),  to the  Tender  and Paying
                           Agent not later than 2:00  p.m.,  New York City time,
                           on any Business Day;

                  (ii)     state the series and the aggregate number of Series 1
                           VRDP Shares to be purchased,  the CUSIP number of the
                           Series  1  VRDP  Shares  to  be  purchased,  and  the
                           Purchase Date and be in substantially the form of and
                           contain  such  other  information   specified  in  an
                           exhibit to the VRDP Purchase Agreement; and

                  (iii)    state   that   the   tendering    Beneficial    Owner
                           acknowledges  that such Beneficial  Owner is required
                           to  deliver  the  Series 1 VRDP  Shares  that are the
                           subject of a Notice of Tender (that has not been duly
                           revoked as  described  below) on or before 2:00 p.m.,
                           New York City time, on the Purchase Date.

                  (b)      Upon  receipt of a Notice of  Tender,  the Tender and
Paying Agent shall provide a copy to the Liquidity  Provider and the Remarketing
Agent (with a copy to the Fund) as promptly as practicable by Electronic  Means,
but no later  than 4:00  p.m.,  New York City  time,  on the date of  receipt or
deemed receipt.

                  (c)      Any  Notice of Tender  delivered  to the  Tender  and
Paying Agent by a Beneficial Owner or its Agent Member after 2:00 p.m., New York
City time,  shall be deemed to have been received by the Tender and Paying Agent
on the next  succeeding  Business  Day, and the Purchase  Date shall be adjusted
such that the Purchase Date shall be the Business Day next  succeeding  the date
specified as the Purchase Date in the relevant Notice of Tender.

                  (d)      The  determination  of the Tender and Paying Agent as
to  whether a Notice of  Tender  has been  properly  delivered  pursuant  to the
foregoing in paragraph  (a)(i) and (ii) shall be conclusive and binding upon the
Beneficial Owner and its Agent Member.

                  (e)      (i)  Series 1 VRDP  Shares are  subject to  Mandatory
         Tender upon the occurrence of a Mandatory Tender Event.

                           (ii) Promptly following the occurrence of a Mandatory
         Tender  Event,  and  in  any  event  within  three  (3)  Business  Days
         thereafter,  the Fund,  or the Tender and Paying Agent at the direction
         of the Fund (provided,  that the Tender and Paying Agent may require up
         to two (2) Business Days prior  notification by Electronic Means by the
         Fund),  shall provide a Mandatory  Tender Notice by Electronic Means to
         Holders, the Remarketing Agent and the Liquidity Provider, specifying a
         Purchase  Date for all  Outstanding  Series 1 VRDP  Shares.  Any notice
         given in respect of a Mandatory  Tender  under this  Statement  will be
         conclusively  presumed  to have been  duly  given,  whether  or not the
         Holders receive such notice.

                           (iii)  Upon  the  occurrence  of a  Mandatory  Tender
         Event,  all  Outstanding  Series 1 VRDP Shares  automatically  shall be
         subject  to  Mandatory  Tender and  delivered  to the Tender and Paying
         Agent for purchase on the designated Purchase Date by purchasers in the
         Remarketing  in the event of a successful  Remarketing  or otherwise by
         the Liquidity  Provider,  including any Series 1 VRDP Shares previously
         tendered pursuant to an Optional Tender for which the Purchase Date has
         not yet occurred.  In the event that Series 1 VRDP Shares are issued in
         certificated form and a Holder of Series 1 VRDP Shares fails to deliver
         such  Series 1 VRDP Shares to which a  Mandatory  Tender  relates on or
         prior to the  Purchase  Date,  the Holder of such  Series 1 VRDP Shares
         shall not be entitled to any payment  (including  any  accumulated  but
         unpaid dividends thereon, whether or not earned or declared) other than
         the Purchase Price of such  undelivered  Series 1 VRDP Shares as of the
         scheduled Purchase Date. Any such undelivered Series 1 VRDP Shares will
         be deemed to be  delivered  to the  Tender and  Paying  Agent,  and the
         Tender and Paying  Agent will place  stop-transfer  orders  against the
         undelivered  Series 1 VRDP  Shares.  Any moneys  held by the Tender and
         Paying Agent for the purchase of undelivered  Series 1 VRDP Shares will
         be held in a separate account by the Tender and Paying Agent,  will not
         be invested,  and will be held for the exclusive  benefit of the Holder
         of such undelivered Series 1 VRDP Shares. The undelivered Series 1 VRDP
         Shares

                                       40

<PAGE>


         will be deemed to be no longer Outstanding (except as to entitlement to
         payment  of the  Purchase  Price),  and  the  Fund  will  issue  to the
         purchaser  replacement Series 1 VRDP Share certificates in lieu of such
         undelivered Series 1 VRDP Shares.

                  (f)      A Beneficial Owner or its Agent Member that delivered
a Notice of Tender in connection  with an Optional Tender may deliver in writing
by  email  transmission  (or if email  transmission  shall  be  unavailable,  by
facsimile  transmission)  to the Tender and Paying  Agent,  not later than 10:00
a.m., New York City time, on or prior to the Business Day immediately  preceding
the Purchase Date, a notice to the effect that such  Beneficial  Owner wishes to
revoke its  election to tender some or all of the Series 1 VRDP Shares that were
specified in such Notice of Tender to be  purchased (a "Notice of  Revocation").
Any Notice of  Revocation  delivered  to the Tender  and Paying  Agent  shall be
promptly  delivered  by  Electronic  Means by the Tender and Paying Agent to the
Liquidity  Provider and the Remarketing Agent (with a copy to the Fund) by 12:00
noon, New York City time, on the Business Day immediately preceding the relevant
Purchase  Date.  The  Remarketing  Agent  (following  receipt of such  Notice of
Revocation) shall notify the Tender and Paying Agent and the Liquidity  Provider
of the number of Series 1 VRDP Shares  specified  in such  Notice of  Revocation
that are subject to an  agreement  of sale  pursuant to a  Remarketing  by email
transmission or facsimile  transmission  not later than 2:00 p.m., New York City
time, on the Business Day  immediately  preceding the Purchase  Date. The Tender
and Paying Agent shall deliver such  notification to the Beneficial Owner or its
Agent Member promptly  following receipt from the Remarketing  Agent, and in any
event  by 4:00  p.m.,  New York  City  time,  on the  Business  Day  immediately
preceding the Purchase  Date.  Any such Notice of Revocation  shall be effective
(without further action on the part of the Beneficial Owner or its Agent Member)
as a  revocation  of the  Optional  Tender of the number of Series 1 VRDP Shares
specified therein as being sought to be revoked, but (except as set forth below)
only if and to the extent that the  Remarketing  Agent has not  entered  into an
agreement to sell such Series 1 VRDP  Shares.  A Notice of  Revocation  shall be
effective as to the number of Series 1 VRDP Shares  specified  therein as having
been  revoked  less the number of such  Series 1 VRDP Shares in respect of which
the  Remarketing  Agent has so  notified  the Tender  and  Paying  Agent and the
Liquidity   Provider   that  it  has  entered   into  an   agreement   of  sale.
Notwithstanding  the  foregoing,  tendered  Series 1 VRDP Shares,  if any,  that
remain unsold on the related Purchase Date shall be allocated by the Remarketing
Agent to each Notice of  Revocation  received in respect of Series 1 VRDP Shares
tendered for  purchase on such  Purchase  Date and not already  satisfied in the
chronological  order in which each such Notice of Revocation was received by the
Tender and Paying Agent,  and each such Notice of Revocation  shall be effective
only to the extent of such  allocation and  availability of unsold Series 1 VRDP
Shares.

                  (g)      The Fund shall use its best  efforts to engage at all
times a Remarketing Agent that is a nationally recognized securities dealer with
expertise in  remarketing  variable-rate  securities  to use its best efforts to
find  purchasers for all Series 1 VRDP Shares  properly  tendered  pursuant to a
Tender.

         2.       Remarketing Schedule.

                  (a)      In  connection  with any attempted  Remarketing,  all

tendered  Series 1 VRDP Shares shall be remarketed at the Purchase Price of such
Series 1 VRDP Shares. The calculation of the Purchase Price of the Series 1 VRDP
Shares that are remarketed or purchased by the Liquidity  Provider shall be made
by the  Remarketing  Agent in  advance  of such  Remarketing  or  purchase  and,
together  with  the  details  of the  aggregate  number  and  Purchase  Price of
remarketed  Series 1 VRDP Shares and the aggregate  number and Purchase Price of
Series 1 VRDP Shares to be purchased by the Liquidity  Provider  pursuant to the
Purchase Obligation, shall be communicated by the Remarketing Agent to the Fund,
the Liquidity  Provider and the Tender and Paying Agent by email transmission or
facsimile  transmission  by 2:00 p.m.,  New York City time,  on the Business Day
immediately preceding the Purchase Date, as described below. The proceeds of any
sale of any remarketed Series 1 VRDP Shares by the Remarketing Agent relating to
tendered  Series 1 VRDP Shares  shall be used for the  purchase of the  tendered
Series 1 VRDP  Shares  at the  Purchase  Price,  and the  terms of the sale will
provide for the wire transfer of such Purchase Price by the Remarketing Agent to
be  received by the Tender and Paying  Agent no later than 11:00 a.m.,  New York
City time,  on the related  Purchase Date for payment to the Agent Member of the
Beneficial Owner, in the case of an Optional Tender, or Holder, in the case of a
Mandatory Tender, tendering Series 1 VRDP Shares for sale through the Securities
Depository  in  immediately  available  funds  against  delivery of the tendered
Series 1 VRDP  Shares to the Tender  and Paying  Agent  through  the  Securities
Depository,  the  delivery of such Series 1 VRDP Shares to the Tender and Paying
Agent through the  Securities  Depository no later than 2:00 p.m., New York City
time, on the Purchase Date, and the  re-delivery of such Series 1 VRDP Shares by
means of "FREE"  delivery

                                       41

<PAGE>


through the Securities  Depository to the Remarketing  Agent for delivery to the
purchaser's  Agent Member  through the  Securities  Depository by 3:00 p.m., New
York City time, on the relevant Purchase Date.

                  (b)      By 2:00 p.m., New York City time, on the Business Day
immediately  preceding each Purchase Date, the Remarketing Agent shall deliver a
notice to the Tender and Paying Agent and the Liquidity Provider (a "Remarketing
Notice"), by email transmission or facsimile  transmission,  that sets forth the
number of Series 1 VRDP Shares,  if any,  that it  successfully  remarketed  for
purchase on such  Purchase Date and the  aggregate  Purchase  Price of such sold
Series 1 VRDP  Shares  and the  number  of  Series 1 VRDP  Shares,  if any,  not
successfully  remarketed  for purchase on such  Purchase  Date and the aggregate
Purchase  Price of such unsold  Series 1 VRDP Shares to be paid by the Liquidity
Provider.  If the Remarketing  Notice states that the Remarketing  Agent has not
successfully  remarketed all of the Series 1 VRDP Shares to be purchased on such
Purchase Date,  the Tender and Paying Agent will promptly,  and in any event not
later  than 4:00 p.m.,  New York City time,  on such  Business  Day,  deliver by
Electronic  Means  to the  Liquidity  Provider  (with  a copy  to  the  Fund)  a
Preliminary  Notice of Purchase that, subject to delivery of the Final Notice of
Purchase on the Purchase Date described below,  provides for the purchase by the
Liquidity  Provider  of the  number  of  such  Series  1 VRDP  Shares  that  the
Remarketing  Agent  stated  in  the  Remarketing   Notice  as  not  having  been
successfully remarketed, including the aggregate Purchase Price of such Series 1
VRDP Shares, as calculated by the Remarketing  Agent. If the Remarketing  Notice
states that the  Remarketing  Agent has not  successfully  remarketed all of the
Series 1 VRDP Shares to be purchased on such  Purchase  Date (or if  remarketing
proceeds  for any tendered  Series 1 VRDP Shares have not been  received for any
reason by the Tender and Paying Agent by 11:00 a.m.,  New York City time, on the
Purchase Date),  the Tender and Paying Agent will deliver by Electronic Means to
the Liquidity  Provider  (with a copy to the Fund) by 12:00 noon,  New York City
time, on such Purchase Date a Final Notice of Purchase that states the number of
Series 1 VRDP Shares  required to be purchased by the  Liquidity  Provider.  For
purposes of the Final Notice of Purchase,  any tendered Series 1 VRDP Shares for
which  remarketing  proceeds have not been received for any reason by the Tender
and Paying Agent by 11:00 a.m., New York City time, on the Purchase Date,  shall
be treated as not having been  successfully  remarketed and shall be required to
be purchased by the Liquidity Provider.  The payment obligation of the Liquidity
Provider shall equal the Purchase  Price of the Series 1 VRDP Shares,  stated in
the Final  Notice of Purchase  delivered  to the  Liquidity  Provider,  as being
required to be purchased by the Liquidity Provider.

                  (c)      The  Liquidity  Provider  shall,  no later  than 2:00
p.m., New York City time, on a Purchase Date for any Series 1 VRDP Shares,  wire
transfer the aggregate  Purchase Price of all Series 1 VRDP Shares in respect of
which Final Notices of Purchase have been delivered to it for purchase of Series
1 VRDP  Shares on such date,  as follows:  (i) in the case of a Final  Notice of
Purchase  delivered  by the  Tender  and  Paying  Agent,  by wire  transfer,  in
immediately  available  funds,  to the  account of the  Tender and Paying  Agent
specified  by the Tender and Paying  Agent in any such Final Notice of Purchase;
and (ii) in the case of a Final  Notice of Purchase  delivered  by a  Beneficial
Owner or its Agent Member, in the case of an Optional Tender, or by a Holder, in
the case of a Mandatory Tender, in the event there is no Tender and Paying Agent
or for any reason the Tender and Paying  Agent does not perform its  obligations
under the VRDP  Purchase  Agreement  and the  Liquidity  Provider has received a
Remarketing  Notice  that such Series 1 VRDP Shares have not been the subject of
an agreement of sale in a Remarketing  and has received  written notice from the
Fund that  there is no Tender  and  Paying  Agent or that the  Tender and Paying
Agent  does not  intend to  perform  its  obligations  under  the VRDP  Purchase
Agreement,  by payment against delivery of the Series 1 VRDP Shares that are the
subject of any such Final Notice of Purchase,  through  means of the  Securities
Depository in the case of Series 1 VRDP Shares in the form of global securities.

                  (d)      Upon  receipt by the Tender and Paying Agent from the
Beneficial Owner or its Agent Member, in the case of an Optional Tender, or from
the Holder,  in the case of a Mandatory Tender, of tendered Series 1 VRDP Shares
and the payment by the Tender and Paying Agent to such  Beneficial  Owner or its
Agent Member,  or such Holder as the case may be, of the Purchase Price therefor
on the  applicable  Purchase  Date, the Tender and Paying Agent shall deliver to
the Liquidity  Provider,  by means of "FREE" delivery  through the system of the
Securities  Depository,  Series 1 VRDP Shares in  satisfaction  of the Liquidity
Provider's  Purchase  Obligation  on such Purchase  Date.  Any funds paid by the
Liquidity  Provider  and held in the account of the Tender and Paying  Agent for
the payment of the Purchase  Price shall be held in trust for the benefit of the
Liquidity Provider until the Series 1 VRDP Shares are delivered by the tendering
Beneficial Owners or their Agent Members,  in the case of an Optional Tender, or
by the tendering  Holder,  in the case of a Mandatory  Tender,  against  payment
therefor  or  returned  to  the  Liquidity  Provider.  Any  funds  paid  by  the
Remarketing  Agent and held in an account of the Tender and Paying Agent for the
payment of the Purchase Price in connection with a Remarketing  shall be held in
trust  for

                                       42

<PAGE>


the benefit of the  Remarketing  Agent on account of purchasers  purchasing in a
Remarketing  until the  Series 1 VRDP  Shares  are  delivered  by the  tendering
Beneficial Owners or their Agent Members,  in the case of an Optional Tender, or
by the tendering  Holders,  in the case of a Mandatory  Tender,  against payment
therefor,  or  returned  to the  Remarketing  Agent  on  account  of  purchasers
purchasing  in a  Remarketing.  Upon  receipt of Series 1 VRDP  Shares  from the
tendering  Beneficial Owners or their Agent Members,  in the case of an Optional
Tender, or from the tendering Holders, in the case of a Mandatory Tender, by the
Tender and Paying  Agent,  the Tender  and Paying  Agent  shall pay,  subject to
receipt of the  Purchase  Price by the  Tender  and Paying  Agent in the form of
remarketing  proceeds from the Remarketing  Agent, with respect to Series 1 VRDP
Shares  remarketed by the Remarketing  Agent, or in the form of payment pursuant
to the VRDP  Purchase  Agreement  from the Liquidity  Provider,  with respect to
Series 1 VRDP Shares  subject to purchase  pursuant to the Purchase  Obligation,
the Purchase  Price for such Series 1 VRDP Shares to such  tendering  Beneficial
Owner,  Agent  Member  or  Holder,  as the case may be. In  accordance  with and
subject to the  foregoing,  the Tender and Paying  Agent  shall  effect any such
payment on the applicable Purchase Date.

                  (e)      Except as  otherwise  expressly  provided for herein,
the purchase and delivery of tendered Series 1 VRDP Shares in the form of global
securities and their  Remarketing  will be  accomplished  in accordance with the
applicable procedures of the Securities Depository.

                  (f)      The Remarketing Agent and the Tender and Paying Agent
each shall use commercially  reasonable efforts to meet the timing  requirements
set forth above.  At any time that no Purchase  Obligation is in effect (or with
respect to a remarketing of Series 1 VRDP Shares held by the Liquidity  Provider
as to which any  then-effective  Purchase  Obligation  by a successor  liquidity
provider is inapplicable  pursuant to the terms of the VRDP Fee Agreement),  any
Series 1 VRDP Shares unsold in a Remarketing  shall be returned to the tendering
Beneficial Owners or their Agent Members,  or the tendering Holders, as the case
may be, by the Tender and Paying Agent.  The Remarketing  Agent may, in its sole
discretion, modify the settlement procedures set forth above with respect to any
Remarketing  upon ten (10) days' prior written notice to the Fund, the Liquidity
Provider and the Tender and Paying Agent,  provided any such  modification  does
not adversely affect the Holders,  the Beneficial  Owners, the Tender and Paying
Agent, the Liquidity Provider or the Fund. The Remarketing Agent may sell Series
1 VRDP Shares for its own account outside of a Remarketing at a price other than
the Purchase Price.

                  (g)      In  connection  with the  allocation of Series 1 VRDP
tendered  for  Remarketing  by the  Liquidity  Provider  and any other Holder or
Beneficial Owner of shares of Series 1 VRDP in any Remarketing,  the Remarketing
Agent shall  allocate those shares of Series 1 VRDP  previously  acquired by the
Liquidity  Provider pursuant to its Purchase  Obligation first to any purchasers
in a  Remarketing  (such  allocation  coming first from those shares of Series 1
VRDP acquired earliest by the Liquidity Provider).

         3.       Determination of Applicable Rate.

                  (a)      The  Applicable  Rate  shall  be  determined  by  the
Remarketing Agent on and as of each Rate  Determination  Date as the lowest rate
under  then-existing  market  conditions  that in the  Remarketing  Agent's sole
judgment  would  result  in the  Series 1 VRDP  Shares  on the  first day of the
Subsequent  Rate Period next  succeeding  the Rate  Determination  Date having a
market value equal to the Liquidation  Preference  thereof (plus accumulated but
unpaid dividends thereon, whether or not earned or declared). Such determination
shall be conclusive and binding upon the interested parties. The Applicable Rate
shall not exceed the Maximum Rate.

                  (b)      The Remarketing  Agent shall establish the Applicable
Rate by 5:00 p.m.,  New York City time, on each Rate  Determination  Date to the
nearest  one-thousandth (0.001) of one percent per annum for the Subsequent Rate
Period.  The Applicable Rate shall be in effect from and including the first day
following  such Rate  Determination  Date to and including  the  following  Rate
Determination  Date.  The  Remarketing  Agent  shall  make the  Applicable  Rate
available after 5:00 p.m., New York City time, on the Rate Determination Date by
email transmission or facsimile  transmission to the Fund, the Tender and Paying
Agent and the Liquidity Provider and post the Applicable Rate on Bloomberg.

                  (c)      In the event that the Remarketing  Agent  establishes
the Maximum  Rate as the  Applicable  Rate for a  Subsequent  Rate  Period,  the
Remarketing  Agent shall  notify the Fund and the Tender and Paying  Agent.  The
Fund will require in the Tender and Paying Agent  Agreement  that the Tender and
Paying Agent will notify the

                                       43

<PAGE>


Liquidity  Provider and the Holders of Series 1 VRDP Shares by first class mail,
postage prepaid (in the case of physical  shares),  or Electronic  Means (in the
case of  Series  1 VRDP  Shares  in the  form of  global  securities)  that  the
Applicable Rate for the Subsequent Rate Period is the Maximum Rate.

                  (d)      In the event  the  Remarketing  Agent  does not or is
unable to determine the Applicable  Rate, or if there is no  Remarketing  Agent,
the Applicable Rate shall be the Maximum Rate.

                  (e)      In the event of a Failed Remarketing  Condition,  the
Applicable  Rate as of the close of business  on the day the Failed  Remarketing
Condition first occurs will be adjusted to the Maximum Rate (with the Applicable
Spread  subject  to  adjustment  as set forth in the  definition  of  Applicable
Spread) and the Maximum Rate will continue to be the  Applicable  Rate (i) until
the first  day of the next  succeeding  Subsequent  Rate  Period  after a Failed
Remarketing Condition no longer exists in the case of a Minimum Rate Period or a
Special  Rate Period of 28 Rate  Period Days or fewer,  and (ii) until the first
day  of the  next  succeeding  Dividend  Period  after  the  Failed  Remarketing
Condition no longer  exists in the case of a Special Rate Period of greater than
28 Rate Period Days.

         4.       Failed  Remarketing  Condition.  In  the  event  of  a  Failed
Remarketing  Condition,  pursuant to the Tender and Paying Agent Agreement,  the
Tender and Paying Agent shall promptly  provide  notice of a Failed  Remarketing
Condition,  but in any event  within  two (2)  Business  Days of  receipt by the
Tender and Paying Agent of notice from the Fund of the occurrence of such Failed
Remarketing  Condition,  by  Electronic  Means (or by first class mail,  postage
prepaid, in the case where the Series 1 VRDP Shares are in physical form) to the
Holders (with a copy to the Fund).

         5.       Purchase of VRDP Shares by Remarketing  Agent. The Remarketing
Agent in its sole  discretion  may  purchase  for its own account  Series 1 VRDP
Shares in a Remarketing;  however,  the Remarketing Agent shall not be obligated
to purchase  any Series 1 VRDP Shares that would  otherwise  remain  unsold in a
Remarketing.  None of the Fund,  the Tender and Paying Agent or any  Remarketing
Agent  shall be  obligated  in any case to  provide  funds to make  payment to a
Beneficial Owner or its Agent Member upon such Beneficial  Owner's tender of its
Series 1 VRDP Shares in a Remarketing  unless,  in each case, such Series 1 VRDP
Shares were acquired for the account of the Fund, the Tender and Paying Agent or
the Remarketing Agent.

         6.       Notification  of  Allocations.  Whenever  the Fund  intends to
include any net capital  gains or ordinary  income  taxable for regular  federal
income tax purposes in any dividend on Series 1 VRDP Shares, the Fund may notify
the  Remarketing  Agent  and  Tender  and  Paying  Agent of the  amount to be so
included  (i)  not  later  than  14  calendar  days  preceding  the  first  Rate
Determination  Date on which  the  Applicable  Rate for such  dividend  is to be
established,  and (ii) for any successive Rate  Determination  Date on which the
Applicable Rate for such dividend is to be established, not later than the close
of business on the immediately  preceding Rate Determination Date. Whenever such
notice is received  from the Fund,  the Tender and Paying Agent will notify each
Holder and the Remarketing Agent will notify each potential  Beneficial Owner or
its Agent  Member.  With respect to a Rate Period for which such advance  notice
was given and whose  dividends are comprised  partly of such ordinary  income or
capital  gains and partly of  exempt-interest  income,  the  different  types of
income  will be paid in the same  relative  proportions  for each day during the
Rate Period.  The Fund may also include such ordinary income or capital gains in
a dividend on shares of Series 1 VRDP without  giving  advance notice thereof if
it increases the dividends by an additional  amount calculated as if such income
was a Taxable  Allocation  and the  additional  amount was a  Gross-up  Payment,
provided  the Fund will  notify the Tender  and Paying  Agent of the  additional
amounts to be included in such dividend at least five Business Days prior to the
applicable Dividend Payment Date.

         7.       Transfers.

                  (a)      Unless otherwise  permitted by the Fund, a Beneficial
Owner or Holder may sell,  transfer or otherwise dispose of Series 1 VRDP Shares
only in whole shares and only pursuant to a Remarketing  in accordance  with the
remarketing  procedures  set  forth  in  Part II of  this  Statement,  provided,
however,  that (a) a sale, transfer or other disposition of Series 1 VRDP Shares
from a  Beneficial  Owner who holds  shares  through an Agent  Member to another
Beneficial  Owner  who holds  shares  through  the same  Agent  Member  shall be
permitted,  and  (b) in the  case  of  all  transfers  other  than  pursuant  to
Remarketings,  the Agent Member (or other  Person,  if permitted by the Fund) to
whom such transfer is made shall advise the Remarketing  Agent. The Fund has not
registered the Series 1 VRDP Shares under the Securities Act.  Accordingly,  the
Series 1 VRDP Shares are subject to restrictions

                                       44

<PAGE>


on  transferability  and  resale  and  may  only  be  purchased  by and  sold to
"qualified  institutional  buyers" (as defined in Rule 144A under the Securities
Act or  any  successor  provision)  in  accordance  with  Rule  144A  under  the
Securities  Act or any successor  provision or any exemption  from  registration
available and  otherwise in accordance  with the legend set forth on the face of
the Series 1 VRDP Shares.

                  (b)      The  Investment  Adviser,  affiliated  persons of the
Investment  Adviser (as defined in Section  2(a)(3) of the 1940 Act) (other than
the Fund,  in the case of a  purchase  of Series 1 VRDP  Shares  which are to be
cancelled  within 10 days of purchase by the Fund),  and Persons  over which the
Investment  Adviser, or affiliated persons of the Investment Adviser (as defined
in Section 2(a)(3) of the 1940 Act), exercise discretionary investment or voting
authority  (other  than the  Fund,  in the case of a  purchase  of Series 1 VRDP
Shares  which are to be cancelled  within 10 days of purchase by the Fund),  are
not permitted to purchase Series 1 VRDP Shares without the prior written consent
of the Liquidity Provider,  and any such purchases without such consent shall be
void ab initio;  provided,  however,  that the Fund shall give prompt  notice to
Beneficial Owners by Electronic Means upon any of the foregoing Persons,  singly
or in the  aggregate,  acquiring  a  beneficial  interest  in 20% or more of the
Series 1 VRDP Shares;  provided,  further, that, without regard to the preceding
requirements,  purchases  of Series 1 VRDP Shares may be made by  broker-dealers
that are  affiliated  persons of the  Investment  Adviser in riskless  principal
transactions with respect to such purchases of Series 1 VRDP Shares.

                  (c)      If at any time the Fund is not furnishing information
to the SEC  pursuant  to Section 13 or 15(d) of the  Exchange  Act,  in order to
preserve the exemption for resales and transfers under Rule 144A, the Fund shall
furnish,  or cause to be  furnished,  to  holders  of Series 1 VRDP  Shares  and
prospective  purchasers of Series 1 VRDP Shares, upon request,  information with
respect to the Fund  satisfying the  requirements  of subsection  (d)(4) of Rule
144A.

         8.       Global  Certificate.  Prior  to the  commencement  of a Voting
Period,  (i) all of the  shares of Series 1 VRDP  outstanding  from time to time
shall be represented by one or more global  certificates  registered in the name
of the Securities Depository or its nominee and (ii) no registration of transfer
of shares of Series 1 VRDP  shall be made on the books of the Fund to any Person
other than the Securities Depository or its nominee.

                                       45

<PAGE>


         IN WITNESS  WHEREOF,  Nuveen AMT-Free  Municipal Income Fund has caused
these  presents  to be signed as of May 3, 2013 in its name and on its behalf by
its Chief  Administrative  Officer and attested by its Assistant  Vice President
and Assistant Secretary.  The Declaration is on file with the Secretary of State
of the  Commonwealth  of  Massachusetts,  and the said officers of the Fund have
executed this Statement as officers and not  individually,  and the  obligations
and rights set forth in this  Statement are not binding upon any such  officers,
or the trustees of the Fund or shareholders of the Fund,  individually,  but are
binding only upon the assets and property of the Fund.

                                    NUVEEN AMT-FREE MUNICIPAL INCOME FUND


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

ATTEST:


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

                                       46
</TEXT>
</DOCUMENT>
